As populations continue to age in the developed world, and better health technologies and pharmaceuticals improve health and prolong life, payers are increasingly focusing on pharmaceutical spending in their overall healthcare budgets.
The pharmaceutical industry faces a variety of healthcare systems and government policies in developed countries, where it must balance patient access to the best treatments within the constraint of limited budgets. In most European countries and in Canada, the government both regulates healthcare and provides it to its citizens. We understand these management and budgetary pressures.
Despite differences in national approaches, we price our products in all OECD (Organization for Economic Co-operation and Development) countries to foster access while ensuring a reasonable return on our investment. Our prices around the world are determined by several factors, including the value of our products to patients, payers and physicians relative to competitor products; the ability and willingness of various customers—including national, regional or local institutional payers, physicians, employers and patients—to pay for our products; and the cost and value of treatment options, such as hospitalization.
The prices of our medicines and vaccines also reflect government regulation and currency fluctuation. While striving to maintain a consistent global approach, Merck also considers the national, competitive and regulatory conditions in each market individually. It is important to recognize that the price a consumer pays is also affected by duties and tariffs imposed on imported medicines and vaccines, as well as price markups by intermediaries, including wholesalers and pharmacies.
Given the choices available within a class of drugs today, powerful and sometimes monopolistic buyers in the pharmaceutical marketplace—particularly governments and national health systems—have intensified pricing pressure throughout the developed world. In price-controlled environments (particularly prevalent in Europe), most governments use international price comparisons and therapeutic reference pricing as levers to set their own purchasing price. In addition, in Europe and a growing number of other developed markets, decisions about medicines are increasingly being relegated to regional payers, making the challenge of ensuring access to new treatments extend beyond price alone.
In the private sector, particularly in developed countries like the United States, price competition has been spurred by private health insurance plans. These payers are able to negotiate significant rebates and discounts with pharmaceutical manufacturers, based on their ability to direct utilization. Where competition exists among health insurance plans, patients are able not only to obtain healthcare and their medicines at competitive prices but also to take advantage of innovative pharmacy services that have improved the quality of pharmacy care.
To learn more about our product pricing, click on one of the links below:Prescription drugs