Orphan Drugs
What is an orphan drug?
Drugs used to treat rare diseases.
What type of good is an orphan drug?
What is a price ceiling?
The maximum legal market price set and allowed by the government.
What did we recommend Brazil to do? (1)
- For more government transparency
What company did we base our report on?
SANOFI
What type of market structure does SANOFI operate in?
Oligopolistic market structure.
Name a positive effect a price ceiling has if implemented.
Makes the good more affordable.
Acts as an anti-inflationary policy.
What is the VBP model?
It sets maximum prices based on a cost-effective threshold.
What Brazilian institution controls drugs prices? (can just mention the abbreviation)
Drug Market Regulation Chamber (CMED)
Name a factor that affects the supply of orphan drugs?
Perishability/time takes to get drugs approved/time period.
Is there a bigger increase in consumer surplus or a bigger decrease in producer surplus?
A bigger decrease in producer surplus.
What is 1 benefit of using a VBP model?
Price alignment, price ceiling reduction, transparency
What is the price elasticity of demand and supply for orphan drugs in Brazil?
True or False? The market structure SANOFI operates in has mutual interdependence and a high-degree of rival consciousness.
True
Why is a price ceiling counterproductive?
True or False? The recommendation on government transparency suggests limiting public access to pricing conditions until after conditional approval has been granted.
False, it recommends disclosing conditions and keeping the public updated on status, which means promoting transparency throughout the process, not limiting it.
How many days does it take to register a drug with ANVISA?
350 days
True or False? Prices tend to be sticky at the high price levels for firms to enjoy normal profits.
False, firms enjoy supernormal profits.
Explain the 3 tiers implemented by CMED.
Tier 1 - Drugs or treatments that are extremely rare, and have no alternatives.
Tier 2 - Contains drugs w/o clinical superiority or drugs with instrumental benefits
Tier 3 - More efficient compared to existing treatments and Price is capped at minimum factory price
True or False? Canada’s Health Technology Assessment (HTA) system prioritizes reimbursements for drugs that exceed the cost-effectiveness threshold.
False, the HTA system actually prioritizes reimbursements for drugs that fall below the cost-effectiveness threshold, not those that exceed it.