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Development and performance of the external reference pricing system in Slovenia from 2007 to 2012
Author’s Accepted Manuscript Development and performance of the external reference pricing system in Slovenia from 2007 to 2012 Nika Marđetko, Nika Rijavec, Mitja Kos www.elsevier.com/locate/hlpt
PII: DOI: Reference:
S2211-8837(17)30045-X http://dx.doi.org/10.1016/j.hlpt.2017.06.005 HLPT239
To appear in: Health Policy and Technology Cite this article as: Nika Marđetko, Nika Rijavec and Mitja Kos, Development and performance of the external reference pricing system in Slovenia from 2007 to 2012, Health Policy and Technology, http://dx.doi.org/10.1016/j.hlpt.2017.06.005 This is a PDF file of an unedited manuscript that has been accepted for publication. As a service to our customers we are providing this early version of the manuscript. The manuscript will undergo copyediting, typesetting, and review of the resulting galley proof before it is published in its final citable form. Please note that during the production process errors may be discovered which could affect the content, and all legal disclaimers that apply to the journal pertain.
Development and performance of the external reference pricing system in Slovenia from 2007 to 2012
Authors: Nika Marđetko MPh1 [email protected] Nika Rijavec MPh1 [email protected] Mitja Kos PhD1§ [email protected] 1
Chair of Social Pharmacy, University of Ljubljana – Faculty of Pharmacy, Aškerčeva cesta 7, 1000 Ljubljana, Slovenia § Corresponding author Mitja Kos PhD E-mail address: [email protected] Telephone number: +386 1 4769 686 Sources of financial or other support for the manuscript: None Key words: External reference pricing system; Slovenia; performance; medicine price reduction agreements; costcontainment
Running title: External reference pricing in Slovenia
Abstract Background From 2007 to 2012 five changes of the Rules defining Slovenian external reference pricing (ERP) were introduced to reduce medicine expenditure. Objective To assess the cost-saving effect of five ERP updates and the cost-saving effect of specific price reduction agreements, and to identify potential inconsistencies in determining the maximum allowed prices (MAPs) based on ERP. 1
Methods To obtain MAPs from 2012 and four sets of MAPs that would be valid if ERP upgrades did not occur, Rules from 2012 and four previous Rules were applied to the same data on prices in reference countries. To assess the ERP updates cost-saving effect, one-year validity of each Rules was assumed. The assumed annual medicine expenditure was calculated considering MAPs according to each Rules and medicine consumption. To detect inconsistencies in determining MAPs, the official MAPs were compared to the MAPs calculated within the study. Results The total cost-saving effect resulting from the difference in assumed medicine expenditure based on the 2012 Rules and 2007 Rules was 5.45%. The greatest cost-saving effect of 3.59% was observed for the 2012 Rules compared to the 2010 Rules, while a 2.28% cost increase was detected when comparing the 2009 Rules to those from 2008. Specific price reduction agreements contributed to 2.32%, 4.51% and 6.74% expenditure reductions, respectively. Inconsistences in the formulation of MAPs were found as 4.75% lower monthly expenditure based on the calculated MAPs. Conclusions ERP system upgrades affected medicine expenditure; however, specific price reduction agreements were shown as a more effective cost-containment measure.
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Introduction In Slovenia as well as in many other European Union (EU) member states medicine pricing is regulated by law (1); however, statutory pricing is usually supplemented with negotiations related to the reimbursement prices. The Slovenian pricing model uses the most common system in the EU, the so-called external reference pricing (ERP) system (2, 3). In this system, the price of medicines in one or several other countries is used to identify a comparative price for the purpose of setting or negotiating the price of medicines in an individual country (3-5). In Slovenia, medicine pricing is defined by the Medicinal Product Act (6-8). Based on EU requirements, regulated pricing of medicines applies only to medicines covered by the public funds, the so-called reimbursable medicines. ERP is the policy for setting the maximum allowed prices (MAPs) of reimbursable medicines. Procedures and methodology for determining MAPs based on the ERP system are defined by the Rules on Determining the Prices of Medicinal Products for Human Use and related amendments (hereafter referred to as Rules) (9-13). The primary national regulatory authority responsible for medicine pricing is the Public Agency of the Republic of Slovenia for Medicinal Products and Medicinal Devices (JAZMP), which is responsible for the regulation and supervision of medicines, including control over setting MAPs of medicines based on ERP. Financing of reimbursable medicines is regulated by the Health Care and Health Insurance Act and falls within the authority of the Health Insurance Institute of Slovenia (HIIS) (14). According to the Bismarck type healthcare system HIIS is the sole authority that provides compulsory health insurance in the country. Whereas HIIS’s principal task is the management of healthcare public funds, it also conducts negotiations on reimbursable price of medicines. Therefore, medicine pricing is partially its responsibility. According to the Rules defining Slovenian ERP, maximum allowed price (MAP) is formulated as the value of ex-factory price plus the wholesale mark-up. The value of ex-factory price, which is in Slovenia administratively called 'the value of manufacturer’s element of price (MEP)', is determined based on the medicine price in the reference countries Germany, Austria and France (6). Medicine prices are obtained from the reference country publications and correspond with retail prices in Austria and France and wholesale prices in Germany. As prices from publications reflect different distribution levels and should include value added tax, the calculations and factors defined by the Rules are used to correct published prices for pertinent wholesale and/or pharmacy margins or value added tax. The calculation method depends on the reference country and medicine price level and it returns the value of ex-factory prices in reference countries (e.g. for medicine prices in Austria lower than 9.58 EUR, ex-factory price = retail price * f; f=0.632). Ex-factory prices obtained from reference countries in this manner are then used for the formulation of reference price, also called comparative price of medicines. As opposed to the other countries using one method for determining reference price, in Slovenia for originators and biosimilars the lowest price among reference countries is used as reference price, whereas for generics the average price of reference countries is taken into account (3). Furthermore, the value of ex-factory price or MEP may amount up to the certain proportion of reference (comparative) price. The proportions of reference (comparative) price are defined by the Rules for each medicine status and are represented in Table 1. For some medicines the size or other characteristics of the Slovenian market prevent marketing authorisation holders to supply market based on the MAP. They are therefore allowed to request the extraordinary higher allowed price (EHAP). In such a case ERP is only a supportive policy as the application for EHAP is based on the justification of expected actual medicine cost and sales figures (6). According to the pricing regulation, the application for a MAP including information about prices in reference countries and all the calculations required for the MAP formulation should be provided by the marketing authorisation 3
holders and submitted to the JAZMP. JAZMP is the competent authority that approves the correctness of the suggested MAP. In Slovenia, the Medicinal Products Act states that the price of reimbursable medicines may be lower than its MAP. Thus, MAP usually represents the basis for the negotiations on reimbursement price. MAP as well as reimbursement price reductions are based on an agreement between marketing authorisation holders or wholesalers and HIIS or other institutions carrying out healthcare activities (7, 8, 15). In general two types of agreements on price reduction exist in Slovenia; namely, individual negotiations and specific pricing agreements. Individual negotiations are the most common contractual arrangements (16), and they mean that each marketing authorisation holder could determine an agreement on medicine price with the health-care payer (HIIS) (17, 18). Specific price reduction agreements are related to the particular groups of medicines. They have been introduced by the intervention of the Ministry of Health, which transferred certain provisions of the Rules to agreements between HIIS and marketing authorisation holders. The procedure of medicine pricing in Slovenia is schematically presented in Figure 1. In order to achieve the most favourable MAPs of medicines and to reduce medicine expenditure, the pricing policy based on ERP was frequently modified through the changes and supplements to the Rules introduced between 2007 and 2012 (19). ERP updates introduced by the Rules were related to the changes in the proportions of the reference (comparative) price (see Table 1). The wholesale markup changes (changes in percentage add-on to the ex-factory price) occurred almost with the entire new version of Rules. With the enforcement of the Rules from 2012 the wholesale mark-up was changed from a percentage add-on to the combination of fix and percentage add-on to the ex-factory price. The calculation of ex-factory prices in reference countries was upgraded with almost all of the Rules updates. Furthermore, the entire methodology of setting MAPs of biosimilar medicines was changed with the enforcement of the Rules from 2008 (10). Additionally, during the period from 2007 to 2012 three specific pricing agreements were introduced as cost-containment measures. The first was a 3% reduction in the originators’ MAPs in 2009 (17), followed by a specific price reduction agreement for an additional 3% reduction in the MAPs of originators in 2010 (20, 21) and in 2012 (19, 22, 23). From international evidence it is known that ERP can lead to substantial savings for public payers. However, the prompt upgrades and adjustments of the policies such as ERP are essential to prevent a decrease in its effectiveness (24). In this regard, the frequent upgrades of the Slovenian ERP along with the specific pricing agreements were expected to contribute toward a decrease in MAPs of medicines and consequently to the reduced medicine expenditure. Still, the absence of a competent authority for the independent parallel price search and determination of MAPs should be perceived as the crucial limitation of the current Slovenian ERP. Together with the frequent updates of the ERP methodology this might present a risk for the mistakes or inconsistencies in MAPs formulation. In addition, due to the ERP characteristic to integrate medicine prices, it has ability to affect not only national medicine prices but also prices worldwide (4, 25). Nevertheless, the literature reports that pricing policy changes have not always resulted in desired outcomes e.g. medicine expenditure reduction (5). Aim The study aimed to evaluate the cost-saving effect of ERP upgrades introduced by the changes and supplements to the Rules from 2007 to 2012. The study was also intended to assess the cost-saving effect of specific price reduction agreements in relation to that resulting from the ERP updates.
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Additionally, the purpose of the study was to identify potential inconsistencies or mistakes in determining MAPs of medicines based on the ERP. Methods The study was conducted based on the reimbursable medicines that included active substances from the set of 95 the most costly active substances in 2011. In this way, the 773 reimbursable medicines that represented 70% of the total reimbursable medicines expenditure in 2011 were included in the study. Medicines with confirmed EHAP as official price were excluded, as for these medicines ERP is only a supportive pricing policy. Therefore, the data analyses were performed on the set of 723 reimbursable medicines with determined MAP as official price. For the medicines that were included in the study, data on medicine prices in reference countries were extracted on the cross-sectional date, namely June 2012 from the following official publications: Erstattungskodex and Warenverzeichnis for Austria, Lauer-Taxe for Germany and Vidal for France. Firstly, MAPs of medicines according to the ERP pricing policy valid in June 2012 were formulated. The Rules from 2012 were applied to the input data on medicine prices in reference countries; thus, a set of MAPs which should coincide with the official MAPs as published by JAZMP in its web publication on June 2012 was determined (26). Further, we were interested in the values of MAPs if in the period from 2007 to 2012 ERP upgrades introduced thought the Rules changes and supplements would not occur. For that purpose, four previous versions of the Rules (Rules from the 2007, 2008, 2009 and 2010) were applied to the same input data on medicine prices in reference countries as Rules from 2012. The methodology of ERP as defined by previous Rules and prices in reference countries from June 2012 were used for the formulation of four additional sets of MAPs. All the updates of the Rules presented in Figure 2 were considered when determining MAPs based on each of the five Rules. To evaluate the cost-saving effect of each ERP pricing policy upgrade enforced through the Rules changes and supplements, we assumed one-year validity period for each of the five Rules. The assumed annual medicine expenditure was therefore calculated considering MAPs as defined by each Rule and annual medicine consumption. We hypothesized that the use of medicines was the same regardless of the assumed Rules. Therefore, data on reimbursable medicines consumption in 2011 provided by the HIIS, which was the last available data on medicine use, was taken into account (27). With such a study design we assessed what would be the assumed reimbursable medicines expenditure in 2012 if each of the previous Rules valid between 2007 and 2012 would still be in force. The budget impact of ERP policy updates was determined for all medicines together, as well as separately for originators, generics and biosimilars. As ERP policy refers only to the reimbursable medicines (covered by the public funds), the assumed medicines expenditure assessed in the present study is public medicine expenditure based on the MAPs of medicines. MAPs of medicines, however, usually represent only the starting point for further medicine price negotiations on actual (reimbursable) medicine prices which are typically confidential. The cost-saving effect of specific price reduction agreements in relation to the cost-saving effect resulting from the Rules updates was assessed by comparing assumed medicine expenditure determined based on the ERP defined by the Rules and assumed medicine expenditure resulting from the overall effect of the ERP updates and specific price reduction agreements. As the first specific price reduction agreement on originators MAPs reduction was introduced during the validity of the Rules from 2009, followed by the second and third introduced during the validity of the Rules from 2010 and 2012, the budget impact of specific price reduction agreements was assessed only in relation to the Rules updates in 2009, 2010 and 2012. Namely, the impact of 3% price reduction of originators 5
MAPs was assessed in relation to the Rules updates from 2009; additional 3% price reduction of originators MAPs, an actual 6% reduction of the originators MAPs was assessed in relation to the Rules updates from 2010 and additional 3% originators MAPs reduction (all together 9% price reduction) was assessed in relation to the Rules from 2012. The assumed medicine expenditure was therefore calculated based on the MAPs of originators reduced according to each specific price reduction agreement, MAPs as defined by the Rules for generics, and biosimilars and reimbursable medicine consumption from 2011. A kind of ERP-based pricing procedure, somehow parallel to that submitted to the JAZMP by marketing authorisation holders, was performed with the calculation of MAPs based on the Rules from 2012 and medicines prices valid in reference countries in June 2012. Actually, the validation of official MAPs was made in order to find potential inconsistencies in pricing of medicines based on ERP. Furthermore, the budget impact of the price inconsistencies resulting from the differences between the official MAPs and MAPs calculated within the present study was assessed. For that purpose the cost difference resulting from monthly expenditure based on the official MAPs and that based on the calculated MAPs was determined. The average monthly medicine consumption from 2011 and the difference between the official and calculated MAPs were taken into account. Results The cost-saving effect of ERP updates introduced by the Rules changes or supplements Table 2 represents the assumed medicine expenditures assessed based on the MAPs of medicines resulting from the ERP policy defined by the five different Rules valid between 2007 and 2012. The assumed medicine expenditure is represented separately for originator, generic, biosimilar medicines and for all medicines together. The cost-saving effect of the ERP updates resulting from the introduction of the Rules changes or supplements is represented in Table 3 and is expressed as the percentage change of the assumed annual medicine expenditure.
The cost-saving effect of specific price reduction agreements Table 4 shows the assumed annual medicine expenditure based on the ERP policy defined by the Rules and assumed annual expenditure based on the ERP policy together with the specific price reduction agreements that were introduced as a supplementary cost-containment measure. The costsaving effect of the specific price reduction agreements is also represented. When comparing the assumed annual medicine expenditure assessed based on the Rules from 2008 and assumed expenditure based on the Rules from 2009 together with the specific price reduction agreement, it is evident that the introduction of the first specific price reduction agreement did not contribute to additional cost savings. In contrast, the overall effect of the ERP policy upgrade and the second and third specific price reduction agreement represented 3.32% and 5.85% reductions, respectively, of the assumed annual medicine expenditure assessed based on the previously valid Rules and specific price reduction agreement. Potential inconsistencies in the performance of the reference pricing system Table 5 shows the matching of official MAPs and MAPs calculated within the present study, and the budget impact of the inconsistencies in pricing of medicines based on the ERP policy defined by the Rules from 2012. Actually, the difference between the assumed monthly medicine expenditure based on the official MAPs and that based on the calculated MAPs is represented. 6
Discussion The present study shows that upgrades of the ERP policy that were introduced from 2007 to 2012 resulted in a €13 million cost decrease or 5.5% cost reduction if we compare assumed annual medicine consumption assessed based on the Rules from 2012 and that resulting from the Rules valid in 2007. On average, that means approximately 1.5% decrease in the assumed annual medicine expenditure, or approximately €3 million per each ERP policy update introduced by the Rules changes or supplements. The greatest decrease in the assumed annual medicine expenditure was observed for biosimilar medicines, followed by generic medicines, while ERP policy updates had less of an impact on originator medicine costs. However, taking into account the much higher cost of originators compared to generics as well as the consumption data, we found that originators and generics contributed approximately 40% and 60% of the decreases, respectively, in the assumed annual medicine expenditure assessed based on the Rules from 2012 compared to that assessed based on the Rules from 2007. Biosimilars had a marginal influence of approximately 0.1% due to their low consumption. The most common ERP updates introduced by the Rules changes or supplements were the changes in the proportion of comparative price, especially for generics. The percentage of the comparative price for generic medicines decreased approximately by 3–4% with almost every Rules change. This ERP policy update contributed the most to the cost savings for generics. The wholesale mark-up change from a percentage add-on to the combination of fix and percentage add-on to the ex-factory price that occurred with the introduction of the Rules from 2012 further contributed to the significant ERP update cost-saving effect. Other ERP methodology updates, represented in Figure 2 resulted in a smaller cost reduction. In contrast, an increase in the proportion of the reference (comparable) price of originators that was introduced by the Rules from 2009 caused a cost increase. All ERP updates introduced by the Rules changes or supplements contributed to the decrease in assumed annual medicine expenditure, except those introduced by the Rules from 2009, which resulted in the increased assumed annual expenditure in relation to that assessed based on the previously valid Rules. The change of the proportion of originators reference (comparative) price from 97% as defined in Rules from 2008 back to the 100% in Rules from 2009 could be seen as an administrative correction due to innovative manufacturers’ opposition to that requirement. However, considering the cost reduction achieved by the introduction of the first specific price reduction agreement in 2009, the assumed annual medicine expenditure increase actually did not occur. The first specific price reduction agreement neutralized the impact of the ERP update related to the increase in proportion of the reference (comparative) price in determining MAP of originators based on the Rules from 2009. In contrast to the first price reduction agreement, the second and third specific price reduction agreements introduced in 2010 and 2012, respectively, achieved a greater cost-saving effect than the ERP policy updates defined by the Rules from 2010 and Rules from 2012. Furthermore, considering the administrative burden that should follow each ERP update introduced by the Rules changes, their cost- saving effect should be perceived as less efficient that that resulting from the specific price reduction agreements. Through the validation of the official MAPs based on the MAPs re-calculation inconsistencies in medicine prices based on the ERP were primarily observed in generics. More than 5% cost difference of the assumed monthly medicine expenditure based on the official MAPs and that based on the calculated MAPs was observed for biosimilars. However given the small number of biosimilars included in the analysis, they did not contribute much to the total cost difference resulting from the differences between the official and calculated MAPs. The largest matching of the official and 7
calculated MAPs as well as of the assumed medicine expenditure was indicated for originators. Nevertheless, the approximately 900,000 EUR cost difference in the assumed monthly medicine expenditure of all medicines represents approximately one third of the savings resulting from each of the ERP update introduced by the Rules changes or supplements on average. Inconsistencies in medicine pricing based on the currently valid ERP that were found by comparing official MAPs and MAPs calculated within the present study were mostly related to the differences in the search of medicine prices in reference countries. In other words, a review of publications on medicine prices in reference countries revealed that some medicines were present in at least two reference countries and not only in one as may be inferred from the proportion of reference (comparative) price stated in the publication on the official MAPs defined by JAZMP. On the contrary, some medicines were present only in one reference country and not in two or more. Differences between official and calculated MAPs could also be a consequence of considering inappropriate dosage form or medicine strength and ignoring the packages containing comparable number of units. Medicines could be launched with different commercial names, dosages and packages causing the identification of the same medicine across countries burdensome. The literature describes this issue as market authorisation holders approach to limit opportunities for the ERP (3, 5). Another concern related to the ERP is access to relevant data sources on medicine prices, especially when the number of reference countries is higher (3, 4, 28, 29). To ensure the predictability and transparency of the medicine pricing based on the ERP policy the specification of the list of reference countries, the data source for the medicine prices and the procedure to follow if the relevant price data are not accessible, should be provided (29). In this regard, in Slovenia, the reference country Austria replaced Italy, which was used before 2007 (30). The reason for discrepancies could also be the change in medicine prices in reference countries. We collected data on medicine prices in reference countries on a cross-sectional date in June 2012, while applicants could access them prior to that date. The ERP limitation arising from the fact that the price changes in reference countries are not automatically translated into price decreases in referencing countries was already exposed in literature (24). Finally, frequent ERP updates introduced by the Rules changes and supplements should also contribute to the inconsistencies in medicine pricing. Inconsistencies in medicine pricing based on the ERP found within the present study could result from the absence of a (regular) competent authority for independent price research, validation of the MAPs determined by the manufacturer authorisation holders and MAPs monitoring and revision. Thus, MAPs determination largely depends on a particular manufacturer authorisation holder. Considering concerns and limitations related to the current ERP policy, a competent authority that should conduct the independent price search parallel to the application procedure similar to the ones in Czech Republic or Cyprus and should conduct price (MAPs) validation, should be introduced in Slovenia. This means that MAPs would not be just checked, but rather that the complete pricing based on ERP should be validated. Ideally, an automated system for the data provision, validation and revisions of MAPs could be established. The competent authority could require additional clarifications and/or evidence on price used from the marketing authorisation holders and thereby reduce price dependency of manufacturers. From the (public) payer perspective, the most important limitation of the ERP policy might be that ERP based pricing follows the officially published medicine prices, which usually does not incorporate price reductions based on the individual negotiations or other cost-containment measures that are introduced in a given country to ensure reimbursable medicine prices acceptable for the public payers (31). Thus, for the pricing of medicines based on the ERP higher medicine prices are taken as a benchmark (5, 28). According to the EU transparency directive each EU member state should be 8
transparent in defining pricing procedures (32), however price reduction negotiations are usually exempt from that. Individual price reduction agreements, discounts or rabats are usually confidential and are therefore valuable in a particular county, but not in the countries that use this country as a reference country within the ERP policy (16). Nevertheless, not only that lower prices could be achieved if price reductions would be taken into account already within the ERP policy, the extent of price negotiations on a national level could also be reduced. It should be exposed that the widespread use of ERP in EU countries can make medicine pricing circular. There are some cases when one country references another and vice versa, like in Slovenia and Austria (28). The literature warns that, if all EU countries apply ERP and they refer to each other the price levels across EU should converge (24). Limitations of the study All five versions of the Rules were applied to the same input data; therefore the impact of the ERP policy updates on medicine expenditure was evaluated with the assumption that all five Rules were in force at the same time. To assess the cost-saving effect of the ERP updates introduced by the Rules changes and supplements annual validity of the particular Rules was assumed. Consequently, medicine expenditure assessed within the present study is not real public expenditure on medicines but it is assumed public expenditure based on the MAPs. For the assessment of the public medicine expenditure based on the actual prices the individual price negotiations should be taken into account. However, due to their confidentiality and data unavailability they could not be evaluated. Conclusions The present study illustrates that any change in the ERP methodology can (significantly) impact medicine prices (MAPs) determined based on the ERP policy and accordingly affect medicine expenditure. Most of the Slovenian ERP policy upgrades resulted in the reduction of medicines expenditure. However, less complex and administratively demanding measures, such as the introduction of specific price reduction agreement, can result in even better cost-containment outcomes than the updates of the ERP policy. Nevertheless, to achieve more dependable and consistent medicine pricing based on the ERP policy, a competent authority responsible for the provision and validation of medicines pricing procedure as well as for the regular price monitoring and revisions should be established in Slovenia. Acknowledgements We thank Public Agency of the Republic of Slovenia for Medicinal Products and Medical Devices (JAZMP) for the data sources. Funding None. Competing interests None declared. Ethical approval Not required.
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13. Rules amending the Rules on determining the prices of medicinal products for human use, Official Gazzette of the Republic of Slovenia, no. 6/2012. [cited 2016 June 20]; Available from: http://www.uradni-list.si/1/content?id=107264. 14. Health Care and Health Insurance Act. [cited 2016 June 20] Available from: http://www.pisrs.si/Pis.web/pregledPredpisa?id=ZAKO213. 15. Barros PP. Pharmaceutical policies in European countries. Adv Health Econ Health Serv Res. 2010;22:3-27. 16. Vogler S, Zimmermann N, Habl C, Piessnegger J, Bucsics A. Discounts and rebates granted to public payers for medicines in European countries. South Med Rev. 2012 Jul;5(1):38-46. 17. Fürst J. [Prescription medicines under the Obligatory health care insurance in 2009] Zdravila na recepte v obveznem zdravstvenem zavarovanju v letu 2009 [in Slovenian]. Recept, Bilten o zdravilih iz obveznega zdravstvenega zavarovanja. 2010;8(1):75-86. 18. Rules on inclusion of medicines on the list, Official Gazette of the Republic of Slovenia, No. 35/2013. Legal Information System of Slovenia; [cited 2016 Jun 5]; Available from: http://www.uradni-list.si/1/objava.jsp?sop=2013-01-1323. 19. Ministry of Health of the Republic of Slovenia. [New Rules on pricing of medicines in Official Gazette] V Uradnem listu objavljen nov Pravilnik o cenah zdravil [in Slovenian]. 2012 [cited 2016 June 25]; Available from: http://www.mz.gov.si/si/medijsko_sredisce/novica/archive/2012/1/select/sporocilo_za_javnost/article/ 698/6415/. 20. Fürst J. [Prescription medicines under the Obligatory health care insurance in 2011] Zdravila na recepte v obveznem zdravstvenem zavarovanju v letu 2011 [in Slovenian]. Recept, Bilten o zdravilih iz obveznega zdravstvenega zavarovanja. 2012;10(1):22-32. 21. Ministry of Health of the Republic of Slovenia. [Four rules for more efficient use of funds for medicines] Štirje pravilniki za učinkovitejšo rabo sredstev za zdravila [in Slovenian]. 2010 [cited 2016 June 25]; Available from: http://www.mz.gov.si/si/medijsko_sredisce/novica/archive/2010/12/select/sporocilo_za_javnost/article /698/6166/. 22. Forum of International Research and Development Pharmaceutical Companies EIG. [Development of the Slovenian health care] Razvojni koraki slovenskega zdravstva - obeti glede dostopnosti zdravil [in Slovenian]. 2012 [cited 2016 June 22]; Available from: http://med.over.net/wp-content/uploads/uvoz/zdravje_bolezni/bolezni/razvojni-koraki-slovenskegazdravstva-obeti-glede-dostopnosti-zdravil.pdf. 23. Forum of International Research and Development Pharmaceutical Companies EIG. [Innovative pharmaceutical industry provide an additional 10 million savings in health care] Inovativne farmacevtske družbe zagotovile dodatnih 10 milijonov eurov prihrankov v zdravstvu [in Slovenian]. 2012 [cited 2016 June 15]; Available from: http://www.firdpc.com/sl/Dogodki_in_novice/Inovativne_farmacevtske_druzbe_zagotovile_dodatnih_ 10_milijonov_eurov/.
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24. Vogler S, Lepenschütz L, Schneider P, Stühlinger V. Study on enhanced cross-country coordination in the area of pharmaceutical product pricing. [cited 2017 March 6]; Available from: http://ec.europa.eu/health/sites/health/files/systems_performance_assessment/docs/pharmaproductprici ng_frep_en.pdf. 25. Stargardt T, Schreyogg J. Impact of cross-reference pricing on pharmaceutical prices: manufacturers' pricing strategies and price regulation. Appl Health Econ Health Policy. 2006;5(4):235-47. 26. Agency of the Republic of Slovenia for Medicines and Medical Devices. List of maximum allowed prices and extraordinary higher allowed prices of medicinal products. [cited 2016 January 21]; Available from: http://www.jazmp.si/humana-zdravila/cene-zdravil/najvisje-dovoljene-cenezdravil/. 27. Health Insurance Institut of Slovenia. The national health claims database. [cited 2017 8 March]; Available from: https://partner.zzzs.si/wps/portal/portali/aizv/zdravila_in_zivila_za_posebne_zdravstvene_namene/pod atki_o_porabi_zdravil/!ut/p/z0/04_Sj9CPykssy0xPLMnMz0vMAfIjo8ziTQxdPd2N_Q08LSyCDQ0cj ZzMzXz8XQ0sTAz0C7IdFQGdnpEx/. 28. Leopold C, Vogler S, Mantel-Teeuwisse AK, de Joncheere K, Leufkens HG, Laing R. Differences in external price referencing in Europe: a descriptive overview. Health Policy. 2012 Jan;104(1):50-60. 29. Kanavos P, Nicod E, Espin J, an den Aardweg S. Short- and Long-Term Effects of ValueBased Pricing vs. External Price Referencing. London School of Economics, Andalusian School of Public Health; Commissioned by the European Commission, Directorate-General Enterprise; 2011 [cited 2017 26 May]; Available from: http://whocc.goeg.at/Literaturliste/Dokumente/FurtherReading/Short-%20and%20longterm%20effect%20of%20value-based%20pricing.pdf. 30. Ministry of Health of the Republic of Slovenia. [Rules on the prices of medicinal products for human use will soon be in force] Pravilnik o cenah zdravil za uporabo v humani medicini bo kmalu v veljavi [in Slovenian]. 2007 [cited 2016 June 25]; Available from: http://www.mz.gov.si/si/medijsko_sredisce/novica/archive/2007/1/select/sporocilo_za_javnost/article/ 698/5374/. 31. Vogler S, Habimana K. Pharmaceutical pricing policies in European countries. Vienna: Gesundheit Österreich Forschungs- und Planungs GmbH; 2014 [cited 2016 15 May]; Available from: http://ctwinvestmentgroup.com/walgreen/wpcontent/uploads/2014/12/GOe_FP_Pharmaceutical_Pricing_Europe_CtWInv_final_forPublication.pdf. 32. Transparency Directive (Council Directive 89/105/EEC). [cited 2017 March 8]; Available from: http://ec.europa.eu/health//sites/health/files/files/eudralex/vol1/dir_1989_105/dir_1989_105_en.pdf.
Figure Captions Figure 1: Pricing of reimbursable medicines in Slovenia. 12
Figure 2: External reference pricing policy updates introduced by the Rules changes or supplements.
PUBLIC AGENCY OF THE REPUBLIC OF SLOVENIA FOR MEDICINAL PRODUCTS AND MEDICAL DEVICES (JAZMP)
HEALTH INSURANCE INSTITUTE OF SLOVENIA (HIIS)
REFERENCE COUNTRIES AUSTRIA Retail prices from publications: Erstattungskodex, Warenverzeichnis
Extraordinary higher allowed price (EHAP)
Ex-factory price
Individual negotiations
FRANCE Retail prices from publication: Vidal
Ex-factory price
Reference or comparative price
GERMANY Wholesale prices from publication: Lauer-Taxe
Ex-factory price
Factors defined by the Rules
Ex-factory price or manufacturers‘ element of price (MEP)
Proportion of reference (comparative) price as defined by the Rules
Maximum allowed price (MAP)
Rules on determining the prices of medicinal products for human use (Official Gazette RS, No. 6/2007)
Assumed annual medicine expenditure Rules 2007
Rules updates in relation to the previous Rules
Pricing and reimbursement negotiations between the marketing authorisation holders and the public payer.
Rules on determining the prices of medicinal products for human use (Official Gazette RS, No. 102/2010) and Specific 3% price reduction agreement of originator medicines
Rules amending the Rules on determining the prices of medicinal products for human use (Official Gazette RS, No. 8/2009) and Specific 3% price reduction agreement of originator medicines
Assumed annual medicine expenditure Rules 2008
Actual (reimbursable) price
Specific price reduction agreements
Wholesale mark-up
Manufacturer authorisation holders are obligated to determine MAP according to the Rules and to submit the application for the MAP approval.
Rules on determining the prices of medicinal products for human use (Official Gazette RS, No. 97/2008)
Medicine pricing agreements
Assumed annual medicine expenditure Rules 2009 +/specific pricing agreement
Rules amending the Rules on determining the prices of medicinal products for human use (Official Gazette RS, No. 6/2012) and Specific 3% price reduction agreement of originator medicines
Assumed annual medicine expenditure Rules 2010 +/specific pricing agreement
• ↑ proportion of • ↓ proportion of • ↓ proportion of compative price for comparative price comparative price for OM OM for GM 2 • ∆ in wholesalers‘ margin • ∆ in wholesalers‘ • ↓ proportion of margin comparative price for GM 2 • ∆ in proportion of comparative price and ∆ in calculation of comparative price for BM • ∆ in calculation and factors used to obtain ex-factory price in reference country France
Assumed annual medicine expenditure Rules 2012 +/specific pricing agreement
• ∆ in wholesalers‘ margin calculation from variable to fixed-variable • ∆ in calculation and factors used to obtain ex-factory price in reference country Germany • ↓ proportion of comparative price for GM 2 and GM 3 • ↓ proportion of comparative price for BM
OM – originator medicine, GM 2 – generic medicine type 2, GM 3 – generic medicine type 3, BM - biosimilar
Table 1: Changes in the proportion of reference (comparative) prices within the formulation of the maximum allowed price of medicines in Slovenia based on the external reference pricing policy. Medicine status
Proportion of the reference (comparative) price1 13
Rules 2007 1
Rules 2008 0.97
Rules 2009 1
Rules 2010 1
Rules 2012 1
0.85
0.82
0.82
0.78/0.74
0.72
3 Generic medicine marketed in one (or no one) reference country3
0.7
0.7
0.7
0.7
0.68
4 Biosimilar medicine marketed in reference countries (one or more)4
0.87
1
1
1
0.92
5 Biosimilar medicine not marketed in reference countries, but marketed in other EU or EEA* members4
0.72
1
1
1
0.92
6 Biosimilar medicine not marketed in reference countries or other EU or EEA member states5
/
0.72
0.72
0.72
0.68
1 Originator medicine 2 Generic medicine marketed in two or all three reference countries or marketed in one reference country where originator is not available2
1
Within the formulation of maximum allowed price (MAP) of medicines ex-factory price may amount only to the certain proportion of the reference (comparative) price determined based on the prices in reference countries. 2
The proportion is referred to the reference (comparative) price determined based on generic prices in reference countries.
3
The proportion is referred to the reference (comparable) price determined based on originator prices in reference countries.
4
The proportion is referred to the reference (comparative) price determined based on biosimilar prices in reference countries.
5
The proportion is referred to the reference (comparative) price determined based on the originator prices in reference countries. *EEA – European economic area
Table 2: The assumed medicine expenditure assessed based on the MAPs of medicines resulting from the ERP policy updates defined by the five different Rules valid between 2007 and 2012 for originator, generic, biosimilar medicines and all medicines together. Assumed annual medicine expenditure [€] Medicine category
ERP policy accord. to the Rules from 2012
ERP policy accord. to the Rules from 2010
ERP policy accord. to the Rules from 2009
ERP policy accord. to the Rules from 2008
ERP policy accord. to the Rules from 2007
Originator
169,099,425
173,674,193
173,674,193
168,537,307
174,123,821
Generic
50,953,712
54,573,680
56,893,081
56,893,081
58,603,564
Biosimilar
64,099
72,184
72,184
72,184
77,909
228,320,056
230,639,458
225,502,572
232,805,294
All medicines 220,117,236
14
Table 3: The cost-saving effect of the ERP updates resulting from the introduction of the Rules changes or supplements, expressed as the percentage change of the assumed annual medicine expenditure for originator, generic, biosimilar medicines and all medicines together.
The cost saving effect of ERP updates expressed as the percentage change of the assumed annual medicine expenditure [%]
The overall cost saving effect of the ERP updates
Medicine category
Rules 2012 in relation to the Rules 2010
Rules 2009 in relation to the Rules 2010
Rules 2009 in relation to the Rules 2008
Rules 2008 in relation to the Rules 2007
Rules 2012 in relation to the Rules 2007
Originator
-2.63%
0.00%
3.05%
-3.21%
-2.89%
Generic
-6.63%
-4.08%
0.00%
-2.92%
-13.05%
Biosimilar
-11.20%
0.00%
0.00%
-7.35%
-17.73%
All
-3.59%
-1.01%
2.28%
-3.14%
-5.45%
Table 4: The assumed annual medicine expenditure based on the ERP policy defined by the Rules and that based on the ERP policy together with the specific price reduction agreements introduced as a supplementary cost-containment measure and the cost-saving effect of the specific price reduction agreements. ERP policy accord. to the Rules from 2012
ERP policy accord. to the Rules from 2010
ERP policy accord. to the Rules from 2009
+/- specific price reduction agreement
+/- specific price reduction agreement
+/- specific price reduction agreement
Assumed annual medicine expenditure based on the ERP 220,117,236 policy only [€]
228,320,056
Assumed annual medicine expenditure based on the ERP 205,288,854 policy and specific price reduction agreement[€] The cost-saving effect of the specific price reduction agreement [%]
-6.74
ERP policy accord. to the Rules from 2008
ERP policy accord. to the Rules from 2007
230,639,458
225,502,572
232,805,294
218,014,994
225,502,366
n/a
n/a
-4.51
-2.23
n/a
n/a
15
Table 5: Matching of the official MAPs and MAPs calculated within the present study and the budget impact of the inconsistencies in pricing of medicines based on the external reference pricing policy defined by the Rules from 2012. Medicine category Cost All medicines Originators difference1 Cost [%] difference N % [€]2 N %
Cost difference [€]2 n
< -5
307
42.5
-1,327,219
76
19.9
-483,776
>= -5
150
20.7
-141,013
112
29.3
0
122
16.9
0
121
<= +5
64
8.9
25,040
> +5
80
11.1
Sum
723
100
1
Generics
Biosimilars
%
Cost difference [€]2 n
%
Cost difference [€]2
223
67.0
-842,542
8
100
-901
-124,177
38
11.4
-16,835
0
0
0.00
31.7
0
1
0.3
0
0
0
0.00
39
10.2
17,743
25
7.5
7,297
0
0
0.00
528,845
34
8.9
431,708
46
13.8
97,137
0
0
0.00
-914,347
382
100
-158,503
333
100
-754,943
8
100
-901
Cost difference between the assumed monthly expenditure based on the official MAPs and that based on the calculated MAPs expressed in %.
< -5: lower assumed monthly medicine expenditure based on the calculated MAPs for more than 5% >= -5: lower assumed monthly medicine expenditure based on the calculated MAPs for less than 5% 0: total consistency <= +5: higher assumed monthly medicine expenditure based on the calculated MAPs for less than 5% > +5: higher assumed monthly medicine expenditure based on the calculated MAPs for more than 5% 2
Cost difference resulting from the assumed monthly expenditure based on the official MAPs and that based on the MAPs calculated within the present study.
Highlights External reference pricing system is a very common pricing model in Europe. To control medicine expenditure the Rules defining Slovenian external reference pricing system were upgraded almost every year between 2007 and 2012. The upgrades to the Rules are not necessarily effective in reducing medicine expenditure. Slovenian external reference pricing system improvement is required to establish a more capable system.
16
PII: DOI: Reference:
S2211-8837(17)30045-X http://dx.doi.org/10.1016/j.hlpt.2017.06.005 HLPT239
To appear in: Health Policy and Technology Cite this article as: Nika Marđetko, Nika Rijavec and Mitja Kos, Development and performance of the external reference pricing system in Slovenia from 2007 to 2012, Health Policy and Technology, http://dx.doi.org/10.1016/j.hlpt.2017.06.005 This is a PDF file of an unedited manuscript that has been accepted for publication. As a service to our customers we are providing this early version of the manuscript. The manuscript will undergo copyediting, typesetting, and review of the resulting galley proof before it is published in its final citable form. Please note that during the production process errors may be discovered which could affect the content, and all legal disclaimers that apply to the journal pertain.
Development and performance of the external reference pricing system in Slovenia from 2007 to 2012
Authors: Nika Marđetko MPh1 [email protected] Nika Rijavec MPh1 [email protected] Mitja Kos PhD1§ [email protected] 1
Chair of Social Pharmacy, University of Ljubljana – Faculty of Pharmacy, Aškerčeva cesta 7, 1000 Ljubljana, Slovenia § Corresponding author Mitja Kos PhD E-mail address: [email protected] Telephone number: +386 1 4769 686 Sources of financial or other support for the manuscript: None Key words: External reference pricing system; Slovenia; performance; medicine price reduction agreements; costcontainment
Running title: External reference pricing in Slovenia
Abstract Background From 2007 to 2012 five changes of the Rules defining Slovenian external reference pricing (ERP) were introduced to reduce medicine expenditure. Objective To assess the cost-saving effect of five ERP updates and the cost-saving effect of specific price reduction agreements, and to identify potential inconsistencies in determining the maximum allowed prices (MAPs) based on ERP. 1
Methods To obtain MAPs from 2012 and four sets of MAPs that would be valid if ERP upgrades did not occur, Rules from 2012 and four previous Rules were applied to the same data on prices in reference countries. To assess the ERP updates cost-saving effect, one-year validity of each Rules was assumed. The assumed annual medicine expenditure was calculated considering MAPs according to each Rules and medicine consumption. To detect inconsistencies in determining MAPs, the official MAPs were compared to the MAPs calculated within the study. Results The total cost-saving effect resulting from the difference in assumed medicine expenditure based on the 2012 Rules and 2007 Rules was 5.45%. The greatest cost-saving effect of 3.59% was observed for the 2012 Rules compared to the 2010 Rules, while a 2.28% cost increase was detected when comparing the 2009 Rules to those from 2008. Specific price reduction agreements contributed to 2.32%, 4.51% and 6.74% expenditure reductions, respectively. Inconsistences in the formulation of MAPs were found as 4.75% lower monthly expenditure based on the calculated MAPs. Conclusions ERP system upgrades affected medicine expenditure; however, specific price reduction agreements were shown as a more effective cost-containment measure.
2
Introduction In Slovenia as well as in many other European Union (EU) member states medicine pricing is regulated by law (1); however, statutory pricing is usually supplemented with negotiations related to the reimbursement prices. The Slovenian pricing model uses the most common system in the EU, the so-called external reference pricing (ERP) system (2, 3). In this system, the price of medicines in one or several other countries is used to identify a comparative price for the purpose of setting or negotiating the price of medicines in an individual country (3-5). In Slovenia, medicine pricing is defined by the Medicinal Product Act (6-8). Based on EU requirements, regulated pricing of medicines applies only to medicines covered by the public funds, the so-called reimbursable medicines. ERP is the policy for setting the maximum allowed prices (MAPs) of reimbursable medicines. Procedures and methodology for determining MAPs based on the ERP system are defined by the Rules on Determining the Prices of Medicinal Products for Human Use and related amendments (hereafter referred to as Rules) (9-13). The primary national regulatory authority responsible for medicine pricing is the Public Agency of the Republic of Slovenia for Medicinal Products and Medicinal Devices (JAZMP), which is responsible for the regulation and supervision of medicines, including control over setting MAPs of medicines based on ERP. Financing of reimbursable medicines is regulated by the Health Care and Health Insurance Act and falls within the authority of the Health Insurance Institute of Slovenia (HIIS) (14). According to the Bismarck type healthcare system HIIS is the sole authority that provides compulsory health insurance in the country. Whereas HIIS’s principal task is the management of healthcare public funds, it also conducts negotiations on reimbursable price of medicines. Therefore, medicine pricing is partially its responsibility. According to the Rules defining Slovenian ERP, maximum allowed price (MAP) is formulated as the value of ex-factory price plus the wholesale mark-up. The value of ex-factory price, which is in Slovenia administratively called 'the value of manufacturer’s element of price (MEP)', is determined based on the medicine price in the reference countries Germany, Austria and France (6). Medicine prices are obtained from the reference country publications and correspond with retail prices in Austria and France and wholesale prices in Germany. As prices from publications reflect different distribution levels and should include value added tax, the calculations and factors defined by the Rules are used to correct published prices for pertinent wholesale and/or pharmacy margins or value added tax. The calculation method depends on the reference country and medicine price level and it returns the value of ex-factory prices in reference countries (e.g. for medicine prices in Austria lower than 9.58 EUR, ex-factory price = retail price * f; f=0.632). Ex-factory prices obtained from reference countries in this manner are then used for the formulation of reference price, also called comparative price of medicines. As opposed to the other countries using one method for determining reference price, in Slovenia for originators and biosimilars the lowest price among reference countries is used as reference price, whereas for generics the average price of reference countries is taken into account (3). Furthermore, the value of ex-factory price or MEP may amount up to the certain proportion of reference (comparative) price. The proportions of reference (comparative) price are defined by the Rules for each medicine status and are represented in Table 1. For some medicines the size or other characteristics of the Slovenian market prevent marketing authorisation holders to supply market based on the MAP. They are therefore allowed to request the extraordinary higher allowed price (EHAP). In such a case ERP is only a supportive policy as the application for EHAP is based on the justification of expected actual medicine cost and sales figures (6). According to the pricing regulation, the application for a MAP including information about prices in reference countries and all the calculations required for the MAP formulation should be provided by the marketing authorisation 3
holders and submitted to the JAZMP. JAZMP is the competent authority that approves the correctness of the suggested MAP. In Slovenia, the Medicinal Products Act states that the price of reimbursable medicines may be lower than its MAP. Thus, MAP usually represents the basis for the negotiations on reimbursement price. MAP as well as reimbursement price reductions are based on an agreement between marketing authorisation holders or wholesalers and HIIS or other institutions carrying out healthcare activities (7, 8, 15). In general two types of agreements on price reduction exist in Slovenia; namely, individual negotiations and specific pricing agreements. Individual negotiations are the most common contractual arrangements (16), and they mean that each marketing authorisation holder could determine an agreement on medicine price with the health-care payer (HIIS) (17, 18). Specific price reduction agreements are related to the particular groups of medicines. They have been introduced by the intervention of the Ministry of Health, which transferred certain provisions of the Rules to agreements between HIIS and marketing authorisation holders. The procedure of medicine pricing in Slovenia is schematically presented in Figure 1. In order to achieve the most favourable MAPs of medicines and to reduce medicine expenditure, the pricing policy based on ERP was frequently modified through the changes and supplements to the Rules introduced between 2007 and 2012 (19). ERP updates introduced by the Rules were related to the changes in the proportions of the reference (comparative) price (see Table 1). The wholesale markup changes (changes in percentage add-on to the ex-factory price) occurred almost with the entire new version of Rules. With the enforcement of the Rules from 2012 the wholesale mark-up was changed from a percentage add-on to the combination of fix and percentage add-on to the ex-factory price. The calculation of ex-factory prices in reference countries was upgraded with almost all of the Rules updates. Furthermore, the entire methodology of setting MAPs of biosimilar medicines was changed with the enforcement of the Rules from 2008 (10). Additionally, during the period from 2007 to 2012 three specific pricing agreements were introduced as cost-containment measures. The first was a 3% reduction in the originators’ MAPs in 2009 (17), followed by a specific price reduction agreement for an additional 3% reduction in the MAPs of originators in 2010 (20, 21) and in 2012 (19, 22, 23). From international evidence it is known that ERP can lead to substantial savings for public payers. However, the prompt upgrades and adjustments of the policies such as ERP are essential to prevent a decrease in its effectiveness (24). In this regard, the frequent upgrades of the Slovenian ERP along with the specific pricing agreements were expected to contribute toward a decrease in MAPs of medicines and consequently to the reduced medicine expenditure. Still, the absence of a competent authority for the independent parallel price search and determination of MAPs should be perceived as the crucial limitation of the current Slovenian ERP. Together with the frequent updates of the ERP methodology this might present a risk for the mistakes or inconsistencies in MAPs formulation. In addition, due to the ERP characteristic to integrate medicine prices, it has ability to affect not only national medicine prices but also prices worldwide (4, 25). Nevertheless, the literature reports that pricing policy changes have not always resulted in desired outcomes e.g. medicine expenditure reduction (5). Aim The study aimed to evaluate the cost-saving effect of ERP upgrades introduced by the changes and supplements to the Rules from 2007 to 2012. The study was also intended to assess the cost-saving effect of specific price reduction agreements in relation to that resulting from the ERP updates.
4
Additionally, the purpose of the study was to identify potential inconsistencies or mistakes in determining MAPs of medicines based on the ERP. Methods The study was conducted based on the reimbursable medicines that included active substances from the set of 95 the most costly active substances in 2011. In this way, the 773 reimbursable medicines that represented 70% of the total reimbursable medicines expenditure in 2011 were included in the study. Medicines with confirmed EHAP as official price were excluded, as for these medicines ERP is only a supportive pricing policy. Therefore, the data analyses were performed on the set of 723 reimbursable medicines with determined MAP as official price. For the medicines that were included in the study, data on medicine prices in reference countries were extracted on the cross-sectional date, namely June 2012 from the following official publications: Erstattungskodex and Warenverzeichnis for Austria, Lauer-Taxe for Germany and Vidal for France. Firstly, MAPs of medicines according to the ERP pricing policy valid in June 2012 were formulated. The Rules from 2012 were applied to the input data on medicine prices in reference countries; thus, a set of MAPs which should coincide with the official MAPs as published by JAZMP in its web publication on June 2012 was determined (26). Further, we were interested in the values of MAPs if in the period from 2007 to 2012 ERP upgrades introduced thought the Rules changes and supplements would not occur. For that purpose, four previous versions of the Rules (Rules from the 2007, 2008, 2009 and 2010) were applied to the same input data on medicine prices in reference countries as Rules from 2012. The methodology of ERP as defined by previous Rules and prices in reference countries from June 2012 were used for the formulation of four additional sets of MAPs. All the updates of the Rules presented in Figure 2 were considered when determining MAPs based on each of the five Rules. To evaluate the cost-saving effect of each ERP pricing policy upgrade enforced through the Rules changes and supplements, we assumed one-year validity period for each of the five Rules. The assumed annual medicine expenditure was therefore calculated considering MAPs as defined by each Rule and annual medicine consumption. We hypothesized that the use of medicines was the same regardless of the assumed Rules. Therefore, data on reimbursable medicines consumption in 2011 provided by the HIIS, which was the last available data on medicine use, was taken into account (27). With such a study design we assessed what would be the assumed reimbursable medicines expenditure in 2012 if each of the previous Rules valid between 2007 and 2012 would still be in force. The budget impact of ERP policy updates was determined for all medicines together, as well as separately for originators, generics and biosimilars. As ERP policy refers only to the reimbursable medicines (covered by the public funds), the assumed medicines expenditure assessed in the present study is public medicine expenditure based on the MAPs of medicines. MAPs of medicines, however, usually represent only the starting point for further medicine price negotiations on actual (reimbursable) medicine prices which are typically confidential. The cost-saving effect of specific price reduction agreements in relation to the cost-saving effect resulting from the Rules updates was assessed by comparing assumed medicine expenditure determined based on the ERP defined by the Rules and assumed medicine expenditure resulting from the overall effect of the ERP updates and specific price reduction agreements. As the first specific price reduction agreement on originators MAPs reduction was introduced during the validity of the Rules from 2009, followed by the second and third introduced during the validity of the Rules from 2010 and 2012, the budget impact of specific price reduction agreements was assessed only in relation to the Rules updates in 2009, 2010 and 2012. Namely, the impact of 3% price reduction of originators 5
MAPs was assessed in relation to the Rules updates from 2009; additional 3% price reduction of originators MAPs, an actual 6% reduction of the originators MAPs was assessed in relation to the Rules updates from 2010 and additional 3% originators MAPs reduction (all together 9% price reduction) was assessed in relation to the Rules from 2012. The assumed medicine expenditure was therefore calculated based on the MAPs of originators reduced according to each specific price reduction agreement, MAPs as defined by the Rules for generics, and biosimilars and reimbursable medicine consumption from 2011. A kind of ERP-based pricing procedure, somehow parallel to that submitted to the JAZMP by marketing authorisation holders, was performed with the calculation of MAPs based on the Rules from 2012 and medicines prices valid in reference countries in June 2012. Actually, the validation of official MAPs was made in order to find potential inconsistencies in pricing of medicines based on ERP. Furthermore, the budget impact of the price inconsistencies resulting from the differences between the official MAPs and MAPs calculated within the present study was assessed. For that purpose the cost difference resulting from monthly expenditure based on the official MAPs and that based on the calculated MAPs was determined. The average monthly medicine consumption from 2011 and the difference between the official and calculated MAPs were taken into account. Results The cost-saving effect of ERP updates introduced by the Rules changes or supplements Table 2 represents the assumed medicine expenditures assessed based on the MAPs of medicines resulting from the ERP policy defined by the five different Rules valid between 2007 and 2012. The assumed medicine expenditure is represented separately for originator, generic, biosimilar medicines and for all medicines together. The cost-saving effect of the ERP updates resulting from the introduction of the Rules changes or supplements is represented in Table 3 and is expressed as the percentage change of the assumed annual medicine expenditure.
The cost-saving effect of specific price reduction agreements Table 4 shows the assumed annual medicine expenditure based on the ERP policy defined by the Rules and assumed annual expenditure based on the ERP policy together with the specific price reduction agreements that were introduced as a supplementary cost-containment measure. The costsaving effect of the specific price reduction agreements is also represented. When comparing the assumed annual medicine expenditure assessed based on the Rules from 2008 and assumed expenditure based on the Rules from 2009 together with the specific price reduction agreement, it is evident that the introduction of the first specific price reduction agreement did not contribute to additional cost savings. In contrast, the overall effect of the ERP policy upgrade and the second and third specific price reduction agreement represented 3.32% and 5.85% reductions, respectively, of the assumed annual medicine expenditure assessed based on the previously valid Rules and specific price reduction agreement. Potential inconsistencies in the performance of the reference pricing system Table 5 shows the matching of official MAPs and MAPs calculated within the present study, and the budget impact of the inconsistencies in pricing of medicines based on the ERP policy defined by the Rules from 2012. Actually, the difference between the assumed monthly medicine expenditure based on the official MAPs and that based on the calculated MAPs is represented. 6
Discussion The present study shows that upgrades of the ERP policy that were introduced from 2007 to 2012 resulted in a €13 million cost decrease or 5.5% cost reduction if we compare assumed annual medicine consumption assessed based on the Rules from 2012 and that resulting from the Rules valid in 2007. On average, that means approximately 1.5% decrease in the assumed annual medicine expenditure, or approximately €3 million per each ERP policy update introduced by the Rules changes or supplements. The greatest decrease in the assumed annual medicine expenditure was observed for biosimilar medicines, followed by generic medicines, while ERP policy updates had less of an impact on originator medicine costs. However, taking into account the much higher cost of originators compared to generics as well as the consumption data, we found that originators and generics contributed approximately 40% and 60% of the decreases, respectively, in the assumed annual medicine expenditure assessed based on the Rules from 2012 compared to that assessed based on the Rules from 2007. Biosimilars had a marginal influence of approximately 0.1% due to their low consumption. The most common ERP updates introduced by the Rules changes or supplements were the changes in the proportion of comparative price, especially for generics. The percentage of the comparative price for generic medicines decreased approximately by 3–4% with almost every Rules change. This ERP policy update contributed the most to the cost savings for generics. The wholesale mark-up change from a percentage add-on to the combination of fix and percentage add-on to the ex-factory price that occurred with the introduction of the Rules from 2012 further contributed to the significant ERP update cost-saving effect. Other ERP methodology updates, represented in Figure 2 resulted in a smaller cost reduction. In contrast, an increase in the proportion of the reference (comparable) price of originators that was introduced by the Rules from 2009 caused a cost increase. All ERP updates introduced by the Rules changes or supplements contributed to the decrease in assumed annual medicine expenditure, except those introduced by the Rules from 2009, which resulted in the increased assumed annual expenditure in relation to that assessed based on the previously valid Rules. The change of the proportion of originators reference (comparative) price from 97% as defined in Rules from 2008 back to the 100% in Rules from 2009 could be seen as an administrative correction due to innovative manufacturers’ opposition to that requirement. However, considering the cost reduction achieved by the introduction of the first specific price reduction agreement in 2009, the assumed annual medicine expenditure increase actually did not occur. The first specific price reduction agreement neutralized the impact of the ERP update related to the increase in proportion of the reference (comparative) price in determining MAP of originators based on the Rules from 2009. In contrast to the first price reduction agreement, the second and third specific price reduction agreements introduced in 2010 and 2012, respectively, achieved a greater cost-saving effect than the ERP policy updates defined by the Rules from 2010 and Rules from 2012. Furthermore, considering the administrative burden that should follow each ERP update introduced by the Rules changes, their cost- saving effect should be perceived as less efficient that that resulting from the specific price reduction agreements. Through the validation of the official MAPs based on the MAPs re-calculation inconsistencies in medicine prices based on the ERP were primarily observed in generics. More than 5% cost difference of the assumed monthly medicine expenditure based on the official MAPs and that based on the calculated MAPs was observed for biosimilars. However given the small number of biosimilars included in the analysis, they did not contribute much to the total cost difference resulting from the differences between the official and calculated MAPs. The largest matching of the official and 7
calculated MAPs as well as of the assumed medicine expenditure was indicated for originators. Nevertheless, the approximately 900,000 EUR cost difference in the assumed monthly medicine expenditure of all medicines represents approximately one third of the savings resulting from each of the ERP update introduced by the Rules changes or supplements on average. Inconsistencies in medicine pricing based on the currently valid ERP that were found by comparing official MAPs and MAPs calculated within the present study were mostly related to the differences in the search of medicine prices in reference countries. In other words, a review of publications on medicine prices in reference countries revealed that some medicines were present in at least two reference countries and not only in one as may be inferred from the proportion of reference (comparative) price stated in the publication on the official MAPs defined by JAZMP. On the contrary, some medicines were present only in one reference country and not in two or more. Differences between official and calculated MAPs could also be a consequence of considering inappropriate dosage form or medicine strength and ignoring the packages containing comparable number of units. Medicines could be launched with different commercial names, dosages and packages causing the identification of the same medicine across countries burdensome. The literature describes this issue as market authorisation holders approach to limit opportunities for the ERP (3, 5). Another concern related to the ERP is access to relevant data sources on medicine prices, especially when the number of reference countries is higher (3, 4, 28, 29). To ensure the predictability and transparency of the medicine pricing based on the ERP policy the specification of the list of reference countries, the data source for the medicine prices and the procedure to follow if the relevant price data are not accessible, should be provided (29). In this regard, in Slovenia, the reference country Austria replaced Italy, which was used before 2007 (30). The reason for discrepancies could also be the change in medicine prices in reference countries. We collected data on medicine prices in reference countries on a cross-sectional date in June 2012, while applicants could access them prior to that date. The ERP limitation arising from the fact that the price changes in reference countries are not automatically translated into price decreases in referencing countries was already exposed in literature (24). Finally, frequent ERP updates introduced by the Rules changes and supplements should also contribute to the inconsistencies in medicine pricing. Inconsistencies in medicine pricing based on the ERP found within the present study could result from the absence of a (regular) competent authority for independent price research, validation of the MAPs determined by the manufacturer authorisation holders and MAPs monitoring and revision. Thus, MAPs determination largely depends on a particular manufacturer authorisation holder. Considering concerns and limitations related to the current ERP policy, a competent authority that should conduct the independent price search parallel to the application procedure similar to the ones in Czech Republic or Cyprus and should conduct price (MAPs) validation, should be introduced in Slovenia. This means that MAPs would not be just checked, but rather that the complete pricing based on ERP should be validated. Ideally, an automated system for the data provision, validation and revisions of MAPs could be established. The competent authority could require additional clarifications and/or evidence on price used from the marketing authorisation holders and thereby reduce price dependency of manufacturers. From the (public) payer perspective, the most important limitation of the ERP policy might be that ERP based pricing follows the officially published medicine prices, which usually does not incorporate price reductions based on the individual negotiations or other cost-containment measures that are introduced in a given country to ensure reimbursable medicine prices acceptable for the public payers (31). Thus, for the pricing of medicines based on the ERP higher medicine prices are taken as a benchmark (5, 28). According to the EU transparency directive each EU member state should be 8
transparent in defining pricing procedures (32), however price reduction negotiations are usually exempt from that. Individual price reduction agreements, discounts or rabats are usually confidential and are therefore valuable in a particular county, but not in the countries that use this country as a reference country within the ERP policy (16). Nevertheless, not only that lower prices could be achieved if price reductions would be taken into account already within the ERP policy, the extent of price negotiations on a national level could also be reduced. It should be exposed that the widespread use of ERP in EU countries can make medicine pricing circular. There are some cases when one country references another and vice versa, like in Slovenia and Austria (28). The literature warns that, if all EU countries apply ERP and they refer to each other the price levels across EU should converge (24). Limitations of the study All five versions of the Rules were applied to the same input data; therefore the impact of the ERP policy updates on medicine expenditure was evaluated with the assumption that all five Rules were in force at the same time. To assess the cost-saving effect of the ERP updates introduced by the Rules changes and supplements annual validity of the particular Rules was assumed. Consequently, medicine expenditure assessed within the present study is not real public expenditure on medicines but it is assumed public expenditure based on the MAPs. For the assessment of the public medicine expenditure based on the actual prices the individual price negotiations should be taken into account. However, due to their confidentiality and data unavailability they could not be evaluated. Conclusions The present study illustrates that any change in the ERP methodology can (significantly) impact medicine prices (MAPs) determined based on the ERP policy and accordingly affect medicine expenditure. Most of the Slovenian ERP policy upgrades resulted in the reduction of medicines expenditure. However, less complex and administratively demanding measures, such as the introduction of specific price reduction agreement, can result in even better cost-containment outcomes than the updates of the ERP policy. Nevertheless, to achieve more dependable and consistent medicine pricing based on the ERP policy, a competent authority responsible for the provision and validation of medicines pricing procedure as well as for the regular price monitoring and revisions should be established in Slovenia. Acknowledgements We thank Public Agency of the Republic of Slovenia for Medicinal Products and Medical Devices (JAZMP) for the data sources. Funding None. Competing interests None declared. Ethical approval Not required.
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References 1. Vogler S, Habl C, Bogut M, Voncina L. Comparing pharmaceutical pricing and reimbursement policies in Croatia to the European Union Member States. Croat Med J. 2011 Apr 15;52(2):183-97. 2. [Economic association of healthcare Slovenia] Drustvo ekonomistov v zdravstvu. [The effectiveness of management and administration in health care, Expert meeting of economicts and managing health care workers Čatež, 20th and 21st of May 2010] Učinkovitost upravljanja v zdravstvu, Strokovno srečanje ekonomistov in poslovodnih delavcev v zdravstvu Čatež, 20. in 21. maj 2010 [in Slovenian]. 2010 [cited 2016 August 30]; Available from: http://www.devz.si/wpcontent/uploads/2010/07/17_srecanje_ekonomistov_pomlad_010_splet2.pdf. 3. Toumi M, Remuzat C, Vataire A, Urbinati D. External reference pricing of medicinal products: simulation-based considerations for cross-county coordination. 2013 [cited 2016 May 28]; Available from: http://ec.europa.eu/health/healthcare/docs/erp_reimbursement_medicinal_products_en.pdf. 4. Leopold C, Mantel-Teeuwisse AK, Seyfang L, Vogler S, de Joncheere K, Laing RO, et al. Impact of external price referencing on medicine prices - a price comparison among 14 European countries. South Med Rev. 2012 Dec;5(2):34-41. 5. Carone G, Schwierz C, Xavier A. Cost-containment policies in public pharmaceutical spending in the EU. 2012 [cited 2016 May 28]; Available from: http://ec.europa.eu/economy_finance/publications/economic_paper/2012/pdf/ecp_461_en.pdf. 6. Public Agency of the Republic of Slovenia for Medicinal Products and Medical Devices. Pricing of medicinal products. 2013 [cited 2016 June 12]; Available from: http://www.jazmp.si/en/pricing/. 7. Medicinal Prodocuts Act (ZZdr-1), Official Gazzette of the Republic of Slovenia, no. 31/2006. [cited 2016 June 22]; Available from: https://www.uradni-list.si/1/content?id=72463. 8. Act Amending the Medicinal Products Act (ZZdr-1A), Official Gazzette of the Republic of Slovenia, no. 45/2008. [cited 2016 June 22]; Available from: http://www.uradnilist.si/1/objava.jsp?sop=2008-01-1989. 9. Rules on determining the prices of medicinal products for human use, Official Gazzette of the Republic of Slovenia, no. 6/2007. [cited 2016 June 20]; Available from: http://www.uradnilist.si/1/objava.jsp?urlurid=2007232. 10. Rules on determining the prices of medicinal products for human use, Official Gazzette of the Republic of Slovenia, no. 97/2008. [cited 2016 June 20]; Available from: http://www.uradnilist.si/1/objava.jsp?urlurid=20084109. 11. Rules amending the Rules on determining the prices of medicinal products for human use, Official Gazzette of the Republic of Slovenia, no. 8/2009. [cited 2016 June 20]; Available from: http://www.uradni-list.si/1/objava.jsp?urlurid=2009218. 12. Rules on determining the prices of medicinal products for human use, Official Gazzette of the Republic of Slovenia, no. 102/2010. [cited 2016 June 20]; Available from: http://www.uradnilist.si/1/content?id=101179. 10
13. Rules amending the Rules on determining the prices of medicinal products for human use, Official Gazzette of the Republic of Slovenia, no. 6/2012. [cited 2016 June 20]; Available from: http://www.uradni-list.si/1/content?id=107264. 14. Health Care and Health Insurance Act. [cited 2016 June 20] Available from: http://www.pisrs.si/Pis.web/pregledPredpisa?id=ZAKO213. 15. Barros PP. Pharmaceutical policies in European countries. Adv Health Econ Health Serv Res. 2010;22:3-27. 16. Vogler S, Zimmermann N, Habl C, Piessnegger J, Bucsics A. Discounts and rebates granted to public payers for medicines in European countries. South Med Rev. 2012 Jul;5(1):38-46. 17. Fürst J. [Prescription medicines under the Obligatory health care insurance in 2009] Zdravila na recepte v obveznem zdravstvenem zavarovanju v letu 2009 [in Slovenian]. Recept, Bilten o zdravilih iz obveznega zdravstvenega zavarovanja. 2010;8(1):75-86. 18. Rules on inclusion of medicines on the list, Official Gazette of the Republic of Slovenia, No. 35/2013. Legal Information System of Slovenia; [cited 2016 Jun 5]; Available from: http://www.uradni-list.si/1/objava.jsp?sop=2013-01-1323. 19. Ministry of Health of the Republic of Slovenia. [New Rules on pricing of medicines in Official Gazette] V Uradnem listu objavljen nov Pravilnik o cenah zdravil [in Slovenian]. 2012 [cited 2016 June 25]; Available from: http://www.mz.gov.si/si/medijsko_sredisce/novica/archive/2012/1/select/sporocilo_za_javnost/article/ 698/6415/. 20. Fürst J. [Prescription medicines under the Obligatory health care insurance in 2011] Zdravila na recepte v obveznem zdravstvenem zavarovanju v letu 2011 [in Slovenian]. Recept, Bilten o zdravilih iz obveznega zdravstvenega zavarovanja. 2012;10(1):22-32. 21. Ministry of Health of the Republic of Slovenia. [Four rules for more efficient use of funds for medicines] Štirje pravilniki za učinkovitejšo rabo sredstev za zdravila [in Slovenian]. 2010 [cited 2016 June 25]; Available from: http://www.mz.gov.si/si/medijsko_sredisce/novica/archive/2010/12/select/sporocilo_za_javnost/article /698/6166/. 22. Forum of International Research and Development Pharmaceutical Companies EIG. [Development of the Slovenian health care] Razvojni koraki slovenskega zdravstva - obeti glede dostopnosti zdravil [in Slovenian]. 2012 [cited 2016 June 22]; Available from: http://med.over.net/wp-content/uploads/uvoz/zdravje_bolezni/bolezni/razvojni-koraki-slovenskegazdravstva-obeti-glede-dostopnosti-zdravil.pdf. 23. Forum of International Research and Development Pharmaceutical Companies EIG. [Innovative pharmaceutical industry provide an additional 10 million savings in health care] Inovativne farmacevtske družbe zagotovile dodatnih 10 milijonov eurov prihrankov v zdravstvu [in Slovenian]. 2012 [cited 2016 June 15]; Available from: http://www.firdpc.com/sl/Dogodki_in_novice/Inovativne_farmacevtske_druzbe_zagotovile_dodatnih_ 10_milijonov_eurov/.
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24. Vogler S, Lepenschütz L, Schneider P, Stühlinger V. Study on enhanced cross-country coordination in the area of pharmaceutical product pricing. [cited 2017 March 6]; Available from: http://ec.europa.eu/health/sites/health/files/systems_performance_assessment/docs/pharmaproductprici ng_frep_en.pdf. 25. Stargardt T, Schreyogg J. Impact of cross-reference pricing on pharmaceutical prices: manufacturers' pricing strategies and price regulation. Appl Health Econ Health Policy. 2006;5(4):235-47. 26. Agency of the Republic of Slovenia for Medicines and Medical Devices. List of maximum allowed prices and extraordinary higher allowed prices of medicinal products. [cited 2016 January 21]; Available from: http://www.jazmp.si/humana-zdravila/cene-zdravil/najvisje-dovoljene-cenezdravil/. 27. Health Insurance Institut of Slovenia. The national health claims database. [cited 2017 8 March]; Available from: https://partner.zzzs.si/wps/portal/portali/aizv/zdravila_in_zivila_za_posebne_zdravstvene_namene/pod atki_o_porabi_zdravil/!ut/p/z0/04_Sj9CPykssy0xPLMnMz0vMAfIjo8ziTQxdPd2N_Q08LSyCDQ0cj ZzMzXz8XQ0sTAz0C7IdFQGdnpEx/. 28. Leopold C, Vogler S, Mantel-Teeuwisse AK, de Joncheere K, Leufkens HG, Laing R. Differences in external price referencing in Europe: a descriptive overview. Health Policy. 2012 Jan;104(1):50-60. 29. Kanavos P, Nicod E, Espin J, an den Aardweg S. Short- and Long-Term Effects of ValueBased Pricing vs. External Price Referencing. London School of Economics, Andalusian School of Public Health; Commissioned by the European Commission, Directorate-General Enterprise; 2011 [cited 2017 26 May]; Available from: http://whocc.goeg.at/Literaturliste/Dokumente/FurtherReading/Short-%20and%20longterm%20effect%20of%20value-based%20pricing.pdf. 30. Ministry of Health of the Republic of Slovenia. [Rules on the prices of medicinal products for human use will soon be in force] Pravilnik o cenah zdravil za uporabo v humani medicini bo kmalu v veljavi [in Slovenian]. 2007 [cited 2016 June 25]; Available from: http://www.mz.gov.si/si/medijsko_sredisce/novica/archive/2007/1/select/sporocilo_za_javnost/article/ 698/5374/. 31. Vogler S, Habimana K. Pharmaceutical pricing policies in European countries. Vienna: Gesundheit Österreich Forschungs- und Planungs GmbH; 2014 [cited 2016 15 May]; Available from: http://ctwinvestmentgroup.com/walgreen/wpcontent/uploads/2014/12/GOe_FP_Pharmaceutical_Pricing_Europe_CtWInv_final_forPublication.pdf. 32. Transparency Directive (Council Directive 89/105/EEC). [cited 2017 March 8]; Available from: http://ec.europa.eu/health//sites/health/files/files/eudralex/vol1/dir_1989_105/dir_1989_105_en.pdf.
Figure Captions Figure 1: Pricing of reimbursable medicines in Slovenia. 12
Figure 2: External reference pricing policy updates introduced by the Rules changes or supplements.
PUBLIC AGENCY OF THE REPUBLIC OF SLOVENIA FOR MEDICINAL PRODUCTS AND MEDICAL DEVICES (JAZMP)
HEALTH INSURANCE INSTITUTE OF SLOVENIA (HIIS)
REFERENCE COUNTRIES AUSTRIA Retail prices from publications: Erstattungskodex, Warenverzeichnis
Extraordinary higher allowed price (EHAP)
Ex-factory price
Individual negotiations
FRANCE Retail prices from publication: Vidal
Ex-factory price
Reference or comparative price
GERMANY Wholesale prices from publication: Lauer-Taxe
Ex-factory price
Factors defined by the Rules
Ex-factory price or manufacturers‘ element of price (MEP)
Proportion of reference (comparative) price as defined by the Rules
Maximum allowed price (MAP)
Rules on determining the prices of medicinal products for human use (Official Gazette RS, No. 6/2007)
Assumed annual medicine expenditure Rules 2007
Rules updates in relation to the previous Rules
Pricing and reimbursement negotiations between the marketing authorisation holders and the public payer.
Rules on determining the prices of medicinal products for human use (Official Gazette RS, No. 102/2010) and Specific 3% price reduction agreement of originator medicines
Rules amending the Rules on determining the prices of medicinal products for human use (Official Gazette RS, No. 8/2009) and Specific 3% price reduction agreement of originator medicines
Assumed annual medicine expenditure Rules 2008
Actual (reimbursable) price
Specific price reduction agreements
Wholesale mark-up
Manufacturer authorisation holders are obligated to determine MAP according to the Rules and to submit the application for the MAP approval.
Rules on determining the prices of medicinal products for human use (Official Gazette RS, No. 97/2008)
Medicine pricing agreements
Assumed annual medicine expenditure Rules 2009 +/specific pricing agreement
Rules amending the Rules on determining the prices of medicinal products for human use (Official Gazette RS, No. 6/2012) and Specific 3% price reduction agreement of originator medicines
Assumed annual medicine expenditure Rules 2010 +/specific pricing agreement
• ↑ proportion of • ↓ proportion of • ↓ proportion of compative price for comparative price comparative price for OM OM for GM 2 • ∆ in wholesalers‘ margin • ∆ in wholesalers‘ • ↓ proportion of margin comparative price for GM 2 • ∆ in proportion of comparative price and ∆ in calculation of comparative price for BM • ∆ in calculation and factors used to obtain ex-factory price in reference country France
Assumed annual medicine expenditure Rules 2012 +/specific pricing agreement
• ∆ in wholesalers‘ margin calculation from variable to fixed-variable • ∆ in calculation and factors used to obtain ex-factory price in reference country Germany • ↓ proportion of comparative price for GM 2 and GM 3 • ↓ proportion of comparative price for BM
OM – originator medicine, GM 2 – generic medicine type 2, GM 3 – generic medicine type 3, BM - biosimilar
Table 1: Changes in the proportion of reference (comparative) prices within the formulation of the maximum allowed price of medicines in Slovenia based on the external reference pricing policy. Medicine status
Proportion of the reference (comparative) price1 13
Rules 2007 1
Rules 2008 0.97
Rules 2009 1
Rules 2010 1
Rules 2012 1
0.85
0.82
0.82
0.78/0.74
0.72
3 Generic medicine marketed in one (or no one) reference country3
0.7
0.7
0.7
0.7
0.68
4 Biosimilar medicine marketed in reference countries (one or more)4
0.87
1
1
1
0.92
5 Biosimilar medicine not marketed in reference countries, but marketed in other EU or EEA* members4
0.72
1
1
1
0.92
6 Biosimilar medicine not marketed in reference countries or other EU or EEA member states5
/
0.72
0.72
0.72
0.68
1 Originator medicine 2 Generic medicine marketed in two or all three reference countries or marketed in one reference country where originator is not available2
1
Within the formulation of maximum allowed price (MAP) of medicines ex-factory price may amount only to the certain proportion of the reference (comparative) price determined based on the prices in reference countries. 2
The proportion is referred to the reference (comparative) price determined based on generic prices in reference countries.
3
The proportion is referred to the reference (comparable) price determined based on originator prices in reference countries.
4
The proportion is referred to the reference (comparative) price determined based on biosimilar prices in reference countries.
5
The proportion is referred to the reference (comparative) price determined based on the originator prices in reference countries. *EEA – European economic area
Table 2: The assumed medicine expenditure assessed based on the MAPs of medicines resulting from the ERP policy updates defined by the five different Rules valid between 2007 and 2012 for originator, generic, biosimilar medicines and all medicines together. Assumed annual medicine expenditure [€] Medicine category
ERP policy accord. to the Rules from 2012
ERP policy accord. to the Rules from 2010
ERP policy accord. to the Rules from 2009
ERP policy accord. to the Rules from 2008
ERP policy accord. to the Rules from 2007
Originator
169,099,425
173,674,193
173,674,193
168,537,307
174,123,821
Generic
50,953,712
54,573,680
56,893,081
56,893,081
58,603,564
Biosimilar
64,099
72,184
72,184
72,184
77,909
228,320,056
230,639,458
225,502,572
232,805,294
All medicines 220,117,236
14
Table 3: The cost-saving effect of the ERP updates resulting from the introduction of the Rules changes or supplements, expressed as the percentage change of the assumed annual medicine expenditure for originator, generic, biosimilar medicines and all medicines together.
The cost saving effect of ERP updates expressed as the percentage change of the assumed annual medicine expenditure [%]
The overall cost saving effect of the ERP updates
Medicine category
Rules 2012 in relation to the Rules 2010
Rules 2009 in relation to the Rules 2010
Rules 2009 in relation to the Rules 2008
Rules 2008 in relation to the Rules 2007
Rules 2012 in relation to the Rules 2007
Originator
-2.63%
0.00%
3.05%
-3.21%
-2.89%
Generic
-6.63%
-4.08%
0.00%
-2.92%
-13.05%
Biosimilar
-11.20%
0.00%
0.00%
-7.35%
-17.73%
All
-3.59%
-1.01%
2.28%
-3.14%
-5.45%
Table 4: The assumed annual medicine expenditure based on the ERP policy defined by the Rules and that based on the ERP policy together with the specific price reduction agreements introduced as a supplementary cost-containment measure and the cost-saving effect of the specific price reduction agreements. ERP policy accord. to the Rules from 2012
ERP policy accord. to the Rules from 2010
ERP policy accord. to the Rules from 2009
+/- specific price reduction agreement
+/- specific price reduction agreement
+/- specific price reduction agreement
Assumed annual medicine expenditure based on the ERP 220,117,236 policy only [€]
228,320,056
Assumed annual medicine expenditure based on the ERP 205,288,854 policy and specific price reduction agreement[€] The cost-saving effect of the specific price reduction agreement [%]
-6.74
ERP policy accord. to the Rules from 2008
ERP policy accord. to the Rules from 2007
230,639,458
225,502,572
232,805,294
218,014,994
225,502,366
n/a
n/a
-4.51
-2.23
n/a
n/a
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Table 5: Matching of the official MAPs and MAPs calculated within the present study and the budget impact of the inconsistencies in pricing of medicines based on the external reference pricing policy defined by the Rules from 2012. Medicine category Cost All medicines Originators difference1 Cost [%] difference N % [€]2 N %
Cost difference [€]2 n
< -5
307
42.5
-1,327,219
76
19.9
-483,776
>= -5
150
20.7
-141,013
112
29.3
0
122
16.9
0
121
<= +5
64
8.9
25,040
> +5
80
11.1
Sum
723
100
1
Generics
Biosimilars
%
Cost difference [€]2 n
%
Cost difference [€]2
223
67.0
-842,542
8
100
-901
-124,177
38
11.4
-16,835
0
0
0.00
31.7
0
1
0.3
0
0
0
0.00
39
10.2
17,743
25
7.5
7,297
0
0
0.00
528,845
34
8.9
431,708
46
13.8
97,137
0
0
0.00
-914,347
382
100
-158,503
333
100
-754,943
8
100
-901
Cost difference between the assumed monthly expenditure based on the official MAPs and that based on the calculated MAPs expressed in %.
< -5: lower assumed monthly medicine expenditure based on the calculated MAPs for more than 5% >= -5: lower assumed monthly medicine expenditure based on the calculated MAPs for less than 5% 0: total consistency <= +5: higher assumed monthly medicine expenditure based on the calculated MAPs for less than 5% > +5: higher assumed monthly medicine expenditure based on the calculated MAPs for more than 5% 2
Cost difference resulting from the assumed monthly expenditure based on the official MAPs and that based on the MAPs calculated within the present study.
Highlights External reference pricing system is a very common pricing model in Europe. To control medicine expenditure the Rules defining Slovenian external reference pricing system were upgraded almost every year between 2007 and 2012. The upgrades to the Rules are not necessarily effective in reducing medicine expenditure. Slovenian external reference pricing system improvement is required to establish a more capable system.
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