- Email: [email protected]
Drug Policy in Latvia
VALUE IN HEALTH REGIONAL ISSUES ] (]]]]) ]]]–]]]
Available online at www.sciencedirect.com
journal homepage: www.elsevier.com/locate/vhri
Drug Policy in Latvia Janis Silins, B.Soc.Sc.1,, Monika Szkultecka-Dębek, MD, PhD2 1
Roche Latvija SIA, Riga, Latvia; 2Roche Polska, Sp. z.o.o., Warsaw, Poland
AB STR A CT
We present a general overview of the health care system as well as the pricing and reimbursement environment in Latvia. Overall, the pharmaceutical sector in Latvia, including pricing and reimbursement, is strictly regulated. The main Latvian stakeholder in the pharmaceutical sector is the Ministry of Health. The State Agency of Medicines and the National Health Service (NHS) are also important institutions for regulation of pharmaceuticals, including pricing and reimbursement. The NHS is the most important institution for regulation of reimbursement of pharmaceuticals. It is responsible for health technology assessment and also for implementing decisions regarding the reimbursement of pharmaceuticals by including medicines in the positive reimbursement lists for outpatient care and defining positive lists of medicinal products for inpatient use. The reimbursement of expenditures for medicinal products and medicinal
devices for outpatient care is a main part of drug funding in Latvia. Reference pricing is in place and prices are revised 4 times a year. The positive reimbursement list for outpatient care consists of three parts: list A, list B, and list C. All the medicines in the positive list are classified into one of three reimbursement categories (100%, 75%, or 50%) depending on the illnesses for which they have been approved. Pharmaceuticals used for inpatient care are included in the cost of inpatient services and are provided free of charge to patients. Inpatient drugs are purchased by health service providers. Keywords: health care system, Latvia, pharmaceutical system, pricing, reimbursement.
Introduction
allow for a fast and relatively simple search to obtain answers, in our opinion, to key questions defining drug policy issues and to facilitate further comparisons across countries. In alignment with the other countries participating in the project, in Latvia we used the same predefined questionnaire to address the issues of interest.
A number of factors could influence or support decisions in the health care sector, for example, use of real-world data as additional information, social aspects, and patients’ insurance and co-payments. Being aware of this and taking into account its interest in the health care area, the International Society for Pharmacoeconomics and Outcomes Research Central and Eastern European Publication Network working group initiated a multinational project to review and describe the drug policies in several countries. Different aspects were analyzed. Starting with a general overview of the health care system, special attention was paid to the pricing of medicinal products, reimbursement decisionmaking process and the factors influencing it, as well as the impact on patients’ access. This study aimed to present an overview of the health care system and the pricing and reimbursement environment in Latvia. This article was prepared as part of a project conducted by the working group under the International Society for Pharmacoeconomics and Outcomes Research Central and Eastern European Publication Network.
Methods The project was conducted in parallel in several countries in 2016 to 2017. The information was collected in a structured way to
& 2017 Published by Elsevier Inc. on behalf of International Society for Pharmacoeconomics and Outcomes Research (ISPOR).
Country Background The population of Latvia in 2015 was 1.99 million people [1]. The life expectancy at birth has increased by 3 years since 2000 to 74 years in 2010 (69 years for males and 78 years for females). It, however, still remains the lowest among the Baltic countries and substantially lower than the average in the European Union (EU) [2]. The total health expenditure as a share of gross domestic product (GDP) was 5.5% in 2014, being one of the lowest shares of GDP spent on health in Europe [3]. General taxation by the central government is the source for the resources for health.
Health Care System General information Since becoming independent in 1991, Latvia has put substantial effort in creating the National Health Service (NHS). The final NHS was established in 2011. The constant changes occurring in Latvia have taken place against a backdrop of relatively poor health and limited funding. It is important to note that Latvia has one of the
Conflicts of interest: The authors have indicated that they have no conflicts of interest with regard to the content of this article. * Address correspondence to: Janis Silins, Roche Latvija SIA, G. Astras Street 8b, Riga LV-1082, Latvia. E-mail: [email protected] 2212-1099$36.00 – see front matter & 2017 Published by Elsevier Inc. on behalf of International Society for Pharmacoeconomics and Outcomes Research (ISPOR). http://dx.doi.org/10.1016/j.vhri.2017.08.006
2
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highest rates of out-of-pocket (OOP) expenditure on health in the EU [2]. According to the Medical Treatment Law (paragraph 16), everyone has the right to receive emergency medical care in Latvia in accordance with regulations. Paragraph 17 of the law specifies who is covered by the statutory health care system: 1) citizens of Latvia; 2) noncitizens of Latvia (individuals who are not citizens of Latvia or any other country, but who, in accordance with the Latvian law “Regarding the status of citizens of the former USSR who possess neither Latvian nor other citizenship,” have the right to a noncitizen passport issued by the Latvian government as well as other specific rights); 3) citizens of the member states of the EU, the countries of the European Economic Area, and the Swiss Confederation who reside in Latvia as a result of employment or being self-employed, as well as members of their families; 4) third-country nationals who have a permanent residence permit in Latvia; 5) refugees and persons who have been granted an alternative status; and 6) persons detained, arrested, and those sentenced with deprivation of liberty [4]. The Latvian statutory health care system is based on general tax–financed health care provision. General taxation by the central government is used to secure resources for health care; nevertheless, patient co-payment is still significant. Health care spending in Latvia is among the lowest when compared with member countries of the Organisation for Economic Co-operation and Development (5.5% vs. 9.0% of the GDP in 2014) [5]. Funding by the public sector is also far lower than the organization’s average, because OOP payments account for 40.1% of the spending [5]. Public health care funding flows from the Ministry of Finance through the Treasury to the NHS, a state-run organization under the Ministry of Health (MoH), acting as the central statutory purchasing organization. The MoH is responsible for the national health policy and the overall organization and functioning of the health system. It is also responsible for the implementation of state health policies and ensures the availability of health care services in Latvia. The statutory health care system covers services provided by physicians and institutions on the basis of agreements with the NHS. The range of health services covered by the state is regulated according to the Regulation of the Cabinet of Ministers of Latvia No. 1529: “Regulations on organization and financing of health care.” According to the regulation, the Latvian benefits basket is determined by a number of explicit inclusion and exclusion lists as well as by certain implicit criteria. Health care in Latvia is provided by the state- and local government–owned institutions, private clinics and hospitals, and individuals. All service providers within the statutory system have to comply with the regulations defined by the MoH and are financed by the NHS. The state is the owner of national multispecialty hospitals (i.e., the university hospitals) as well as all specialized hospitals. Rehabilitation care is provided by dedicated rehabilitation hospitals and rehabilitation centers. Only a very small part of the hospital sector is privately owned. In relation to outpatient services (both general practitioners and specialists), about 70% to 80% of health centers are private, with the remaining being owned by municipalities. Most of the small hospitals and some regional hospitals are owned by municipalities, whereas larger hospitals (e.g., university hospitals) and specialized hospitals (e.g., psychiatric hospitals) are owned by the MoH. Some outpatient clinics are organized as public-private partnerships (municipalities, along with private owners) [2]. The government has initiated a health care reform to improve public health indicators. The main objectives of the reform are improving the health care provider network, promoting the
quality of health care services, solving human resource issues, and developing a strategic approach for procurement of health care services when ensuring the optimal public funding of the health sector.
Pricing of medicinal products To commence the distribution of a medicinal product in the territory of Latvia, marketing authorization holders (MAHs) must submit the exfactory price of the product to the State Agency of Medicines. Pricing of pharmaceuticals is regulated in Latvia according to Regulation No. 803: “Regulation on pricing principles for medicinal products.” For nonreimbursable medicines, prices are based on the manufacturer’s price of the product defined by the MAH. Limited markup for wholesalers and pharmacies is applied according to defined formulas: 1. The price for which a drug wholesaler sells a medicinal product is determined by multiplying the manufacturer’s price by the correction factor and adding the correction sum and the value-added tax (VAT). The VAT for medicines in Latvia is 12%. The correction factor and the correction sum are determined on the basis of the manufacturer’s price. To determine the wholesaler’s price, the following formula is used: LC ¼RC kþ X þV, where LC is the wholesaler’s price, RC is the manufacturer’s price, k is the correction factor, X is the correction sum, and V is the VAT. In accordance with Annex 1 of Regulation No. 803, the correction factors and correction sums are applied on the basis of the manufacturer’s price (see Table 1). The wholesaler’s price is the maximum price for the wholesaler, regardless of the number of wholesalers involved in a particular drug distribution. 2. The price for which a pharmacy sells a medicinal product is determined by multiplying the price for which the pharmacy procures the product from the drug manufacturer or the drug wholesaler without VAT with the correction factor and adding the correction sum and the VAT. The correction factor and the correction sum are determined on the basis of the procurement price. To determine the pharmacy price, the following formula is used: AC ¼IC n þ Y þ V, where AC is the pharmacy price, IC is the procurement price, n is the correction factor, Y is the correction sum, and V is the VAT. In accordance with Annex 2 of Regulation No. 803, the correction factors and correction sums are applied on the basis of the procurement price (see Table 2). This pharmacy price is the maximum price for pharmacies, regardless of the number of pharmacies involved in the distribution process. Pharmacies can also apply lower markups. For pharmaceuticals included in the positive list, prices are negotiated between the NHS and the MAHs. Limited markup for
Table 1 – Level of correction factors and correction sums applied on the basis of the manufacturer’s price. Manufacturer’s price (€)
Correction factor
Correction sum (€)
0–4.26 4.27–14.22 14.23 and higher
1.18 1.15 1.10
– 0.13 0.84
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Table 2 – Level of correction factors and correction sums applied on the basis of the procurement price. Procurement price (€) 0.00–1.41 1.42–2.84 2.85–4.26 4.27–7.10 7.11–14.22 14.23–28.45 28.46 and higher
Correction factor
Correction sum (€)
1.40 1.35 1.30 1.25 1.20 1.15 1.10
– 0.07 0.21 0.43 0.78 1.49 2.92
wholesalers and pharmacies is applied according to formulas defined in Regulation No. 899: “Procedures for the reimbursement of expenses toward the purchase of medicinal products and medical devices for the outpatient care”: 1. The basic price of reimbursement (kompensācijas bāzes cena [KBC]) for medicinal products, or any medicinal product reimbursed from the state budget funding in part or completely (wholesaler’s sales price), shall not exceed the price obtained by using the following formula: KBC ¼KMRC þ LP, where KBC is the basic price of reimbursement for the medicinal products (wholesaler’s price), KMRC is the manufacturer’s price for reimbursement, and LP is the wholesaler’s markup. In accordance with Annex 4 of Regulation No. 899, the wholesaler’s markup (in percent) is applied on the basis of the manufacturer’s price (see Table 3). 2. The pharmacy price of reimbursable medicinal products, or any medicinal product reimbursed from the state budget funding in part or completely, shall be determined by using the following formula: KMAC ¼ LC kþ X þV, where KMAC is the pharmacy price of the reimbursable medicinal product, KBC is the basic price of reimbursement (wholesale price), k is the correction factor, X is the correction sum, and V is the calculated VAT. In accordance with Annex 5 of Regulation No. 899, the correction factors and correction sums are applied on the basis of the manufacturer’s price (see Table 4). It should be mentioned that the medicinal products included in the positive reimbursement list of reimbursable medicinal products must be distributed within pharmacies only, at the
Table 3 – Level of wholesaler’s markup applied on the basis of the manufacturer’s price. No.
1 2 3 4 5 6 7 8 9
Manufacturer’s price (€)
Wholesaler’s markup (%)
0.01–2.83 2.84–5.68 5.69–11.37 11.38–21.33 21.34–28.44 28.45–142.27 142.28–711.42 711.43–1422.86 1422.87 and higher
10 9 7 6 5 4 3 2 1
pharmacy price determined by the NHS in accordance with Regulation No. 899. Patient co-payment will be applied if the difference between the pharmacy price of the medicinal product and the reimbursement sum exists.
The reimbursement decision-making process The NHS is responsible for making decisions regarding the reimbursement of pharmaceuticals by including medicines in the positive list. Decisions are made in accordance with the requirements of Regulation No. 899. The MAH of the medicinal product or his authorized representative or the wholesaler or his authorized representative has to submit an application to the NHS with information about comparative effectiveness data for the pharmaceutical product, clinical information (e.g., indication, comparative therapies, or the intended patient group), pharmacoeconomics information, and price. The NHS evaluates the application on the basis of the information provided and makes a decision for including a pharmaceutical in the positive reimbursement list. The decision depends on several criteria: burden of disease, the therapeutic value of a pharmaceutical, correspondence to treatment schemes, cost-effectiveness of the product, and impact on the health care budget. All the pharmaceuticals included in the positive list are classified into one of three reimbursement categories (100%, 75%, and 50%). The reimbursement category depends on the illnesses for which a particular pharmaceutical has been approved. Table 5 presents the principles of classification of diagnosis and categories of reimbursement. For example, all medicines in the positive list for the diagnosis of rheumatoid arthritis are fully (100%) reimbursed by the NHS, whereas pharmaceuticals for inflammatory bowel disease fall into the 75% reimbursement category, with the remaining 25% having to be covered by patients as OOP payments. The full list of diagnosis and categories of reimbursement is included in Regulation No. 899 (Annex 1). In addition, the positive list consists of three parts—list A, list B, and list C: 1. List A is a reference price list with groups of interchangeable pharmaceutical products, for which the NHS used to pay the same “reference” price. The groups consist of either 1) products with the same active ingredient or 2) certain products within one pharmacotherapeutic group that have the same efficacy and side effects, the same route of administration, and the same patient target groups. 2. List B consists of noninterchangeable products.
Table 4 – Level of correction factors and correction sums applied on the basis of the basic reimbursement price. The basic price of reimbursement (wholesale price) (€) 0.01–1.41 1.42–2.83 2.84–4.25 4.26–7.10 7.11–14.21 14.22–21.33 21.34–28.44 28.45–71.13 71.14 and higher
Correction factor
Correction sum (€)
1.3 1.25 1.2 1.17 1.15 1.1 1.07 1.05 1.0
0 0.07 0.21 0.43 0.57 1.28 1.92 2.49 6.05
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Table 5 – The principles of classification of diagnosis and categories of reimbursement [6]. Reimbursement category
Criteria
Category I (100%)
Reimbursement of medicinal products and medicinal devices in the amount of 100% if the patient has been diagnosed with a chronic, life-threatening disease or a disease that results in a severe, irreversible disability, and the treatment of which requires the use of the respective medicinal products to maintain the patient’s vital functions Reimbursement of medicinal products and medicinal devices in the amount of 75% if the patient has been diagnosed with a chronic disease, the treatment of which without the administration of the respective medicinal products would complicate the maintenance of the patient’s vital functions, or a disease that results in a severe disability Reimbursement of medicinal products and medicinal devices in the amount of 50% if the patient has been diagnosed with a chronic or acute disease, the treatment of which requires administration of the medicinal product to maintain or improve the patient’s health condition, or in case vaccines are reimbursed from the funds granted for reimbursement
Category II (75%)
Category III (50%)
3. List C contains high-cost pharmaceutical products with annual treatment costs exceeding €4300. A mandatory rebate is applied for medicines included in list C. The number of patients to be treated is defined on an annual basis. Treatment with a particular pharmaceutical has to be requested by a council of specialists and approved by the NHS patient by patient. In special situations, the NHS may also approve the reimbursement of medicines that are not included in the positive list and when alternative treatment is not available. Reimbursement has to be requested for individual patients and determined by a council of specialists that the medicine is necessary for saving the life of the patient. In addition, 50% reimbursement for all nationally registered prescription medicines for children up to 24 months and 25% reimbursement for all pregnant women (plus until 42 days after childbirth) have been introduced since September 2012.
Health technology assessment role in the decision-making process In Latvia, the NHS is responsible for health technology assessment. It assesses each candidate drug on the basis of its relative effectiveness and proposed price level. Efficacy is compared with already reimbursed drugs or other specific drugs (on the basis of scientific studies as well as national and international treatment guidelines); the price is compared with prices in the reference EU countries (which should not exceed the prices in other Baltic
countries or should be the third lowest price among the Czech Republic, Denmark, Romania, Slovakia, and Hungary). Cost-effectiveness analysis and budget impact analysis are required for reimbursement decisions [6]. An explicit incremental cost-effectiveness ratio (ICER) threshold is not mentioned in the regulation. According to the regulation, the ICER threshold is defined as the ICER for additional life-year gained, which does not exceed the ICER for medicinal products and medical devices already included in the positive reimbursement list. The NHS took over the functions formerly carried out by the Centre of Health Economics and the Health Payment Centre and it is currently the partner of the European network for Health Technology Assessment.
Real-world data The Center of Disease Prevention and Control (CDPC) of Latvia is the main institution responsible for collecting and summarizing all health-related data in Latvia. The CDPC is under the direct control of the MoH. It is the national public health institute and collaborates with the World Health Organization and other public health institutions worldwide. All health care institutions have legal obligations to complete and submit register cards for a number of disease registers kept at the CDPC. The following registers are maintained by the CDPC: Cancer Registry, Registry of Tuberculosis, Registry of Sexually Transmitted Infections, Registry of Mental Disorders, Registry of Drug Abuse, Registry of Occupational Diseases, Registry of Chernobyl-Related Diseases, Registry of Diabetes Mellitus, Registry of Injuries, Registry of Congenital Abnormalities, and Multiple Sclerosis Registry. The health-related data managed by the CDPC can be made available on request. The NHS is collecting all data related only to the use of NHSpaid health services. There are no formal requirements in relation to real-world evidence (RWE) in the decision-making process for reimbursement. RWE could only be a supportive argument. According to existing legislation, randomized controlled trials are required and evidence is taken into consideration only if the full article with study results is published.
Reimbursement decisions Figure 1 illustrates the Latvia drug reimbursement approval process, which is regulated by Regulation No. 899.
Applicant submits reimbursement application to NHS
NHS conducts pharmacoeconomic and cost-effectiveness assessment of the submitted application
NHS negotiates price with the applicant
Drug is included to the positive reimbursement list
Fig. 1 – Drug reimbursement approval process in Latvia. NHS, National Health Service.
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As described earlier, the reimbursement lists are positive and there are three types of reimbursement lists: lists A, B, and C [6]. The criteria on which reimbursement decisions are taken are described in Regulation No. 899 and officially require the following: 1. A summary of clinical trials and copies of publications with reference to the source specified that demonstrate the therapeutic efficacy and benefits of the mentioned medicinal product compared with other available alternative therapy in Latvia; 2. Information on the manufacturer’s price in the Czech Republic, Denmark, Estonia, Lithuania, Romania, Slovak Republic, and Hungary in the relevant currency and in euros in conformity with the exchange rate determined by the Bank of Latvia for the day of application; 3. Calculation of the expected expenditure of the funds granted for reimbursement, including comparative therapy, patient target groups and the number of patients, as well as the calculation of the potential amount of medicinal products and the number of medical devices within the scope of reimbursement procedures in Latvia, and the foreseen turnover; 4. Pharmacoeconomic evaluation according to the guidelines for economic evaluation (Because of similar economic and social conditions and pharmaceutical market features [i.e., reimbursement based on the severity and chronic nature of the disease, price control for reimbursed pharmaceuticals, regulated maximum wholesale and retail margins, positive reimbursement lists, and reference pricing mechanisms], the Baltic Guideline for Economic Evaluation of Pharmaceuticals [2002] is used in Latvia, Estonia, and Lithuania); 5. Confirmation by applicant that the continuous presence on the market of the reimbursable medicinal products will be ensured; 6. An authorization issued by the MAH or a wholesaler if an authorized representative of the MAH or a wholesaler is submitting the application; 7. A document verifying registration of the applicant in any of the European Economic Area states as well as a document (copy) verifying the right for representation; 8. Information on the number of patients for whom the expenses toward the purchase of the relevant medicinal product are intended to be covered from their own funds if the medicinal product should be included in list C [6]. The NHS shall examine an application regarding the inclusion of a medicinal product in the list of reimbursable medicinal products, review of the conditions of reimbursement, or inclusion of a medicinal product in another list and make a decision within 180 days after registration of the application (not including the time required for obtaining additional information). According to Regulation No. 899, the reimbursement prices are revised by the NHS 4 times a year. Reimbursement conditions are revised ad hoc.
Orphan drugs policy There is no specific policy established for the pricing and reimbursement of orphan drugs. Orphan drugs can be provided through the three main mechanisms. First is the reimbursement system, when the product is included in the positive reimbursement list. Orphan drugs can also be reimbursed on the basis of a request for reimbursement of medicines for individual patients and determined by a council of specialists that the medicine is necessary for saving the life of the patient. In addition, there is a
5
special state-funded program for the treatment of children with rare diseases: “Medicinal treatment for children with rare diseases.”
Co-payments Patient co-payments depend on the reimbursement level and reference product price level (list A products). As described earlier, according to Regulation No. 899, all medicines included in the positive list are classified into one of three reimbursement categories (100%, 75%, or 50%) depending on the illnesses for which they have been approved. In line with this classification, the NHS fully covers the cost of the medication, and in case the costs are covered only partially, then the remaining part has to be covered by patients as OOP payments. When a nonreference medicinal product included in list A of reimbursable medicinal products is prescribed, the patient shall cover the difference between reference and nonreference medicinal product pharmacy prices. According to the information on the consumption of medicinal products in Latvia in 2016 collected by the State Agency of Medicines, the state funding for the reimbursement of medicinal products was €148 million (including 12% VAT), but the patients’ co-payment for the medicinal products in total was €40.05 million. Patients paid €23.57 million out of this amount because they chose to buy nonreference-priced medicines (within the same international nonproprietary name [INN]) [7].
Cost-containment measures There are budgets for the prescribing of reimbursable medicinal products allocated for physicians who have agreement with the NHS. Regulations regarding dispensing of medicines are in place for enforcement [6].
Generic substitution According to the Latvian legislation, a physician may prescribe a medicinal product by the trade name and the pharmacist is allowed to substitute it with an analogue if the doctor has not forbidden this possibility on the prescription. Nevertheless, in the case of the first prescription of a list A reimbursable medicinal product, the INN of the medicinal product should be indicated on the prescription and the pharmacist has to offer different medications to the patient, including the cheapest alternative for the patient.
INN prescriptions INN prescribing is possible. According to Regulation No. 899, INN prescribing is mandatory for naive patients when the physician prescribes list A reimbursable medicine.
Conclusions The pharmaceutical market in Latvia is strictly regulated. In Latvia, the NHS is responsible for health technology assessment and for implementation of decisions regarding the reimbursement of pharmaceuticals by including a medicine in the reimbursement list. Reference pricing is in place and prices are revised 4 times a year. Reimbursement lists are positive and the medicines on the positive list are classified into one of three reimbursement categories (100%, 75%, or 50%) depending on the illnesses for which they have been approved. There are no formal requirements in relation to RWE in the decision-making process for reimbursement of medicines. Changes in the drug policy may occur because of ongoing health care reform. In light of the
6
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insufficient public funding for health care, there is limited access to innovative medicines. R EF E R EN CE S
[1] Central Statistical Bureau of Latvia. The statistical data collection “Demography 2015”. 2015. Available from: http://www.csb.gov.lv/en: [Accessed March 10, 2017]. [2] Mitenbergs U, Taube M, Misins J, et al. Latvia: health system review. Health Syst Transit 2012;14:xv–xii, 1–191. [3] Eurostat. Healthcare expenditure statistics. Available from: http://ec.europa. eu/eurostat/statistics-explained/index.php/Healthcare_expenditure_ statistics. [Accessed March 10, 2017].
[4] Medical Treatment Law. The Parliament of the Republic of Latvia (Saeima). Available from: https://likumi.lv/ta/id/44108-arstniecibaslikums. [Accessed August 8, 2017]. [5] OECD.stat. Data in Theme: Health, Health expenditure and financing. Available from: http://stats.oecd.org/Index.aspx?DataSetCode=SHA. [Accessed March 14, 2017]. [6] Regulation of Cabinet of Ministers No. 899: procedures for the reimbursement of expenses toward the purchase of medicinal products and medical devices for the outpatient care. Available from: https://likumi.lv/doc.php?id=147522&from=off. [Accessed March 16, 2017]. [7] Svens Henkuzens/ The State Agency of Medicines (SAM) of Latvia / presentation "Kas visbūtiskāk ietekmē zāļu cenu Latvijā?"/ 2017. Available from: https://www.zva.gov.lv//?id=644&sa=644&top=5. [Accessed August 8, 2017].
Available online at www.sciencedirect.com
journal homepage: www.elsevier.com/locate/vhri
Drug Policy in Latvia Janis Silins, B.Soc.Sc.1,, Monika Szkultecka-Dębek, MD, PhD2 1
Roche Latvija SIA, Riga, Latvia; 2Roche Polska, Sp. z.o.o., Warsaw, Poland
AB STR A CT
We present a general overview of the health care system as well as the pricing and reimbursement environment in Latvia. Overall, the pharmaceutical sector in Latvia, including pricing and reimbursement, is strictly regulated. The main Latvian stakeholder in the pharmaceutical sector is the Ministry of Health. The State Agency of Medicines and the National Health Service (NHS) are also important institutions for regulation of pharmaceuticals, including pricing and reimbursement. The NHS is the most important institution for regulation of reimbursement of pharmaceuticals. It is responsible for health technology assessment and also for implementing decisions regarding the reimbursement of pharmaceuticals by including medicines in the positive reimbursement lists for outpatient care and defining positive lists of medicinal products for inpatient use. The reimbursement of expenditures for medicinal products and medicinal
devices for outpatient care is a main part of drug funding in Latvia. Reference pricing is in place and prices are revised 4 times a year. The positive reimbursement list for outpatient care consists of three parts: list A, list B, and list C. All the medicines in the positive list are classified into one of three reimbursement categories (100%, 75%, or 50%) depending on the illnesses for which they have been approved. Pharmaceuticals used for inpatient care are included in the cost of inpatient services and are provided free of charge to patients. Inpatient drugs are purchased by health service providers. Keywords: health care system, Latvia, pharmaceutical system, pricing, reimbursement.
Introduction
allow for a fast and relatively simple search to obtain answers, in our opinion, to key questions defining drug policy issues and to facilitate further comparisons across countries. In alignment with the other countries participating in the project, in Latvia we used the same predefined questionnaire to address the issues of interest.
A number of factors could influence or support decisions in the health care sector, for example, use of real-world data as additional information, social aspects, and patients’ insurance and co-payments. Being aware of this and taking into account its interest in the health care area, the International Society for Pharmacoeconomics and Outcomes Research Central and Eastern European Publication Network working group initiated a multinational project to review and describe the drug policies in several countries. Different aspects were analyzed. Starting with a general overview of the health care system, special attention was paid to the pricing of medicinal products, reimbursement decisionmaking process and the factors influencing it, as well as the impact on patients’ access. This study aimed to present an overview of the health care system and the pricing and reimbursement environment in Latvia. This article was prepared as part of a project conducted by the working group under the International Society for Pharmacoeconomics and Outcomes Research Central and Eastern European Publication Network.
Methods The project was conducted in parallel in several countries in 2016 to 2017. The information was collected in a structured way to
& 2017 Published by Elsevier Inc. on behalf of International Society for Pharmacoeconomics and Outcomes Research (ISPOR).
Country Background The population of Latvia in 2015 was 1.99 million people [1]. The life expectancy at birth has increased by 3 years since 2000 to 74 years in 2010 (69 years for males and 78 years for females). It, however, still remains the lowest among the Baltic countries and substantially lower than the average in the European Union (EU) [2]. The total health expenditure as a share of gross domestic product (GDP) was 5.5% in 2014, being one of the lowest shares of GDP spent on health in Europe [3]. General taxation by the central government is the source for the resources for health.
Health Care System General information Since becoming independent in 1991, Latvia has put substantial effort in creating the National Health Service (NHS). The final NHS was established in 2011. The constant changes occurring in Latvia have taken place against a backdrop of relatively poor health and limited funding. It is important to note that Latvia has one of the
Conflicts of interest: The authors have indicated that they have no conflicts of interest with regard to the content of this article. * Address correspondence to: Janis Silins, Roche Latvija SIA, G. Astras Street 8b, Riga LV-1082, Latvia. E-mail: [email protected] 2212-1099$36.00 – see front matter & 2017 Published by Elsevier Inc. on behalf of International Society for Pharmacoeconomics and Outcomes Research (ISPOR). http://dx.doi.org/10.1016/j.vhri.2017.08.006
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highest rates of out-of-pocket (OOP) expenditure on health in the EU [2]. According to the Medical Treatment Law (paragraph 16), everyone has the right to receive emergency medical care in Latvia in accordance with regulations. Paragraph 17 of the law specifies who is covered by the statutory health care system: 1) citizens of Latvia; 2) noncitizens of Latvia (individuals who are not citizens of Latvia or any other country, but who, in accordance with the Latvian law “Regarding the status of citizens of the former USSR who possess neither Latvian nor other citizenship,” have the right to a noncitizen passport issued by the Latvian government as well as other specific rights); 3) citizens of the member states of the EU, the countries of the European Economic Area, and the Swiss Confederation who reside in Latvia as a result of employment or being self-employed, as well as members of their families; 4) third-country nationals who have a permanent residence permit in Latvia; 5) refugees and persons who have been granted an alternative status; and 6) persons detained, arrested, and those sentenced with deprivation of liberty [4]. The Latvian statutory health care system is based on general tax–financed health care provision. General taxation by the central government is used to secure resources for health care; nevertheless, patient co-payment is still significant. Health care spending in Latvia is among the lowest when compared with member countries of the Organisation for Economic Co-operation and Development (5.5% vs. 9.0% of the GDP in 2014) [5]. Funding by the public sector is also far lower than the organization’s average, because OOP payments account for 40.1% of the spending [5]. Public health care funding flows from the Ministry of Finance through the Treasury to the NHS, a state-run organization under the Ministry of Health (MoH), acting as the central statutory purchasing organization. The MoH is responsible for the national health policy and the overall organization and functioning of the health system. It is also responsible for the implementation of state health policies and ensures the availability of health care services in Latvia. The statutory health care system covers services provided by physicians and institutions on the basis of agreements with the NHS. The range of health services covered by the state is regulated according to the Regulation of the Cabinet of Ministers of Latvia No. 1529: “Regulations on organization and financing of health care.” According to the regulation, the Latvian benefits basket is determined by a number of explicit inclusion and exclusion lists as well as by certain implicit criteria. Health care in Latvia is provided by the state- and local government–owned institutions, private clinics and hospitals, and individuals. All service providers within the statutory system have to comply with the regulations defined by the MoH and are financed by the NHS. The state is the owner of national multispecialty hospitals (i.e., the university hospitals) as well as all specialized hospitals. Rehabilitation care is provided by dedicated rehabilitation hospitals and rehabilitation centers. Only a very small part of the hospital sector is privately owned. In relation to outpatient services (both general practitioners and specialists), about 70% to 80% of health centers are private, with the remaining being owned by municipalities. Most of the small hospitals and some regional hospitals are owned by municipalities, whereas larger hospitals (e.g., university hospitals) and specialized hospitals (e.g., psychiatric hospitals) are owned by the MoH. Some outpatient clinics are organized as public-private partnerships (municipalities, along with private owners) [2]. The government has initiated a health care reform to improve public health indicators. The main objectives of the reform are improving the health care provider network, promoting the
quality of health care services, solving human resource issues, and developing a strategic approach for procurement of health care services when ensuring the optimal public funding of the health sector.
Pricing of medicinal products To commence the distribution of a medicinal product in the territory of Latvia, marketing authorization holders (MAHs) must submit the exfactory price of the product to the State Agency of Medicines. Pricing of pharmaceuticals is regulated in Latvia according to Regulation No. 803: “Regulation on pricing principles for medicinal products.” For nonreimbursable medicines, prices are based on the manufacturer’s price of the product defined by the MAH. Limited markup for wholesalers and pharmacies is applied according to defined formulas: 1. The price for which a drug wholesaler sells a medicinal product is determined by multiplying the manufacturer’s price by the correction factor and adding the correction sum and the value-added tax (VAT). The VAT for medicines in Latvia is 12%. The correction factor and the correction sum are determined on the basis of the manufacturer’s price. To determine the wholesaler’s price, the following formula is used: LC ¼RC kþ X þV, where LC is the wholesaler’s price, RC is the manufacturer’s price, k is the correction factor, X is the correction sum, and V is the VAT. In accordance with Annex 1 of Regulation No. 803, the correction factors and correction sums are applied on the basis of the manufacturer’s price (see Table 1). The wholesaler’s price is the maximum price for the wholesaler, regardless of the number of wholesalers involved in a particular drug distribution. 2. The price for which a pharmacy sells a medicinal product is determined by multiplying the price for which the pharmacy procures the product from the drug manufacturer or the drug wholesaler without VAT with the correction factor and adding the correction sum and the VAT. The correction factor and the correction sum are determined on the basis of the procurement price. To determine the pharmacy price, the following formula is used: AC ¼IC n þ Y þ V, where AC is the pharmacy price, IC is the procurement price, n is the correction factor, Y is the correction sum, and V is the VAT. In accordance with Annex 2 of Regulation No. 803, the correction factors and correction sums are applied on the basis of the procurement price (see Table 2). This pharmacy price is the maximum price for pharmacies, regardless of the number of pharmacies involved in the distribution process. Pharmacies can also apply lower markups. For pharmaceuticals included in the positive list, prices are negotiated between the NHS and the MAHs. Limited markup for
Table 1 – Level of correction factors and correction sums applied on the basis of the manufacturer’s price. Manufacturer’s price (€)
Correction factor
Correction sum (€)
0–4.26 4.27–14.22 14.23 and higher
1.18 1.15 1.10
– 0.13 0.84
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Table 2 – Level of correction factors and correction sums applied on the basis of the procurement price. Procurement price (€) 0.00–1.41 1.42–2.84 2.85–4.26 4.27–7.10 7.11–14.22 14.23–28.45 28.46 and higher
Correction factor
Correction sum (€)
1.40 1.35 1.30 1.25 1.20 1.15 1.10
– 0.07 0.21 0.43 0.78 1.49 2.92
wholesalers and pharmacies is applied according to formulas defined in Regulation No. 899: “Procedures for the reimbursement of expenses toward the purchase of medicinal products and medical devices for the outpatient care”: 1. The basic price of reimbursement (kompensācijas bāzes cena [KBC]) for medicinal products, or any medicinal product reimbursed from the state budget funding in part or completely (wholesaler’s sales price), shall not exceed the price obtained by using the following formula: KBC ¼KMRC þ LP, where KBC is the basic price of reimbursement for the medicinal products (wholesaler’s price), KMRC is the manufacturer’s price for reimbursement, and LP is the wholesaler’s markup. In accordance with Annex 4 of Regulation No. 899, the wholesaler’s markup (in percent) is applied on the basis of the manufacturer’s price (see Table 3). 2. The pharmacy price of reimbursable medicinal products, or any medicinal product reimbursed from the state budget funding in part or completely, shall be determined by using the following formula: KMAC ¼ LC kþ X þV, where KMAC is the pharmacy price of the reimbursable medicinal product, KBC is the basic price of reimbursement (wholesale price), k is the correction factor, X is the correction sum, and V is the calculated VAT. In accordance with Annex 5 of Regulation No. 899, the correction factors and correction sums are applied on the basis of the manufacturer’s price (see Table 4). It should be mentioned that the medicinal products included in the positive reimbursement list of reimbursable medicinal products must be distributed within pharmacies only, at the
Table 3 – Level of wholesaler’s markup applied on the basis of the manufacturer’s price. No.
1 2 3 4 5 6 7 8 9
Manufacturer’s price (€)
Wholesaler’s markup (%)
0.01–2.83 2.84–5.68 5.69–11.37 11.38–21.33 21.34–28.44 28.45–142.27 142.28–711.42 711.43–1422.86 1422.87 and higher
10 9 7 6 5 4 3 2 1
pharmacy price determined by the NHS in accordance with Regulation No. 899. Patient co-payment will be applied if the difference between the pharmacy price of the medicinal product and the reimbursement sum exists.
The reimbursement decision-making process The NHS is responsible for making decisions regarding the reimbursement of pharmaceuticals by including medicines in the positive list. Decisions are made in accordance with the requirements of Regulation No. 899. The MAH of the medicinal product or his authorized representative or the wholesaler or his authorized representative has to submit an application to the NHS with information about comparative effectiveness data for the pharmaceutical product, clinical information (e.g., indication, comparative therapies, or the intended patient group), pharmacoeconomics information, and price. The NHS evaluates the application on the basis of the information provided and makes a decision for including a pharmaceutical in the positive reimbursement list. The decision depends on several criteria: burden of disease, the therapeutic value of a pharmaceutical, correspondence to treatment schemes, cost-effectiveness of the product, and impact on the health care budget. All the pharmaceuticals included in the positive list are classified into one of three reimbursement categories (100%, 75%, and 50%). The reimbursement category depends on the illnesses for which a particular pharmaceutical has been approved. Table 5 presents the principles of classification of diagnosis and categories of reimbursement. For example, all medicines in the positive list for the diagnosis of rheumatoid arthritis are fully (100%) reimbursed by the NHS, whereas pharmaceuticals for inflammatory bowel disease fall into the 75% reimbursement category, with the remaining 25% having to be covered by patients as OOP payments. The full list of diagnosis and categories of reimbursement is included in Regulation No. 899 (Annex 1). In addition, the positive list consists of three parts—list A, list B, and list C: 1. List A is a reference price list with groups of interchangeable pharmaceutical products, for which the NHS used to pay the same “reference” price. The groups consist of either 1) products with the same active ingredient or 2) certain products within one pharmacotherapeutic group that have the same efficacy and side effects, the same route of administration, and the same patient target groups. 2. List B consists of noninterchangeable products.
Table 4 – Level of correction factors and correction sums applied on the basis of the basic reimbursement price. The basic price of reimbursement (wholesale price) (€) 0.01–1.41 1.42–2.83 2.84–4.25 4.26–7.10 7.11–14.21 14.22–21.33 21.34–28.44 28.45–71.13 71.14 and higher
Correction factor
Correction sum (€)
1.3 1.25 1.2 1.17 1.15 1.1 1.07 1.05 1.0
0 0.07 0.21 0.43 0.57 1.28 1.92 2.49 6.05
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Table 5 – The principles of classification of diagnosis and categories of reimbursement [6]. Reimbursement category
Criteria
Category I (100%)
Reimbursement of medicinal products and medicinal devices in the amount of 100% if the patient has been diagnosed with a chronic, life-threatening disease or a disease that results in a severe, irreversible disability, and the treatment of which requires the use of the respective medicinal products to maintain the patient’s vital functions Reimbursement of medicinal products and medicinal devices in the amount of 75% if the patient has been diagnosed with a chronic disease, the treatment of which without the administration of the respective medicinal products would complicate the maintenance of the patient’s vital functions, or a disease that results in a severe disability Reimbursement of medicinal products and medicinal devices in the amount of 50% if the patient has been diagnosed with a chronic or acute disease, the treatment of which requires administration of the medicinal product to maintain or improve the patient’s health condition, or in case vaccines are reimbursed from the funds granted for reimbursement
Category II (75%)
Category III (50%)
3. List C contains high-cost pharmaceutical products with annual treatment costs exceeding €4300. A mandatory rebate is applied for medicines included in list C. The number of patients to be treated is defined on an annual basis. Treatment with a particular pharmaceutical has to be requested by a council of specialists and approved by the NHS patient by patient. In special situations, the NHS may also approve the reimbursement of medicines that are not included in the positive list and when alternative treatment is not available. Reimbursement has to be requested for individual patients and determined by a council of specialists that the medicine is necessary for saving the life of the patient. In addition, 50% reimbursement for all nationally registered prescription medicines for children up to 24 months and 25% reimbursement for all pregnant women (plus until 42 days after childbirth) have been introduced since September 2012.
Health technology assessment role in the decision-making process In Latvia, the NHS is responsible for health technology assessment. It assesses each candidate drug on the basis of its relative effectiveness and proposed price level. Efficacy is compared with already reimbursed drugs or other specific drugs (on the basis of scientific studies as well as national and international treatment guidelines); the price is compared with prices in the reference EU countries (which should not exceed the prices in other Baltic
countries or should be the third lowest price among the Czech Republic, Denmark, Romania, Slovakia, and Hungary). Cost-effectiveness analysis and budget impact analysis are required for reimbursement decisions [6]. An explicit incremental cost-effectiveness ratio (ICER) threshold is not mentioned in the regulation. According to the regulation, the ICER threshold is defined as the ICER for additional life-year gained, which does not exceed the ICER for medicinal products and medical devices already included in the positive reimbursement list. The NHS took over the functions formerly carried out by the Centre of Health Economics and the Health Payment Centre and it is currently the partner of the European network for Health Technology Assessment.
Real-world data The Center of Disease Prevention and Control (CDPC) of Latvia is the main institution responsible for collecting and summarizing all health-related data in Latvia. The CDPC is under the direct control of the MoH. It is the national public health institute and collaborates with the World Health Organization and other public health institutions worldwide. All health care institutions have legal obligations to complete and submit register cards for a number of disease registers kept at the CDPC. The following registers are maintained by the CDPC: Cancer Registry, Registry of Tuberculosis, Registry of Sexually Transmitted Infections, Registry of Mental Disorders, Registry of Drug Abuse, Registry of Occupational Diseases, Registry of Chernobyl-Related Diseases, Registry of Diabetes Mellitus, Registry of Injuries, Registry of Congenital Abnormalities, and Multiple Sclerosis Registry. The health-related data managed by the CDPC can be made available on request. The NHS is collecting all data related only to the use of NHSpaid health services. There are no formal requirements in relation to real-world evidence (RWE) in the decision-making process for reimbursement. RWE could only be a supportive argument. According to existing legislation, randomized controlled trials are required and evidence is taken into consideration only if the full article with study results is published.
Reimbursement decisions Figure 1 illustrates the Latvia drug reimbursement approval process, which is regulated by Regulation No. 899.
Applicant submits reimbursement application to NHS
NHS conducts pharmacoeconomic and cost-effectiveness assessment of the submitted application
NHS negotiates price with the applicant
Drug is included to the positive reimbursement list
Fig. 1 – Drug reimbursement approval process in Latvia. NHS, National Health Service.
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As described earlier, the reimbursement lists are positive and there are three types of reimbursement lists: lists A, B, and C [6]. The criteria on which reimbursement decisions are taken are described in Regulation No. 899 and officially require the following: 1. A summary of clinical trials and copies of publications with reference to the source specified that demonstrate the therapeutic efficacy and benefits of the mentioned medicinal product compared with other available alternative therapy in Latvia; 2. Information on the manufacturer’s price in the Czech Republic, Denmark, Estonia, Lithuania, Romania, Slovak Republic, and Hungary in the relevant currency and in euros in conformity with the exchange rate determined by the Bank of Latvia for the day of application; 3. Calculation of the expected expenditure of the funds granted for reimbursement, including comparative therapy, patient target groups and the number of patients, as well as the calculation of the potential amount of medicinal products and the number of medical devices within the scope of reimbursement procedures in Latvia, and the foreseen turnover; 4. Pharmacoeconomic evaluation according to the guidelines for economic evaluation (Because of similar economic and social conditions and pharmaceutical market features [i.e., reimbursement based on the severity and chronic nature of the disease, price control for reimbursed pharmaceuticals, regulated maximum wholesale and retail margins, positive reimbursement lists, and reference pricing mechanisms], the Baltic Guideline for Economic Evaluation of Pharmaceuticals [2002] is used in Latvia, Estonia, and Lithuania); 5. Confirmation by applicant that the continuous presence on the market of the reimbursable medicinal products will be ensured; 6. An authorization issued by the MAH or a wholesaler if an authorized representative of the MAH or a wholesaler is submitting the application; 7. A document verifying registration of the applicant in any of the European Economic Area states as well as a document (copy) verifying the right for representation; 8. Information on the number of patients for whom the expenses toward the purchase of the relevant medicinal product are intended to be covered from their own funds if the medicinal product should be included in list C [6]. The NHS shall examine an application regarding the inclusion of a medicinal product in the list of reimbursable medicinal products, review of the conditions of reimbursement, or inclusion of a medicinal product in another list and make a decision within 180 days after registration of the application (not including the time required for obtaining additional information). According to Regulation No. 899, the reimbursement prices are revised by the NHS 4 times a year. Reimbursement conditions are revised ad hoc.
Orphan drugs policy There is no specific policy established for the pricing and reimbursement of orphan drugs. Orphan drugs can be provided through the three main mechanisms. First is the reimbursement system, when the product is included in the positive reimbursement list. Orphan drugs can also be reimbursed on the basis of a request for reimbursement of medicines for individual patients and determined by a council of specialists that the medicine is necessary for saving the life of the patient. In addition, there is a
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special state-funded program for the treatment of children with rare diseases: “Medicinal treatment for children with rare diseases.”
Co-payments Patient co-payments depend on the reimbursement level and reference product price level (list A products). As described earlier, according to Regulation No. 899, all medicines included in the positive list are classified into one of three reimbursement categories (100%, 75%, or 50%) depending on the illnesses for which they have been approved. In line with this classification, the NHS fully covers the cost of the medication, and in case the costs are covered only partially, then the remaining part has to be covered by patients as OOP payments. When a nonreference medicinal product included in list A of reimbursable medicinal products is prescribed, the patient shall cover the difference between reference and nonreference medicinal product pharmacy prices. According to the information on the consumption of medicinal products in Latvia in 2016 collected by the State Agency of Medicines, the state funding for the reimbursement of medicinal products was €148 million (including 12% VAT), but the patients’ co-payment for the medicinal products in total was €40.05 million. Patients paid €23.57 million out of this amount because they chose to buy nonreference-priced medicines (within the same international nonproprietary name [INN]) [7].
Cost-containment measures There are budgets for the prescribing of reimbursable medicinal products allocated for physicians who have agreement with the NHS. Regulations regarding dispensing of medicines are in place for enforcement [6].
Generic substitution According to the Latvian legislation, a physician may prescribe a medicinal product by the trade name and the pharmacist is allowed to substitute it with an analogue if the doctor has not forbidden this possibility on the prescription. Nevertheless, in the case of the first prescription of a list A reimbursable medicinal product, the INN of the medicinal product should be indicated on the prescription and the pharmacist has to offer different medications to the patient, including the cheapest alternative for the patient.
INN prescriptions INN prescribing is possible. According to Regulation No. 899, INN prescribing is mandatory for naive patients when the physician prescribes list A reimbursable medicine.
Conclusions The pharmaceutical market in Latvia is strictly regulated. In Latvia, the NHS is responsible for health technology assessment and for implementation of decisions regarding the reimbursement of pharmaceuticals by including a medicine in the reimbursement list. Reference pricing is in place and prices are revised 4 times a year. Reimbursement lists are positive and the medicines on the positive list are classified into one of three reimbursement categories (100%, 75%, or 50%) depending on the illnesses for which they have been approved. There are no formal requirements in relation to RWE in the decision-making process for reimbursement of medicines. Changes in the drug policy may occur because of ongoing health care reform. In light of the
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insufficient public funding for health care, there is limited access to innovative medicines. R EF E R EN CE S
[1] Central Statistical Bureau of Latvia. The statistical data collection “Demography 2015”. 2015. Available from: http://www.csb.gov.lv/en: [Accessed March 10, 2017]. [2] Mitenbergs U, Taube M, Misins J, et al. Latvia: health system review. Health Syst Transit 2012;14:xv–xii, 1–191. [3] Eurostat. Healthcare expenditure statistics. Available from: http://ec.europa. eu/eurostat/statistics-explained/index.php/Healthcare_expenditure_ statistics. [Accessed March 10, 2017].
[4] Medical Treatment Law. The Parliament of the Republic of Latvia (Saeima). Available from: https://likumi.lv/ta/id/44108-arstniecibaslikums. [Accessed August 8, 2017]. [5] OECD.stat. Data in Theme: Health, Health expenditure and financing. Available from: http://stats.oecd.org/Index.aspx?DataSetCode=SHA. [Accessed March 14, 2017]. [6] Regulation of Cabinet of Ministers No. 899: procedures for the reimbursement of expenses toward the purchase of medicinal products and medical devices for the outpatient care. Available from: https://likumi.lv/doc.php?id=147522&from=off. [Accessed March 16, 2017]. [7] Svens Henkuzens/ The State Agency of Medicines (SAM) of Latvia / presentation "Kas visbūtiskāk ietekmē zāļu cenu Latvijā?"/ 2017. Available from: https://www.zva.gov.lv//?id=644&sa=644&top=5. [Accessed August 8, 2017].