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The Worldwide Guide to Pricing & Reimbursement

  • April 2013
  • -
  • Espicom Business Intelligence
  • -
  • 146 pages

The issues of pricing and reimbursement play an important role in determining the likely commercial success of a pharmaceutical product in the marketplace. Following marketing authorisation, the pharmaceutical industry must successfully navigate national regulatory systems to determine the price at which a product can be sold and whether or not it will be eligible for reimbursement by public or private health insurers.

So how is pharmaceutical pricing established? There is no simple answer to this question. For other consumer goods, pricing may be as simple as the manufacturer setting a price at which their product can reasonably be sold in a particular market. In other words, a competitive price that is both affordable for the customer and allows the manufacturer to make a profit. For pharmaceutical companies, pricing is often far more complicated. Governments and health insurance providers around the world strive to contain costs while providing effective medicines for their patients. Their efforts to do so have resulted in national pricing policies that include various direct and indirect pricing controls. For prescription pharmaceuticals in particular, the issues of pricing and reimbursement are inextricably linked, as one is dependent on the other.

In the majority of countries surveyed for this report, there is some form of pricing control for pharmaceuticals that are reimbursed under the public health system, whether direct or indirect. National pricing authorities employ various methods of arriving at pharmaceutical prices, such as reference pricing schemes, fixed generic price reductions, fixed wholesale and pharmacy mark-ups, or limitations on company profits. Rather than relying on one method of price control, government agencies generally employ several tactics to minimise reimbursement costs. These may be directly enforced, or the subject of negotiation between government and industry.

Internal reference pricing schemes are often used to calculate the reimbursement rate for a particular therapeutic group of drugs. These may only come into play once generic alternatives are available for a group of drugs with the same active ingredient, or they may include a wider range of patented drugs with a similar therapeutic effect.

External reference pricing, also known as international reference pricing, is often employed for products that are new to the market. Put simply, a pricing authority will compare the manufacturer’s suggested price for the product with the price in a basket of other countries in which it is marketed. There are numerous variations among external reference pricing schemes. A basket of countries may include as few as three neighbouring states with a similar standard of living, or as many as 30 countries from various parts of the world. The reference price may be calculated as the median price among a group of countries; the mean average of a defined number of countries, to which a percentage reduction may or may not be applied; or it may simply be the lowest price among all countries in the basket. In other words, there are almost as many variations of reference pricing schemes as there are countries that operate them.

External pricing schemes in Western Europe have come under particular criticism from industry as a result of austerity measures in countries like Greece and Spain that have dramatically reduced prices in those markets. The continued inclusion of these countries in reference baskets has a knock-on effect in many other markets, causing prices to fall in countries with a higher standard of living. The industry argues that price differentiation between countries should be on the basis of ability to pay, rather then a system of reference pricing that apparently bears little relation to purchasing power parity.

For manufacturers, even when the issue of price has been successfully concluded, the issue of reimbursement may still remain. For a prescription medication to be used by the widest possible number of patients, it needs to be included in the reimbursement scheme. In some countries, reimbursement and pricing go hand in hand, so that once a price has been arrived at, the product is available for reimbursement. In others, the product will need to be included on a positive reimbursement list, or be recommended by a national body, such as the National Institute of Health and Clinical Excellence (NICE) in the UK.

However it is arrived at, the price and reimbursement status of a medicinal product has a direct impact on everyone involved: manufacturers, wholesalers, hospitals, pharmacies, health insurers and, finally, the patients, who simply want access to the best medicine at a price they can afford.


Table Of Contents

The Worldwide Guide to Pricing and Reimbursement
Contents

FOREWORD 1
EXECUTIVE SUMMARY 3
PRICING and REIMBURSEMENT SYSTEMS 5
Free Pricing and Indirect Control 5
Reference Pricing 6
External Reference Pricing 6
Internal Reference Pricing 9
Fixed Generic Price Reductions 9
Wholesale and Pharmacy Mark-ups 10
Reimbursement Lists 10
Positive and Negative Lists 10
Essential Medicines 11
AMERICAS 12
ARGENTINA 13
Pricing 13
Price Controls in the National Medicines Policy, 2002 13
BRAZIL 14
Pricing 14
Drug Price Set-up 14
Drug Price Control 14
Reimbursement 16
PFPB 16
CANADA 17
Pricing 17
Reimbursement 17
Provincial Formularies 17
Drug Insurance Programmes 18
National Pharmaceuticals Strategy 19
CHILE 19
Pricing 19
Public Procurement 19
Reimbursement 20
COLOMBIA 20
Pricing 20
Price Regulation 20
Resolutions/Decrees Issued in 2010 21
Resolution No. 04/2006 22
SISMED 24
Reimbursement 24
MEXICO 25
Pricing 25
Private Sector 25
Public Procurement 26
Seguro Popular 26
Reimbursement 27
PERU 27
Pricing 27
Public Procurement 27
Reverse Auctions 28
Public Monitoring 28
OPPF 28
Reimbursement 29
PNUM 29
USA 29
Pricing 29
Public Drug Procurement 29
Average Wholesale Price (AWP) 30
Biologics Price Competition and Innovation Act 30
Reimbursement 31
Medicaid 31
Medicare 31
Legislative Background 32
Bill H.R.1 32
State Pricing/Reimbursement Moves 33
VENEZUELA 33
Pricing 33
Regulation 33
Background to Price Control 34
Foreign Exchange Controls 34
Reimbursement 35
ASIA/PACIFIC 36
AUSTRALIA 37
Pricing 37
Drug Pricing Developments 37
PBS Drug Price Cuts 37
PBS Medicine Bill Reforms 38
Reference Pricing System 38
12.5% PriceReductions for New Market Entrants 39
US Free Trade Agreement 39
Reimbursement 39
PBS Reimbursement Reforms 39
Patient Co-Payments 41
CHINA 41
Pricing 41
Essential Drugs List 41
Price Reductions 42
Mandatory Licensing 42
Reimbursement 42
Patient Contributions 43
INDIA 44
Pricing 44
Drugs (Prices Control) Amendment Order and Second Amendment Order, 2006 44
National Pharmaceuticals Pricing Policy, 2012 45
Background 45
NPPP-2012 and NLEM-2011 45
Reimbursement 46
INDONESIA 46
Pricing 46
Price Changes 47
Essential Drugs List 47
Reimbursement 48
JAPAN 48
Pricing 48
Price Reductions 48
Reimbursement 48
National Health Insurance Drug Price List 49
MALAYSIA 49
Pricing 49
NEW ZEALAND 50
Pricing 50
Drug Tender Scheme 50
Reimbursement 50
Prescription Charges 51
PAKISTAN 51
Pricing 51
Drug Pricing Policy 52
Medicine Tariffs Abolished 52
PHILIPPINES 52
Pricing 52
Government Mediated Access Price 52
Further Price Reductions, 2010 53
DoH issues Cease and Desist Orders on retailers that violate the GMAP and MRP 53
Reimbursement 54
SINGAPORE 54
Pricing 54
Reimbursement 54
SOUTH KOREA 55
Pricing 55
Key Developments 55
Drug Price Cuts to Encourage Generic Competition 55
Preferential Drug Price-Cut Exemption Policy 56
Transacted Drug Price Control System 56
Separation of Prescribing and Dispensing 56
Reimbursement 57
TAIWAN 57
Pricing 57
Reimbursement 58
THAILAND 59
Pricing 59
Reimbursement 59
VIETNAM 60
Pricing 60
Price Increases 60
Imported Drugs 60
Drug Pricing Decree 60
Cuts in Tax and Import Duties 61
Reimbursement 61
CENTRAL AND EASTERN EUROPE 62
BULGARIA 63
Pricing 63
Reimbursement 64
CROATIA 65
Pricing 65
Reimbursement 65
CZECH REPUBLIC 66
Pricing 66
Reimbursement 67
ESTONIA 68
Pricing 68
Reimbursement 68
HUNGARY 69
Pricing 69
Price Freezing, the Pharma Economic Act and Subsequent Developments 69
Reimbursement 70
LATVIA 70
Pricing 70
Reimbursement 71
LITHUANIA 71
Pricing 71
Reimbursement 72
POLAND 73
Pricing 73
Reimbursement 73
ROMANIA 74
Pricing 74
Reimbursement 74
RUSSIA 75
Pricing 75
Maximum Prices 76
Price Freezes 76
Reimbursement 77
DLO Programme 77
DLO Budget 77
DLO Procurement 78
Vital and Essential Medicines List 78
SLOVAKIA 78
Pricing 78
Reimbursement 79
SLOVENIA 79
Pricing 79
Reimbursement 80
UKRAINE 80
Pricing 80
Reimbursement 81
MIDDLE EAST/AFRICA 82
EGYPT 82
Pricing 82
Reimbursement 84
ISRAEL 85
Pricing 85
Reimbursement 85
MOROCCO 85
Pricing 85
Parliamentary Drug Pricing Report 86
Reimbursement 87
SAUDI ARABIA 87
Pricing 87
National Unified Procurement Company for Medical Supplies 88
Reimbursement 88
SOUTH AFRICA 88
Pricing 88
Dispensing Fees Charged by Pharmacists 89
Reimbursement 89
Essential Medicines List 89
TURKEY 90
Pricing 90
Price Cuts 91
Reimbursement 91
WESTERN EUROPE 92
AUSTRIA 94
Pricing 94
Reimbursement 95
Erstattungskodex (EKO) 95
Rational Use of Pharmaceuticals 96
Prescription Charges 96
BELGIUM 97
Pricing 97
Reference Price System 97
Cost Control Policies 97
Reimbursement 98
Patient Co-payments 99
DENMARK 100
Pricing 100
Medicine Prices 100
Price Index 100
Pharmacy Prices Decline 101
Reimbursement 101
Executive Order 102
Reimbursement Thresholds 103
Reference Price System 103
FINLAND 104
Pricing 104
Reference Price System and Generic Substitution 104
Reimbursement 104
Reimbursement Categories 105
Basic Reimbursement 105
Special Reimbursement 105
Patient Co-payments 106
FRANCE 106
Pricing 106
Reimbursement 107
GERMANY 108
Pricing 108
Background to AMNOG 108
Industry Concerns 109
Pharmaceutical Discount Contracts 109
Generic Substitution Policies 110
Reimbursement 110
GREECE 110
Pricing 110
Reference Price System 111
Wholesale and Retail Margins 111
Reimbursement 111
IRELAND 112
Pricing 112
Reference Pricing and Generic Substitution 112
Wholesale Margins 113
Reimbursement 113
HSE Primary Care Reimbursement Service (PCRS) 113
Prescription Charges 114
ITALY 114
Pricing 114
Reimbursement 115
Risk Sharing 115
NETHERLANDS 116
Pricing 116
Pharmacy Fees 116
Reimbursement 117
NORWAY 117
Pricing 117
Reference Pricing System 117
Generic Pricing System 118
Wholesale and Pharmacy Mark-ups 118
Reimbursement 119
First-Choice Scheme 120
Patient Co-payments 120
PORTUGAL 120
Pricing 120
Reference Pricing System 120
Pharmacy Margins 121
Reimbursement 121
SPAIN 122
Pricing 122
Regulatory Bodies 122
Reference Pricing System 123
Drug Price Discounts 124
Reimbursement 124
Generic Prescribing 124
Pharmacy Margins 125
Patient Co-payments 125
SWEDEN 125
Pricing 125
Reimbursement 126
Reimbursement Rates 127
SWITZERLAND 127
Pricing 127
Reimbursement 128
UNITED KINGDOM 129
Pricing 129
PPRS 2009 129
Reimbursement Decisions 130
Patient Access Schemes 130
Prescription Charges 130
SOURCES 132



List of Tables

Countries Operating External Reference Price Systems 7
Pricing and Reimbursement in the Americas 12
Pricing and Reimbursement in the Asia/Pacific Region 36
Pricing and Reimbursement in Central and Eastern Europe 62
Pricing and Reimbursement in the Middle East and Africa 82
Pricing and Reimbursement in Western Europe 92
List of Figures
Most-commonly Referenced Countries for External Pricing 8

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