Medicines Pricing Policies in Europe
Richard Laing with materials provided by
Kees de Joncheere
WHO HQ and WHO Regional Office for Europe
and
Claudia Habl
GÖG ÖBIG
And
Overview
Health and health care in Europe : some data
Pharmaceutical markets in Europe
Pharmaceutical policies and strategies on improving use and containing costs
Challenges and conclusions
Health care expenditures in Europe as % of GDP, 2000 or last
3 4 0 1 0 2 T o ta l h ea lth ex p en d itu re a s % o f G D P
0 2 4 6 8 1 0 1 2
1 9 9 9G e rm a n y1 9 9 8S w itz e rla n d1 9 9 9F ra n c e1 9 9 9N o rw a y1 9 9 4C ro a tia2 0 0 0M a lta1 9 9 9B e lg iu m1 9 9 9Ic e la n d2 0 0 0G re e c e1 9 9 9E U a v e ra g e2 0 0 0Is ra e l2 0 0 0D e n m a rk1 9 9 9A u s tria2 0 0 0N e th e rla n d s1 9 9 8S w e d e n1 9 9 9Ita ly2 0 0 0S lo v e n ia1 9 9 8P o rtu g a l2 0 0 0Y u g o s la v ia F R2 0 0 0C z e c h R e p u b lic1 9 9 8S p a in1 9 9 9U n ite d K in g d o m1 9 9 9F in la n d2 0 0 0H u n g a ry2 0 0 0S lo v a k ia1 9 9 9P o la n d2 0 0 0L ith u a n ia1 9 9 9E U R O P E1 9 9 9L u x e m b o u rg1 9 9 9Ire la n d2 0 0 0E s to n ia2 0 0 0C E E a v e ra g e2 0 0 0G e o rg ia2 0 0 0L a tv ia1 9 9 8T u rk e y1 9 9 4B u lg a ria2 0 0 0F Y R M a c e d o n ia2 0 0 0B e la ru s2 0 0 0U k ra in e1 9 9 3A rm e n ia1 9 9 1B o s n ia -H e rc e g .1 9 9 6T u rk m e n is ta n2 0 0 0N IS a v e ra g e2 0 0 0U z b e k is ta n2 0 0 0M o ld o v a2 0 0 0R u s s ia1 9 9 4A lb a n ia1 9 9 8R o m a n ia1 9 9 9K y rg y z s ta n2 0 0 0K a z a k h s ta n1 9 9 8T a jik is ta n2 0 0 0A z e rb a ija n
L a s t A v a ila b le
EU 15 average
CCEE average
NISaverage
Pharmaceutical expenditure/capita in Europe (year 2003)
0
100
200
300
400
500
600
FR IT GR AT SE FI NL DK ES IR EL HU CZ SK PL
Pharmaceutical Expenditure in € per capita
Source: OECD 2005
Pharmaceutical expenditure/GDP in Europe (year 2003)*
* HU: 2002Source: OECD 2005
0.0
0.5
1.0
1.5
2.0
2.5
SK FR HU PL IT ES GER EL CZ AT SE FI NL DK IR
Total pharmaceutical expenditure in % of GDP
Patient share of Price of Medicines
Source: WHO, Alcimed, Member States, Industry associations
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
LV LT PL DK FI EE PT SL HU SE FR SK BE AT EL CZ IR ES GER UK IT NL
Public coverage Patient share
Medicines in Europe – key data
EU average (BE, FR, GR missing): 8.3
changes 1990 – 2000: highest increase in SE (elderly populat.)
particular decrease in 90s in DE and IT due to cost-containment
no direct connection between the number of prescriptions and extent of public PE
EU average expenditure per prescription at the expense of Social Insurance/NHS: € 20,-
Number of prescriptions
per capita 2000/latest
14.4
12.5
11.4
5.0
5.0
5.4
5.7
5.8
6.9
7.3
8.3
9.5
10.6
0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0
ES
AT
PT
GB
DE
EU
IE
SE
IT
NL
DK
FI
LU
average number of prescriptions per inhabitant
Statins
0
10
20
30
40
50
60
70
NOR FRA NED BEL SWE FIN GER IRL SPA UK AUS PRT DNK ITA
Country
DD
D p
er
1000 p
ers
on
s c
overe
d p
er
day
Total*
Fluvastatin
Lovastatin
Cerivastatin
Pravastatin
Atorvastatin
Simvastatin
The use of Statins in Europe 2000(EURO-MED-STAT data)
0
5
10
15
20
25
30
35
FR GR LU PT IT BE SK HR PL IS IE ES FI BG CZ SI SE HU NO UK DK DE LV AT EE NL
DD
D p
er 1
000 in
h. p
er d
ay
Variation in outpatient antibiotic use in 26 European countries in 2002
Source: Goosens et al, Lancet, 2005; 365: 579-587; ESAC project.
Goals for pharmaceutical policies in Europe
Equitable access for patients to effective, safe and good quality medicines
Enhancing appropriate use of medicines for better health outcomes
Ensuring value for money
Balance with industrial policy objectives
Underpinning values : equity, solidarity, access, quality, participation
Medicines provision in Europe
Funded by State taxes or through compulsory social insurance, or a combination
In many countries “private” or semi-private delivery of services :
in many countries physicians and pharmacists are privately employed professionals who are fully contracted by the national health system
hospitals are often privately or semi-government owned, but get contracted by the health service
Overall stewardship role of government / state
The rising costs on medicines Higher volumes and higher price component
Ageing Shift to new medicines in same therapeutic category New drugs for prevention, and for diseases that could
not be treated e.g. AIDS, MS “Life-style drugs” Hospital - primary care shifts
especially for Eastern Europe : increase public coverage and close treatment gap
Mind the gap
Public finance cannot keep up with increase in drug expenditures
Options for policy-makers Increase health budgets : funding from …? Limit range of drugs to be reimbursed : medical need
and quality treatment Increase efficiency (regulation of prices, prescribing,
use, …) : requires sustainable funding and programmes
Shift expenditures to patients :
equity, solidarity …?
Increasing use of strategies to select medicines for public provision
Positive list for reimbursement ( NL, DK, Swe, …) Reference pricing, with generic or therapeutic groups (D,
Ita, NL, Por, Rom, …) Differential reimbursement % ( Fr, Bul, …) Economic evaluation of medicines ( Fin, NL, Swe, UK,…) Promote use of generics ( UK, DK, D, Fr, …) Co-payment mechanism (DK, N, Esp, …) Standard treatment guidelines (UK, DK, Esp, …) …
Ways of pricing – Manufacturer / importer level
Free pricing, Price notification
Public procurement / Tendering
Direct pricing (e.g. cost-plus pricing, statutory price fixing with different methods like international price comparisons)
Price negotiations (price-volume agreements, pay-backs, discounts)
(Indirect) Profit control
Pricing (manufacturer level) 2005 - EU-15
Free Pricing Price Negotiations Statutory Pricing
AT (in general: all pharm.) - (legal basis for all ph.)
BE OTC - POM
DK for non-reimbursable pharm - reimburs. ph. (alternate)
DE for innovative pharm. (~ not under reference price system)
- indirect via reference price system
FI for non-reimbursable pharm. - reimburs. ph.
FR for non-reimbursable pharm. reimburs. Pharm. -
EL - - all pharmaceuticals
IR OTC POM -
IT for non-reimbursable pharm. reimb. p. (EU registrat.) reimb. p. (nat. registrat.)
LU for non-reimbursable pharm. - reimburs. ph.
NL for non-reimbursable pharm. - reimburs. ph.
PT OTC Reimburs. Pharm. POM
SE non-reimbursed pharm. - reimburs. ph.
ES EFP = non-reimb. OTC - Eticas= POM+reim.OTC
UK for non-reimbursable pharm. and reimbursable brands but profit is controlled through PPRS generics
Internal Reference Price Systems
Definition
Operates by grouping similar products together and specifying a relative price. The use of a reference price as a reimbursement benchmark, implies that the government will only pay that particular price. Any excess above the reference price has to be paid by the insured.
Germany, Sweden, Denmark, Italy, Belgium, Netherlands, Norway, Australia, New Zealand, Canada [British Columbia]
External price referencing
Def.: International, cross-country price comparisons using different, so-called country “baskets”
Careful selection of methodology used (e.g. selection of comparative products, price levels etc) is crucial for success
Prices in countries are interlinked, as they influence each other poorer countries pay more, rich pay less
Most often referenced country in Europe: Germany
Only 4 Countries (AT, FI, IT, PL) reference to all other EU Members (or even other countries)
Industry tries to react using price bands
External price referencing, like parallel trade, benefits the rich countries at the expense of poor countries
Price comparison in 24 EU Member States
Source: ÖBIG 2005
Fluoxetine 20 mg capsule of Eli Lilly
€ 0,00
€ 0,20
€ 0,40
€ 0,60
€ 0,80
€ 1,00
€ 1,20
AT BE CY CZ GR DK ES ET FR EL HU IT IR LT LU NL PT SK SE UK
Ex-factory price in € per cap
Member State Standard VAT Pharms Specific regsAustria 20% 20%Belgium 21% 6%Cyprus 0% 0%Czech Republic 19% 5%Denmark 25% 25%Estonia 18% 5%Finland 22% 8%France 20.6% 2,1% (reimb.) 5,5% (non-reimb.)Germany 16% 16%Greece 18% 9%Hungary 25% 5%Ireland 21% 0% (oral) 21% (non-oral)Italy 20% 10%Latvia 18% 5%Lithuania 18% 5%Luxembourg 15% 3%Malta 0% 0%Netherlands 19% 6%Poland 22% 7%Portugal 19% 5%Slovakia 19% 19%Slovenia 20% 8.5%Spain 16% 4%Sweden 25% 0% (POM) 25% (OTC)United Kingdom 17.5% 0% (NHS) 17,5% (OTC)
VATin
theEU
Price regulation pharmacies
Regulating distribution margins In Europe, pharmacies 10-30% and wholesalers 1-10% Use degressive margins How to deal with rebates and discounts ?
Pharmacy Margins 2005 - EU-10
Statutory provisions Regulation
EST for all products regressive scheme with maximum margins and flat rate elements (15-40%)
LV 1 for reimbursable products, 1 for non-reimbursable
2 diff. regressive scheme with max. mark-ups (reimbursables: 5-30%, non-reimbursables: 10-40%)
LT for reimbursable Rx regressive scheme with maximum mark-ups (4-22%)
M for all products maximum linear mark-up on wholesale/import price
PL for reimbursable products regressive margin scheme (average 23%)
SK for all products maximum mark-up (plus additional maximum dispensing mark-up for wholesaler and pharmacist) (average 34%)
SLO no regulation no margin, but fee for service
CZ for all products maximum dispensing mark-up for wholesaler and pharmacist together (29%)
HU for all products regressive scheme with mark-ups
CY for all products maximum linear margin on wholesale price (25%)
My Personal Conclusions
All price control systems have problems! Start with the easier options.
Remember that there is a difference between being a payer and a price regulator.
The Health Ministry is not responsible for the profitability of the local pharmaceutical industry. The Health Ministry is responsible for the health (both physical & financial) of their people.
My Personal Conclusions (2)
Remove duties and taxes on medicines. For innovator patent protected products for which there are
no therapeutic alternatives, use pharmaco economic analysis to determine prices (See Australia PBS)
Where there are therapeutic alternatives e.g. statins use internal reference pricing system if possible
If there is a political decision to use international price comparisons choose your comparator countries carefully and review frequently (Remember New Zealand)
For generic products for which there are multiple competitive suppliers consider having no price controls and provide information to consumers about quality and pricing of products. Provide international price comparisons such as MSH IDPIG
If generic prices MUST be price controlled, set the prices UP from procurement prices not DOWN from originator prices
My Personal Conclusions (3)
Whatever is done, monitor for intended and unintended effects on price, prescribing and dispensing practices and volumes. Use time series analysis.
Collect information regularly from HAI Medicine Prices web site and WHO Sources of Price Information sites
There is a lot of money in medicines. Reducing prices may result in reduced profits! This can result in political or other such responses!
Be careful and ensure that you use the best available data and information in a transparent fashion!
Good luck!
Time Series Analysis Results
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60%
0 2 4 6 8 10 12 14 16 18 20
Time
Val
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Policy Group Control Group
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