GBI Research, the leading business intelligence provider, has released its latest research “Pharmaceutical Pricing and Reimbursement in Europe – Reference Pricing and Similar Initiatives Being Applied to Innovative Drugs Pose Significant Challenge to Pharmaceutical Companies”.
It provides a comprehensive overview of the healthcare systems as well as pricing and reimbursement processes in 12 European nations with a detailed analysis of the different regulatory mechanisms used in these countries. The report closely scrutinizes major changes in pricing and reimbursement for pharmaceuticals in these European nations in the recent past and their impact in the near future. The countries analyzed in the report are the top five European countries as well as Eastern European countries, namely the Czech Republic, Poland, Romania and Hungary in addition to the Scandinavian nations Norway, Finland and Denmark.
Pricing and Reimbursement in Europe
Pricing and Reimbursement in Europe, Estimated Costs Paid by the Patient and Health Insurance System in the Total Reimbursed Pharmacy Market Value at Retail Prices (%), 2008
Source: GBI Research, European Federation of Pharmaceutical Industries and Associations (EFPIA)
Healthcare across the European Union (EU) and majority of the European nations is largely publicly financed and is provided by health insurance systems; hence, the governments of European nations play a key role in providing healthcare for their citizens. Health is a high priority for Europe’s citizens and pharmaceutical costs are the third most costly component in the member states’ healthcare budgets. Hospital and ambulatory care spending account for the first two most important components in their health care budgets, according to a 2009 report by the European Commission. Currently, the governments of the member countries face substantially rising costs for the provision of health care (average costs are rising at a faster rate than Gross Domestic Product (GDP) due to factors such as over-prescription of drugs, their irrational usage, and other key factors such as Europe’s ageing population and increasing cost of new medical technologies. Consumer preference for branded drugs to generic drugs in cases where drug patents have expired is also contributing to increasing healthcare costs.
Growing Healthcare Expenditure Fuelled by an Ageing Population in Europe
It was estimated that in 2009, the average number of healthy life years by people in the EU (27 countries) was 73.3 years, with Sweden accounting for the highest number of healthy life years at 79.1 years. Governments across Europe are facing growing healthcare expenditure, primarily due to ageing populations. However, recent austerity measures implemented by countries such as Italy, France, Germany and the UK to tackle the economic crisis have resulted in tightening healthcare budgets, resulting in a downward pressure on pharmaceutical prices. This is bringing changes in the pricing and reimbursement scenario in countries across Europe. The specific features of individual policies vary significantly across the member nations.
Value-based pricing Replacing Pharmaceutical Price Regulation Scheme in the UK from 2014
After the current PPRS, the system of pricing medicines, launched in 2009 has run its course, a new value-based approach to the pricing of branded medicines, called value-based pricing (VBP) is expected to be introduced in the UK after the expiry of PPRS in 2013, despite concerns regarding the mechanism of the VBP system. The UK is among the few markets that allows drug companies to set their own prices; however, the National Institute of Health and Clinical Excellence (NICE), one of the main regulatory bodies, under the Conservative-Liberal Democrat coalition has decided to adopt VBP which will be determined by the maximum affordable cost per Quality Adjusted Life Years (QALY) generated by the use of new medicines. At the time of establishing the price of a new drug candidate, the drug manufacturer will be required to submit clinical trial evidence suggesting that their drug is more effective than existing drugs in the market. The new system will be applied to newly branded prescription drugs, but will not be applied to currently marketed drugs or generics. As this new system is introduced, the main focus of regulation is shifted towards profit rather than price controls.
Reimbursement Reduced for Drugs with Moderate and Low Clinical Benefit in France
The French government intends to cut its healthcare bill and a major reduction will be derived from limiting drug prices and enforcing price cuts including parallel imported drugs. The French government’s pricing and reimbursement committee, Economic Committee on Health Products (CEPS) has instituted a change in reimbursement rate of drugs with moderate clinical benefit from 35% to 30% and to 15% from a previous 20% for drugs with low clinical benefit. The move was part of the 2011 Social Security Budget Bill. Moreover, for all medical procedures, the co-payment will be increased by half a percentage point. Also, the health ministry is creating a roadmap for changes in the laws on reimbursing drugs that will result in quicker termination of reimbursement for drugs given a minimal clinical benefit rating.
Benefit Assessment Led Price Negotiation, Price Freeze and Mandatory Discounts in Germany
Pharmaceutical prices in Germany have been among the highest in Europe. The Act on the Reform of the Market for Medicinal Products (AMNOG) that came into effect on January 2011 in Germany is expected to assist in the overall effort to curb in exploding costs for the country’s public health insurance system. The new act will only allow the pharmaceutical manufacturers to set prices freely for the first year post the drug product’s launch in the German market after which they are required to negotiate the prices with the Federal Joint Committee (Gemeinsamer Bundesausschuss, G-BA). A major cost containment measure relates to the in-patent drugs where pharmaceutical manufacturers are required to submit evidence of the added benefit rendered to patients when they launch a product with new active ingredients to market. Mandatory discounts for patented medicines offered to the statutory health system have been increased from 6% to 16%. Moreover, price freeze on medicines have been imposed until the end of 2013 at August 2009 levels. The objective behind the measure was an urgent and short term control on expenditure growth. It will also retain the old discount price contract system for generic drugs.
A Rebate of 7.5% for In-Patent Drugs and Price Cuts for Generics in Spain
Though price cuts are not imposed on reimbursed patented drugs in Spain, effective from June 2010 they have been imposed with rebates under the National Health System (NHS). The rebate is 7.5% of the sales to the NHS for all reimbursed medicines, whether for ambulatory or hospital use. Orphan medicines are also subject to a 4% rebate. An average 25% cut in generic prices has been implemented from July 2010 as a part of the austerity package in an effort to bring down the health care costs. Moreover, several regions in the country such as Navarra, Extremadura, Catalonia are attempting to shape prescribing pattern and encourage greater use of generics by instructing doctors to prescribe common medications by active pharmaceutical ingredient instead of branded products. Other initiatives expected to impact pricing of pharmaceuticals include regional tendering, and creating regional catalogues that prioritize reimbursed medicines though such catalogues exceed regional authority and the Supreme Court often overturn these regional initiatives.
To order this report, or to find out more visit GBI Research.