The Ukraine Ministry of Health (MoH) reference pricing working group has made a series of amendments to the government's draft resolution 'On the reference pricing for medicines'.
Implications | Amendments in the Ukrainian government's latest version of its draft resolution 'On the reference pricing for medicines' include new procedures depending on whether the drug is original or generic, rules for declaring changes in the marginal wholesale price of foreign original drugs and biosimilars, modifications in the country range used, clarification of inconsistencies in secondary packaging, and revised rules for pricing generics. |
Outlook | The revisions are intended to resolve previous versions' shortcomings in the calculation of marginal wholesale prices but leave most items unchanged. The proposed reference pricing mechanism is intended for medicines reimbursed by the state during ambulatory use, but not for public procurement, which the government is considering separately. |
An article in the Ukrainian source Apteka reviews the latest revised version of a governmental draft resolution 'On the reference pricing of medicines', published on 19 August 2016. The text of the revised draft resolution is available in Ukrainian here.
The proposed reference pricing mechanism is to be applied to medicines included in the list of domestic and foreign pharmaceuticals that can be purchased by institutions and healthcare facilities, fully or partially financed from state and local budgets. The full list of these medicines is given in Ukrainian here.
Main features of the amendments to the draft resolution
As part of the revision, a new declaration procedure is proposed, depending on whether the drug is original or generic. A change to the marginal wholesale price of an original drug of foreign manufacture or a biosimilar must not exceed the arithmetic mean value among the three lowest wholesale prices for a reference product in the following countries: Bulgaria, Moldova, Poland, Slovakia, Czech Republic, Latvia, Hungary, and Serbia. In the previous version of the resolution, the country of first registration of the product was also included as a reference country, but this has been removed. The declared change to the marginal wholesale price should be equal to the minimum value of that in the reference countries.
Another change in the revised version is the clarification of inconsistencies relating to secondary packaging in Ukraine and reference countries. In the absence of reference countries, if the size of the secondary package for a product is identical to that for the reference drug, it may be used directly to calculate marginal wholesale prices, but this is not possible in many cases of drugs packaged differently.
For generic medicinal products, declarations of changes in wholesale prices are subject to the limitation of the wholesale price of the original drug, as follows:
• For the first generic registered in Ukraine after the original drug, the marginal change in wholesale prices should be less than 20% of the marginal wholesale price for the corresponding original drug;
• For each subsequent generic drug registered in Ukraine over time, changes in the marginal wholesale price should be lower than 10% of the changes in marginal wholesale prices for previously approved generics, but not less than 50% of the marginal wholesale price for the corresponding original drug;
• In the absence of a marginal wholesale price for the corresponding original drug, the wholesale prices for generics are to be 20% lower than the arithmetic mean of the lowest of three selling prices for the corresponding original drug in the reference countries;
• In the absence of a marginal wholesale price for the original drug, and the availability of reference generics previously approved in the Ukraine, the declared marginal wholesale price for a new generic should be less than 10% of the marginal wholesale prices for previously Ukrainian-approved generic reference drugs, but not less than 62.5% of marginal changes in wholesale prices for the first approved generic.
Expected effects on pricing of popular hypertension and diabetes drugs
In its review, Apteka conducts case studies on how the proposed system might affect the prices of some popular drugs for treating hypertension and diabetes. Full details of these case studies (in Ukrainian) are given here.
For the Ukraine-registered original drug Norvasc (amlodipine, Pfizer (US)) for hypertension, the declared wholesale price for Norvasc 10 mg x30 is USD590.05, almost 7 times higher than the mean value among the three lowest wholesale prices in the reference countries. This would mean that some manufacturers (particularly foreign) of amlodipine, such as Krka (Slovenia) and Dr Reddy's (India), could be forced to cut their prices by 30–80% from those they are currently declaring, whereas others, such as Pharmak (Ukraine), would be able to increase their price by 6–379%.
However, for the antihypertensive bisoprolol, the result is quite different. The declared price of the original drug Concor (Takeda, Japan and Merck KgaA, Germany) is lower than the average of the three lowest wholesale prices in the reference countries, so that, following the calculation, all manufacturers would be able to increase the value by 21–168%, and the original's price could rise by 59%.
For the original drug Renitek (enalapril, Merck & Co (US)), available in packages of 14 and 28, most generics registered in Ukraine are in packs of 20 and 30. In this case, the maximum wholesale prices for packs of 20 and 30 are based on the cost of 28-drug packs in reference countries.
For hypoglycaemic drugs, all examples that were analysed (metformin, gliclazide, and glimepiride) had declared wholesale prices exceeding the mean value of the three lowest wholesale prices for the reference countries. In particular, with glimepiride, manufacturers could be forced, on average, to reduce their price to a quarter of its current level. According to Apteka, forced reductions such as these might lead some manufacturers not to participate in public procurement.
Outlook and implications
In the opinion of the author of the review, the revised draft resolution has resolved a number of shortcomings in previous methodologies for calculating marginal wholesale prices, while changing little else in the main body of the proposal and leaving many key issues unresolved. He suggests further amendments should focus on developing effective mechanisms for limiting retail prices of drugs from Ukraine-resident manufacturers.
The proposed reference pricing mechanism is intended for use on drugs whose costs are reimbursed by the state during ambulatory use, but not for public procurement, which is covered by a separate draft resolution and working group (see Ukraine: 12 August 2016: Ukrainian MoH forms working group on reform of public procurement of medicines).
The original draft resolution was discussed at the inaugural meeting of the reference pricing working group, and initial amendments were incorporated at a subsequent meeting (see Ukraine: 14 July 2016: Ukrainian government publishes amended draft resolution on reference pricing). Under the newly amended draft resolution, if passed, changes to pricing would be implemented by 1 October 2016. These procedures are intended to complement reforms to Ukraine's national procurement and reimbursement strategies (see Ukraine: 2 February 2016: Ukrainian MoH prepares national drug policy plan). The Ukrainian cabinet previously abandoned a scheme for reference pricing, in order to stabilise drug prices during Ukrainian currency fluctuations (see Ukraine: 7 July 2015: Ukraine's cabinet regulation removing reference pricing and correction of prices to reflect exchange-rate changes comes into effect). The new scheme is intended to reduce geographical price fluctuations, improve transparency, and address recent issues of overpricing and low availability of certain drugs in some areas.