IHS Global Insight Perspective | |
Significance | The update to the Serbian national health insurer's drug list, introduced in March, includes 250 new generics, while the total value of drug reimbursement provided by the insurer increased by 24% y/y in 2009. |
Implications | The increasing value of drug reimbursement in Serbia, and the rise in the volume of pharmaceuticals reimbursed, is a reflection of the growth of the pharmaceutical market as a whole in the country. Meanwhile, measures in the updated drug list are intended to result in price cuts, but the exchange rate adopted by the Serbian government for the setting of drug prices is expected to result in across-the-board price rises. |
Outlook | The Serbian pharmaceutical market is growing dynamically, and the policy enunciated by the country's health insurance provider specifies generic substitution wherever possible, so that it can be seen as a welcoming market for generics producers, and a more challenging market for innovative drug makers. However, the market's dynamic growth and strategic importance in regional terms mean that most companies will seek to increase their involvement within it in the future. |
Serbian RZZO Puts 250 New Generics Onto Drug List in March
The Serbian national health insurance fund (RZZO) has put an update of its drug list into operation in the country—following acceptance by the Serbian government in early March—which includes an additional 250 new generic drugs. Of these, some 88 new drugs have been added to category A of the drug list: this refers to drugs issued on prescription, for which a fixed co-payment is charged, and which are otherwise fully covered by the RZZO. Some 69 new drugs have been added to category A1, which covers drugs that have alternatives category A, and are therefore partially reimbursed (at specific percentage levels). A total of 89 new drugs have been added to category B, (drugs fully reimbursed in hospitals), while in the case of category C (products with specific prescription procedures, such as cancer medicines), three new drugs have been added. Finally, in the case of category D (diagnostic and therapeutic agents not registered in Serbia, requiring special authorisation for import), seven new drugs have been added.
Plavix Reimbursement Reduced, Novo Nordisk Insulin Gains Reimbursement
The RZZO gives the specific example of Sanofi-Aventis' antiplatelet drug Plavix (clopidogrel), for which reimbursement (for a 28-tablet package) has been reduced from 1,200 dinars (US$16.06) to 350 dinars. According to RZZO director Svetlana Vukajlovic, quoted by Serbian news provider Blic, the price of a 28-tablet package of Plavix in Serbia has been reduced from 45 euro (US$60.1) to 15 euro, because the producer was compelled to lower the price. Meanwhile, among the drugs that have been removed from the list is Serbian generics producer Hemofarm's insulin, due to the fact that the company has decided not to extend its registration, reports Blic. Instead, Danish company Novo Nordisk's Insulatard (insulin) is to be reimbursed by the RZZO.
New List Brings in Price Reductions, But New Exchange Rate Puts Savings Into Doubt
The RZZO intends to revise its drug list twice yearly, and include any new medicines that are cheaper than the existing ones on the list, reports Blic. According to Svetlana Vukajlovic, competition has been encouraged between manufacturers in order to help bring down prices, while the addition of new generics on the list will also have the effect of price reduction. The price of drugs in Serbia is being referenced against the price of most drugs in most countries in the region, Vukajlovic told the source, and she stated that the present phase of price lowering will result in savings of 80 million dinars per month. However, this prediction is put into doubt by the fact that the Serbian government has recently passed a decree on the formation of medicine prices, which is based on a euro exchange rate described as "unrealistic" by Dragomir Marisavljevic, president of the Serbian Association of Pharmaceutical Producers, as quoted in Serbian newspaper Danas. According to Marisavljevic, the result of the decree will be a 7.6% across-the-board increase in drug prices.
Value of Drug Reimbursement in Serbia Increases 24% in 2009
Meanwhile, the RZZO has reported that in 2009, the value of the reimbursement provided for medicines in Serbia was 26.8 billion dinars, which represents an increase of 24% year-on-year (y/y). In volume terms, the total number of medicine packages reimbursed by the RZZO in Serbia during 2009 amounted to 85.9 million, which represents a rise of 4.9% y/y. The number of prescriptions issued in 2009 amounted to 59.3 million, an increase of 5.1% y/y. There was an increase in the amount that patients paid in fixed co-payments in 2009 to 1.5 billion dinars, compared with 813.5 million dinars in 2008; this is explained as a result of the increase in the rate of fixed co-payment from 20 to 50 dinars. Conversely, however, the amount patients had to pay out of their pockets for drugs in group A1—for which a percentage of reimbursement is provided—went down from 3.3 billion dinars in 2008 to 3.1 billion dinars in 2009. This is explained as the result of a significant number of drugs being transferred from category A1 to category A during 2009. The therapeutic area for which the largest number of prescriptions was issued in 2009 was cardiovascular diseases, having 24.6 million prescriptions issued, with the cost of these drugs amounting to 10.5 billion dinars.
Outlook and Implications
As demonstrated by the figures provided by the RZZO for 2009, the Serbian pharmaceutical market is growing as the investment of the Serbian state in drug reimbursement continues to increase. For generics producers, the Serbian market is particularly attractive, as it will certainly remain a policy priority of the Serbian ministry of health and the RZZO to continue adding new, cheaper alternatives to its list. It is likely that local producers will be more negatively affected by the policy of continuing price cuts, as they are more reliant on the domestic market for their revenue. Also, the exchange rate established by the Serbian government for the setting of drug prices is reported to be having a very detrimental effect on domestic producers (see Serbia: 10 March 2010: Serbian Pharmaceutical Industry Incurs Heavy Losses Due to Non-Compliance with Euro Exchange Rate, New Law Change Could Provide Boost).
For international, innovative pharmaceutical producers, the Serbian market is becoming a more difficult environment, as the situation with the reduction in reimbursement of Plavix demonstrates. The arrival of generic versions of the drug meant that Sanofi-Aventis had to reduce its price in Serbia in order to continue receiving reimbursement, according to the RZZO's director, quoted in Blic; Serbia observes its own patent regulations, and therefore allows generic versions of Plavix onto the market, although the drug's patent is only officially due to expire in 2013 in Europe, and 2011 in the United States. With the RZZO seeking to apply the same policy for all drugs, it can be expected that similar situations will occur in the future with other drugs for which there are generic versions available. However, with the size of the Serbian market due to increase in both volume and value terms, it will be a country in which most pharmaceutical companies—both generic and innovative—will want to be more involved.