A legal amendment has come into force in Latvia that brings about changes to the international reference-pricing system for drugs in Latvia, among other things.
IHS Global Insight perspective | |
Significance | A new legal amendment has reportedly come into force in Latvia, which includes a change to the international reference pricing system for drugs in Latvia. |
Implications | Although these are not major changes in themselves, the growing importance of international reference pricing (IRP) means that they will be followed closely by the pharmaceutical industry. |
Outlook | The planned changes to the IRP system are likely to result in a more flexible system, while in terms of their impact, as a small group of the lowest priced countries in the EU is being used, it is unlikely to mean a particular change to the prices in Latvia. |
Important change to IRP comes into effect
A legal amendment has come into force in Latvia that introduces several important changes connected with pharmaceutical pricing and reimbursement. According to reports from the Latvian pharmaceutical news provider Farmacija.lv, the amendment will mean that the system of international reference pricing (IRP) in place in the country will be changed. Instead of the current situation in which prices of reimbursable drugs cannot exceed the three lowest prices in other European member states in all European Union member states, in order for medicines or medical devices to be considered for reimbursement, their prices will have to be no higher than the third lowest ex-manufacturer or wholesale price in the Czech Republic, Slovakia, Romania, Hungary, and Denmark, and not higher than in Estonia or Lithuania. Prices are to be updated annually on 1 February.
The amendment also means that if a pharmacy does not have the cheapest equivalent medicine or medical device available, it will be possible for the pharmacist to provide the patient with the next cheapest medicine or medical device; the pharmacist will be obliged to report to the health inspectorate of the unavailability of a medicine or medical device.
Favourable change in criteria to assess clinical efficacy
The amendment also provides for the inclusion of time to disease progression as a criteria to be considered when the clinical efficacy of a drug is being assessed, and not just overall survival. This, the source stated, should increase access to innovative medicines that are "therapeutically and economically" justified for reimbursement. In the same vein, there is also provision for reimbursement for individual patients.
Finally, the amendment means that in order for companies applying for inclusion on the reimbursement list to be exempt from paying annual maintenance fees to remain on the reimbursement list, the turnover for the drug concerned will have to be LVL2,000 (USD3,735) and not LVL1,500 as it is today.
Outlook and implications
This amendment was initially mooted as far back as July, and certain provisions are a direct response to some problems that have arisen within the reimbursed drug sector in the country this year. For example, the provision allowing pharmacists to dispense the next cheapest medicine or medical device in the event that the cheapest is unavailable comes after the problems that were experienced in pharmacies after the implementation of the rule making it mandatory to dispense the cheapest drug in a therapeutic group, with pharmacies frequently not being able to dispense the cheapest one, because of a lack of stocks (see Latvia: 7 March 2012: Latvia's New Outpatient Reimbursement Regulations Cause Complications). This is a positive development for generics producers in particular, as it is likely to allow for a greater number of medicines to gain more market share, with a degree of flexibility on price – although only minimal one.
The changes to the IRP system mean that Latvia will be referencing against a smaller group of low-price countries, and therefore it is likely that it will have a bit more flexibility and the system will be less cumbersome. Annual price referencing means prices will not be updated as often as in some countries; in Slovakia, for example, it takes place on a quarterly basis.