Pharmaceutical Pricing and Reimbursement in Greece

3,204 views

Published on

A proposal for a system of pharmaceutical pricing and reimbursement in greece

Published in: Health & Medicine
0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
3,204
On SlideShare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
0
Comments
0
Likes
1
Embeds 0
No embeds

No notes for slide

Pharmaceutical Pricing and Reimbursement in Greece

  1. 1. Pharmaceutical Pricing and Reimbursement in Greece25/5/2011 ΣfΕΕ 1
  2. 2. Greek Pharmaceutical Market Today Product Money Everything controlled by government (cartel?)25/5/2011 ΣfΕΕ 2
  3. 3. Pharmaceutical Pricing Today (retail market, 0% co-pay) • Pharma Revenue: Ex-Factory – 4% Rebate91.08 • Ex-Factory: Pharma -> Wholesaler94.88 • Wholesale: Wholesaler -> Pharmacy100.00 • 5.4% markup • Pharmacy Margin135.00 • 35% markup • Retail: Pharmacy -> Social Security OR Private Payer143.78 • VAT 6.5%25/5/2011 ΣfΕΕ 3
  4. 4. Pharmaceutical Reimbursement Today• Negative Reimbursement List – All other medicines reimbursed• 3 levels of co-pay for reimbursed medicines based on combination of medicine & disease – 0% – 10% – 25%25/5/2011 ΣfΕΕ 4
  5. 5. Contradictions to Free Market Principles that Exist Today• Legislated prices, margins and discounts between two private businesses – Government created cartels• Legislated cost burdens between two private businesses – Who pays for goods shipment – Who pays for insurance – Who pays for destruction of expired goods• Government should not legislate any of these25/5/2011 ΣfΕΕ 5
  6. 6. Proposal A Win – Win Solution25/5/2011 ΣfΕΕ 6
  7. 7. Government Benefits• No medicine shortages• Total Public Pharmaceutical Expenditure will gradually reach approximately 1% of GDP• Decrease in social security waste• Increase in VAT• Increase in Income Tax• IMF & EU goals for free markets• Benefits for employment in pharmaceutical & other industries – Increased contributions to social security• Clearer horizon for pharmaceutical investment in research & development• Ability to fund social policy to help patients who need lower co-pay25/5/2011 ΣfΕΕ 7
  8. 8. Prerequisites• Must Have: Full Electronic Medicine Supply Chain Tracking – All medicines bought by the government must be recorded electronically – All medicines sold by pharmacies must be recorded electronically – All medicines sold by wholesalers and private clinics must be recorded electronically – All medicines sold by pharma industry must be recorded electronically – Monthly updated data for calculating % of medicines sold that are reimbursed• Useful to Have: Full Electronic Patient Health Record – Would allow reliable and verifiable indication based reimbursement – Would lead to savings in other areas of healthcare25/5/2011 ΣfΕΕ 8
  9. 9. Pharmaceutical Pricing25/5/2011 ΣfΕΕ 9
  10. 10. Pricing Goals• Government should be involved and control prices only where government pays• All prices that government does not pay should be “free” – In essence “Free” prices are not free – Market forces shape prices more efficiently than any forced control: • Competition • Customers • Distribution channels • European Pricing - Parallel Import / Export • Internal Company Policies – Free prices will force society (physicians & patients) to become more price sensitive25/5/2011 ΣfΕΕ 10
  11. 11. PricingFree Price Reimbursementfor private market buyers for government only• Pharma Company Sets Wholesale • Social Security will calculate reimbursed wholesale Price (Price to pharmacist) and price – E.g value based price, international reference price Suggested Retail Price – all prices will be recalculated once a year – Pharma company may offer discounts • New products reimbursed when price is available – Wholesalers may offer discounts in at least one other European country – Pharmacists may offer discounts – quick access to new medicines for patients – new products repriced every quarter for first 12 – Private clinic may offer discounts quarters (3 years) to capture new cheaper countries – Public hospitals must transfer • Reasonable pharmacy markup/discount discounts to social security • Social Security will reimburse private clinics at• Published online in official SfEE wholesale price + 5% price bulletin quarterly • Public Hospitals will purchase at hospital price – SfEE publishes next quarters prices • Social Security will reimburse public hospitals at online two weeks before quarter their purchase price + x% starts • Reimbursed wholesale price cannot be higher than – Companies responsible for free wholesale price (RWP <= FWP) submitting prices electronically to • Prices not published SfEE two weeks before publish date25/5/2011 ΣfΕΕ 11
  12. 12. Reimbursed Money Flow Government money Private money (margins and prices not controlled by government)25/5/2011 ΣfΕΕ 12
  13. 13. 3 part Pharma Industry Rebate • Euro amount for each unit reimbursed Fixed • Difference between free wholesale price and reimbursed Amount wholesale price • % of reimbursed wholesale price • Based on proportion of total units sold reimbursed Variable % • As % of units reimbursed falls from 100% this variable rebate % increases 4% Fixed • 4% of reimbursed wholesale price Rebate • Same as today25/5/2011 ΣfΕΕ 13
  14. 14. Rebate Paid by Pharma Companies (does not include price difference part) 16% 14% Rebate % of reimbursed price 12% 10% 8% 6% 4% 2% 0% 50% 95% 90% 85% 80% 75% 70% 65% 60% 55% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 100% % of total units sold reimbursed25/5/2011 ΣfΕΕ 14
  15. 15. Variable Rebate Mechanism• At each quarter close government will calculate total number of each medicine purchased by social security and will compare to total sales provided by pharmaceutical companies to EOF.• For every 1% point of non-reimbursed sales rebate will increase by 0.1% – 0% non-reimbursed sales = 0% + 4% rebate – 100% non-reimbursed sales = 10% + 4% rebate25/5/2011 ΣfΕΕ 15
  16. 16. Price System (25% free price premium, retail market, 0% co-pay, 65% reimbursed sales)Today Reimbursment Money FlowNet Rebate 4% Net Rebate 7.5% • Pharma Revenue •Pharma Revenue: Ex-Factory – 4% Rebate91.08 • Ex-Factory – Rebate = 25 + 4% + 3.5% = 32.5 •Ex-Factory: Pharma -> Wholesaler • Ex-Factory: Pharma -> Wholesaler94.88 •Wholesale: Wholesaler -> Pharmacy • Wholesale: Wholesaler -> Pharmacy •5.4% markup100.00 125.00 •Pharmacy Margin • Retail (before VAT): Pharmacy -> Social Security •35% markup • 25% markup on Reimbursed wholesale price135.00 150.00 •Retail Price: Pharmacy -> Social Security OR Private Patient • VAT (Social Security does not pay VAT)143.78 •+VAT 6.5% Total Gov Spend = 150.00 – 32.50 rebate = 117.50 (vs 135)25/5/2011 ΣfΕΕ 16
  17. 17. Price System (25% free price premium, 100% contribution, 65% of units sold reimbursed)Free Market Money Flow Reimbursed Money Flow Reimbursed Wholesale Price = 100 Net Rebate 7.5% • Pharma Revenue • Pharma Revenue • =Ex-Factory – Rebate = 25 + 4% + 3.5% = 32.5 • Ex-Factory: Pharma -> Wholesaler • Ex-Factory: Pharma -> Wholesaler • Wholesale: Wholesaler -> Pharmacy • Wholesale: Wholesaler -> Pharmacy125.00 125.00 • Pharmacy Margin • Retail (before VAT): Pharmacy -> Social Security168.75 • Suggested 35% markup 150.00 • 25% markup on Reimbursed wholesale price • Retail Price: Pharmacy -> Private Patient • VAT (Social Security does not pay VAT)190.69 • VAT 13% Total Gov Spend = 150.00 – 32.50 rebate = 117.50 (vs 130 today)25/5/2011 ΣfΕΕ 17
  18. 18. Co-payment• Government will legislate social security contribution. – Patient co-payment will be on free price • Will give a small benefit for social security • This benefit will finance the necessity for some populations to have reduced co-payment25/5/2011 ΣfΕΕ 18
  19. 19. Rebate & Sales Example (retail market, fixed units, 25% free price premium, 0% co-pay) 180,000 0% 160,000 -2% 140,000 -4% 120,000 -6% Pharma Sales (Before Rebate) 100,000 Pharmacy Saleseuro Total Pharma Rebate -8% 80,000 Total Gov Expenditure (After Rebate) Total Pharma Revenue (After Rebate) -10% 60,000 Rebate % -12% 40,000 20,000 -14% 0 -16% 100% 95% 90% 85% 80% 75% 70% 65% 60% 55% 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% % of total units sold reimbursed 25/5/2011 ΣfΕΕ 19
  20. 20. Generics• The use of generics could significantly reduce government pharmaceutical expenditure IF1. There is ongoing official accreditation to ensure quality of generic medicines2. There is full implementation of generic pricing rules (IMF says 60%)3. Price sensitivity in society increases by the application of this proposal• When a molecule has gone off patent and generic competition begins, the value of the contribution of social security can decrease. – For example: social security contribution can move to 60% of prototype product reimbursed wholesale price for all medicines with that active ingredient25/5/2011 ΣfΕΕ 20
  21. 21. Issues not yet resolved• Pharmacy Reimbursed Margin – Options could include: • Fixed markup • Variable discount on total amount purchased • Variable discount on how fast payment is made – 25% markup used here for examples as mentioned in IMF document: • reduced profit margin of pharmacies on retail prices directly to 15-20 percent or indirectly through rebates (25% markup = 20% margin)• VAT – For government VAT is in one pocket out the other – For private payers VAT is revenue for government – State buyers should not pay VAT25/5/2011 ΣfΕΕ 21
  22. 22. Reimbursement25/5/2011 ΣfΕΕ 22
  23. 23. Reimbursement Goals1. No reimbursement for lifestyle ailments2. Reimbursement for other illnesses with varying levels of patient co-payment3. Incentive for physicians, pharmacists and patients to prefer treatments that represent better value for money25/5/2011 ΣfΕΕ 23
  24. 24. 1. Negative List• Certain products are not reimbursed – Lifestyle – Over the counter – Inadequate efficacy (do not work)• Reimbursement for certain diseases with co-pay – For some patients these products are not lifestyle treatments but chronic illness treatments – Some products made lead to significant savings in other health care expenses (e.g. smoking cessation)25/5/2011 ΣfΕΕ 24
  25. 25. 2. Reimbursement Contribution Social security contribution should also have social criteria (patient ability to afford, age group, etc)Contribution categories:• Full contribution for chronic life threatening diseases / therapies• Large contribution for serious diseases / therapies• Medium contribution for less serious diseases / therapies• Low social security contribution• Very low social security contribution (similar to Belgian reimbursement system)25/5/2011 ΣfΕΕ 25
  26. 26. 3. Incentive for lower cost• Create an incentive for cheaper therapies with patients as drivers – Social security must increase price sensitivity in patients who will then influence physicians and pharmacists – Co-payment is the only way to incent patients to select cheaper medicines25/5/2011 ΣfΕΕ 26
  27. 27. Government Benefits• No medicine shortages• Total Public Pharmaceutical Expenditure will gradually reach approximately 1% of GDP• Decrease in social security waste• Increase in VAT• Increase in Income Tax• IMF & EU goals for free markets• Benefits for employment in pharmaceutical & other industries – Increased contributions to social security• Clearer horizon for pharmaceutical investment in research & development• Ability to fund social policy to help patients who need lower co-pay25/5/2011 ΣfΕΕ 27
  28. 28. Contradictions to Free Market Principles that Exist Today• Legislated prices, margins and discounts between two private businesses – Government created cartels• Legislated cost burdens between two private businesses – Who pays for goods shipment – Who pays for insurance – Who pays for destruction of expired goods• Government should not legislate any of these25/5/2011 ΣfΕΕ 28

×