The Perfect 'Pricing' Storm

Dear Readers,

so much is going on these days that it is difficult to decide what to discuss here (although a nice problem to have ;). We are having the "Perfect Storm" on the pricing front, first with Greece's major cuts, many companies now are withdrawing products, exchange rate devaluations with international price referencing consequences, than followed by Spain price cuts and other measures, twice actually, now Italy and France as per FirstWord article below. In addition to that the German health minister has brought foreward the new proposal of the reform of the drug law (Arzneimittelgesetz) that also will have major implications if approved. It will now go through discussions and voting in the Bundestag.


France, Italy announce drug pricing cuts
by Lianne Dane

France and Italy announced plans to reduce healthcare spending, with a particular focus on cutting drug prices in a bid to close budget shortfalls. France plans to reduce drug prices by 100 million euros ($122 million) this year, while the Italian government aims to cut off-patent generic drug prices by 12.5 percent from June 2010 until the end of the year.

Other measures introduced in Italy include the establishment of a drug tendering system beginning in 2011 where reimbursement of generics will be limited to the least expensive medicine within four therapeutic categories.

Commenting on France's decision, Noël Renaudin, an official in the health ministry, said "we have to stop the infinite growth in prices for drugs. It’s no longer reasonable.” The announcements follow a recent decree by Greek authorities to lower drug prices by about 25 percent in the country. Citigroup analysts predicted that drug price cuts in Europe's five largest economies could measure between 5 percent and 10 percent.

Commenting on the news, an international health policy expert from the London School of Economics, Panos Kanavos, said “in the face of adversity, commodities like drugs are an easy place for decision-makers to start [cutting] …. and there is considerable scope to cut in many cases." GlaxoSmithKline CEO Andrew Witty noted that "a few European countries hit us every year with big price cuts. I’m not terrified.”


mintorcia said...

Hi Ulf, Hope this can help. Michele

Medicine Price Cuts Proposed In Europe In 2010

(Price changes are complex, based on a mix of legislation and regulations. They can affect branded and generic drugs differently, and the timing of their implementation, even after they become law, often is unclear. A summary of some of the more important changes announced so far in 2010 follows.)

Status of Implementation

Price freeze; increase rebate to health insurance plans by drug companies temporarily to 16 percent from 6 percent; mandatory negotiations with pharma to discount drugs; implementation of cost-effectiveness studies; creation of a drug effectiveness agency.
Parliamentary approval needed for price freeze to start in August 2010. Higher rebates also start in August, slated to end in 2013.

7.5 percent price cut to branded drugs; 30 percent price cut to generics.
Decree passed in Cabinet; immediate implementation

Austerity measures announced, including savings of $100 million from 2010 drug budget. Government reimbursement rate for branded drugs reduced to between 10-20 percent from 35 percent for 110 drugs with "low therapeutic value"; rate for drugs with "high therapeutic value" is 65 percent, and for drugs with "moderate value" is 35 percent.
Next step unclear for austerity measures. Effective date for rate cut is April 2010.

12.5 percent price cut on generics and introduction of tendering.
Immediate price cut, tendering to start in 2011.

40 percent price cut on 300 branded generics; reference pricing; generic substitution.
Price cut implemented; other measures to start next year.

3 percent to 27 percent price cuts on branded products (average of 21.5 percent).

Generic substitution by pharmacists.
Still under discussion

Source: Companies, Barlay's Capital analyst report (6/1/10), previous coverage in "The Pink Sheet"

Okyalos said...

I am a pharmacist from Cyprus and i would appreciate whethre i could get some information regarding Italy´s reimbursement system.
If you want any data from Cyprus, let me know