ShareIn the evening of 9 September 2010, a proposed act on the reimbursement of drugs, foodstuffs intended for particular nutritional purposes and medical devices was sent for interministerial and public consultation (bill of 8 September 2010; further: the Reimbursement Act).
The proposed amendments are revolutionary and could lead to a radical and fundamental change in existing business models and in the rules on marketing activities, and could even affect sales structure. This primarily applies to manufacturers of drugs, foodstuffs intended for particular nutritional purposes and medical devices, and wholesalers, etc. The new regulation will also influence the professional practice of and the level of legal risk for doctors and pharmacists.
The major planned changes are given below:
| Proposed change | Business effects on firms |
|---|---|
| Introduction of fixed official sales prices, wholesale margins (5%) and retail margins for reimbursed drugs, foodstuffs intended for particular nutritional purposes and medical devices; prices will be set in administrative decisions (for 2 to 5 years) | Restriction or elimination of discounting practices among manufacturers, wholesalers and pharmacies; the change will also impact the structure and profitability of the sub-wholesale trade |
| Introduction of a new tax payable by an applicant that obtains a product reimbursement decision. The tax will be 3% of the official sales price multiplied by the number of unit packages sold in a year | Additional costs to businesses – introduction of the new tax, reduced profits from reimbursed products; need to restructure agreements with foreign parent companies or suppliers, to include the restructuring of existing transfer pricing models |
| Reimbursement limits being set according to a new comprehensive model based on DDD and introduction of so-called limit groups differentiated based on criteria such as similar indications, similar effectiveness, but also material effect on health, additional effect on health and intervention force | Potential improvement in reimbursement situation for innovative products; major complications in calculating reimbursement limits |
| Restriction on substitution at pharmacy level solely to drugs on the drug reimbursement lists, leading to exclusion of so-called back-door reimbursement | Products benefiting to date from back-door reimbursement will lose their competitive edge |
| Introduction of a ban on health institutions providing 24-hour or all-day health services purchasing drugs at a price higher than the official purchase price plus wholesale margin; this means that official drug prices will become maximum prices for hospital purposes | Change in the profitability of drug sales by way of tenders to hospitals |
| Indication of maximum (total) reimbursement budget of up to 17% of total NHS public funds; if this threshold is exceeded, an entity holding a decision on product reimbursement will have to refund to the NHS an amount corresponding to the share of reimbursement costs of its product (foodstuff, medical device) in the excess | Potential major restrictions on marketing activity aimed at abruptly increasing the trade in drugs; taking on a serious financial risk that cannot be fully controlled by the firm’s position; potential need to take out insurance; need to restructure agreements with parent companies and foreign suppliers |
| Introduction of negative reimbursement criteria, including a criterion for eliminating from reimbursement any drug that can be replaced by a change in the patient’s life style | Exclusion from reimbursement of specific products for specified patient groups, limiting reimbursement of lifestyle drugs |
| Lists of reimbursed products will be announced in legislative advertising (not in regulations as to date), and the basis for a specific drug (foodstuff intended for particular nutritional purposes or medical device) being included in the said legislative advertising will be a Minister of Health reimbursement decision | More frequent updating of reimbursement lists; faster and simpler entry of new drugs on/removal from lists |
| Introduction of new criteria for reimbursement decisions being overturned – based on these criteria a decision can be overturned if, e.g. the reliability and precision of calculations contained in the price application are challenged | Increased risk related to pharmo-economic calculations provided in price applications |
| Introduction of optional instruments for splitting economic risk between the payer and the firm (price-volume agreements), enabling, e.g. the official sales price to be made dependent on a set volume of trade in a reimbursed product | Potential for Minister of Health to create additional negotiating pressure; increase in market rivalry at reimbursement negotiation level |
| Imposition on doctors of an obligation to refund to the NHS an amount corresponding to the amount of undue reimbursement in the event of: (i) prescriptions being written with no justification on medical grounds; (ii) prescriptions being written contrary to service recipient’s entitlements | Negative incentive for doctors to prescribe reimbursed drugs; need for additional education of doctors in this respect |
| Introduction of severe fines to be imposed by the Minister of Health, e.g. (i) for applying non-uniform terms and conditions of agreements for trading in or manufacturing reimbursed products, (ii) for applying margins and prices other than those introduced by the Reimbursement Act, (iii) for failing to ensure the regular supplies needed to satisfy service recipients’ needs | Need to review all distribution agreements (not only those with wholesalers as to date) in terms of uniformity; increased legal risk arising from applying agreements leading to transfer of fee between different trading levels (e.g. agreements on promotional co-operation) |
| Tightening up and clarifying anti-corruption criminal provisions | Significant increase in legal risk arising from atypical marketing activities |
