Samia Saad

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Current Medicine Pricing Policies in EMR Jordan

Samia Saad Independent Consultant Medicines
Transparency Alliance (MeTA) Dead Sea, Jordan,
4th December 2007
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• OUTLINE
• Common Practice Medicine Price Setting Models
  in EMR Countries
• 2. Challenges with Common Practice
• 3. Possible Solutions
• - new tools strategies for price negotiation
• Recommendations
• Jordans 2004 Pricing Criteria revisions
• 6. Generics Policies in Jordan

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Why do we need Pricing Policies?
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Common Practice Medicine Price Setting Models
in EMR Countries
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Reference Price (Imported Innovator Medicines) -
Ref. Countries Strategies commonly used in EMR

• 1. Country of origin
• 2. Basket of European Countries that use Cost
  Effectiveness Analysis (Jordan)
• 3. Neighbouring countries- Saudi Arabia often
  used ( Jordan, GCC, Pakistan, Yemen)
• 4. India, Australia, NZ, Canada (Pakistan)
• 5. Cost of Therapeutic equivalents already in
  market (Pakistan, Yemen)
• 6. As many countries as possible from a varied
  panel of 32 countries (Saudi Arabia)
• 7. France (Tunis , Morocco)
• 8. BNF 30 (Sudan) BNF -(15-20) (Yemen)
• 9. Pharmaco - econmics tools such as CEA
  (Jordan, Egypt, Saudi Arabia)

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Pricing Down Mechanisms for Generics

• Set of price of underlying Innovator (with
  max. ceiling)
• Some countries give price advantage based on
  order of market entry, whereby each new entrant
  is priced 10 lower than previous generic
  Kuwait, Saudi Arabia, Bahrain)
• Some countries check lowest generic in market
  and reduce by set (Pakistan)

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Challenges in Price Setting for EMR countries
1. NDP implementation 2. Negotiation of
price of Innovator Brand no bargaining power
with pharma, what market can bear! 3. high
prices/cost new/high tech medicines
4. Re-pricing - withdrawal 5. Local agents can
be barrier 6. Volume and market
segmentation 7. Physician Medical Association
pressure to import high cost IB
medicines 8. Weak regulatory authority
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Recommendations

• 1. Volume flat price for new technologies -
  improved bargaining through
• - Collective bargaining through joint CIF
  medicine price setting (regional or
  subregional according to socioeconomic
  indictators). Use GCC experience as model.
• - better information sharing on price setting
  with neighbouring countries
• 2. Use registration of new medicines to reduce
  older brands (IB) from same pharma company (eg.
  Pakistan)
• 3. Better information on prices and price setting
  mechanisms in EMR countries (eg. through price
  lists on websites)
• 4. Reference countries
• - increase no. of countries (eg. Saudi Arabia
  model)
• - look South (eg. Australia and NZ where prices
  of IB lower than USA and Europe)
• 5. Use more pharmaco-economic tools such as CEA
• 6. Re-price whole class of therapeutic medicines
  NOT just individual medicine
• 7. Physician/Professional Association pressure
  EDUCATION, EDUCATION, EDUCATION!

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Structure and Process of Regulating Medicine
Prices

• Separate Pricing Department within JFDA (used to
  be joint committee for registration and
  pricing)
• JFDA has a bioequivalence studies committee that
  reports to the registration committee and
  pricing department
• On 29/1/2004 new pricing criteria was released
  available on JFDA website and JFDA official
  Gazette under which the HAI/WHO medicine price
  survey was conducted
• Modifications to pricing criteria were released
  by JFDA on on 09/05/2007

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JFDA Medicine Price Setting for Jordanian Market

• MSP/FOB/CIF price is set by the Pricing
  Department by implementing the official
  pricing criteria
• The mark ups of wholesalers and retailers are
  set by the Pharmacy and Drug Law bylaws
• Where no international reference price exists
  for new medicines, JFDA utilises
  pharmaco-economics (eg. cost- effectiveness
  analysis) to set the price

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Price Setting - INNOVATOR MEDICINES
Final price is taken from whichever of
mechanisms (1-4) below is less Pricing
Formula/cost analysis 1. Drug price is computed
from cost price on the basis of the
factory-listed price in the invoice issued from
the party designated to issue invoices (Article
2) 2. Cost of imported drug on the basis of the
selling price to public in Country of Origin
after deducting Value Added Tax there, if
applicable, and after deducting the profits of
wholesalers and retailers (Article 3) Reference
Price 3. Median price resulting from prices of
public in Britain, France, Spain, Italy, Germany,
Greece and the Netherlands computed from applying
Article (3) of this Regime. If not priced in all
of those countries, median price where available
in these countries is computed, provided number
thereof is not less than three countries.(Article
4.c) 4. Price computed from the export price to
the Saudi Market if available
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Additional Negotiation
If drug is registered and priced in Country of
Origin only and the application of Article 4.c
becomes impracticable, then it shall be priced on
basis of drug prices having close chemical
composition and/or therapeutic effect provided
the extent of this resemblance shall be
determined by the Committee for registering New
Drugs through Specimen No. (1), approved for such
purpose (Article 4.e), using pharmaco-economic
tools
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Price Setting - Generic Medicines

• The pricing of generic drugs manufactured by
  local companies in Jordan is directly linked to
  the prices of the underlying innovator drugs
• The same pricing policies relating to innovator
  drugs apply, such that the price should not
  exceed 80 of the price of the underlying
  innovator drug (Article 5) when registered and
  priced initially or upon re-pricing it by virtue
  of Article (15), whichever is less

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Supply Chain add-on Costs
Markups Wholesale19 Retail 26 Taxes
Duties 5 import tariff 4 sales tax Many
medicines, excluding antibiotics, are charged up
to 5 import fee, depending on country trade
agreements with Jordan, often resulting in a
cumulative mark-up of up to 70
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Trade Agreements

• Jordan has been a member of World Trade
  organisation since 11th April 2000.
• Important Existing Trade Agreements
• FTA with USA (17/12/2001)
• Association agreement with EU (1/5/2002) aims
  to create FTA with EU by 2010
• FTA with EFTA States (Iceland, Liechtenstein,
  Norway and Switzerland) 21/6/ 2001
• FTA with Singapore (16/5/2004)
• Since January 2006, agreements between Jordan and
  the EU as well as with EFTA countries have
  resulted in customs duties being reduced from 5
  to 0.

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Revision to Pricing Criteria - May 2007

• Germany has been replaced by Belgium in the
  basket of countries used to calculate median.
• JFDAs rationale
• Belgium has lower, more reasonable prices
• access to its prices is publicly available
• Further revisions will be discussed in the
  panel

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Generics Policies (I)

• Quality Assurance
• bioequivalence studies are required for generics
  at the time of registration
• Patents
• Patent Law 21 of 2001 is in force. In addition,
  the Unfair Competition and Trade Secrets Law 15
  of 2000 provides considerable protection for
  pharmaceutical products. Under this Law, the
  duration of data protection is for five years
  starting on the date of receiving marketing
  approval and covers products registered by
  foreign companies after the Law became enacted,
  regardless of whether or not the product is still
  in-patent.

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Generics Policies (II)

• Regulation Registration
• Bolar like provision exists - 9 months before
  patent expiry, generic manufacturers can submit
  bioequivalence test results and start the market
  application procedure. However, if the product is
  protected by Data Protection filed under Law 15
  of 2000, the JFDA does not accept any
  applications for regulatory approval
• Differential registration fees Innovator 1200
  JD ,Generic 200 JD
• Average period of registration is maximum of 180
  days from date of complete submission of
  documentation. No difference for Generics
• Registration period after which companies have to
  re-register their products
• Innovator after initial registration, innovator
  is re-priced after 2 years. Thereafter every 5
  years.
• Generic every five years for re-registration and
  re-pricing

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Generics Policies (III)

• Competition There are sufficient numbers of
  manufacturers (17 local) and importers for
  generic price competition to occur. Competition
  not fully free - JFDA regulates prices (sets
  maximum price ceiling for generics as 80 of
  innovator)
• Labelling Branded Generic names usually used,
  but active substances must be labeled on outer
  and inner packaging (no font size or position
  stipulated in law)

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Generics Policies (IV)

• Reimbursement
• In public sector, patient has to pay anything
  above cost of lowest priced generic (LPG). If
  patient obtains medicine under public health
  insurance from private sector they will only get
  reimbursed LPG price
• A committee for procurement tendering determines
  which drugs will be reimbursed in public sector
  and under national health insurance
• In general innovator not available in public
  sector so difficult to assess if co-payment above
  LPG leads to higher generic use

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Generics Policies (V)

• Prescribing Policies
• Generic prescribing is required in the public
  sector. In the private sector there no
  requirement or encouragement to prescribe
  generics and innovator is prevalent
• Physicians are not provided with sources of
  information for generic names
• Perception from physicians is that they prefer
  Innovator medicines, although they do have
  confidence in locally produced Generics

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Generics Policies (VI)

• Sales and dispensing policies
• - No laws allowing substitution
• No financial incentive exists for the Generics
  to be sold preferentially, since Innovator and
  Generic medicines have the same mark up
• Public Education
• - No official public education campaign or
  strategy on generic medicines to patients,
  pharmacists or prescribers.
• Overall, poor perception of generics.
• Jordan has a brand culture!

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Thank You!