ISPOR Croatia Chapter: Croatian Pricing & Reimbursement Overview

1. ISPOR Croatia Chapter: Croatian Pricing & Reimbursement Overview ISPOR Belgrade conference, March 2009. Viola Macolić Šarinić

2. Croatian Pricing & Reimbursement Overview ISPOR Belgrade conference, March 2009.

3. ISPOR Croatia Chapter ISPOR Belgrade conference, March 2009.

4. ISPOR Croatia • Was established in May 2008 under the name Croatian Society for Pharmacoeconomics and Outcome Research – ISPOR Croatia. • 32 members • academia, research institutes, and the pharmaceutical industry • medical doctors, pharmacists • Executive Board: • Pero Draganic, MD PhD – president • Ljubica Besker-Ivasovic MD PhD –president elect • Viola Macolic-Sarinic MD M.Sc - secretary

6. ISPOR Croatia • Internal education for the members • Lecture topics (2008): • Introduction in Pharmacoeconomics • Outcome Research • Incremental Cost-Effectiveness Ratio • Main Principles of Conduction of Pharmacoeconomics Analyses • ISPOR Book of Terms – translation into Croatian language • Development of Pharmacoeconomic guidelines • Workshops

8. Croatian Pricing & Reimbursement Overview ISPOR Belgrade conference, March 2009.

9. General Market Overview • - More than 80 marketing authorization holders • All major pharma companies present • 3 domestic generic companies • Only one (state-owned) health insurance company, so far • A & B reimbursement list: without and with co-payment • A special fund for rare-disease and expensive medications

10. Major Problems Pricing - lack of stimulation for innovation; - high prices of generics. Reimbursement - lack of transparency and EBM use; - insufficient understanding of Health Technology Assessment; - no clear guidelines within reimbursement process. Drug Prescription & Dispensing - no incentives for generic use – only penalties for budget overruns; - co-payments

12. Current Decision Process • National Level • Only one (state-owned) health insurance company (HZZO); • Both pricing and reimbursement levels depend solely on HZZO; • Few legislative acts define reimbursement processes and pricing • A new Ordinance from May 2008 (Gazette 60/08) includes • pharmacoeconomic analysis • Private insurances – just additional health insurance

13. Current Decision Process(cont.) • Regional Level • administrative role • decision making process is mostly centralised

14. Current Decision Process(cont.) • Hospital Level • Independent Hospital Formularies • own decision making boards (Hospital Drug Committees); • Separate negotiations with state health insurance for hospital drug budget • Hospital budget is limited and is negotiated on the basis of: • previous period expenditures • assessment of expected drug expenditures for the negotiating period

17. Short Description of Reimbursement Process • Main principles defined by law (Acts on pricing, including onto the list • A or list B, launching, marketing) • MAH applies for the reimbursement • ↓ • Health Insurance Drug Committee (independent experts) - application • assessment • ↓ • Health Insurance Board of Directors – final decision

18. Short Description of Reimbursement Process (cont.) • MAH APPLICATION • wholesale price proposal • compared with reference countries • level of difference (price difference year – to - date) • pharmaco-toxicological expert opinion • clinical expert opinion • pharmacoeconomic analysis;

19. Short Description of Reimbursement Process(cont.) • MAH APPLICATION • applications are reviewed on regular basis by the Health Insurance Drug Committee and either accepted, rejected or sent back for recalculations; • DECISION MAKING • accepted applications are forwarded to the Health Insurance Board of Directors (various influences involved into the final decision) Generic drugs – shortened procedure - approvals 6 – 8 times a year Innovative drugs: “bulk” approvals usually once or twice a year!

20. “Disadvantages” of pharmacoeconomic analysis use - Due to the substantial impact of new drugs on the health budget a price is a principal guide for successful reimbursement ! - Cost minimization analysis generally used, often inadequately ! - Cost effectiveness analysis often misinterpret (generally associated with substantially increased expenses) ! • Problems with acceptance of innovative drugs

21. Funding Mechanisms • All levels of the health insurance generally funded from the state budget • Co-payment introduced but not fully cleared • DRG based reimbursement list is being developed

22. Refferent Countries and Resulting Prices - 11% - 16% - 30,67% - 31% …innovative drugs to 80-90% level of AVG refferent price! … generic drugs to 60% level of AVG refferent price!

23. Timing • Drug Committee - monthly meetings • Generic and parallel drugs 3-6 months • Generic drugs with lower price – regularly approved; - Innovative drugs up to one year (depends on the time of submission)!

26. Critical review • Burden of new drugs extremely high even for the richest countries Spending for Medicare Part B, which covers drugs administered in a physician's office setting (of which cancer treatments make up a large proportion), rose from $3 billion in 1997 to $11 billion in 2004. Nelson R. N Engl J Med. 2009 Cancer patients with private health insurance are at risk for huge medical debts, personal bankruptcy, and delaying or forgoing treatment. Mulcahy N. Medscape Medical News, 2009

27. Critical review(cont.) • LIMITATIONS • In qualitative assessment of applications • APPROPRIATE WEIGHT OF OUTCOMES • ISOLATED ASSESSMENTS • DATA INTERPRETATION • DATA TRANSFERABILITY ACKNOWLEDGEMENT Of concern to health economists, said Dr. Bach, is that, at least in some cases, the cost of oncology drugs appears to be rising faster than the health benefits associated with them. Several experts have suggested a pattern of "diminishing returns," for example, in the treatment of metastatic colorectal cancer. Nelson R. N Engl J Med. 2009

28. Critical review (cont.) • LIMITATIONS • In final decision • SOCIO-ECONOMIC INFLUENCE • POLITICAL INFLUENCE • DATA INTERPRETATION • OTHER INFLUENCES

29. Future Developments MAGIC SOLUTION – hardly to be expected!

30. Future Developments (cont.) • financial ability insuficient to follow growth of drug expenditures • more (private) insurance companies; • higher impact of external fundings (co-payments, funds, additional insurance, etc.) • efforts for better expenditure control: • more precisely rules definitions • strenghtening of the pharmacoeconomy role • HTA Agency • education on all reimbursment levels

31. Potential Future Developments in HTA • Following has to be enacted: • clear guidelines for analysis conduct; • types of analysis stated; • clear perspective of analysis; • discounting rate; • financial tresholds have to be decided upon (CUA & CEA).

32. Authors Marijo Vukušić Marinko Bilušić Viola Macolić Šarinić