Pharmaceutical Pricing and Reimbursement in the Middle East and North Africa Region
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Pharmaceutical pricing and reimbursement in the Middle East and North Africa region A mapping of the current landscape and options for the future Panos Kanavos, Victoria Tzouma, Anna-Maria Fontrier, Bregtje Kamphuis, Georgia Colville Parkin & Shadi Saleh November 2018 Pricing and Reimbursement in the Middle East and North Africa region This research was commissioned via LSE Consulting which was set up by the London School of Economics and Political Science to enable and facilitate the application of its academic expertise and intellectual resources. LSE Consulting LSE Enterprise Limited London School of Economics and Political Science Houghton Street London WC2A 2AE (T) +44 (0)20 7955 7128 (E) [email protected] (W) lse.ac.uk/consultancy Pricing and Reimbursement in the Middle East and North Africa region Report authors Dr Panos Kanavos is Associate Professor in International Health Policy in the Department of Health Policy and Deputy Director of LSE Health, London School of Economics (LSE). Victoria Tzouma is Associate Director in Health Economic s and Policy at the Medical Technology Research Group/LSE Health, LSE. Anna-Maria Fontrier is Research Associate at the Medical Technology Research Group/LSE Health, LSE. Bregtje Kamphuis is Assistant Director in Health Policy at the Medical Technology Research Group/LSE Health, LSE. Georgia Colville Parkin is Research Associate at the Medical Technology Research Group/LSE Health, LSE. Professor Shadi Saleh is Professor of Health System and Financing, American University of Beirut. Copyright © 2018 by the Authors (P.G. Kanavos, V. Tzouma, A-M. Fontrier, B. Kamphuis, G. Colville Parkin, S. Saleh). ISBN: 978-1-909890-54-1 i Pricing and Reimbursement in the Middle East and North Africa region Acknowledgements This research was supported by the Pharmaceutical Research and Manufacturers of Americ a (PhRMA). The authors are grateful to the experts and stakeholders who provided their insights and expertise on the topics of pricing and reimbursement in the Middle East and North Africa region through survey responses and telephone interviews. An anonymized list of contributors is provided in Appendix 3. Experts on this list included Ms Rania Ashraf, Dr Gihan Hamdy El-Sisi, Ms Sanae Mousannif, Dr Yacine Sellam, and Dr Mohammed Wadie Zerhouni. ii Pricing and Reimbursement in the Middle East and North Africa region Table of contents Abbreviations vi Executive summary viii 1. Introduction 1 2. Methodology 3 2.1. Analytical framework 3 2.2. Systematic literature review 3 2.3. Primary data collection 6 2.4. Analysis 6 3. Healthcare and pharmaceutical spending 8 3.1. Healthcare expenditure and sources of financing 8 3.2. Pharmaceutical market size and expenditure 10 4. Pharmaceutical pricing policies 11 4.1. Pricing policies for pharmaceuticals 11 4.1.1. Pricing policies for in-patent pharmaceuticals 11 4.1.2. Pricing policies for off-patent pharmaceuticals 18 4.1.3. Pricing policies for generic pharmaceuticals 18 4.1.4. Pricing policies for locally manufactured pharmaceuticals 23 4.1.5. Pricing policies for multinational manufacturers 24 4.2. The role and key features of ERP 24 4.2.1. Price calculation 24 4.2.2. Reference basket 25 4.2.3. Prices used to inform ERP 25 4.2.4. Sources of information for pricing decisions 25 4.2.5. Price revisions 25 4.2.6. Price adjustments 27 5. Coverage and reimbursement policies and procurement 31 5.1. Reimbursement & Procurement 31 5.1.1. In-patent pharmaceuticals 31 5.1.2. Off-patent pharmaceuticals 35 5.1.3. Generic pharmaceuticals and biosimilars 38 5.2. Generic prescribing and substitution 41 6. Industrial policies – Support of local and international industry 44 6.1. Manufacturing activities 44 6.2. Supporting local and foreign manufacturers 48 6.2.1. Support of local manufacturing activities 48 6.2.2. Support of multinational manufacturing activities 50 7. Pricing and reimbursement in MENA countries: A synthesis 52 7.1. Issues relating to pharmaceutical pricing policies in the MENA region 52 7.1.1. Pricing policies and ERP 52 7.1.2. MENA ERP systems vs. ERP best practice 55 7.2. Issues relating to coverage, reimbursement and procurement in the MENA region 58 7.3. Issues relating to local industrial policies 61 iii Pricing and Reimbursement in the Middle East and North Africa region 7.4. Impact of pricing, reimbursement and procurement policies in the MENA region 61 7.4.1. Impact of Pricing Policies (ERP) on Prices in MENA Region 61 7.4.2. Pricing Policies and likely Access Barriers and Availability Concerns 64 7.4.3. Affordability issues 65 7.4.4. International implications of ERP 67 8. Policy options – What is the way forward? 70 8.1. How can the current pricing system become more effective or efficient and what steps are needed for that? 70 8.1.1. Interventions in the medium-term 70 8.1.2. Interventions in the long-term 79 8.2. Transitioning from ERP to VBP 85 8.2.1. The philosophy of ERP in the context of pharmaceutical policy and to reimbursement 85 8.2.2. Dealing with innovative and niche products 86 8.2.3. Requirements for the transition from an ERP to a VBP system 87 8.2.4. Is there a role for HTA in value assessment in MENA countries? 88 8.2.5. Re-thinking universal coverage and reimbursement 91 Bibliography 93 Appendix 1: Literature Review Strategy and Results 100 Appendix 2: Interview Discussion Guide 103 Appendix 3: Stakeholder Interview List 126 Appendix 4: Healthcare and pharmaceutical financing 128 Appendix 5: World Bank Income Classification 136 iv Pricing and Reimbursement in the Middle East and North Africa region Tables, figures, and boxes Table 1: Analytical framework and key endpoints.......................................................................... 4 Table 2: The 14 best practice principles of ERP ............................................................................. 7 Table 3: Health care expenditure and sources of health system financing, 2017 PPP$ 1 .................. 9 Table 4: Pharmaceutical expenditure and relation to health expenditure, 2016............................ 10 Table 5: Pricing criteria for price setting of in-patent pharmaceuticals in the MENA Region, 2018117 Table 6: Price setting of generic pharmaceuticals in the MENA Region, 2018 1 .............................. 22 Table 7: Salient features of ERP in the MENA Region................................................................... 28 Table 8: Reimbursement and procurement mechanisms for in-patent medicines, 2018*.............. 32 Table 9: Reimbursement and procurement mechanisms for off-patent medicines, 2018* ............ 37 Table 10: Reimbursement and procurement mechanisms for generic medicines* ........................ 40 Table 11: The extent of biosimilar readiness in MENA countries................................................... 41 Table 12: Generic Prescribing and Substitution* ......................................................................... 43 Table 13: Summary of evidence on the state of the art in local manufacturing activities .............. 45 Table 14: Support for local manufacturers .................................................................................. 48 Table 15: Support for multinational manufacturers ..................................................................... 50 Table 16: External Price Referencing in MENA Countries: Adherence to the 14 Best Practice Principles ................................................................................................................................... 57 Table 17: Pricing policies and their international implications: Summary of available evidence..... 68 Figure 1: Medium- and long-term Pricing Policy Strategy in the MENA region .............................. 71 Figure 2: Flowchart of the SLR relating to the peer-reviewed literature only .............................. 102 Box 1: Administrative simplicity and transparency - Options for MENA countries ......................... 72 Box 2: Appeals process: Options for MENA countries .................................................................. 73 Box 3: Selection of reference countries: Options for MENA countries ........................................... 75 Box 4: International implications of ERP implementation – Options for MENA countries ............... 76 Box 5: Use of publicly available ex-factory prices - Options for MENA countries ........................... 77 Box 6: Choice of price based on ERP principles – Options for MENA countries .............................. 78 Box 7: Dealing with exchange rate fluctuations – Options for MENA countries ............................. 79 Box 8: Objectives of ERP - Options for MENA countries ............................................................... 81 Box 9: Focus of ERP on in-patent products - Options for MENA countries..................................... 82 Box 10: ERP and other methods to determine reimbursement - Options for MENA countries........ 83 Box 11: Respecting patent status – Option for MENA countries ................................................... 84 Box 12: Alignment of ERP with other tools – Options for MENA countries..................................... 85 Box 13: The role of ERP in the context of pharmaceutical policy .................................................. 86 Box 14: ERP and innovative/niche products ................................................................................ 87 Box 15: Transitioning from an ERP to a VBP system..................................................................