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Impact of dual pricing on pharmaceuticals in Spain

07 December 2015 Floriane Reinaud

The Royal Decree of April 2012 allows the government to apply dual pricing for pharmaceuticals when the price requested by the pharmaceutical company is believed to be too high. Dual pricing consists of setting two prices for one product: one for the public and another for the private sector. Prices for pharmaceuticals intended for the private sector are higher and are paid out of pocket by patients. The retail price intended for the private sector is nevertheless the price considered as the list price in Spain. Pharmaceuticals intended for the public sector (included in the reimbursement list) are priced at a lower level. In the end, the public can be considered as the reimbursement price.

Our PharmOnline Internaltional (POLI) service has allowed us to identify the number and type of pharmaceuticals that are and therefore could be impacted by dual pricing in Spain.

A system still used for a limited number of products overall but innovative products in the oncology and infectious diseases therapeutic areas more likely to be affected.

By the end of August 141 molecules accounting for 205 brand names and 333 presentations currently authorised in Spain were priced under the dual pricing system. Overall, this account for a very limited number of presentations available in Spain (1.2%) but this system could potentially be increasingly used in the future by the Spanish government.

Our data show that dual pricing applies to all types of pharmaceuticals, branded or generics, and intended for the retail or hospital markets. However, the majority of the drugs (65.7%) that are dual priced are either branded pharmaceuticals (55.5%) or branded generic products (10.2%). To a lower extent, generics or over-the-counter products are also affected.

Among dual-priced products, three therapeutic areas are primarily affected:

  • Respiratory system: genericsed drugs or drugs that are not necessarily innovative account for the majority of the drugs included in this domain.
  • Antineoplastic and immunomodulating agents: all but one of the drugs included in this domain are approved by the EMA, and at least 90% are still protected by patent.
  • Anti-infective for systemic use: in this domain, the majority of the drugs are also approved via the centralized procedure and still protected by patent.

A few examples of drugs for which dual pricing apply are available in the table below.

When implemented, dual pricing allows the government to negotiate significant discount
Public prices are rarely made publicly available. When available, IHS Life Sciences analysed differences between public and private prices. Price differences are rather large and easily average 20%. Within our sample, the smallest price difference experienced was 8.2%, with the largest reaching 58.4%.

A few examples are available in the chart below.

Dual pricing was implemented around 3 years ago and has started to be used by the Spanish government to limit pharmaceutical expenditure. It indirectly allows the government to negotiate "discounts" (reimbursement or public price in this case) and prevents at the same time list prices from being cut. Consequently, it does not trigger price cuts in other countries due to IRP rules.

This system will probably be increasingly used in the country, notably for new innovative and expensive products and more specifically in the oncology and infectious diseases therapeutic areas. For instance, the well-known breakthrough therapies Sovaldi (sofosbuvir, Gilead) and Harvoni (ledipasvir, sofosbuvir, Gilead) were both included into a dual pricing.

Floriane Reinaud is a principal life sciences analyst for IHS
Posted 8 December 2015

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