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Earlier this year, important amendments to of Ordinance 10 (on
the terms and procedure for the payment of medicinal products) of
the Ministry of Health (MoH) ushered in some fundamental changes
that look set to significantly worsen the pricing and reimbursement
(P&R) landscape for pharmaceutical companies operating in
Bulgaria - and particularly for research-based companies. These
changes follow on from previous regulatory innovations introduced
in recent years, involving outcomes monitoring and discounting.
However, the latest changes move these on to a new level - and a
particularly challenging one for manufacturers.
Payment by results
Already from the beginning of 2017, there has been a system of
additional monitoring in place for new originator medicines
considered to lack evidence of therapeutic effectiveness, or which
are seen as having an unfavorable cost-benefit ratio. Monitoring is
supposed to take place in a defined group of hospitals, and the use
of these medicines is limited to these institutions.
The latest changes to Ordinance 10 move this process on even
further, and into the realm of payment by results. Marketing
authorization holders of drugs previously unreimbursed in Bulgaria
and without sufficient evidence of therapeutic efficacy are
obliged, under the amendments, to negotiate levels or reimbursement
with the National Health Insurance Fund (NZOK) based on the outcome
of treatment. Additional monitoring supposed to take place, as
before, at a specified list of hospitals, and the use of these
medicines is limited to these hospitals; the National Council for
Prices and Reimbursement of Medicinal Products (NSCRLP) is given
the role of coordinating the monitoring process and the collection
of information.
Manufacturers, represented by the Association of the
Research-based Pharmaceutical Manufacturers in Bulgaria (ARPharM),
have expressed alarm about the vagueness of the regulations and the
potential absence of scrutiny of the NZOK's decisions on paying for
medicines under such a payment-by-results system. According to
Deyan Denev, ARPharM's executive director, quoted by Bulgarian
newspaper Trud, a major issue is the absence of
infrastructure in hospitals to run the monitoring system
effectively, meaning that even if a contract is concluded with the
NZOK, it may not pay, because of a lack of data.
Payback
Equally challenging for the industry is the new 'payback'-style
mechanism introduced, according to the MoH, to ensure the
sustainability of the NZOK's budget. This new regulation means that
if spending by the NZOK on a medicine exceeds the level of the
equivalent quarter of the previous year, the manufacturer must pay
the difference - in the case of all medicines reimbursed by the
NZOK, both originator and generic including also some hospital
medicines (i.e. oncology drugs). Rebates are exempted from the
amount to be paid back, and it is also corrected on the basis of
the planned budget of the NZOK for the drug group concerned, if
applicable; although there are some mitigating elements in the
regulations, it still means that for some time, at least,
manufacturers are likely to have to provide previously unreimbursed
medicines without charge to the NZOK in order to ensure that they
are placed on the reimbursement list. In the case of new drugs not
previously reimbursed in Bulgaria, which have no reimbursed
equivalents, the first quarter of their presence on the market
becomes the reference quarter for the payback calculation. However,
the first quarter on the market will have no reference period, and
when launching new reimbursed products, there tends to be a period
of growth before sales stabilize; therefore, producers can be
expected to have to provide a fair number of free packages.
Furthermore, the payback system is structured in such a way that it
aims to ensure that NZOK drug spending does not exceed the level of
the previous year, which is likely to have a negative effect on the
growth of the Bulgarian pharmaceutical market.
Impact on pharma industry
The payment-by-results system and the payback mechanism are,
arguably, the most significant of the recent reforms in the
Bulgaria pricing and reimbursement system, and they come after
several years in which previous reforms, such as the introduction
of systematic HTA evaluation and mandatory discounts on new
originator medicines, have failed to curb the strong growth in
reimbursement spending. Certainly, NZOK spending on reimbursement
has grown at a very dynamic rate in recent years - from BGN366
million (USD209.5 million) to BGN1.1 billion in 2018 - and in
successive years, the budgeted amount has regularly proven to be
inadequate to meet demand, making top-ups necessary over the course
of the year. As Bulgaria has become integrated into the European
Union, following its 2007 accession, its citizens have come to
expect similar standards to those they see in other EU countries. A
surge in the number of new originator medicines available to
patients in the current decade has set a standard, and with the
incidence of cancer and other serious and chronic disease rising -
not to mention the presence of a strong patient advocacy sector -
the Bulgarian authorities face a significant challenge to meet the
rising demand.
However, these regulatory innovations could have gone a little
too far. If the NZOK expects research-based manufacturers to simply
donate medicines that are designated to the payment-by-results
system, until results are provided, for inadequately defined time
periods, it may find that manufacturers simply opt to avoid the
Bulgarian market until these products have more thorough data,
which could be several years. Equally, the payback system is also
likely to act as an additional disincentive. Companies represented
by ARPharM are considering making an appeal to the Bulgarian
Commission for Protection of Competition.
Posted 17 May 2019 by Brendan Melck, Senior Research Analyst, Life Sciences, IHS Markit
