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Will IRP upend Czech orphan drug reforms?
On 14 September, the Czech Chamber of Deputies gave its final approval to the amendment of the Public Health Insurance Act (48/1997) that has been described by the Ministry of Health (MoH) as the most significant change in pharmaceutical policy - and specifically pricing and reimbursement (P&R) policy - in Czechia for 13 years. This comes after a long and difficult passage through the legislature, with the COVID-19 pandemic delaying the amendment substantially, and amid concerns that the forthcoming general election in October could further scupper its progress. However, it was signed on 27 September and is due to enter into law from the beginning of 2022.
Orphan drugs will be more accessible, patients to participate in the P&R process
The most substantial changes set to be introduced under the amendment affect orphan drug P&R. Section 39 - which covers drug P&R - has been expanded to include a whole new subsection dedicated to these therapies. A new set of ten criteria to be considered in the assessment of orphan drugs includes soft criteria, such as the societal significance of the drug's potential therapeutic effect and its contribution to improving quality of life. While cost-effectiveness analysis is included, this does not include an incremental cost-benefit ratio. Crucially, patients' groups are included among the parties to reimbursement proceedings, together with health insurance companies (HICs), marketing authorization holders (MAHs), and relevant associations of medical experts. These interest groups will be able to put forward evidence in the first month of a P&R procedure, after which the State Institute for Drug Control (SÚKL) will publish an evaluation report (within 110 days of the beginning of the procedure). Significantly, this will involve a standard P&R procedure, meaning that orphan drugs - so often reimbursed outside the standard system in Czechia - will be brought inside it. As such, they will become subject to international reference pricing (IRP). It has been estimated by the Czech Association of Innovative Pharmaceutical Industry (AIFP) that this will lead to price reductions of 15%-20% on average.
The aforementioned parties to the proceedings - including patients' groups - will have a 15-day period to comment on the SÚKL's evaluation report, which will then be sent to the MoH, which gives a 'binding opinion'. Helping in making this opinion will be a new advisory body, which will also include patients' representatives. The SÚKL will be obliged to follow the binding opinion of the MoH. If this opinion involves proposed changes to the conditions proposed in the evaluation report, the MAH will have a chance to accept these - if it does, the drug will be approved; if it doesn't, it won't.
Currently, many Czech patients with rare diseases rely on obtaining reimbursement through so-called Section 16 exceptions. This refers to the section of the Public Health Insurance Act that allows for exceptional reimbursement of medical technologies not included in the standard list of reimbursed technologies when there are no alternatives. Although most patients are granted reimbursement in this way, bringing orphan drugs into the standard reimbursement system will lead to a significant improvement in predictability, as well as allowing for a reduction in unit prices, under IRP.
Longer temporary reimbursement for 'VILP' drugs
The current Czech P&R system includes a category of medicines known as 'highly-innovative medicinal products', or 'vysoce inovativní léčivý přípravek' (VILP). These are generally high-cost originator medicines approved centrally in the EU that have good clinical data but are above the Czech cost-effectiveness threshold; current rules allow for a two-year reimbursement contract for VILP drugs, with a possible extra year. Under the new amendment, the temporary reimbursement contracts have been extended to a maximum of three years, with a possible extra two years. This will give more stability and predictability to the market, meaning that fewer patients will have to revert to Section 16 exceptions when their VILP treatments reach the end of their temporary reimbursement period. Good for patients, and good for manufacturers.
Upsides and downsides
In the case of both VILP and orphan drugs, the amendment formalizes a payback system under which MAHs will be obliged to pay back costs above those stated in the budget impact analysis to the HICs, and will be obliged to sign risk-sharing agreements with HICs detailing how this will arranged. Thus, on the upside, MAHs get greater predictability with longer temporary contracts but will be required to agree on risk-sharing arrangements - although many were already doing this with HICs already anyway.
Additionally, in the case of patients who are being treated with a VILP drug for which the temporary reimbursement period has come to an end, and where, subsequently, on the basis of a P&R application procedure, the SÚKL decides that the drug is not eligible for continued funding, the MAH will have to provide the drug-free of charge for at least 36 months, or until the patient is switched to an effective and safe reimbursed treatment. The AIFP has called for clarifications of these requirements.
Under the current system, most orphan drugs are not subject to standard reimbursement, but are still available under Section 16 (albeit with a lot of bureaucratic delays); bringing them into the standard system will have a substantial downward effect on prices due to the use of IRP - although, on the upside, the changes should allow for quicker access to greater treatment volumes.
The final version of the amendment, including changes introduced by the Senate, which was unanimously approved by the Chamber of Deputies, is yet to be made publicly available; the details above relate to the available draft amendment, although most of these elements are unlikely to undergo significant changes. There is recognition in Czechia that the amendment will mean additional costs, particularly due to the greater accessibility of orphan drugs. It is also likely that unit costs of orphan drugs will fall as they start to undergo standard P&R procedures, including IRP. The biggest winners of the amendment are rare disease patients, who get a seat at the table in P&R procedures, and will be much less frequently obliged to revert to Section 16 exceptions when seeking treatment.
Learn more about the role of IRP with IRP 360
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