3rd Baltic Conference on Medicines

Economic Evaluation, Reimbursement and Rational Use of Pharmaceuticals

Pricing and Reimbursement of Pharmaceuticals in

Baltic Countries

Daiga Behmane

Medicines Pricing and Reimbursement Agency, Latvia

June 17, 2004, Tallinn, Estonia

Health care system reforms in 1990s in Baltic countries

Introduction of market economy principles in health care

Changes in status and structure of health care providers

Introduction of new insurance schemes

Increased availability of new technologies,

pharmaceuticals

Increased quality of health care services and providers

Rapid increase in health care costs

Health policies in Baltic countries

European social model: equity and solidarity in access to health services

Insurance schemes: compulsory and private insurance

Balance between primary and secondary health care

Reimbursement systems of pharmaceuticals

A lot of debate around the health care systems

What is the result of the reform? Do we measure it?

Is the health system good and fair?

Is it performing as good as it could?

Does only health care system performance determins the status of

population health ? Socio-economic factors? Lifestyles? Physical

environment?

How to dicrease the gap between patient expectations and real access to

health care services?

What is the role of pharmaceutical policy to meet better health

outcomes?

Pharmaceutical policies in Baltic countries, common features

Equitable access for patients to effective, safe and good quality

medicines - 1990s

Enhancing rational use of medicines for better outcomes in health

care (treatment guidelines, therapeutic committees in hospitals e.t.c.)

Ensuring value for money

access and affordability

Baltic cooperation on medicines

Baltic cooperation on medicines has started already in the beginning of 1990s

1993 – an Agreement on mutual recognition of marketing authorizations of pharmaceutical products manufactured in Lithuania, Latvia and Estonia

1995 –the Cooperation agreement in the field of Medicine, Health Care and Health Insurance was signed the Baltic Coordinating Committee on Pharmaceuticals was established

Common problems

Public funds for healthcare do not cover all public needs

Growing expenditure for pharmaceuticals (volume and costs), justified or unreasonable?

Consumption of pharmaceuticals per capita is 4 to 5 times less than EU average

GDP per capita is 6-7 times less than EU average

Newly introduced medicines are marketed at EU prices,

There is a growing disparity between availability of products on the market and possibility to pay

Affordability is a burning question

Pharmaceutical market, Baltic countries, pharmacy prices, 2002-2003

Population, mln

Pharmaceutical consumption, mln

EUR

Pharmaceutical consumption per

capita, EURPopulation,

mln

Pharmaceutical consumption, mln

EUR

Pharmaceutical consumption per

capita, EUREstonia 1,36 104 76 1,36 125 (120%) 92Latvia 2,35 123 52 2,33 143 (116%) 61Lithuania 3,47 290 84 3,46 348 (120%) 101

total: 7.18total: 517 mln

EUR aver: 72 EUR total: 7.15total: 616 mln EUR (119%) aver: 86 EUR

Data source: Health care authorities, Baltic countries

2002 2003

Cooperation in the field of pricing and reimbursement of pharmaceuticals

EU legislation has less influence on price regulations and the design of reimbursement systems on the national level Implementation of the requirements of the Transparency directive (89/105/EEC)Pricing and reimbursement decisions are strongly based on demand side measures and health budget impact – national decisions1990s – disparities in pharmaceutical prices, small markets

Cooperation and information exchange between national authorities

Reimbursement systems of pharmaceuticals in Baltic countries

Similar featuresReimbursement based on the severity and chronic nature of the disease Price control for reimbursed pharmaceuticalsRegulated maximum wholesale and retail marginsPositive lists Reference pricing mechanismsSpecial reimbursement conditions for most expensive pharmaceuticals Increased role of therapeutic and economic evaluation of pharmaceuticals

Reimbursement systems of pharmaceuticals in Baltic countries

Similar criteria for reimbursement • burden of disease (100%, 75%, 50%)

• therapeutic value of a drug

• cost-effectiveness data

• impact on healthcare budget

Economic evaluation of pharmaceuticals

Baltic Guideline for Economic Evaluation of PharmaceuticalsAdopted as a common methodology for economic evaluation of pharmaceuticals in the Baltic countries during Ministers’ meeting in Riga on the 6th September 2002

Each country has adopted it’s own legislative act enforcing the use of the Guideline on the national level

In force since the second half of 2002 or the 1st January 2003

Use of economic evaluation of pharmaceuticals in decision making in Baltic countries

For budget allocation in health care

For selection of drugs for reimbursement or other state funding

For setting a reasonable price for pharmaceuticals

For rational pharmacotherapy guidelines

For promoting rational prescribing

Why economic evaluation?

Economic evaluation:application of analytical methods to define cost and consequences of drug treatment to support decision

making in resource allocation in health care

COSTS OUTCOMES

Objective of the Guideline – to provide methodology for pharmacoeconomic analysis performed as a part of an

application for a new drug to be reimbursed in Baltic countries

Principles of the economic evaluation

Desk-top” economic analysis are carried out for the purposes of the application

Analysis should be distinguished from a “field” analysis, where where a specially designed economic study is carried out

If economic analysis are performed abroad, it can be applied to the local situation

Economic analysis can be performed only on the basis of published clinical trial data or clinical trial data performed as a part of drug licensing process

Perspective of the economic evaluation

All analysis are to be conducted from a health care perspective (including only direct costs and benefits for health care)

Analysis from a societal perspective (including all costs and benefits outside the health care system) may only be presented in addition, if considered relevant by the applicant

Gains from common methodology

Possibility to exchange information on the assessment of the cost-effectiveness of new drugs submitted for reimbursement

Results of pharmacoeconomic analysis are comparable between countries

More effective work of state institutions involved in evaluations

Possibility of harmonization of prices of pharmaceuticals

Simplified application process for the industry

What is different in the reimbursement systems?

Differences

Budgets for reimbursement

Share of reimbursement of total health care expenditures

Estonia 20%, Latvia 7,5%

Number of active substances reimbursedLatvia 600

Lithuania 1500

Estonia 1580 (100% ;75%)

Reimbursement of pharmaceuticals,market share, 2002-2003

Market share of reimbursable pharmaceuticals in 2003, mln EUR

0

50

100

150

200

250

300

350

2002 Pharm.consumption, mln EUR 104 290 123

2002 Reimb.for amb.care, mln EUR 46,73 97,9 26,8

2003 Pharm.consumption, mln EUR 125 348 143

2003 Reimb.for amb.care, mln EUR 43,77 105,7 26,2

Estonia Lithuania Latvia

18%22%

30%34%

35%45%

Reimbursement of pharmaceuticals in Baltic

countries, EUR per capita, 2001-2003

0

5

10

15

20

25

30

35

40

45

Estonia 31 37 34 41

Lithuania 26 34 28 31

Latvia 7 11 11 12

2001 2002 2003 2004

Reimbursement of pharmaceuticals in Baltic countries (including centralized purchases), EUR per capita, 2001-2003

0

5

10

15

20

25

30

35

40

45

50

Estonia 33 39 36 44

Lithuania 31 36 29 32

Latvia 12 16 16 18

2001 2002 2003 2004

Comparison of reimbursement of pharmaceuticals by disease groups in Baltic countries, 2002, EUR per capita

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6

8

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14

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Latvia Estonia Lithuania

Total expenditure on reimbursement and drugs for cardiovascular diseases in Baltic states per capita EUR, 2002

0

5

10

15

20

25

30

35

Total 34 12 28

Cardiovascular diseases 15 2 6

Estonia Latvia Lithuania

Price dicrease due to economic evaluation of pharmaceuticals by disease groups, number of evaluations, Latvia, 2002, annual savings ~ 400 000 LVL

0

20

40

60

80

100

120

Number of drugsWITH pricedecrease

Number of drugsWITHOUTprice decrease

Conclusions

The growth of pharmaceutical markets and pharmaceutical consumption in Baltic countries are mainly affected by affordability aspects and the limited funding

Although social and economic conditions are similar, financing and reimbursement levels of pharmaceuticals differ in Baltic countries

Health economics should be applied not only to reimbursement decisions, but also in other health care sectors enabling cost effective pharmaceuticals to be reimbursed

Further analysis should be developed to analyze the implications of different reimbursement conditions on health outcomes