- The Central and Eastern Europe (CEE) region is attractive to drug manufacturers for its large cumulative population, evolving price and market access (P&MA) landscape, and relatively high willingness-to-pay (WTP) thresholds
- International Reference Pricing (IRP) policies continues to be one of the most important criteria in price decision-making in CEE markets and they are constantly evolving, with at least five markets updating their policies in the last year
- Given their impact, it is important to understand CEE IRP policies when developing a launch sequencing strategy for pharmaceuticals
- CBPartners’ take: Changes to IRP policies in the CEE markets can impact pricing across the EU region and should therefore be closely monitored particularly as the list price in a given CEE market may be re-referenced by other global markets
Resources to reference:
To inform this blog post and infographic, CBPartners has analysed the IRP policies of 16 key CEE markets*. If you are interested in further exploring the similarities and differences in International Reference Pricing (IRP) policies and the overall impact in the region, download our IRP app from the App store.
*The 16 CEE markets analysed are: BGR, CYP, CZE, GRC, HRV, HUN, LVA, LTU, ROU, RUS, SRB, SVK, SVN, UKR, EST and POL.
Currently, the majority of CEE countries have a formal reference policy in place and typically reference the lowest price across their IRP basket.
When an IRP reference policy is considered, countries either establish a formal (i.e., reference pricing is codified into their regulatory system), or informal (i.e., reference pricing is not codified and only informally considered in HTA assessments or price negotiations) reference procedure. The decision typically depends on a countries administrative capacity and willingness to conduct local price negotiations. All of the 16 CEE markets in scope of this research, with exception of POL and EST, apply a formal IRP reference policy, confirming that IRP serves as a major price-setting mechanism in the region.
Some CEE countries use IRP to set a maximum price because they do not have extensive HTA or price negotiation systems in place (e.g., RUS). However, other countries such as POL and CZE complement their HTA with IRP as a starting point for price negotiations.
Out of the CEE markets, SVK is the most frequently referenced (by 11 of 16 markets in scope). In close second, CZE and the EU3 markets are referenced by 10 of the 16 CEE markets in scope. Within the CEE region, it’s important for manufacturers to monitor SVK prices closely to avoid the risk of price erosion in the region due to the IRP.
The CEE markets are also an important external reference outside of the CEE region. GRC is one of the most influential references, with over 15 non-CEE countries within and outside of the EU referencing GRC prices.
Despite the widespread use of IRP, various limitations are associated with the policy. Such limitations include the lack of reliable sources of price information, exchange rate volatility, price heterogeneity and hidden discounts. While IRP is widely used across Europe, processes and availability of price details vary from one country to another. Highly-referenced countries should be closely watched as they are likely to provide risk to other countries.
In the past year, four key CEE markets – RUS, LTU, GRC, and UKR – have announced changes to their IRP policies:
- RUS: Released a new list of 12 reference countries. This excluded nine of the previous 21-country basket. The reference countries now include: HUN, GRC, BGR, ESP, NLD, POL, ROU, SVK, TUR, FRA, , and the country in which the product is.
- LTU: Based on the adjusted IRP methodology, there was an update to the reimbursement list by the Lithuania MoH (Ministry of Health) in July 2018. The methodology now includes the reference country list of all EU countries, with the maximum allowable list price for reimbursed products benchmarked to the average of the three lowest prices declared in the country basket.
- GRC: A final version of proposed changes to pharmaceutical pricing and reimbursement (P&R) regulations have been presented by the Greek Ministry of Health (MoH). The repricing of medicines will take place on an annual vs. semi-annual basis and the IRP rules are applicable to both on-patent medicines. This includes orphan drugs, and off-patent medicines in GRC. According to the latest MoH proposal, the average of the two lowest visible prices of the 22 Eurozone countries will be referenced (vs. lowest only) as the visible list price.
- UKR: The Ukrainian Ministry of Health (MoH) is considering extending the application of the existing IRP rules for a pilot Affordable Medicines reimbursement scheme, which was implemented in 2017, to the entire National List of Essential Medicines. The reference price setting rule (e.g., lowest, average of two lowest prices) is currently unclear and the current scheme for the IRP country list includes: CZE, HUN, LAT, POL and SLV.
The implications of these IRP policy changes vary depending on the market:
- RUS: Given RUS will continue to reference the lowest price in the basket on an annual basis and included no new markets in their basket, the change is not expected to have a significant impact on the maximum price set for the EDL (Essential Drugs List).
- LHU: The wider range of country selection for the LHU reference basket and the risk of being delisted may cause a domino effect, where prices gradually decrease in other CEE countries referencing LHU, such as LVA.
- GRC: The reduced frequency of review and a 10% limit to price changes in GRC would be favourable for pharmaceutical manufacturers especially given ongoing debates and HTA referencing in this country.
- UKR: The impact of IRP changes in UKR are uncertain, given the ongoing reform of the UKR’s healthcare system. Successful incorporation of IRP will depend on the implementation of healthcare reforms as well as on UKR’s ability to curb issues with exchange-rate fluctuations
IRP plays a key role in determining the pharmaceutical price in a given CEE market. IRP policies in CEE countries, particularly markets that are referenced by many other markets, should be closely monitored by pharmaceutical manufacturers to ensure optimal pricing strategies.