Generic substitution of drugs and reference pricing.

palmcut

Generic substitution and reference pricing (GSRP) becomes effective for the public on 1/11/2013.

From the 1/11/13 a pharmacist is obliged to dispense the best value drug on a prescription unless the doctor writes "Do not substitute" on the prescription.

The IMB have listed 20 drugs that will come under this legistlation. The first of these drugs is Atorvastatin and the reference price for the four different strengths of Atorvastatin has been set by the HSE.
Other drugs will come into effect over the following 6/7 months.

The price to the patient will be the reference price + the pharmacy dispensing fee.
If a patient wants to get the Brand then the patient will have to pay the difference between the brand price and reference price in addition to paying the reference price + the pharmacy fee.
This applies to all drug schemes including the Medical card, Long term illness and DPS.

eg Brand=10.00
Reference price =4.00
For a private patient who takes the generic then the price will be 4.00 + the dispensing fee.
For a private patient who insists on the brand then the price to the patient will be 4.00 + the dispensing fee + 6.00. (the difference between the brand and the reference/generic)

For a medical card patient the price for a patient who wants the brand will be 6.00+ 1.50. (The 1.50 is the co-payment per item on the medical card)

For a long term illness patient who wants a brand the charge will 6.00. (LTI patients do not make a co-payment for their medication)

The only exception to this will be where the GP writes is his/her own handwriting "Do not substitute". The GP may be asked to provide a clinical reason for this exemption.

L1011

Esomeprazole and Rosuvastatin are also on the swapout list with approved equivalents now.

locum-motion

palmcut wrote: »

...

eg Brand=10.00
Reference price =4.00
For a private patient who takes the generic then the price will be 4.00 + the dispensing fee.
For a private patient who insists on the brand then the price to the patient will be 4.00 + the dispensing fee + 6.00. (the difference between the brand and the reference/generic)

For a medical card patient the price for a patient who wants the brand will be 6.00+ 1.50. (The 1.50 is the co-payment per item on the medical card)

For a long term illness patient who wants a brand the charge will 6.00. (LTI patients do not make a co-payment for their medication)

The only exception to this will be where the GP writes is his/her own handwriting "Do not substitute". The GP may be asked to provide a clinical reason for this exemption.

Sorry, but you're wrong.

For a private patient, the pharmacy will charge whatever it thinks the market will stand. Which is the same as is currently the case.

For other patients, the pharmacy will charge (at the very least) the difference in actual invoice cost between the two (ie the €6 you mentioned), but the Act doesn't prohibit charging another fee as well. In other words, if a patient insists on getting Lipitor rather than the cheapest generic Atorvastatin, the pharmacy is likely to add on a fee for the time and inconvenience of obtaining a product that they don't stock, especially for them.

L1011

As a sort-of on topic aside, for at least one of the doses, Lipitor is actually the cheapest at the moment.

echo beach

MYOB wrote: »

As a sort-of on topic aside, for at least one of the doses, Lipitor is actually the cheapest at the moment.

It is very difficult to know what the price of any brand or generic will be in the long term, or indeed what brands will remain on the Irish market. This is the big unknown. It is possible we will see constant increasing and decreasing of prices for a period at least as companies jockey for market share and attempt to force competitors out of the market, resulting in complete confusion. The HSE is promising patient information but two months into the process there is no sign of it so there is no definitive source of information.

The disjointed nature of the process isn't helping. It is as if we decided to change over to the euro by introducing €50 notes one month, €1 coins a while later and telling people the other notes and coins would be coming soon.

palmcut

The reference price for the public for the following drugs will happen on the following dates.

Atorvastatin...1/11/13.

Esomeprazole...1/12/13.
Rosuvastatin...1/12/13.

Omeprazole...1/1/14. (estimated)
Pravastatin...1/1/14.(estimated)

The Department of Health or the HSE have been very poor in highlighting these changes to the public. There is a promise of a few leaflets towards the end of October.
The Minister or whoever is responsible needs to be far more proactive to ensure the success of generic substitution and reference pricing.

Mucco

This is welcome news, but real savings will only appear once the price of the generic begins to drop. My understanding (which may be wrong) is that the price is still set by the HSE based on the original in-patent price. Generics companies can sell to pharmacies at lower prices in order to capture market share, but the pharmacies pocket the difference. In the UK, the NHS claws-back some of this difference, though I don't know how they now the cost price to the pharmacy.
I don't know why the HSE don't use tendering for some of the high volume drugs like the statins, it was resulted in dramatically lower prices in other countries.

echo beach

Mucco wrote: »

This is welcome news, but real savings will only appear once the price of the generic begins to drop. My understanding (which may be wrong) is that the price is still set by the HSE based on the original in-patent price.

That is no longer the case. The reference price is set by the HSE, in 'consultation' with all the companies who hold product licences for the drug in question. They go for the lowest price at which companies will continue to supply the Irish market and hopefully will have enough sense not to set it so low that supplies will all be exported to higher cost countries, leaving the Irish market without essential drugs.

Even if the generic prices fall substantially, as has happened with atorvastatin, don't expect the overall drugs bill to fall. All the savings, and more, are eaten up by the huge cost of new drugs for conditions like cancer, MS and CF where costs can run to tens of thousands of euro for a single patient.

Nonoperational

The reference price is hugely cheaper than the current generic price.

RobFowl

Nonoperational wrote: »

The reference price is hugely cheaper than the current generic price.

Has it been set yet and if so what is it?

echo beach

RobFowl wrote: »

Has it been set yet and if so what is it?

The reference price for atorvastatin has been set, and the required 30 days notice given so it will apply from Nov 1st. I don't have the figures to hand but it is a big drop.

Mucco

Thanks for the clarification on pricing of generics. Do you know the mechanism of the consultation? Is it sealed bids? Negotiations? And how does the supply then work, can anyone supply at the price agreed? If so, there's an incentive for everyone to put in high bids.

echo beach

Consultation is the usual form when dealing with the HSE. They tell the relevant parties what they are going to do. The 'stakeholders' have their say then the HSE does what it was going to do anyway. The suppliers don't make bids or negotiate. They are told what the reference price is.

Nonoperational

RobFowl wrote: »

Has it been set yet and if so what is it?

I can't remember off the top of my head, but for Atorvastatin it's very considerable. I think the currant generic is around €11 for 28x10mgs, the reference price is around €3.50.

Mucco

echo beach wrote: »

Consultation is the usual form when dealing with the HSE. They tell the relevant parties what they are going to do. The 'stakeholders' have their say then the HSE does what it was going to do anyway. The suppliers don't make bids or negotiate. They are told what the reference price is.

Thanks again, but if the price is not set via bidding or negotiation, where does it come from? As people seem to call it a 'reference price', I guess it's set in reference to prices in other EU states - is this correct?

Abby19

Mucco wrote: »

Thanks again, but if the price is not set via bidding or negotiation, where does it come from? As people seem to call it a 'reference price', I guess it's set in reference to prices in other EU states - is this correct?

http://www.counterintelligence.ie/imgdir/docs/26174_economies_drug_usage.pdf Page 13 - not sure if still the current method though.

Drug Pricing
Since 1993 the price of medications introduced into Ireland were linked to the currency adjusted wholesale price in the UK, or the average of the wholesale price in Denmark, France, Germany, the Netherlands and the UK (whichever was lower). As all of these countries with the exception of France were recognised “high priced” member states, the price control formula for Ireland established a “Northern European” price that was above the community norm. As a consequence, medicine prices in Ireland at that time, prior to the negotiation of the 2006 IPHA agreement had been amongst the highest in Europe. A study conducted by the National Centre for Pharmacoeconomics in 2004 demonstrated savings in excess of €16 million per annum could be anticipated if Ireland reimbursed medication at the average European price.[4] The 2006 IPHA/HSE agreement links the price of medicines in this country to nine EU states including Austria, Belgium, Finland, Denmark, France, Germany, the Netherlands, Spain and the UK. The inclusion of countries such as Austria, Belgium, Finland and Spain, whilst not resulting in an average European price, would be expected to reduce the price of medicines in Ireland over time.
The price to the wholesaler of any new medicine introduced to Ireland under the new agreement shall be realigned to the currency adjusted average price to the wholesaler in the nominated EU member states in which the medicine is available two and four years following commencement of the agreement. Many EU Member States have negotiated price freezes and cuts in recent years. The UK are proposing a 3.9% cut in the cost of drugs sold to the NHS in February 2009 and a further cut of 1.9% in January 2010.

Significant savings have been achieved as a result of the revised pricing mechanism under the new IPHA/HSE agreement and will continue with the ongoing monitoring of drug utilisation and expenditure data under the Community Drugs Schemes. The development of analytical capacity for this purpose should be a priority.

Mucco

Abby19 wrote: »

http://www.counterintelligence.ie/imgdir/docs/26174_economies_drug_usage.pdf Page 13 - not sure if still the current method though.

Thanks Abby19, but I think that's for in-patent medicines. I am interested in generics. Prices used to be set at a defined discount from the in-patent price (see IPHA agreements), but that seems to have changed. I would like to fully understand the new mechanism, the new act outlines it, but I'd like to know how it is implemented in practice.

echo beach

Mucco wrote: »

I would like to fully understand the new mechanism.

Wouldn't we all. If you do solve the mystery please share with the rest of us.

Mucco wrote: »

Thanks again, but if the price is not set via bidding or negotiation, where does it come from? As people seem to call it a 'reference price', I guess it's set in reference to prices in other EU states - is this correct?

The HSE set the price. A close listen to the Anglo tapes might give you an idea where figures tend to come from in this country.
The term 'reference price' doesn't mean it is set in reference to any other price but that this will be the price everybody has to refer to from now on.

Nonoperational

I'd imagine they look at the prices in the UK, and tell the generic companies to cut the bull**** prices they have at the moment and give a price similar to that.

At the moment prices are kept artificially high and as a result the pharmacies get huge bonuses. Atorvastatin can sometimes come with a bonus of buy 1 get 9 free. I kid you not.

L1011

Nonoperational wrote: »

Atorvastatin can sometimes come with a bonus of buy 1 get 9 free. I kid you not.

Can confirm this, I've seen this offer (and its equal value stated as 90% off, they didn't bother sending you all 10 boxes) cold-faxed to pharmacies by distributors in the past week.

Mucco

I didn't know that about Atorva, though I can believe it- it's hugely overpriced compared to the UK, and a huge number of generic suppliers entered the market as soon as Pfizer's patent expired. This suggests there was plenty of money to be made.

Ireland is not unique, when they started to use a tendering process for drugs in the Netherlands, prices dropped overnight by 80-90% for some statins, omeprazole...see:
KANAVOS, P., SEELEY, L. & VANDOROS, S. (2009) Tender systems for outpatient pharmaceuticals in the European Union: Evidence from the Netherlands, Germany and Belgium.