Daiga Behmane Medicines Pricing and Reimbursement Agency, Latvia

1. 3rd Baltic Conference on MedicinesEconomic Evaluation, Reimbursement and Rational Use of PharmaceuticalsPricing and Reimbursement of Pharmaceuticals in Baltic Countries Daiga Behmane Medicines Pricing and Reimbursement Agency, Latvia June 17, 2004, Tallinn, Estonia

2. 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

3. 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

4. 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?

5. 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

6. 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

7. 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

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

9. 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 decisions • 1990s – disparities in pharmaceutical prices, small markets Cooperation and information exchange between national authorities

10. Reimbursement systems of pharmaceuticals in Baltic countries Similar features • Reimbursement based on the severity and chronic nature of the disease • Price control for reimbursed pharmaceuticals • Regulated maximum wholesale and retail margins • Positive lists • Reference pricing mechanisms • Special reimbursement conditions for most expensive pharmaceuticals • Increased role of therapeutic and economic evaluation of pharmaceuticals

11. 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

12. Economic evaluation of pharmaceuticals Baltic Guideline for Economic Evaluation of Pharmaceuticals • Adopted 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

13. 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

14. 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

15. 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

16. 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

17. 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

18. 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 reimbursed Latvia 600 Lithuania 1500 Estonia 1580 (100% ;75%)

19. Reimbursement of pharmaceuticals,market share, 2002-2003

20. Reimbursement of pharmaceuticals in Baltic countries, EUR per capita, 2001-2003

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

22. Comparison of reimbursement of pharmaceuticals by disease groupsin Baltic countries, 2002, EUR per capita

23. Total expenditure on reimbursement and drugs for cardiovascular diseases in Baltic states per capitaEUR, 2002

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

25. 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