PHARMACOLOGY & BIOMOLECULAR RESEARCH (PBR)

Snap Shot on Some Drug Expenditures in Macedonia Related to Extremely Low-Price Generics –How Low Can We Go?

Marija Seistrajkova1*, Merjem Hadzihamza1


1Health Insurance Fund of Macedonia, Macedonia, Europe.


*Corresponding Author: Marija Seistrajkova, Advisor to the CEO, Health Insurance Fund of Macedonia, Macedonia, Europe, TEL: 0038978443587 ; FAX: +0038978443587; E-mail:mgulija@gmail.com


Citation: Marija Seistrajkova, Merjem Hadzihamza (2018) Snap Shot on Some Drug Expenditures in Macedonia Related to Extremely Low-Price Generics –How Low Can We Go? Pharmacol biomol res 1: 104.


Copyright: :© 2018 Marija Seistrajkova, et al. This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited


Received date: March 14, 2018; Accepted date: March 25, 2018; Published date: March 31, 2018.


Introduction: about the generic prices

There comes a moment in the life of every branded drug when exclusivity will be lost and generics will begin to compete for market share. Important for consumers, byers and producers is how the prices of branded drugs “fall”. With entry of generic products on the market, prices would decline in the following weeks, months and years. How quickly this would happen? How low the prices will go? Usually the price initially declines rapidly (scalloped decay), but then flattens out. In some cases, the decline is extremely rapid, where in others the decline can take many years. Having more than three generic licenses’ holders on the market usually means that the price will decline rapidly. The value of the brand in the year prior to generic launch is an indicator of the speed of price decay: the larger the value of the brand, the more generic companies are likely to launch the generic. Blockbuster drugs are expected to see more generic manufacturers. But, there is a possibility of price bounces sometime in the “scalloped decay period”. One reason for this occurrence might be the number of producers of the generic with the same active ingredient. IF the generic price approaches a generic company’s cost of goods, some companies might withdraw from the market: less suppliers on the market higher the price of the products. These bounces happen in about 20% of products; about 80% continue to follow the “scalloped decay period”. We can summarize that the key factors determining generic prices are reimbursement price, number of generic competitors on the market and the value of the brand prior to patent expiry.


Reimbursement savings in national generic policies


Many countries in Europe included generics prescription or/and generic procurement in their health policies. The benefits of such a policy are related to decrease of the costs and achieving savings in procurement of pharmaceuticals. With the establishment of reference pricing models and reimbursement policies, savings through genericization are perceived as cost advantages in reimbursement schemes. However, the questions that arise are whether savings from genericization are robust enough across different policy settings and whether regulation of (generic) pharmaceutical markets has any bearing on their magnitude [1].


Macedonia at a glance


Low cost generics have the priority in drugs supply in every heath care system which counts for accountability and savings. In Macedonia, as in many countries, Positive list drugs (PL) are covered by the national health care insurance company (Health Insurance Fund, HIF) and therefore are incredibly significant for appropriate functioning of the healthcare system. Implementation of generics policy (genericization) and generic prescription was introduced few years ago, giving the possibility to HIF to define reference pricing model for reimbursement (per generic), distribution in pharmacies (per generic – lowest reference price) and patients to choose (from available generics on the market with possibility of copayment if choosing branded medications). This policy envisaged serious savings for provision of pharmaceuticals on the primary health care level, where financially “covered “drugs (by the HIF) were dispensed in pharmacies in primary health care level.


Talking about the structure of the List, PL can be defined by many structures which depend on the need for its use, such as: drugs for PHC and hospitals, generics and branded drugs, difference in the issuance mechanism (prescription non-prescription), etc.


The importance of the prices of the drugs on the PL is a priority for achieving appropriate supply with medications to the patients (health service provision), high quality of the drugs at lowest acceptable costs and decrease of the out-of-pocket payments and co-payments for drugs. Drugs on the PL are provided to the patients and refunded by the HIF to the health institutions: PHC pharmacies (with the contract with the HIF) and hospitals. Therefore, the formulation (definition, setting) of the prices of drugs is of an essential importance for the heath institutions and the patients.


First level of setting the drugs’ prices is during the procedure of registration which is defined by the national Drug Agency. It sets the maximum price (ceiling price) above which the company registering the drug, cannot sell its product. The methodology of the Agency is very complex and difficult [2]. On the other hand, the HIF as national payer for the health services (drugs inclusive) pays providers for services (drugs) ONLY for the drugs included on the PL. The price the HIF pays is the reference price [3] and MUST BE AT OR BELOW the set ceiling price of the Agency. So, pricing mechanisms are double (at national level) but specific and different for each entity responsible.


According to the Report on drug expenditures on yearly basis produced by the HIF and published on their web site (for year 2014) [4], there is an evident increase in realization (or more precisely utilization) of the prescriptions in 2014 compared with previous years (counting 2008 and further) and there is a significant increase of about 88%; which is a very god indicator showing that prescribed drugs are taken from the pharmacies and eventually used by the patients. Also, total number of drugs covered by the HIF (from the PL) where is no additional copayment by the patients has increased from 2009 (20% only) to 2014 (75%). This is also very beautiful indicator showing that the HIF succeeded to provide the majority of the drugs from the PL free of copayment for the insures.


Let’s look upon the Positive list of drugs from another angle:


•Last serious revision (in terms of addition/deletion of new generics) was done in 2009 where 38 new drugs (in terms of forms and strengths in total) were added (out of 426 generics)


•Addition of the two important generic imatinib in 2012 and clopidogrel in 2014 was made


•Changes were made only in the “transfer” of some drugs from hospital to primary care list, inclusion of all registered strengths of the same generics and changes in the prescription way


In our brief investigation and snap shot of the recent developments in decreasing of the drug prices, we found out that some of the prices of the drugs on the PL not only have been dramatically decreased but have shown absurdly low prices in terms of basic comparison with box of chewing gum, lighter, pack of cigarettes or else. There comes the question related to the minimal price of the production of each and every single package of medication where there is no suspicion about the quality of the content: HOW LOW CAN WE GO WITH THE PRICES?


Methodology

We looked upon the PL officially published by the health authorities in Macedonia (web site of the Ministry of Health [5], Drug Agency [6] and national HIF [7]). Special attention was given to the partition of the generic drugs (as per the definition of the Drugs agency and cited in the Law on Pharmaceuticals and Medical Devices [8], versus terms used as originators which were not included in this investigation).


From the generics on the PL we selected the ones which have history for decreasing of the prices (from 2011-2015) and those drugs with absurdly low prices. Comparison was made as well as calculation of the decreasing of the price (on a revision or yearly level) and in total for the entire period of time.


Additional comparison of the prices was made for some selected drugs: the prices set by the Agency as maximum price and the reference price set by the HIF. Selected drugs were taken from the pool of most used drugs (according to the utilization of prescriptions in 2014, source HIF) and some drugs with the “crazy” low price per package. Knowing the mechanisms of pricing the results are still unbelievable.


Results

Selected generics included in measuring the decreasing of the price (for the period 2011-2015 where decrease occurred) showed variable decrease ranging from 16-76% for all investigated drugs. Full table is presented in annex 1. From the table 1 it is evident that the decrease in prices is huge for M05BA04 alendronic acid (decrease of about 60%), J01CR02 amoxicillin+clavulanic acid powder for oral suspension (about 50%), C10AA05 atorvastatin (20mg, 40mg, 80mg decrease of about 65%, 65% and 50% respectively), J01FA10 azithromycin (29%), J01MA02 ciprofloxacin (50%), R06AX27 desloratadine (64%), M01AB05 diclofenac (46%), M05BA06 ibandronic acid (43%), L01XE01 imatinib (53%), N05AH03 olanzapine (about 50%), C10AA01 simvastatin (about 60%), C08DA01 verapamil (about 50%).


Table 1: Comparison of prices of some selected generics from the PL.


ATC Generic name Max price by Drug Agency Reference price by HIF Difference
Max price per pack wholesale (no VAT) in MKD Max price per pack wholesale (no VAT) in EUR Ref price per pack (+VAT) in MKD Ref price per pack (+VAT) in EUR
N05BA01 diazepam 26.58 0.44 10.00 0.16 0.38
M01AB05 diclofenac 63.96 1.05 8.00 0.13 0.13
C01AA05 digoxin 30.48 0.50 32.00 0.52 1.05
C09AA02 enalapril 35.00 0.57 16.00 0.26 0.46
C09AA02 enalapril 24.60 0.40 17.00 0.28 0.69
C09AA02 enalapril 67.00 1.10 17.00 0.28 0.25
C09AA02 enalapril 72.60 1.19 18.00 0.30 0.25
A02BA03 famotidine 48.40 0.79 24.00 0.39 0.50
C03CA01 furosemide 29.75 0.49 29.00 0.48 0.97
H03AA01 levothyroxine 23.94 0.39 44.00 0.72 1.84
M01AE03 ketoprofen 55.24 0.91 23.00 0.38 0.42
R06AX13 loratadine 63.67 1.04 19.00 0.31 0.30
10BA02 metformin 56.69 0.93 34.00 0.56 0.60
H02AB04 methylprednisolone 51.92 0.85 76.00 1.25 1.46
N03AA02 phenobarbital 40.02 0.66 42.00 0.69 1.05
N03AA02 phenobarbital 47.76 0.78 39.00 0.64 0.82
C08DA01 verapamil 61.95 1.02 25.00 0.41 0.40

There is an evidence of noted absurdly low prices for some generics, presented as maximum price set by the Drug Agency and reference price set by the HIF calculated in euros (EUR). Many drugs have the price per package set below 1 euro.


Investigated reference price list of the HIF showed the following results (below) [9]. The full list is presented in annex 2. Table 2. presents only top 20 drugs with unbelievable low prices. Prices of selected generics are presented with addition of value added tax (VAT), which represents the price of the medication on the market (retail price).


Table 2: Reference prices of some drugs according to officially published price revision (25.11.2015).


ATC Generic name INN Branded name Producer Ref price per pack (+VAT) Ref price per pack (+VAT) in EUR
M01AE01015 Ibuprofen NEOFEN DIRECT tabl 10 x 200mg BELUPO 6.00 0.10
M01AE01015 Ibuprofen CAFFETIN MENSTRUAL tabl 10 x 200mg ALKALOID 6.00 0.10
M01AE01015 Ibuprofen BLOKMAX tabl 10 x 200mg ALKALOID 6.00 0.10
M01AE01015 Ibuprofen AKTIFEN caps 10 x 200mg REPLEKFARM 6.00 0.10
N05BA08001 Bromazepam LEXILIUM tabl 30 x 1,5mg ALKALOID 7.00 0.11
N05BA08001 Bromazepam BROMAZEPAM tabl. 30 x 1,5mg JAKA 80 7.00 0.11
N05BA08001 Bromazepam LEKSAN tabl 30 x 1,5mg REPLEKFARM 7.00 0.11
J01AA02001 Doxycycline DOKSICIKLIN caps5 x 100mg JAKA 80 8.00 0.13
J01AA02001 Doxycycline DOVICIN caps 5 x 100mg GALENIKA 8.00 0.13
M01AB05003 Diclofenac RAPTEN -K tabl 10 x 50mg HEMOFARM 8.00 0.13
M01AB05003 Diclofenac VOLTAREN RAPID tabl 10 x 50mg PLIVA 8.00 0.13
M01AB05003 Diclofenac DIFEN RAPID tabl 10 x 50mg BOSNALIJEK 8.00 0.13
C08CA05004 Nifedipine NIFEDIPIN RETARD tabl 20 x 20mg REPLEKFARM 9.00 0.15
N02BE01002 Paracetamol PARACETAMOL ALKALOID tabl 10 x 500mg ALKALOID 10.00 0.16
N02BE01002 Paracetamol FEBRICET tabl 10 x 500mg HEMOFARM 10.00 0.16
N05BA01001 Diazepam DIAZEPAM tabl 30 x 2mg REPLEKFARM 10.00 0.16
N05BA01001 Diazepam APAURIN tabl 30 x 2mg KRKA 10.00 0.16
N05BA01001 Diazepam DIAZEPAM ALKALOID tabl 30 x 2mg ALKALOID 10.00 0.16
N05BA01001 Diazepam DIAZEPAM tabl 30 x 2mg JAKA 80 10.00 0.16

The change of the prices of the generics was also investigated. The aim was to collect evidence and show the decrease of the prices, where it was expected to find both scalloped and flat line decay. Presented drugs mostly followed the “scalloping decay” because those generics recently entered the marked. On the other hand, some drugs have “flat line fall”, because of the long presence on the market. Figure 1. shows some decrease in prices for selected generics.


Figure 1
Figure 1: “Fall” of prices for some generics (2011-2016, in MKD [10]).

Discussion

It is evident that the pricing mechanisms for PL’s drugs need to be justified, adapted and for sure revised. Double setting of prices might lead to extremely low prices, especially pointing to the wide variety of reference countries used by the Drug Agency which number is 12. Having on mind that 12 reference countries include some which markets are incomparable with Macedonia (Turkey for example). Very low prices of drugs even though are related to old generics inevitably pose the question of the quality of the drug as well as the content of active substance. There is no clear justification for the extremely low price of some old generics on the market: is comparison with other comparable markets relevant? Is presence of the drug on the market sufficient? Are there too many license holders on the market? What are the consumption rates of generics and share of the market by each license holder separately? Those information have to be collected and elaborated. Further comparison (benchmarking) with reference countries which have adequate similarities (number of the population, PPP, GDP etc) with Macedonia needs to be done. The idea of setting the lowest or approximately lowest price for some drugs might be useful and should be further elaborated. Another question which is relevant is: what is the maximum number of license holders for the same generic, where we have very small market and possible competition for market share? We believe that some restrictive mechanisms on the number of license holders have to be applied aiming for the Government to ensure continuity in market supply for generics which are on the PLD.


The main objective still goes with the PL: do we really have an updated and upgraded Positive list of drugs? For sure it is not recently widened (extended or expanded) and adjusted. PL should follow most recent needs for treatment for the majority of the Macedonian population. Showed savings presented in the HIF report are not relevant; they have more virtual expression and do not show the realistic situation for drug utilization in primary health care. Do we use same funds for more drugs when claiming savings? Certainly not. Do we use more funds from the obvious savings for more drugs or just for the same old drugs with all registered strengths and forms and whatever? Knowing that the PL has not been extended and the prices have been drastically decreased, there is only one question very much intriguing here: what are the benefits for the patients from the entire scheme? Can decreased copayment(s) justify it all or we are talking about inappropriate distribution and use of funds?


Our investigation tackled only small part of the visible iceberg called Positive list of drugs. Eventually lots of issues still remain open and need to be investigated and discussed abut.


Conclusion

Related to this brief investigation and snap shot of the situation with the PL and prices in general, many things have to be redefined or at least revised. Formulation of the prices should be unified at a national level and prices of drugs should be more realistic leaving no space for doubts about quality. PL at least should be revised in serious manner not the trivial one. The politics of savings should be oriented towards using of the saved funds for palette of new drugs’ inclusions adjusted to the realistic needs of the population. Eventually we should consider setting the lowest price of some drugs especially the old generics. Another open question will remain: registration of the generics and its limitations which leads to possible interruption of the market variety for choices of drugs. Still long way to go for Macedonia.


Annex 1


Annex 2


References

  1. http://apps.who.int/medicinedocs/en/m/abstract/Js20146en/
  2. http://malmed.gov.mk/index.php/2015-07-11-10-47-48
  3. http://www.fzo.org.mk/default.asp?ItemID=DEDE57A4C482144FAF640B8A39A098F4
  4. http://www.fzo.org.mk/WBStorage/Files/Izvestaj%20za%20potrosuvacka%20na%20lekoviod%20PPLL%202014%20-%2021%2004%202015.pdf
  5. http://zdravstvo.gov.mk/category/%D0%BC%D0%B8%D0%BD%D0%B8%D1%81%D1%82%D0%B5%D1%80%D1%81%D1%82%D0%B2%D0%BE-2/organi-vo-sostav/agencija-za-lekovi/
  6. https://lekovi.zdravstvo.gov.mk/
  7. http://www.fzo.org.mk/default.asp?ItemID=2B3322450619934B9D04F6F2B08AAEF0
  8. http://www.fzo.org.mk/WBStorage/Files/Zakon_za_lekovite_i_medicinskite_pomagala_(Sl._vesnik_br._106_od_05.09.2007_godina).pdf
  9. http://www.fzo.org.mk/default.asp?ItemID=C9043B4D1B15F543AE7B7EC1F1244C37
  10. MKD, Macedonian denar, 1EUR=61.2MKD