The New Pricing and Reimbursement of Pharmaceuticals in Italy Prof. Fabrizio Gianfrate LUISS University & Business

1. The New Pricing and Reimbursement of Pharmaceuticals in Italy Prof. Fabrizio Gianfrate LUISS University & Business School, Rome, Italy EFA – Vilnius - May, 29 2010

2. Organization of Italian NHS NHS € MAJOR HOSPITALS REGIONS € € Local Healthcare Units (ASL) € € € € € + SMALL HOSPITALS Patient G.P./Spec Pharmacies € € € Wholesaler Company €

3. Italian Healthcare expenditure 1998-2009 Pharma tot: 17% € bn

4. Main Items of NHS Expenditure (2009) Public Health Care Exp./GDP = 6,7% Total Health Care Exp./GDP = 8,7% the public hospital expenditure is 47% of the public health care expenditure Ministry of Economy, 2010 * estimation

5. NHS and Private pharma expenditure composition (2009) Private pharma exp.: 7 bn € NHS pharma exp: 16 bn € (11,8 bn retail; 4,2 Hospital) Source: Farmindustria (mod.)

6. Pricing and reimbursement of drugs Pricing & Reimbursement: Negotiation CLASS A: Assigned price – Reimb. 100% OFF-PATENT Assigned price (min – 20% of patented); Reimb. Reference Price CLASS H Only Hospital; Assigned price; 100% reimbursed CLASS C Free price – Pom No reimb. CLASS C bis Free price – OTC. No reimb.

7. Market access process AIFA Italian Drug Agency Registered medicines off patent reference price in patent “negotiated” price NHS pricing and reimbursement Hospital Bid Hospital medicines purchased on local bid ASL (Local Healthcare Units) Medicines bought by local units – Retail channel

8. Freedom of the company to choose if asking for reimbursement or not MA quite fast for not reimbursed medicines Discussion is mainly focused not on the reimbursement system but on the price system It means that the decisions on the medical value is tied to the price Pro and Cons of the Italian reimbursement system

9. Negotiation Only one process price-reimbursement Per product On portfolio Temporary Conditional: including specific clauses or agreements (price/volume, monitored, ecc.)

10. Negotiation main criteria NHS budget impact Comparison with prices of other EU countries Value of innovation degree Temporary application by monitoring Price volume ratio Cost effectiveness analysis Total mkt of that area N. of patients supposed to treat Mkt forecast and expected share Annual cost or saving for NHS Ranking in therapy Portfolio compensation Other major EU countries pricing Risk sharimg – Payment by results

11. Hospital Price • for all medicines bought by hospitals the price is based on AIFA negotiation system • Starting price for negotiation is 50% of the negotiated price • Local bid (when applicable)

12. Only for off-patent medicines (ATC Ctg. IV level) Reference price is the lowest price of the ATC category IV Reference Price for off-patent

13. Last 5 years of Gov’nts rules targeting pharmaceuticals • Introduction of the National Drug Agency (AIFA) • Cap of 13% farma exp. of NHS expenditure • Price reduction of 5% (7% on 2003) • Regional based formularies • Direct distribution from hospitals • Direct purchase from hc unit (50% discounted) • Price cut of off-patent drugs • Price/volume ratio at negotiation • Strong reduction of SPC time • New national formulary based on reference price • Pharmacies extra discount • Prescription limitation notes • “Pay-back” clause for overspending 13% on NHS budget • 5% tax on promotional expenses • Regional reference price on top spending patented drug classes • New caps: 14% (retail) and 2,4% (hospitals) • Price cut of generics

14. NHS pharma expenditure caps Ceiling of the public pharmaceutical expenditure 13,3% of the financed public health care fund for retails distribution (primary care) Payback from industries, wholesalers, pharmacies - Direct from industries on respective calculated budget - By discount from wholesalers and pharmacies 2,4% of the expenditure of medicines delivered through Hospitals Extra cap only from regions Only if all NHS exp exceed To be taken even from other extra HC budget 20% of annual incremental resources to innovative drugs prices

15. Innovation evaluation criteria therapeutic effect therapeutic innovation = + disease seriousness availability of treatments + a IMPORTANT b a a c for each therapeutic agent b b a b MODERATE c c c a b MODEST technological innovation c pharmacological innovation

17. Drug Agency patient log for monitored treatments Fonte: www.agenziafarmaco.it

18. Drugs registered with risk sharing • ERLOTINIB (Tarceva) 50% by NHS for 2 months/2 cycles • SUNITINIB (Sutent) 50% by NHS for 3 months/2 cycles • SORAFENIB (Nexavar) 100% by NHS for 2 months then non refound non resp. • DASATINIB (Sprycel) 50% by NHS for 1 month/1 cycle (cytogenetic resp.) • NILOTINIB (Tasigna) 100% by NHS for 1 month then refound non resp. • BEVACIZUMAB (Avastin) 50% by NHS for 6 weeks then 100% after 15° cycle (10 mg/Kg every 2 weeks) or 16° cycle (15 mg/Kg every 3 weeks) • PEGAPTANIB (Macugen) 100% by NHS for 2 doses, then refound non resp. • RANIBIZUMAB (Lucentis) 100% by NHS for 3 months then refound non resp. • LAPATINIB (Tykerb) 100% by NHS for 3 months then refound non resp.

19. Fabrizio Gianfrate Professor of Health Economics Luiss University and Business School University of Ferrara Consultant Editor-in-chief Tecnica Ospedaliera magazine tel.: +39 335 6060065e-mail:fgianfrate@tiscali.it