Pricing and reimbursement

Price regulation

To what extent is the market price of a medicinal product or medical device governed by law or regulation?

The prices of pharmaceuticals in Israel are subject to MoH control.

The prices of POMs are determined under the 1996 Law of Supervision of Prices of Consumer Goods and Services and the 2001 Order for Supervision of Prices of Consumers Goods and Services (Maximum Prices for POMs), as amended periodically, as well as the 2001 Order for Supervision of Prices of Consumer Goods and Services (Application of Law on Preparations).

The monitoring and pricing system of POMs is based on market prices prevailing in certain corresponding countries, from which a normative price is derived to reflect the retailer costs of the drug in these corresponding countries. Currently, as amended in 2018, the maximum price will be calculated as an average of the three lowest prices from seven corresponding countries (Belgium, Hungary, Spain, France, the United Kingdom, Germany and the Netherlands), or if there is no corresponding price in three countries, an average of the relevant one or two countries, as the case may be.

Negotiations between manufacturers and providers

Must pharmaceutical and medical device manufacturers negotiate the prices of their products with public healthcare providers?

Health funds are responsible for purchasing the majority of pharmaceuticals sold in Israel, thus enabling them to purchase off-patent pharmaceuticals at prices below the maximum prices set in the MoH pricing list.

Pharmaceutical manufacturers usually negotiate prices with the MoH as part of the decision process regarding additions to the basket. This is usually done through a hedging arrangement capping the state’s expenditures during the first few years after introduction to the basket.

Reimbursement

In which circumstances will the national health insurance system reimburse the cost of medicines?

Health funds bear (with mostly nominal co-payments in certain circumstances) the cost of medicines within the basket.

In order to be funded for treatment outside the scope of the basket (also for off-label or compassionate purposes), a petition to a special committee of respective health fund must be submitted and its decision may be appealed to a regional labour court. Notably, in certain cases, these treatments may already be included in supplementary health fund service packages, which the majority of insureds hold.

Certain patients are entirely or partially exempt from co-payments, such as chronic patients who are exempt from paying for pharmaceuticals included in the basket above a certain limit.

Health funds have several reimbursement routes, for example, for insureds with financial needs or for certain services. In addition, a family cap for co-payments is set by health funds, and any overcollection of payment will be reimbursed upon request.

In consequence of a class action filed against a health fund, retroactive reimbursement also exists for holocaust survivors subsidised by the German government for their recognised health condition. The reimbursement is for medicine and treatment for the recognised health condition.

MoH Guideline No. 14, concerning conducting human clinical trials, as amended in 2016, states that patients who underwent clinical trials will continue to receive the research product - a pharmaceutical - for free for the following three years under certain conditions (the trials were successful, the product was registered for the requested indication, there is no concern of public health ramifications for the long term, and the like).

Price adjudication

If applicable, what is the competent body for decisions regarding the pricing and reimbursability of medicinal products?

Each health fund internally operates the pricing and reimbursability of medicinal products purchased for the health fund within the framework of the relevant laws and regulations.

A department at the MoH is responsible for planning, budgeting and pricing health services. It monitors and provides financial consultation to hospitals and health funds, coordinates pricing committees, conducts financial analyses, etc.

A Ministry of Finance pricing committee established under the 1998 Law of Supervision of Prices of Consumer Goods and Services provides its recommendation to the relevant ministers with respect to price monitoring. An administrative appeal is available.

Discount

Are manufacturers or distributors of medicinal products statutorily obliged to give a discount to health insurance schemes or third parties?

The manufacturers or distributors of medicinal products are statutorily only required not to exceed the maximum prices. In view of the pricing system, the possibility of parallel import and import of non-registered pharmaceuticals under Regulation 29, competitive prices are typically negotiated for off-patent drugs.