A complex scenario

Last May, Royal Decree-Law 16/2012 was validated by the Spanish Congress as part of the austerity measures taken by the Government.

The aim of the new regulation is for the State to save EUR 7bn, of which around EUR 3bn will fall on the pharmaceutical industry; this measure being a direct consequence of the State’s powers to fix prices.

The new regulation has a major impact on the pharmaceutical industry and is generating significant controversy in the sector, especially as regards prescription and pricing. It will be necessary to await the regulatory development of numerous measures, which are mentioned in Royal Decree-Law without much detail.

Prescription and dispensation

Royal Decree-Law introduces fundamental changes:

  • A new distinction is made among acute conditions, first prescription in chronic conditions, and continuing treatment of chronic conditions.
  • Under these categories, the prescription of medicinal products included in the reference price system or in homogeneous groups (as described below) not included in this system, will generally be by active ingredient (as opposed to brand name) for acute conditions.
  • For treatment of chronic conditions, Royal Decree-Law states that the first prescription corresponding to the first treatment will generally be by active ingredient. However, it will be possible to continue the treatment prescribing a brand name, when the medicinal product is included in the reference price system; that is, the lower priced product (precio menor) within the homogeneous group.

When the prescription is made by active ingredient, the pharmacist will dispense the "lowest priced" medicinal product (precio más bajo) of its homogeneous group, and if the price is the same, the corresponding generic or biosimilar product. Similarly, when prescription is made by brand name, if the prescribed medicinal product is priced higher than the lowest price of the homogeneous group, it will be replaced by another of the lowest price and if the price is the same, by the corresponding generic or biosimilar product. Accordingly, there is a clear push in favor of the generic product and a significant pressure on pricing of products generally.

The new wording is not clear at all and is leading to a lot of confusion amongst pharmacists and pharmaceutical companies.   There are now four different concepts: "reference price system", "homogeneous group", "lower price" and "lowest price". Lowest price is the new category which was introduced by Royal Decree-Law.

  • The "reference price" is the maximum amount with which the medicinal product presentations included in each of the reference groups will be financed, provided they are prescribed and dispensed from public funds. The reference group is made up of all presentations of a financed medicinal product with the same active ingredient and route of administration. The group must include at least one biosimilar or generic presentation financed by the National Health System (unless the medicinal product or its main active ingredient have been authorized for a minimum of ten years in a European Union member state, in which case the existence of a generic product will not be essential to establish a group).
  • The "homogeneous group" is made up of presentations of financed medicinal products with the same active ingredient by reference to the dosage, content, pharmaceutical form and route of administration, which could be inter-changed in dispensation.
  • The "lower price" is set by the Health Ministry, for each homogeneous group and is incorporated into the National Health System "Nomenclátor" (list of products included in pharmaceutical assistance updated every month by the Health Ministry), but this price does not necessarily have to be the same as the lowest price in the market .
  • The "lowest" price is the lowest market price.

According to Royal Decree-Law, when the pharmacist is obliged to dispense the lowest priced medicinal product, he must dispense not the lower priced product according to the list of lower prices, but the one marketed at the lowest price at any given moment.

This situation involves price changes every month and is creating stock problems in pharmacies. Moreover, some generic pharmaceutical companies are lowering their prices aggressively and are then unable to meet the demand, which is causing supply problems.  

The Health Ministry has distributed the following diagram in order to clarify this confusing situation (click here to see the diagram).

Reference prices/selected prices    

A substantial change has been introduced through the double mechanism "reference price system" and "selected price system."

  • Reference prices : as explained above, in order to determine a new reference group it will no longer be necessary for a generic or biosimilar product to exist in the market. It is sufficient that the medicinal product or its main active ingredient has been authorized (not marketed) for a minimum of ten years in a European Union member state.

The Government may review the lower prices of new groups included in the reference price system every three months. For existing ones, the price revision will be annual.

  • Selected prices: this new system is created by Royal Decree-Law for financed and unfinanced medicinal products and medical devices.

Some people believe this system will involve a covert tender. In order to bring this new system into effect, the Health Ministry will prepare a reasoned proposal setting out the selected maximum price applicable in each case. In doing so, it will take into account the consumption of the group, the budgetary impact, the existence of at least three medicinal products in the group and that there is no risk of shortages. Among the submissions received in response to the Ministry’s proposal, the best price will be selected. The laboratories concerned must expressly declare their commitment to ensure an adequate supply. Medicinal products and medical devices that exceed the maximum price will be excluded from the National Health System financing for the time that the selected price applies. This new selected price will be effective for two years and cannot be modified in this period.

Other changes

Along with the above mentioned measures there are new features such as the ability to "de-fund" medicinal products.

The "de-funding" of over 400 medicinal products will probably come into force in August 2012. Royal Decree-Law allows medicinal products to be excluded from National Health Service pharmaceutical assistance on the following grounds: setting of selected prices, coexistence with an OTC medicinal product with the same active ingredient and the same dosage, consideration of the medicinal product as an advertising medicinal product in the European area, consolidated security and efficiency profiles of the active ingredient, prescription for minor symptoms and compliance with criteria of non-inclusion in public financing.

Although the Autonomous Regions (Comunidades Autónomas) largely object to this measure, the Spanish association of innovative pharmaceutical companies, "Farmaindustria", is happy with this decision. Farmaindustria considers that in order to safeguard the National Health System’s sustainability and access to therapeutic innovations it is necessary to make savings through de-funding certain medicinal products prescribed for minor symptoms.

Royal Decree-Law introduces other changes such as: new criteria for inclusion in pharmaceutical assistance (the innovation component for undisputable therapeutic advances will be a new criterion), increased co-payment, changing the scale of deductions for the pharmacy or adapting the packaging to the duration of treatment.

In short, the Royal Decree-Law introduces many changes aimed at reducing spending, but it will be necessary to await future development of this regulation and the practical implementation in order to assess the implications more clearly.