By Constantinos Psillides
WORLD Health Organisation (WHO) experts have suggested an across-the-board cut of 8-8.5 per cent on drug prices in Cyprus as part of needed sweeping reforms before a National Health Scheme (NHS) can be effectively implemented.
The WHO report, commissioned by the government, was made public yesterday.
It highlights not only the high price of branded drugs but also generic ones, the plethora of private pharmacies and their mark-ups, the lack of mechanisms to monitor and control the prescribing behaviour of physicians, and their relationships with pharmaceutical companies.
According to the report, in 2011, €106.8 million (50.5%) and €104.5 million (49.5%) were spent in the private sector and public sector, respectively, despite the private sector serving less than 20% of the population.
“Per capita spending on drugs in the private sector is among the highest in the world,” said the report, adding that Cypriot generic drug prices were among the highest in Europe. Cyprus and the Czech Republic are the only EU member states that rely on foreign list prices to set domestic generic drug prices. By relying on the list prices instead of transaction prices in other countries, the Cypriot consumer was vastly overpaying for generic drugs.
“The private sector prices are high and the burden is borne by patients. This can lead to salient affordability issues and may even deter some patients from seeking pharmacologic treatment,” the WHO said.
“Given the current economic climate the decreased purchasing power of the average Cypriot patient, downward pricing changes would ensure more affordable prices for the private sector.”
Compounding this, the WHO said that currently, there were no mechanisms in place to monitor and control the prescribing behaviour of physicians. Coupled with brand awareness, this has led physicians to potentially over-prescribe on-patent, expensive products with no fear of financial or non-financial penalties.
“It is essential to break any financial relationships between physicians and pharmaceutical manufacturers or the pharmaceutical supply chain,” said the report.
There also did not appear to be any limits on promotional activities by manufacturers and distributors or any self-regulating practices (such as a code of practice), potentially incentivising providers to induce demand.
“The pharmacy remuneration structure and the absence of generic substitution favour the dispensing of expensive products,” the report said.
The report cited data provided by the Pharmaceutical Services, which showed that 81.3 per cent of sales in the private sector, in 2013 (€110.5 million), concerned medicines for which their wholesale price was below €50.
Based on current practices, these medicines fall into the broad category of the 37 per cent retail markup added to the wholesale price. “This is one of the highest allowable markups in EU Member States and merits revision,” the report added.
In addition to a recommended across-the-board price cut of 8.0-8.5 per cent, the WHO suggested a price reduction between 20-30 per cent to all off-patent originator brands. Generic versions of the off-patent originator brands for which Cypriots are vastly overpaying, should continue to be priced at 80 per cent of the originator prices, it said. “A price decline in the above range will ensure savings to private sector patients and is unlikely to jeopardise supply to the public sector,” said the report.
It also recommended changing the basket of countries used in calculating the list price of the medicines and revise the list annually. Improving the perception of generic medicines was also essential as patients are currently sceptical about their value.
The report deals indepth with issues such as drug pricing that need to be addressed before the NHS can be implemented. It warns that it will take at least three to four years before the reforms will see results.
The issue of consumers being overcharged for drugs, was showcased in the worst possible way two months ago.
Auditor General Odysseas Michaelides filed a report saying that the committee in charge of pricing failed to take corrective action when drug prices in Greece rose in 2009, resulting in millions of euros being wasted on overpriced drugs because the committee continued to use Greece as a ‘cheap’ benchmark for drugs prices.
Greece was meant to be used as a market sample of cheap drugs, thereby offsetting the more expensive drugs sold in Switzerland. Austria and France, which are also used in the sample.
When drug prices in Greece increased between 2009 and 2012, no measures were taken to adjust the formula, leading to allegations that millions of euros were spent on drugs unnecessarily because the committee continued to use Greece as a ‘cheap’ benchmark for drugs prices. The WHO report suggested using two low-priced and one medium-priced countries on the list.
Current news also reinforced the experts views about lack of control over doctors. On Saturday, Health Minister Phillipos Patsalis ordered a probe on the prescription practices of a doctor at the Cyprus Institute of Neurology and Genetics after suspicions arose that he favoured prescribing a drug subsidised by the state, pocketing the subsidy.
While the health ministry press office sent the WHO report to the media yesterday, Patsalis did not make any comment on the subject.