October 11, 2019

New criteria for the negotiation of prices for medicines

On August 1, 2019, the Ministry of Health announced the approval of a Ministerial Decree, issued in agreement with the Ministry of Economy and Finance, which sets new criteria for the price negotiation procedure between the medicine marketing authorisation holder (MAH) and the Italian Agency of Medicines (AIFA) in order to establish the price for medicines that will be reimbursed by the National Health Service (NHS).

The Ministerial Decree shall be published in the Italian Official Gazette. Once it is published, it will replace the previous CIPE[1] Resolution no. 3 of February 1, 2001 (CIPE Resolution 3/2001).

The approval of this Ministerial Decree aims to achieve transparency in price negotiation and the updating of the criteria established by the CIPE Resolution 3/2001. In particular, more emphasis has been put on the requirement for this added therapeutic value of the medicines that are under negotiation.

Scope of application

The Ministerial Decree applies to the following types of medicines:

  • medicines reimbursable by the NHS that have been authorised to be placed on the market in accordance with the centralised authorisation procedure, with decentralised authorisation procedure, the mutual recognition and national procedure;
  • categories of medicines exceptionally reimbursable by the NHS when there is no valid therapeutic alternative on the Italian market, in accordance with Law Decree no. 536 of October 21, 1996, (the negotiation of the price of these medicines is subject to a simplified and accelerated procedure); and
  • specific categories of class C and C-nn medicines purchased by NHS entities for public health needs.

The MAH’s request for negotiation

The price negotiation procedure is normally started by the MAH. However, AIFA may launch the negotiation in specific cases (i.e., in the event of medicines reimbursement for which has a significant impact in terms of the expenditure of the NHS).

In order to start the negotiation procedure, the MAH will submit the appropriate application to AIFA, which will be supported by specific documentation. By way of example, the MAH will send AIFA the following documents:

  • scientific documentation demonstrating the added therapeutic value of the new medicine compared with the treatments that are currently available on the Italian market. If the added therapeutic value of the medicine is not demonstrated, MAH will have to prove additional elements which may ground the interest of the NHS, such as a specific economic advantage connected to the use of the new medicine;
  • an estimate of the annual market shares that the MAH expects to acquire in the next 36 months in the specific market segment (the CIPE Resolution 3/2001 provided for a shorter period of 24 months);
  • MAH self-certification attesting its productive capacity and indicating the activities that the MAH intends to implement to ensure the supply of the medicine to the NHS in order to cover the population’s needs;
  • any other information relevant to the negotiation, such as the patent status of the medicine.

The Ministerial Decree also provides that AIFA will adopt a resolution in order to establish further detailed rules on how to prepare the documentation that is required by the MAH.

Aspects of the negotiation procedure and the functions of committees

The Ministerial Decree states that the negotiation procedure shall be completed within 180 days, instead of 90 days, as provided for by CIPE Resolution 3/2001. Moreover, the negotiation may be suspended only once, for a maximum of 90 days, in cases where AIFA requests additional documents or information. The MAH may also ask for suspension of the negotiations only once, to provide additional useful documentation.

The Ministerial Decree specifies the functions that are performed by the two committees that are relied upon by AIFA during the procedure: the Technical and Scientific Committee (Commissione Tecnico Scientifica – “CTS”) and the Pricing and Reimbursement Committee (Comitato Prezzi e Rimborso – “CPR”).

Specifically, the CTS evaluates the clinic value and the added therapeutic value of the new medicine compared with the currently available treatments. Outcomes of the CTS assessment may be negative if it deems that the new medicine has no added therapeutic value when compared to the existing treatments; CTS may also propose limitations on the reimbursement. Once the evaluation has been completed, the CTS transmits the documentation to the CPR.

The CPR examines the proposal submitted by the MAH, taking into consideration specific criteria, such as the CTS’s assessment on the therapeutic added value of the medicine, the cost of the medicine compared with the treatments already available in the NHS and the number of treatments expected. Then it proposes an agreement to the MAH and, on that basis, negotiations may start.

The conclusion of the negotiation procedure

The negotiation procedure is completed when AIFA and MAH reach an agreement setting out the conditions of reimbursement and the price. The price negotiated between AIFA and MAH (the ex-fabrica price) represents the maximum purchase price for NHS entities. In the event that agreement is not reached, the medicine is automatically classified in Class C and cannot thus be reimbursed for by the NHS.

According to the Ministerial Decree, to establish the terms and conditions of the agreement with the MAH, AIFA takes into account several criteria, such as sales volume and the product availability to the NHS.

Moreover, the Ministerial Decree states that the agreement includes the following provisions:

  • the MAH shall annually communicate to AIFA the data on sales, turnover, marketing costs and the patent status of the medicine, and report any discrepancies with respect to what was previously estimated;
  • only in case of low-cost medicines, may the MAH increase the price of medicines if: (i) there are difficulties in finding the raw materials, or (ii) the MAH can demonstrate the impossibility of remaining on the market under conditions that are established due to increases in production costs;
  • AIFA may establish certain automatic price calculation systems in favour of generic and biosimilar drugs for which there are similar medicines on the market, the price of which is reimbursed by NHS, and may indicate the conditions for automatic renewal of the agreement, meanwhile providing also for cases of progressive discounts.

The main features of the agreement executed between the MAH and AIFA

The Ministerial Decree establishes that the price agreement is valid for 24 months.

The agreement is tacitly renewed for a further 24 months on the same terms and conditions, unless one of the parties submits a proposal to amend the terms of the agreement at least 60 days (rather than 90 days, as provided for by CIPE Resolution 3/2001), before the natural expiry of the agreement. In the latter case, AIFA restarts the negotiations and the previous agreement remains in force until the conclusion of such negotiations.

Moreover, the Ministerial Decree introduces the possibility that AIFA can restart the price negotiation with the MAH before the expiry of the agreement in the event that: (i) there are market changes able to cause an excessive use of the medicine or to determine an unfavourable cost/benefit ratio, if compared to the alternative treatments that are available within the NHS, (ii) new evidence on the effectiveness and safety of medicine is available, and (iii) there is an evident shortage of the medicine on the Italian market.

Moreover, AIFA and the MAH may agree on innovative negotiating models in addition to typical contractual schemes, such as price-volume, turnover ceilings and pay-back.

[1] The Interministerial Committee on Economic Planning.

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