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CYPRUS: Pharma prices 20-30% too high, says WHO

21 August, 2014

The single most important challenge of the pharmaceutical sector in Cyprus is the absence of a health insurance scheme and the resulting lack of a reimbursement system that accounts for the peculiarities of the local market, the World Health Organisation (WHO) said in a report for the pharmaceutical pricing policy in Cyprus.
The study said that medicines should be priced 20-30% lower to compensate for a drop in GDP per capita, while generic brands should be priced at 80% of that.
The report that has been delivered to the Ministry of Health since June but released on Wednesday, contains recommendations for the short-term, interventions aiming at addressing gaps in the organisation and delivery of health and pharmaceutical services in anticipation of the introduction of the National Health Insurance Scheme (GESY) and recommendations for the long-term.
“Without a reimbursement system, the country is unable to exercise any form of market power by implementing tools that are used in most other EU member states,” the report said.
WHO noted that the Ministry of Health should continue the system of external pricing referencing (EPR) but should consider introducing risk-sharing agreements in the negotiation process of the public sector and respect the confidentiality of these agreements.
As the current legal framework does not allow for direct and confidential negotiation with manufacturers, WHO recommends “that such a framework be put together as a matter of priority.”
The report also said that the prices should be re-calibrated on the basis of the current EPR reference basket by means of a wealth adjustment based on GDP differences. The MoH should introduce a wealth adjustment to the prices derived from external price referencing, calculated as a function of GDP differences between Cyprus and the current basket of countries in the EPR scheme. Based on the decline in GDP per capita between 2009 and 2012, the level of correction should be 8.5%, the report noted.
It also pointed out that the implementation of “a modest-to-moderate across-the-board price cut of 8.0-8.5%” should be considered, pointing out however, that it is important to ensure this will not have a spill-over effect in other countries that reference the Cypriot prices, which could jeopardise availability of these products.
WHO also suggested that the MoH should implement a price reduction between 20-30% to all off-patent originator brands, while generic versions of the off-patent originator brands should continue to be priced at 80% of the originator prices.
“A price decline in the above range will ensure savings to private sector patients and is unlikely to jeopardise supply to the public sector,” the report noted.
The report recommends that the price should be revised on an annual basis, which would allow the competent authorities to capitalise sooner on price revisions.