Drug Pricing System in Japan

Transcription

1 Reference Chuikyo - 1 June 6, 2012 Drug Pricing System in Japan April 2012 (Underlined phrases in red in this text: New features and modifications to the current pricing system adopted by the 2012 system reform) 1 Outline of the current pricing system 1. The National Health Insurance (NHI) Drug Price List ( NHI Price List ) is a list of drug prices to be reimbursed to hospitals and pharmacies ( health-insurance medical service providers ) under the national health insurance programs. 2. The latest NHI Price List was publicly notified by the Minister of the MHLW on Feb 10, 2012 based on the Drug Price Calculation Criteria proposed by Chuikyo*. 3. Drug prices listed in the NHI Price List are periodically reviewed and revised to reflect actual trade prices ( market prices ) based on market survey results ( drug price survey ). * Chuikyo: the Central Social Insurance Medical Council 2

2 Price Calculation of New Drugs 3 Price calculation method for new drugs New drugs Overview Similar drug(s), Yes Similar drug(s), No (1) Drugs of similar efficacy comparison-based price setting ( I ) (1) Premiums Novelty % Utility (I) 35 60% Utility (II) 5 30% Marketability (I) 10 20% Marketability (II) 5% Pediatric use 5 20% (2) Drugs of similar efficacy comparison-based price setting ( II ) (Drugs with less novelty) (3) Cost-based price setting Costs: Manufacturing (import) Sales & general administration Operating profit Distribution & marketing Consumption tax, etc (4) Adjustment w/ foreign prices (4) Adjustment w/ foreign prices (4) Adjustment w/ foreign prices Reduce the estimated price if 1.5 fold the foreign price Increase the estimated price if 0.75 fold the foreign price Reduce the estimated price if 1.5 fold the foreign price Reduce price if 15fold 1.5 the foreign price Increase the estimated price if 0.75 fold the foreign price (5) Specification (eg, strength)-based price adjustment Note) Kit products with high utility: Add 5% premium to costs of kit parts as well as Premium (5) above. 4

3 Calculation method for new drugs (1)-1 Basic rules When a similar drug is available, the daily price of the new drug is set the same to ensure fair market competition [drug of similar efficacy comparison-based price setting [ I ] ]. The reference drug is a similar drug that was added to the NHI Price List within the past 10 years and has no generic versions available in the list. = < Daily drug-price adjustment > 1 tab = 50 1 tab = X 50 x 3 tab = X x 2 tab 3 tab / day 2tab/day X =75 The reference drug should be similar to the new drug in any one of the following features: A Indications / efficacy B Pharmacological actions C Composition and chem structure D Application route, formulation category, dosage form, and administration method Premiums (eg, novelty, utility, marketability, and pediatric use) are added to the above price when the new drug has higher benefits than the reference drug. Novelty premium % Novel mechanism, improved efficacy / safety / therapeutic method Utility ypremium 5 60% Improved efficacy / safety / therapeutic method, etc Marketability premium 5%, 10 20% Orphan indications, etc. Pediatric-use premium 5 20% Ex. Dosage / administration clearly implies potential use in children. 5 Calculation method for new drugs (1)-2 Basic rules Novelty premium (70 120%) Marketability premium (I) (10 20%) New drugs (entered in the NHI Price List) that meet all of the following requirements: A The drug has a new clinically useful mechanism. B The drug efficacy & safety have been demonstrated to be greater than the reference drug with evidences. C The drug has been objectively confirmed to improve therapy of indicated diseases and injuries. Utility premium (I) (35 60%) New drugs that meet two of the following three requirements for utility premium:. Utility premium (II) (5 30%) New drugs that meet all of the following requirements: A The drug has a new clinically useful mechanism. B The drug efficacy & safety have been demonstrated to be greater than the reference drug with evidences. C The drug has been objectively confirmed to improve therapy of indicated diseases and injuries. D The drug has been objectively shown to offer greater therapeutic utility than the reference drug as a result of formulation improvement. * PAL: Pharmaceutical Affairs Law + New drugs that meet both the following requirements: A The drug is an orphan drug defined in the PAL* and an orphan indication is its main indication. B The reference drug has not been given marketability premium (I). Marketability premium (II) (5%) New drugs that meet both the following requirements: A Main indications of the drug correspond to separately defined indications for drugs with small markets. B The reference drug has not been given marketability premium (I) or (II). Pediatric-use premium (5 20%) New drugs that meet both the following requirements (except for drugs not studied in Japanese children): A Main indications or dosages for the indications of the drug explicitly implies the potential for use in children (including infants, suckling babies, newborns, and lowbirth-weight babies). B The reference drug has not been given pediatric-use premium. Note) If the drug also meets requirements for marketability II, only the pediatric-use premium is given. 6

4 Calculation method for new drugs (2) Special rules The price of a new but less novel drug shall be set at the lowest among the prices of drugs in its class entered to the NHI Price List during the past several years [drug of similar efficacy comparison-based price setting [II] ]. Less novel new drugs that t meet all of the following criteria: i The drug does not meet any requirements for premiums categories. More than 3 drugs in class are already available on the market. 3 years has passed since the entry of the oldest drug in class in the price list. As a rule, the drug is subject to the lower price of the following two options: (1) Lowest daily price of drugs in class listed during the past 6 years (2) Average daily price of drugs in class listed during the past 10 years (3) If the lowest price selected above is higher than the price calculated by the drug of similar efficacy comparison-based price setting (I) ( price of most similar drug), this price is compared to the following two options to select the lowest price among (3), (4), and (5). (4) Lowest daily price of drugs in class listed during the past 10 years (5) Average daily price of drugs in class listed during the past 15 years 7 Calculation method for new drugs (3) Special rules If no reference drug is available, the price of the new drug is set based on costs such as those of raw materials and manufacturing (cost-based price setting). (Example) (1) Raw materials (API, additives, containers, packages, etc.) (2) Labor ( = 4,026 < Note 1 > labor time ) (3) Manufacturing ( = < Note 2 > ) (4) Total manufacturing (importation) costs (5) Marketing, R&D, etc. (5/(4+5+6) (4 5 + = < Note 2 > ) (6) Operating profit ( 6 / ( ) = < Note 2 > ) (7) Distribution ( 7 / ( ) = < Note 3 > ) (8) Consumption tax ( 5% ) Total : drug price (Underlined values shall be average rates [mean value over the last 3 years in the pharmaceutical manufacturing industry], as a rule). %Operating profit (currently 19.1%) is adjusted by ± 50%, depending on novelty, efficacy, and safety compared to existing drugs. <Note 1> Unit labor cost: Average over : Monthly Labor Survey (MHLW) <Note 2> Labor expense rate, sales & general administration expense rate, operating profit rate: Average over : Handbook of Industrial Financial Data (Development Bank of Japan) <Note 3> Distribution expense rate: Average over : Statistics on the Pharmaceutical Industry (Economic Affairs Division, Health Policy Bureau, MHLW) API: Active pharmaceutical ingredient 8

5 Calculation method for new drugs (4)-1 Adjustment with foreign prices The price, whether calculated by the drug of similar efficacy comparisonbased price setting (I) or by cost-based price setting, is compared with foreign prices and recalculated and adjusted accordingly if price differences are substantial [foreign price-based adjustment]. 1. Average foreign price: Mean of US, UK, German, and French prices 2. Criteria for adjustment: (1) 1.5 fold higher than the average Lower the price (2) 0.75 fold lower than the average Increase the price (1) 1.5 fold (2) 0.75 fold 1 Calculated price Foreign average price Foreign average price 1 3 Foreign average price 1 2 Foreign average price (Note: Maximum price increase: 2 fold) 9 Calculation method for new drugs (4)-2 Adjustment with foreign prices Special provisions in calculating price based on foreign average price The highest foreign price 5-fold higher than the lowest price is not considered in the adjustment for cases where two or more foreign prices are available for comparison. The highest foreign price 2-fold higher than the arithmetic average of lower prices is assumed to be equivalent to 2 fold the arithmetic average in the price adjustment for cases where three or more foreign prices are available for comparison. The price of new drug is adjusted based on the foreign average price pre-arranged as above. The price increase adjustment with foreign price is not permitted in the following instances: Price calculation is based on the drug of similar efficacy comparison-based price setting (II) (lownovelty drugs). There are multiple drug specifications (ie, strengths) subject to premium considerations which are valued at both higher and lower foreign prices. There are multiple drug specifications subject to premium considerations among which only non- general-purpose specification is subject to the price setting. Only one foreign price is available for price adjustment. 10

6 Calculation method for new drugs (5) Adjustment among specifications The price of a new drug (subject to the drug of similar efficacy comparison-based price setting [I] or [II] ) for a non-general-purpose specification is calculated based on the price ratio with the foreign price of the general-purpose specification [specification-based price adjustment]. Ex. The calculated price of Tablet A for a general purpose specification (5 mg) is NHI prices of a reference drug (Tablet B): 10-mg tab: (general purpose), 5-mg tab: (non-general purpose) Price ratio between specifications of a reference drug (Tablet B): log ( / ) / log ( 10 / 5 ) = Drug prices: Drug prices: non-general purpose p vs. general purposep non-general purpose p vs. general purposep Calculated prices of Table A for non-general-purpose specifications (2.5 & 10 mg) : 2.5-mg tab: x ( 2.5 / 5 ) = mg tab: x ( 10 / 5 ) = Calculated drug price: General-purpose specification Strength: Non-general vs. general-purpose 11 Calculation method for new drugs (6) Kit products Kit products: Products composed of APIs and delivering systems (eg, g prefilled syringes) Price calculation method: Price of APIs contained in the kit calculated by routine procedures for listing in the NHI Price List + Costs of materials (other than APIs) to feature kit parts which are necessary for the manufacture & distribution of the kit Premiums for kits having high clinical utility: A premium (A = 5%) is given to the new kit (other than kits already listed in the NHI Price List), provided that the new kit meets any one of the following requirements (its structure and functions must be novel compared to existing kits). (a) Capable of reducing a risk of infection (b) Capable of reducing a risk of erroneous dispensing (c) Capable of patient treatment in emergency setting (d) Capable of improving quality of care 12

7 Calculation method for new drugs (7) Combination products If a new combination product meets all of the following requirements and if all of APIs are original i products of the manufacture, the price is calculated l by multiplying 0.8 to NHI prices of the individual APIs. Premiums are given when certain requirements are met. i) All individual APIs are listed in the NHI Price List. ii) Clinical efficacy of the combination product is essentially the same with the integration of the APIs listed in the price list. iii) The administration route is the same between these products. Note) The above rule does not apply to anti-hiv drugs as well as injectable or topical combination o products with evident supportive clinical ca data or clinical ca merits. The prices of these products are calculated under the following rules: 1) The price is not lower than the total of individual API prices. 2) The price is lower of the following, if one or more of APIs are not the original of the manufacturer: (1) 0.8 x price of the own original x price of supplier ss original drug (2) 0.8 x price of the own original + lowest price of generic drugs 13 Calculation method for new drugs (8) Other new rules New drugs created by optical resolution of existing drugs (racemates) The price of a new drug created by optical resolution, which is similar in dosing route, indications, etc. to a racemate(s) already listed in the NHI Price List, is calculated by multiplying 80/100 by the value obtained by the drug of similar efficacy comparison-based price setting (I) using the racemate(s). (Premiums are added to the calculated price if the new drug has greater benefits than the reference drug.) This rule is not applied to a new optically-active drug that meets any one of the following criteria: (A) The reference racemate was entered in the NHI Price List a long time ago ( 15 years). (B) The optical resolution provided objective evidences of greater efficacy and/or safety than the reference racemate. (C) The market authorization holder of the new drug is not the market authorization holder of the reference racemate. 14

8 New drug pricing process Marketing authorization Request for entry into the NHI Price List 1st meeting on pricing Hearing on marketing authorization holder s opinion, if requested Objection, No Notice of calculated drug price 60 days, as a rule 90 days at the latest Objection, Yes Appeal of dissatisfaction 2nd meeting on pricing Hearing on applicant s opinion on dissatisfaction Notice of decision Reporting of the NHI price to and consent from Chuikyo Price listing (4 times/yr) 15 Revision of Prices Listed in the NHI Price List 16

9 Calculation method for listed drugs (1) Volume Distribution of market prices Weighted average price + consumption tax ( 80) Price adjustment (2%) New price ( 82) Price Price before revision ( 100) The new price is calculated by adding consumption tax and price adjustment rate (2% of market price for securing drug supply to the market) to the weighted average wholesale price (market price before tax) to hospitals / pharmacies. New price weighted average wholesale price 1 + Consumption tax rate = (market price before tax) to x + Adjustment t (including local consumption tax) hospitals / pharmacies 17 Calculation method for listed drugs (2) Special rules (1) 1. Price reduction of original drug following entry of generic drugs in the NHI Drug Price List ( special drug price reduction ) The price of an original is revised in accordance with the basic rules at every time of revision but further reduced by 4% to 6% if the first generic drug (except for an orphan drug, etc.) has been entered to the price list. 2. If pediatric or orphan indications are approved or if true clinical utility has been verified after launch, premiums are added to the price revised in accordance with the basic rules. 3. Recalculation of price (1) Drugs sold far more than expected due to massive changes in therapeutic practices induced by eg, changes in usage, target populations [expanded market size-based price resetting] # Similar drugs subject to repricing based on expanded market size do not include those that were entered in the price list long ago and that do not compete with each other in the market. # Drugs subject to cost-based price setting are repriced when their market sizes have expanded by more than 10 times their forecasted sizes AND have surpassed 10 bil. (2) Drugs whose main indications have been changed [new indications-based price resetting] (3) Drugs whose dosage & administration for main indications have been changed [new dosage/administration-based price resetting] (4) Drugs with high health & medical needs but priced too low to continue supply [unprofitable trade-based price resetting] 18

10 4. Lowest price rule Calculation method for listed drugs (3) Special rules (2) When the calculated price of a listed drug is lower than the lowest formulation-based price, the lowest price is selected for the listed drug. 5. Price revision of new drugs protected under patent or in the reexamination period The Premium System for the Promotion of Innovative Drug Discovery and Resolution of Off-Label Use introduced on a trial basis in Fiscal 2010 has been continued in Fiscal 2012 with revisions to matters that needed verification for price calculation. 6. Price revision of combination products If an ingredient of the combination product is subject to the consideration for special price reduction, the price of the combination product is calculated by taking into account the revision rate of the ingredient. 7. Price revision of generic drugs In addition to the current rules for pricing by generic name (price calculated based on current market prices: < 20% of the highest price), market prices of generic drugs between 20% and 30% of the highest are weighted and the average price is listed as the uniform NHI price for the generic name. If the price of a generic drug calculated based on current market prices is 30% of the highest, multiple calculated prices which are less than 3% of the highest are weighted and the average price is listed as the uniform NHI price for such drugs. 19