workshop on medicines price negotiations in the … · 1 summary ensuring access to essential...

12–14 March 2019Manila, Philippines

Meeting Report

WORKSHOP ON MEDICINES PRICE NEGOTIATIONS IN THE

WESTERN PACIFIC REGION

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WORLD HEALTH ORGANIZATION

REGIONAL OFFICE FOR THE WESTERN PACIFIC

REPORT SERIES NUMBER: RS/2019/GE/17(PHL) English only

MEETING REPORT

WORKSHOP ON MEDICINES PRICE NEGOTIATIONS IN THE WESTERN

PACIFIC REGION

Convened by:

WORLD HEALTH ORGANIZATION

REGIONAL OFFICE FOR THE WESTERN PACIFIC

Manila, Philippines

12–14 March 2019

Not for sale

Printed and distributed by:

World Health Organization

Regional Office for the Western Pacific

Manila, Philippines

October 2019

NOTE

The views expressed in this report are those of the participants of the Workshop on Medicines

Price Negotiations in the Western Pacific Region and do not necessarily reflect the policies of

the conveners.

This report has been prepared by the World Health Organization Regional Office for the

Western Pacific for Member States in the Region and for those who participated in the

Workshop on Medicines Price Negotiations in the Western Pacific Region in Manila, the

Philippines from 12 to 14 March 2019.

CONTENTS

SUMMARY ........................................................................................................................................................... 1

1. INTRODUCTION .............................................................................................................................................. 2

1.1 Meeting organization .................................................................................................................................... 2

1.2 Meeting objectives ........................................................................................................................................ 2

2. PROCEEDINGS ................................................................................................................................................. 2

2.1 Opening session ............................................................................................................................................ 2

2.2 Session 1. Overview of medicines pricing .................................................................................................... 2

Session 2. Medicine prices: Impact on universal health coverage and public health.......................................... 5

Session 3. Negotiating for medicines: country experiences................................................................................ 6

Session 4. Current practices in negotiating medicine prices ............................................................................... 9

Session 5. What and who are we negotiating for: a summary of medicines pricing- Mr Tsyganov ................. 10

Session 6. TRIPS flexibilities as levers for price negotiation- Dr Salma Bahri ................................................ 11

Session 7. Principles of negotiation- Dr Rintoul .............................................................................................. 11

Session 9. Group work session – mock negotiations ........................................................................................ 12

3. CONCLUSIONS AND RECOMMENDATIONS ........................................................................................... 14

3.1 Conclusions ......................................................................................................................................... 14

3.2 Recommendations....................................................................................................................................... 14

3.2.1 Recommendations for Member States ................................................................................................. 14

3.2.2 Recommendations for WHO ............................................................................................................... 15

ANNEX 1 ............................................................................................................................................................. 16

ANNEX 2 ............................................................................................................................................................. 17

ANNEX 3 ............................................................................................................................................................. 24

Keywords: Drugs, Essential – Economics / Drug Costs / Pharmaceutical preparations –

economics / Price controls

1

SUMMARY

Ensuring access to essential medicines has been recognized in the Sustainable Development

Goals, specifically in target 3.8, which is to achieve universal health coverage including

access to safe, effective, quality and affordable essential medicines for all without financial

hardship.

Treatments are more effective than ever with life-saving innovative medicines coming into

the market, but prohibitively high prices hinder access. High prices push individuals and

families into poverty and drain the limited resources of national health systems. In many

Member States in the Western Pacific Region, the out-of-pocket share of total expenditure on

pharmaceuticals is high.

Monopolistic market dominance observed with new treatments for hepatitis C, cancer and

noncommunicable diseases in recent years has triggered a global debate around affordable

medicines for all and the need for stronger price regulations and subsequent Member State

requests to WHO to facilitate learning and capacity-building in medicines price negotiations.

Effective negotiation starts from understanding complex price components, profit margins

and various transactional costs by the manufacturers, wholesalers, distributors and retailers. A

structured approach to preparing and conducting price negotiations is needed based on market

research and economic evaluations.

A three-day Workshop on Medicines Price Negotiations in the Western Pacific Region was

held in Manila, the Philippines from 12 to 14 March 2019. Twelve countries participated in

the meeting, namely, Brunei Darussalam, Cambodia, China, Japan, the Lao People’s

Democratic Republic, Malaysia, Mongolia, New Zealand, the Philippines, the Republic of

Korea, Singapore and Viet Nam. Experts were also invited from Australia’s Department of

Health, Malaysia’s Ministry of Health and Thailand’s Health Intervention and Technology

Assessment Program.

The participants discussed the issues and current landscape of countries in terms of

negotiation and agreed that stronger collaboration among neighbouring countries is needed to

share information on prices and suppliers of quality and affordable medical products, in

addition to networking to support the neighbouring countries to establish a policy, system,

process and mechanisms for price negotiations.

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1. INTRODUCTION

1.1 Meeting organization

A three-day Workshop on Medicines Price Negotiations in the Western Pacific Region was

held in Manila, the Philippines from 12 to 14 March 2019. The participants were from 12

countries: Brunei Darussalam, Cambodia, China, Japan, the Lao People’s Democratic

Republic, Malaysia, Mongolia, New Zealand, the Philippines, the Republic of Korea,

Singapore and Viet Nam.

1.2 Meeting objectives

The objectives of the meeting were:

1) to share experiences and analyze obstacles faced by Member States in conducting

effective negotiations;

2) to build skills in preparing and conducting price negotiations; and

3) to identify future opportunities for Member States to collaborate on price negotiations.

2. PROCEEDINGS

2.1 Opening session

Dr Socorro Escalante, Coordinator, Essential Medicines and Health Technologies, World

Health Organization (WHO) Regional Office for the Western Pacific, delivered the opening

remarks. She started by acknowledging the experts, temporary advisers and participants and

emphasizing that their diverse experiences would be valuable to the workshop. She provided

a significant background that the WHO Regional Office for the Western Pacific has been

providing support to Member States to improve their access to essential medicines. Four

years ago, the Asia Pacific Network for Access to Medicines was participated by countries

from the WHO Western Pacific and South-East Asia region. In response to several requests

to build capacity in price negotiation, this workshop was developed.

As stated by Dr Escalante, price negotiation is complex and multidimensional. With countries

facing the challenges of fewer resources, increasing population health demands and more

complicated marketing strategies, this meeting aimed to identify approaches in addressing

emerging challenges, complexities and better management of resources.

Following the opening remarks, Dr Escalante provided an overview of the three-day

workshop. Finally, individual introductions were made by the temporary advisers,

participants, observers and secretariat.

2.2 Session 1. Overview of medicines pricing

This session aimed to provide a global overview of medicines pricing and information on

factors affecting prices – patents, industry marketing strategies and the concept of fair

pricing.

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Session 1.1 Medicine prices: global overview- Mr Andrew RINTOUL

WHO noted that by 2021, an estimated US$ 1.5 trillion will be spent each year on medicines

globally. Despite this, access to medicines is still a challenge. Medicines pricing is only a

small part of the process of getting medicines to patients. On technology value chain, all steps

in the process, starting from research and development (R&D) and innovation and moving on

to manufacturing, marketing registration, selection, pricing and reimbursement, procurement

and supply, prescribing and dispensing, are going to influence getting medicines to patients

and the affordability to patients, along with legislation, regulation, governance and

monitoring.

Many challenges faced by countries in providing universal access to medicines including:

• inadequate financing to ensure universal access to essential medicines;

• inefficiencies in procurement and managing supply chains;

• limited pricing policies and/or negotiating capacity to get the lowest possible prices

for quality products;

• substandard quality medicines due to limited regulatory capacity and enforcement;

• widespread inappropriate prescribing and use; and

out-of-pocket spending is up to 80–90% of total pharmaceutical spending in some

countries.

Although prices have been trending upwards over time, there has been no increase in the

effectiveness or any additional benefits to warrant the price increase. The following options

for Member States to consider:

• strengthening pricing policies at the national and regional level;

• improving the efficiency of expenditure on cancer medicines;

• improving transparency of pricing approaches;

• promoting cross-border collaboration for information sharing, regulation and

procurement;

• managing factors that would influence the demand for medicines; and

• realigning incentives for research and development.

WHO developed several guidelines and recommended policies for countries to adopt in

medicines pricing including regulation of mark-ups, tax exemptions/reductions for

pharmaceutical products, cost-plus pricing, external reference pricing, use of health

technology assessment (HTA), internal reference pricing, and promotion of the use of generic

medicines.

In conclusion, fair pricing is defined as quality medical products that are affordable to all

patients and health systems, allows for a reasonable profit margin (also allowing for

investment in innovation), and assures a stable supply of older products.

Session 1.2 Factors affecting medicine prices

Session 1.2.a Patents: Dr Salma Bahri

There are several factors influencing access to medicines including affordable prices.

Globally, governments tend to reform medicines pricing to ensure the costs fully reflect the

clinical benefits and to improve patient access to new innovative treatments.

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High prices among patented medicines noted the importance of pricing policy and “value-

based pricing”. However, there are at least two challenges in assessing the value of drugs: 1)

cost-effectiveness can be measured only after a drug has been licensed, allowing assessment

over time through comparisons with other treatments available; and 2) in some instances,

even after a drug is claimed to be cost-effective based on an initial assessment, there might

not be consensus as to whether treatment is cost-effective even after being used for some

time.

In the protection of intellectual property, governments need to find a balance between short-

and long-term interests, i.e. between maximizing access and promoting creativity and

innovation. There are international treaties from 1983 to 2017 that provide various

implementation options for governments to respond to domestic needs and evolving national

policy priorities including: 1) Agreement on Trade-Related Aspects of Intellectual Property

Rights (TRIPS); and 2) Patent Law Treaty.

The most important consideration for international patents and public health is to reconcile

incentives for innovation with access to medical products. Key concept of the patent system

consists of patent rights, anti-competitive behavior, patentability, compulsory licensing for

export, compulsory licensing and government procurement. In identifying patentability

criteria, it is important to draw the line between incremental innovations (combination and

new dosage forms, new formulation with better product characteristics, new routes of

delivery and paediatric formulations) and “evergreening”.

Session 1.2.b Marketing strategies of the pharmaceutical industry: Dr Escalante

The basic facts of pharmaceutical pricing includes: 1) medicines are priced as far as the

market can bear; 2) brand premium is created: new drugs are launched in markets that can

afford brands; 3) markets are considered separate, i.e. one country, one market (different

pricing); 4) the non-launch strategy; and 5) pharmaceutical pricing strategy may or may not

have a correlation to the country's gross domestic product (GDP).

There is a wide range of marketing strategies that need to be understood. Marketing

expenditure is distributed into journal advertisement, direct consumer advertising, detailing

and product samples. The drug-life optimization (DLO) model, which allows companies to

plan and execute prelaunch activities much earlier to position the product and generate

stakeholder awareness and demand. Countries need to understand the clinical trial phases for

the sake of transparency.

Market skimming is another strategy used to set the maximum price for a new product to skin

maximum revenues layer by layer from the segments willing to pay the high price. Niching is

also used as a strategy, from a large market to small population groups.

Various means are used to expand the market, including disease mongering, off-label use and

volume through adherence programmes. Different discounts and rebates are used across

countries, making it difficult for governments to determine how much they are paying.

Countries need to understand the marketing strategies when negotiating for medicine prices.

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Session 2. Medicine prices: Impact on universal health coverage and public health

Session 2.1 Universal access to medicines in the face of high medicine prices- Mr Nikolai

Tsyganov

Impact of medicine prices on universal access to medicines was introduced by the speaker.

Medicines are often available in the private sector, but few people can benefit because of high

prices. Government has an important role in terms of regulation of prices and subsidizing the

payments.

Countries are faced with several challenges, including new high-cost treatments, budgetary

constraints, industry expecting to be paid for the cost of manufacturing and business needs,

and constantly changing treatments and population context. Factors affecting cost include

supply changes, development of newer and more expensive drugs (e.g. high-cost biologics

and targeted treatments for diseases such as cancer), the population size or number of

patients, and the number of per capita prescriptions.

Considering the factors affecting universal access to medicines, countries may consider

looking at existing pricing systems and devices, such as HTA, which can provide evidence-

based pricing and legislation of pricing assessment and systems. Pricing assessment should

be independent, and value based.

Governments to consider patient and consumer inputs and to involve them as stakeholders in

the decision-making process. Governments can learn from stakeholders about factors

impacting decision-making such as societal values and perspectives on costs and benefits,

expectations of treatment benefits and harms, patients’ understanding of how the benefits or

harms influence their quality of life and broader social impacts of medicines availability.

Consider several factors that impact decision-making that are quantifiable (e.g. comparative

health gains, comparative cost-effectiveness, patient affordability in the absence of subsidy,

predicted use in practice and total financial implications for government health budgets) and

less quantifiable (e.g. overall confidence in the evidence from the manufacturer, equity of

access, presence of effective alternatives and severity of the medical condition treated).

And finally, it is important to consider linkage between HTA and policy decision-making.

The HTA agency's proximity to decision-makers (i.e. budget holders) influences its effect on

value-based pricing.

Session 2.2 The case of hepatitis medicines: Dr Po-Lin Chan

Out of the 324 million people living with chronic hepatitis B and C, globally, almost half

(40%) are in the Western Pacific Region. Further, in 2015, more than 400 000 deaths by

major communicable diseases (HIV/AIDS, tuberculosis, malaria and hepatitis) in the Western

Pacific Region were hepatitis-related.

Hepatitis, a viral infection that can cause liver cancer and cirrhosis, is one of the leading

causes of death in the Region. The epidemics of hepatitis are growing because of the growing

elderly population in Asia.

In 2015, Member States endorsed the Regional Action Plan for Viral Hepatitis in the Western

Pacific 2016–2020, and in 2017, to further strengthen efforts in eliminating hepatitis, they

endorsed the Regional Framework for the Triple Elimination of Mother-to-Child

Transmission of HIV, Hepatitis B and Syphilis in Asia and the Pacific 2018–2030.

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Elimination strategies are well functioning in terms of prevention through vaccination but not

treatment after diagnosis. In selecting treatment, for example, direct acting antivirals hepatitis

C medicines have six existing genotypes. Countries need to understand what genotype is

needed for simplified population-wide service delivery. Another strategy is to articulate

country needs and translate them into national plans and data for decision-making.

Elimination targets and timelines should be clear.

Government needs to explore all combinations of strategies and approaches suited to the

country context to get the best price for medicines. Approaches can include advocacy,

technical evidence, government leadership, pharmaceutical and procurement strategies,

regulatory and legal options and most importantly countries need to look at global and local

market dynamics to generate options.

Session 3. Negotiating for medicines: country experiences

Session 3.1 Country presentations

Australia- The Pharmaceutical Benefits Scheme (PBS) is the country’s universal subsidy

scheme for medicines. PBS is a federal government programme that provides benefits to all

Australian residents, either in the community or in private hospitals. The programme has

been operating for 60 years and has subsidized up to 5000 brands/products. To be included in

the PBS, a product must go through a cost-effectiveness assessment (e.g. HTA), which has

been mandatory since 1993.

In Australia, patients are charged a flat co-payment regardless of the amount of the whole

treatment. This practice ensures that the payment is shared and that patients will value the

medicines given to them.

Before a product can be listed in the PBS and subsidized, it must be registered with the

Therapeutic Goods and Administration, which is responsible for ensuring the efficacy, safety

and quality of medicines, and then recommended by the Pharmaceutical Benefits Advisory

Committee (PBAC) for comparative effectiveness, safety and cost-effectiveness before

getting approval by the Australian Government.

The PBAC is an expert independent body that recommends new medicines to the Ministry of

Health for inclusion in the PBS. The PBAC members include clinicians, health economists,

patient groups, pharmacists and others. In addition, the PBAC has an economic subcommittee

that reviews and interprets economic analysis and a drug utilization subcommittee that

collects and analyses data on drug utilization.

PBS pricing policies in Australia includes: reference policies, anniversary price reductions,

first new brand (generic entry) and price disclosure (generic brand competition).

Lao People’s Democratic Republic- Law and policy regarding access and regulation of

medical products exist. The Revolving Drug Fund (RDF) has been implemented since 1990.

For public health facility there is a clear pricing mechanism of mark up from the procurement

cost, however there is no pricing policy for the private sector.

The Lao People’s Democratic Republic has a long history of decentralized medicines

procurement. Centralized procurement was launched in 2008 based on regulations of the

Ministry of Finance. The centralized procurement system currently covers six provinces,

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while the remaining provinces have an independent procurement system. The Ministry of

Health is planning to expand centralized procurement to the whole country in the future.

Challenges in terms of access to medicines includes: limited access to medicines for some

diseases; unregistered medicines in the market; differential pricing; free pricing in the private

sector; undeveloped price control regulation; and lack of monitoring the impact of policies on

prices.

The Lao PDR Government supports prices control and acknowledges the need to promote the

use of low price medical products; however, there is need for assistance and capacity-

building on the use of various pricing policies and intervention to make medicines more

affordable.

Malaysia- Overview of Malaysia’s health care system was presented. Patients pay a minimal

amount in public health-care facilities but pay out of pocket in private facilities.

Strengthening the national formulary is one of the strategies being used to improve access to

medicines; the formulary serves as a guide for the Ministry of Health in selecting treatments.

The National Pharmaceutical Regulatory Agency has registered 23 869 medicines in

December 2018, and 1678 items are listed in the national formulary. The Ministry of Health’s

national formulary review panel meets three times a year to review the medicines to be

included in the national formulary; the panel decisions are based on expert opinions that are

evidence and value based.

Malaysia’s methods of procurement in the public sector uses indirect price control, tender

price estimation, evaluation and negotiation and price referencing for price estimation and

price negotiation. The methods of procurement in Malaysia are done through a concession

company, central contract (open tender and direct negotiation) and local purchase (direct

purchase or quotation).

A pooled procurement system is used by three ministries (Ministry of Health, Ministry of

Defence and Ministry of Education) to strengthen their bargaining power (when buying in

high volumes), to procure the same medicines at the same price, and to build sustainable

supply.

Price negotiation in Malaysia happens during new drug listing and during procurement of

existing drugs in the Ministry of Health. Factors considered include internal versus external

reference prices, volume/quantity of procurement, price trends in the local market, indication

of the product, availability of generic products, patent expiry and exchange rate/consumer

price index or inflation rate.

The most successful experience of Malaysia in price negotiation has been for hepatitis C

treatment through the use of a compulsory license, which is the right of the Government as

indicated in the law.

Malaysia is also faced with challenges, including lack of negotiating expertise unable to bring

down prices despite high purchase volumes, market monopoly and differential pricing. The

ways forward for Malaysia include strengthening the regulatory framework and accelerating

the process for generics/biosimilar, transparent patient access scheme, active price

negotiation and redistribution of budget.

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Philippines shared its strategies used to implement Universal Health Care Law. Spending on

medicines in the Philippines is mostly out of pocket. It accounts for at least 85% of medicines

expenditure. The current national insurance covers only hospital confinement, but for

medicines used by the vertical programmes such as TB, HIV/AIDS and malaria, medicines

are given free at the primary health care level through public procurement.

From 2002 to 2017, prices have dropped for both innovator brands and generic equivalents in

the public sector because of control interventions such as international pricing, tendering,

generic policies and control of unethical relationships. However, in general, the price of

innovator brands is 22 times higher in the private sector compared to the public sector.

The Generics Act of the Philippines has created more transparent systems and has increased

access to generic medicines, even in the private sector. It requires hospitals and drugstores to

submit their prices through an electronic drug price monitoring platform, whereby the

Government can monitor price mark-ups at the retail level. Most common essential medicines

have generic equivalents, but the new and innovative medicines, especially cancer medicines,

are out of reach for many patients and the national Government.

Compared to the other ASEAN and high-income countries, the Philippines still gets higher

prices for innovator. Hence, the Philippines is considering shifting to pooled procurement.

In terms of medicines pricing and purchasing reform, the Philippines aims to promote

transparency in the entire value chain and fair pricing. Pricing reform activities include

central price negotiation for high-cost medicines, implementation of international price

reference HTA for innovative medicines, price regulation or setting clear margins at all levels

of the supply chain and fostering of competition through the market.

In fostering competition, the Philippines is working to improve price transparency for

consumers including strengthening the Drug Price Watch system, expanding the electronic

drug monitoring programme, accelerating approval by the Philippine Food and Drug

Administration (especially for medicines that are not accessible and has no competitors in the

market), and working with both public and private stakeholders on robust competition

policies in the pharmaceutical sector to prevent anti-competitive behaviours.

Singapore has a mixed financing scheme for the public and private sectors depending on the

therapeutic area. In the past, Singapore passively accepted prices based on what was offered

in the market and listed for subsidy. However, when Singapore compared their prices with

those in countries with transparent systems, they found that prices were up to two times

higher.

Singapore has significantly improved transparency, shifting from closed-door meetings

within the Ministry of Health to meeting with manufacturers. They managed to negotiate 200

drugs but successfully subsidized only 34 drugs, for which they negotiated a 30% price

reduction.

Singapore shared some lessons from their experience on the use of biologics and generics.

The generics adoption rate is 90% in public hospitals. Brand delisting does not result in price

cuts, but this requires a more in-depth discussion with the clinicians and stakeholders. The

utilization of generics is tracked and monitored; there is no point in listing for subsidy

without the high usage of the most cost-effective options. Committees within hospitals exist

to oversee the adoption rates of generics.

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The challenge in Singapore is that there are many financing schemes. When companies find a

financing scheme that can offer higher prices, then there is no point in lowering prices.

The way forward for ministry of health Singapore is to continue refining the process, work

more closely with the other central procurement agencies engage with all stakeholders

especially clinicians, and continue measuring outcomes.

3.2 Panel discussions

Representatives from Mongolia, Cambodia and Viet Nam were asked to share their

experiences with price negotiation.

Session 4. Current practices in negotiating medicine prices

Session 4.1 Role of HTA in price negotiation- Ms Netnapis Suchonwanich,

In Thailand the use of HTA is mandatory in the development of benefit packages under

universal health coverage. The process of enlisting products to the National List of Essential

Medicines (NLEM) include economic evaluation under the Health Economic Working Group

which is looking at the budget impact in terms of key factors and impact on total population

(incidence and prevalence), total patients (diagnosis and treatment), target population

(resource utilization in the health-care system) and total cost (new treatment cost).

HTA process in Thailand is emphasizing the importance of civil society involvement in the

gathering of data on the burden of disease. Data collection tools for NLEM price negotiation,

includes: 1) review framework (i.e. access tool) consisting of policy decisions based on

clinical aspects and selection policy, country context, epidemiological data, usage and cost,

economic studies, budget impacts, and price negotiation model; and 2) benchmarking price

(i.e. pricing tool) consisting of health economics information, international reference prices,

threshold prices, domestic reference prices and clinical practice guidelines.

There are different negotiation models used by Thailand: value-based pricing, medicines

patent pool, volume purchase, choose one price, market competition, managed entry

agreement and risk-sharing. Decisions are based not only on cost-effectiveness but also on

criteria such as catastrophic prevention, medium- to long-term budget impact assessments,

ethical concerns, supply-side capacity to scale up new interventions and equity

considerations.

There is a need to be dynamic in using HTA in order to control the negotiation process.

Beyond HTA, it is also important to prioritize, especially for products with high clinical

value.

In the future, HTA can also be used in deciding on 1) biosimilar products (e.g. some

countries offer incentives for using biosimilar products, some countries have internal

reference pricing for biosimilar products; 2) indication-based products (i.e. products used for

many indications); 3) co-dependent technologies (i.e. products that rely on another

technology to achieve their intended purpose or enhance their effect).

Session 4.2 Does international reference pricing work? - Dr Rintoul

External reference pricing (EPR) is used by countries in setting, validating and negotiating

prices and as a reference for special pricing arrangements such as price-volume agreements

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and for comparing published and real prices. WHO website contains links to many sources of

information on medicines pricing. In 29 out of 32 surveyed countries in Europe, EPR is

applied during the pricing. Countries use different reference countries, and country baskets

vary between countries. It would be helpful for countries in the Western Pacific Region to

look at prices of countries outside the Region as well, as more data would mean more

comparison.

In price negotiation, countries have differences with respect to the scope of medicines, price

type (e.g. ex-factory price, wholesale price), price revisions, price sources, dealing with

missing information and exchanges rates. In practical terms, EPR is a costly and time-

consuming exercise that could benefit from tools and mechanism to ease the workload.

The use of EPR can lead to substantial savings for public payers, but the effect seems to fade

over time. Other limitations have been observed, including: 1) lack of availability

incentivizes manufacturers to first launch in high-priced countries and delay (or not launch)

in lower-price countries; 2) lack of transparency and non-consideration of (even statutory)

discounts lead to the distortion of prices and public payers possibly overpaying; 3) EPR is a

complicated exercise that requires expertise and administrative efforts to establish and run an

appropriate system; 4) prices obtained by EPR do not reflect the value of medicine in the

given country and are influenced by the design of the system; 5) EPR is exposed to exchange

rate volatility when reference prices are denominated in local currencies; and 6) tendency of

convergence to the top rather than a race to the bottom.

WHO guidelines state that countries should consider using ERP as a method for negotiating

or benchmarking the price of a medicine, and as a part of an overall strategy in combination

with other methods for setting the price. Countries should also define transparent methods

and processes to be used. In selecting comparator countries to use for ERP, countries should

consider their economic status, pharmaceutical pricing systems, the publication of actual

versus negotiated or concealed prices, exact comparator products supplied and similar

burdens of disease.

Session 5. What and who are we negotiating for: a summary of medicines pricing- Mr

Tsyganov

In framing up a pharmaceutical pricing model should always be based on a balance between

access of medicines and price negotiating. It is not always about the unit price but should

consider the total health outcome.

First, it is important to be clear about what should be done. Would it result in equity of access

and value for money? Second, it is important to be clear about what the government is willing

to buy. Would it improve an average patient’s health outcome over time compared to

currently available therapy? Third, it is important to consider cost-effectiveness. What do

governments pay now? Are the current treatments sufficient? The pharmaceutical pricing

model should send a consistent message on pricing regulation and research and development;

hence, it should also consider what manufacturers are looking for.

The roles of government were highlighted in terms of providing access to medicines. While

national regulatory authorities (NRAs) aim to strike a balance between the extent of benefits

and the extent of harms, the main concern of HTA agencies/payers is that the extent of harms

and cost should be weighed over the benefits.

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After identifying what the government is willing to buy and pay for, the next step would be to

consider what is negotiable. In price negotiation, the government can consider the direct

method or the indirect method. The direct method uses unit pricing, which is the most direct

and simple way to control cost and manage entry agreements. The indirect method restricts

use to those likely to benefit most.

Unit price is the most direct and reliable method of price negotiation; however, it is important

to consider other alternative arrangements to move forward. The more complex the

arrangement, the more difficult it is to ensure it works.

The speaker shared a link to Australia's guideline and template on deeds of agreement

(http://www.pbs.gov.au/industry/listing/elements/deeds-agreement/Guidelines-for-Deeds-of-

Agreement-v1-4.pdf and http://www.pbs.gov.au/industry/listing/elements/deeds-

agreement/Basic-De-identified-Deed-example-only.pdf).

Session 6. TRIPS flexibilities as levers for price negotiation- Dr Salma Bahri

There are several international treaties that provide implementation options for governments

to respond to domestic need and evolving policy priority. The TRIPS Agreement is an

international legal agreement that allows Member States of the World Trade Organization

(WTO) to provide more extensive protection of intellectual property.

Malaysia's experience with procuring the generic antiviral medicine using the TRIPs

flexibilities started in 2015 with several sessions of engagement with the patent holder and

other stakeholders until its inclusion into voluntary license in 2017. The key success factors

for this type of intervention are strong political will, the advocators and drivers should come

from the management of the ministry of health, strong collaboration with other ministries

such as the ministry of trade, patent office, other agencies and nongovernmental

organizations, and engagement of the pharmaceutical industry.

Session 7. Principles of negotiation- Dr Rintoul

Success in negotiation starts with understanding partisan perceptions and avoiding common

errors. People have different perceptions for any situation; hence, it is advantageous to

undertake "the consensus exercise", i.e. gather all potential perspectives from the first, second

and neutral persons. In the process of price negotiation, it is important to be purposive, to

consider how your message will be heard, to encourage mutual trust, to question critical

assumptions and to pay attention to the process.

The sequential of steps for negotiating effectively starts from setting goals, preparing for the

strategy, conducting negotiations and reviewing. The speaker shared practical tips for

conducting a negotiation that governments should keep in mind and the common errors that

can be avoided in conducting a negotiation.

In conclusion, negotiation can help create a process and a frame of mind to address problems

related to decision-making. However, some parties involved in the negotiation may refuse to

adopt the same or similar frame of mind.

Session 8. Negotiation process- Dr Escalante

Negotiation process is broadly categorized into three steps. The first step is preparation which

includes setting boundaries, defining the best alternative to a negotiated agreement

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(BATNA), determining three prices (reservation price, target price and walk-away price), and

gathering information and rigorous evidence and documentation.

The second step in the process is bargaining. It is dynamic and may take many different

forms depending on the parties and particular circumstances. Bargaining should start with

building rapport. While bargaining, it is important to control emotions and reactions; both

parties must have a positive demeanour and willingness to explore opportunities and

solutions. In making the first offer, be careful in setting the baseline. When faced with an

impasse, it is important to focus on interests rather than positions, to make small concessions,

to take a break and, if necessary, to bring in a third party.

The final step in the negotiation process is closure. Closing a negotiation can mean two

different things: 1) parties with different ideas have reached a mutually agreed conclusion;

and 2) parties have acknowledged or formalized the idea that agreement has been reached.

Ensure that all agreements are understood and accepted before finalization. All the essential

terms must be clearly stated in writing.

Session 9. Group work session – mock negotiations

Day 3 started with a brief recap and reflections by the participants.

In order for the participants to further understand the language used in negotiations and the

specific situations of the negotiation process, a group work exercise was carried out.

Participants brainstormed ideas and discussed four topics, including 1) negotiation of

medicine prices for universal health coverage, 2) high-cost medicines, 3) compulsory

licensing and parallel importation, and 4) using evidence on HTA and value frameworks.

Each group was assigned a topic, and the free-flowing table discussions were facilitated by a

temporary adviser.

Following the group work exercise, the rapporteur briefly reported back on the key messages.

Topic 1 – negotiation of medicine prices for universal health coverage. Most patients with

rare diseases or cancer cannot afford new treatments or innovative products because of the

high costs associated with a lack of competition or insufficient supply. He highlighted that

countries should learn how to approach cases such as orphan drugs where access to medicine

is difficult. It is vital to compare available medicines in terms of the clinical outcome and use

the data for negotiation.

Quantity or volume of product is a major consideration in negotiation; however, forecasting

or having an estimated volume remains a challenge in each country. The facilitator advised

participants to consider several factors, such as the number of patients, cost per patient,

disease type, disease prevalence and accuracy of the clinician’s request. He concluded that

the best practice to determine the price is to look at the average price and match the lowest

market price.

Topic 2 – focused on high-cost medicines such as cancer and hepatitis drugs. Countries raised

several issues when it comes to health and drug financing: medicines pricing, transparency,

management of conflicts of interest and difficulty in communicating with the

parliamentarians. Currency fluctuation and inflation greatly affect the prices of medicines,

particularly cancer drugs, biologicals, biosimilars and hepatitis medicines. The power of bulk

procurement was highlighted, and some countries procure in volume to get the benchmark

13

prices. Strengthening the capacity of the committee on drug negotiations is vital to optimizing

negotiation results.

Topic 3 – patented medicines and negotiations under compulsory licensing or parallel

importation. Most of the high-priced medicines are patented and are categorized as

innovative drugs. The facilitator emphasized the importance of pricing policy and value-

based pricing, which links costs to clinical evidence. Drug companies can provide the pharma

economic data with technical and pricing evidence; however, it is important to have a

thorough evaluation of the dossier based on the national tendering and procurement

requirements.

Topic 4 – using evidence on HTA and value frameworks to help the group in their

negotiation. The facilitator stressed the two main factors that need to be considered in price

negotiation: 1) access tool and 2) pricing tool. The minimum outline to prepare for the price

negotiation includes strategic pricing for policy-makers, results from the cost-effectiveness

analysis, a system that will provide an estimated number of patients per year and drug price

comparison (value-based pricing, risk-sharing and budget impact), while the recommended

budget forecasting is three to five years. The facilitator shared Thailand’s experience with

price negotiations and provided recommendations to different countries. She concluded that a

mechanism should be in place on different situations such as limited time of procurement or

procuring for large target populations such as antihypertensive medicines.

Session 10. Closing session

Dr Socorro Escalante facilitated the closing session by getting feedback from the participants

on way forward and areas of improvement. She mentioned that WHO Regional Office for the

Western Pacific will be formalizing a training module for negotiation of medicine prices. She

also encouraged the countries to contribute data to the Price Information Exchange for

Medicine (PIEMEDS), which is a confidential platform mechanism to view and contribute

negotiated prices of medicines. She stressed her appreciation for the participants’ active

cooperation and interest in the group work.

14

3. CONCLUSIONS AND RECOMMENDATIONS

3.1 Conclusions

The rising cost of medicines, leading to decreased accessibility, has been exerting pressure on

low- and middle-income countries. Meanwhile, high-income countries are also struggling to

maintain and extend their levels of service coverage, quality and financial risk protection.

Ensuring quality medical products that are affordable for both the health system and patients

will improve access to essential medicines and reduce high out-of-pocket spending.

Since marketing strategies affect the prices of medicine, policy-makers need to have a good

understanding of how this occurs.

Protecting the intellectual property of producers to promote creativity and innovation will

also benefit the population by providing equitable access to affordable and quality-assured

medicines.

Integrating the HTA process and having an in-depth understanding of the national market

scenarios are critical prior to setting the negotiated price and actual price negotiations.

Universal access to medicines is an essential part of an effective welfare system. It will limit

the cost of disease progression to a point where hospitalization or other care is no longer

needed. Thus, by providing universal access, governments could see a long-term economic

benefit.

Member States will greatly benefit from strengthened collaboration among neighbouring

countries to share information on prices and suppliers of quality and affordable medical

products, in addition to networking to support the neighbouring countries to establish a

policy, system, process and mechanisms for price negotiations.

3.2 Recommendations

3.2.1 Recommendations for Member States

Member States are encouraged to consider the following:

1) Utilize the Price Information Exchange for Medicines (PIEMEDS) platform for price

sharing in the Region.

2) Include a pricing negotiation workshop in the country plan to ensure allocation of

resources.

3) Collaborate with other Member States across the Region to share information and

identify potential strategies, appropriate interventions and solutions for critical issues

such as high-cost medicines and patents.

4) Ensure policies in the pricing and procurement process are simple yet robust.

15

3.2.2 Recommendations for WHO

WHO is requested to consider the following:

1) In the context of access to medicines in the Asia–Pacific, formalize a training module

or guideline for negotiating prices of medicines.

2) Form a pool of experts for pricing and negotiations to assist continuing capacity-

building and policy development in countries.

3) Strengthen PIEMEDS for price information, as a platform to collect and make

available country data regarding medicine prices and potential negotiation of prices.

4) Mobilize support from more developed countries to support resource-constrained

countries to develop capacity of individuals and institutions, such as through a

fellowship programme on the detailed implementation of the system.

5) Conduct an annual workshop to build capacity on price negotiation.

6) Ensure access to quality safe, effective and affordable essential medicines for the

whole population to achieve better health outcomes.

16

ANNEX 1

List of Abbreviations

ASEAN Association of the South-East Asian Nations

BATNA better than your best alternative

EPR external price reference

GDP gross domestic product

HITAP Health Intervention and Technology Assessment Program

HTA health technology assessment

NLEM National List of Essential Medicines

PIEMEDS Price Information Exchange for Medicine

PBAC Pharmaceutical Benefits Advisory Committee

PBS Pharmaceutical Benefits Scheme

R&D Research and Development

TRIPS Trade-Related Aspects of Intellectual Property Rights

UHC universal health coverage

WTO World Trade Organization

WHO World Health Organization

17

ANNEX 2

LIST OF PARTICIPANTS, TEMPORARY ADVISERS,

OBSERVERS AND SECRETARIAT

CAMBODIA Dr SOK Po

Deputy Director

Hospital Services Department

Ministry of Health

#80, Samdech Penn Nouth, Blv 289

Phnom Penh

Tel no: +855-23 885 970

Fax no: +855-23 884 909

Email: [email protected]

Dr SOK Kanha

Deputy Director

Planning and Health Information Department

Ministry of Health

#80, Samdech Penn Nouth, Blv 289

Phnom Penh

Tel no: +855-12 622 107

Fax no: +855-23 880969


CHINA, PEOPLE'S

REPUBLIC

Ms MA Lili

Deputy Director

Department of Drug Policy and

Essential Medicine

National Health Commission

No. 1 Xizhimen Outer South Road

Beijing

Tel no: +86-10-68792604

Fax no: +86 10 68791747


Mr WENG Linjia

Deputy Division Director

National Health Care Security Administration

Xicheng District

Beijing

Tel no: +86-10-89061340

Fax no: +86-10-84061288


18

LAO, PEOLE'S

DEMOCRATIC

REPUBLIC

Mr Bounxou KEOHAVONG

Deputy Director General

Food and Drug Department

Ministry of Health

Simuang Road, Vientiane

Tel no: +856 21 214013

Fax no: +85621 214015


Ms Manivong SOMSAVANG

Technical Staff

National Health Insurance Bureau

Ministry of Health

Simuang Road, Vientiane

Tel no: +856-20 28267423

Fax no: +856-21 840813


MALAYSIA

Ms Saliza Binti IBRAHIM

Senior Principal Assistat Director

Pharmaceutical Services Division

Ministry of Health

Lot 36, Jalan Universiti, PJS 13, 46200

Petaling Jaya, Selangor

Tel no: +60 166600049 +603 78413631


Ms Nordiana SHARIFF

Senior Principal Assistat Director

Ministry of Health

Pharmaceutical Services Division

Lot 36, Jalan Universiti, PJS 13, 46200

Petaling Jaya, Selangor

Tel. no: +6012 364 0836 +603 7843618


MONGOLIA Mr Altankhuyag CHULUUNBAT

Director General

General Authority for Health Insurance

Ministry of Health

Chingisiin urgun chuluu

Ulaanbaatar 14210

Tel no: +976-7010 0005


19

Ms Munkhtuul TOGTOKH

Senior Officer

Division of Pharmaceuticals

Medical Devices and Manufacturig Technology

Ministry of Health

Government Building VIII

Olympic Street- 2, Sukhbaatar District

Ulaanbaatar

Tel no: +976-96655810

Email: [email protected]; [email protected]

PHILIPPINES Dr Anna Melissa GUERRERO

Medical Officer V

Pharmaceutical Division

Department of Health

San Lazaro Compound

Sta Cruz, Manila


Dr Melanie C. SANTILLAN

Acting Senior Manager

Benefits Developement and Research Department

PhilHealth Citystate Centre, 709 Shaw Blvd.

1603 Pasig City

Tel no : +63 2 441-7444 loc. 7580

Email : [email protected]

SINGAPORE Mr NG Kwong Hoe

Principal Head, Evaluation

Agency for Care Effectiveness

Ministry of Health

College of Medicine Building

16 College Road, Singapore (169884)

Tel. no.: 65 81233157


Mr DIONG Tza-Kai

Specialist

Agency for Care Effectivenss

Ministry of Health

College of Medicine Building

16 College Road, Singapore (169884)


20

VIET NAM Ms NGUYEN Quynh Hoa

Vice Director

Viet Nam National Centre of Centralized

Drug Procurement

Ministry of Health

138A Gangvo Street, Ba Dinh

Hanoi

Tel no.: +842462732338

Fax no: +842462732383


Ms NGUYEN Le Hien

Specialist

Viet Nam National Centre of Centralized

Drug Procurement

No 138A Giang Vo Street

Badinh District

Hanoi

Tel no.: +842 462732383

Fax no: +842 462732383


2. TEMPORARY ADVISERS

Dr Nikolai TSYGANOV

Director

PBS Pricing and Managed Access Section


Sirius Building, Furzer Street

Woden ACT 2605

Canberra

Australia

Tel. no.:+612 6289 3315


Dr Salmah binti BAHRI

Former Senior Director

Pharmaceutical Services

Ministry of Health

25, Jalan Desa 2

Taman Desa, Sungai Abong

84000 Muar , Johor, Malaysia

Tel no.: +6012 2200546


21

Ms Netnapis SUCHONWANICH

Advisor

Health Intervention and

Technology Assessment Program

12 Soi Nonthaburi 6/6 Yaek 1

Nonthaburi, Thailand

Tel. no.: +66847510944


3. OBSERVERS

DEPARTMENT OF

HEALTH,

PHILIPPINES

Mr Jeffrey CASTRO

Senior Health Program Officer



Manila


Ms Vanesa SAULOG-OBERA

Supervising Health Program Officer



Manila


Ms Anne Julienne GENUINO

Senior Health Program Officer

Health Technology Assessment Unit


Manila


Ms Diana Beatriz BAYANI

Health Technology Assessment Unit


Manila


22

Ms Merla Rose D. REYES

Head

Product Team for Special Benefits

Benefits Development and Research Department

PhilHealth

Citystate Centre, 709 Shaw Blvd.

1603 Pasig City

Tel no: +63 2 2345332


4. SECRETARIAT

WHO/WPRO Dr Socorro ESCALANTE (Responsible Officer)

Coordinator

Essential Medicines and Health Technologies



United Nations Avenue

Manila

Tel no.: + 63 2 528 9846


Dr Po-Lin CHAN

Medical Officer

HSI/AIDS




Manila

Tel no.: +632 5289750


Ms Cheryl Valerie LEGASPI

Consultant





Manila

Tel. no.: +632 5289823


Ms Charisse TAN

Consultant





Manila

Tel. no.: +632 5289821


mailto:[email protected]

mailto:[email protected]

23

WHO/HQ Mr Andrew RINTOUL

Scientist

Innovation Access and Use

Essential Medicines and Health Products

Access to Medicines, Vaccines and Pharmaceuticals


Geneva

Tel no.: + 41 22 791 1032


24

ANNEX 3

Meeting Timetable

Time Tuesday 12 March Wednesday 13 March Thursday 14 March

08:00-08:30

Registration

Session 6: Foundations for Negotiation

Session 13: Practicum and case

practices

(Groups will rotate)

Dr Andrew Rintoul and Dr Socorro Escalante

Case 1: Medicines for UHC

Facilitators: Dr Nikolai Tsyganov

08:30-09:00 1.1 Opening session

Opening Remarks, WHO

Overview of the meeting and meeting objectives

– Dr Socorro Escalante, WPRO

Participant Introduction and icebreaker

Group photo

09:00-10:00 Session 1: Overview of medicines pricing Session 7: Strategies and styles for negotiation Case 2 : High cost medicines

Facilitator: Dr Andrew Rintoul 1.1. Medicines prices: global overview – Dr Andrew Rintoul, WHO Geneva

1.2. Factors affecting medicines prices

Patents – Dr Salmah Bahri

Marketing strategies – Dr Socorro Escalante

The concept of fair pricing– Dr Andrew Rintoul

- Dr Andrew Rintoul and Dr Socorro Escalante

10:00-10:30 Morning Tea Morning Tea Morning Tea

10:30-11:00 Session 2: Medicines Prices: Impact on UHC and Public Health Session 8: Negotiation skills and bargaining tactics Case 3: Innovator (patented

medicines)

Facilitator: Dr Salmah Bahri

2.1. How can governments ensure UHC in the face of high medicines prices –

Dr Nikolai Tsyganov

2.2. Medicines prices and public health programmes: The case of hepatitis

medicines – Dr Po-Lin Chan


25

11:00-12:00 Session 3: Negotiating for medicines: country experiences Session 9: Preparing for negotiations and best alternative

to a negotiated agreement (BATNA)

Case 4: Using evidence for

negotiation

Facilitator: Ms Netnapis

Suchonwanich

3.1. Country presentations

- Australia: The Pharmaceutical Benefit Scheme – Dr Nikolai Tsyganov

- China

- Malaysia

- Singapore

3.2. Panel discussion

- Cambodia

- Lao

- Mongolia

- Philippines

- Viet Nam


12:00-1:30 Lunch Lunch Lunch

1:30-2:30 Session 4: Current practices in negotiating medicines prices Session 10: Bargaining and problem solving Session 14: Feedback

4.1. Defining the outcomes – Dr Socorro Escalante, WPRO

4.2. Using evidence and value frameworks

What and who are we negotiating for – Dr Nikolai Tsyganov

The role of health technology assessment in negotiations

– Ms Netnapis Suchonwanich

Plenary discussion


- Group Feedback

- Plenary discussion

2:30-3:00 Session 4 (continued) Session 11: Closure Phase Session 16: Closure

4.3. How TRIPS flexibilities can serve as levers for negotiation

– Dr Salmah Bahri

4.4. International reference pricing, does it work?

– Dr Andrew Rintoul

Plenary discussion


- Conclusions and

recommendations

- Way forward

3:00-3:30 Afternoon Tea

3:30 – 5:00 Session 5: Introduction to negotiation Session 12: Assessment and evaluation

- Dr Andrew Rintoul and Dr Socorro Escalante - Dr Andrew Rintoul and Dr Socorro Escalante

6:00-8:00 Reception

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