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Cost-Effectiveness Assessment of Pharmaceuticals: Key Questions

Cost-effectiveness assessment is a crucial element of the administrative process for determining drug reimbursement, not only in the Czech Republic. A well-prepared cost-effectiveness analysis, including budget impact assessment, not only supports the applicant's arguments but also minimizes requests for additional documentation from the State Institute for Drug Control (SÚKL/Institute) via cooperation requests, which have become standard practice.

This article presents a selection of key questions that applicants seeking drug reimbursement (where cost-effectiveness assessment is required) should be able to answer within their submitted evaluation.

The pharmaceutical market in the Czech Republic is undergoing a gradual shift in decision-making practices, which may significantly impact pricing and reimbursement regulations as well as the entire pharmaceutical sector. Section 39c(2)(b) of the Public Health Insurance Act has been in use for a long time; however, its true potential to influence reimbursement dynamics is only now becoming apparent. The uncertainty arises from the gradual convergence of differences between innovative biological molecules entering the market and those already reimbursed. The concept of comparably effective therapy thus becomes a risk factor for new medicinal products.

How Does the New Approach Work? In a recent reimbursement revision decision regarding JAK inhibitors (Ref. No. SUKLS274309/2022), SUKL determined the reimbursement for certain indications based on the daily costs of comparably effective therapy. This means that medicinal products were not necessarily placed in the same reference group as the compared therapies, yet their reimbursement was set according to cheaper alternatives from another reference group, which included, for instance, generic drugs. In the case of filgotinib, the reference product, a head-to-head clinical study (Combe, B. et al.) comparing its efficacy with the TNF-alpha inhibitor adalimumab confirmed direct clinical equivalence between these therapies.

This approach has several critical consequences:

• Reduction in the reimbursement of innovative medicines – if the reimbursement of a medicinal product is set according to another reference group that includes generics, it automatically decreases regardless of the original therapeutic value.
• Domino effect on other groups – once reimbursement is lowered in one group, this decrease can reflect in reimbursement revisions across other reference groups, leading to a gradual overall reduction in reimbursements.
• Unpredictability for pharmaceutical manufacturers – companies bringing new medicinal products to market lack certainty about how their reimbursement will be determined, as it may be derived from different reference groups without formal inclusion in them.

Long-Term Impacts This new approach has not only short-term effects on the reimbursement of specific medicines but also long-term consequences for the entire pharmaceutical sector:

1. Reduced attractiveness of the Czech market – if innovative medicines are systematically undervalued, pharmaceutical companies may be discouraged from introducing new medicines to the Czech market.
2. Impact on patients – lower reimbursements may lead to reduced availability of innovative therapies and fewer treatment options for both patients and physicians.
3. Disruption of reimbursement policy transparency – linking reimbursements across different reference groups may complicate predictability and planning in the field of pharmaco-economics.

Open Question: Where is the Boundary Between Efficiency and Innovation Regulation? How might the domino effect manifest in non-referential indications in the future? This case represents a breakthrough in setting more than one additional increased reimbursement, meaning the barrier of "only one increased reimbursement" is eliminated. On the other hand, this new trend may lead to an intricate network of interconnected reference groups with generic-based reimbursements, discouraging marketing authorization holders from including their products in such groups.

The text was translated using ChatGPT 4o.

The European Medicines Agency (EMA) has announced the launch of a new platform designed to routinely monitor shortages of centrally authorized medicines. This platform is a direct result of Regulation (EU) 2022/123, which aims to improve preparedness for and mitigation of medicine shortages across EU member states.

Key Points:

• Platform Availability: The European Shortages Monitoring Platform (ESMP) is now accessible online.
• Mandatory Usage: Starting from February 2, 2025, all Marketing Authorization Holders (MAHs) with centrally authorized products will be required to use the ESMP.
• Early Familiarity: EMA encourages MAHs to familiarize themselves with the platform before the mandatory deadline.
• Data Submission: Until February 2, 2025, MAHs and National Competent Authorities (NCAs) can submit data on supply, demand, and availability of both centrally and nationally authorized medicines to the EMA's Executive Steering Group on Shortages and Safety of Medicinal Products (MSSG).
• Medicine Monitoring: The platform will be used for routine monitoring of all centrally authorized medicines and may also be used for monitoring nationally authorized medicines under special circumstances.

Additional Resources:

• Frequently Asked Questions

From January 1, 2025, Slovakia will include medicines and medical devices in the reduced VAT rate of 5%. This move is part of a broader tax reform aimed at improving access to essential goods for the population while reducing the financial burden on patients. The changes are likely a response to the European Commission’s assessment of public finances and an effort to reduce the budget deficit.

This change contrasts with developments in the Czech Republic, where, as of January 1, 2024, the VAT rate on medicines increased from the original 10% to 12%, as we mentioned in our previous article Changes in VAT Rate for Pharmaceuticals.

What Impact Will the Reduced VAT Rate Have in Slovakia?

The lower VAT rate is expected to significantly reduce costs for patients in Slovakia for medical devices and medicines, both in outpatient and hospital care. The direct financial impact on individuals will depend on specific measures and pricing policies. For comparison, Slovakia’s VAT on medicines has dropped from 10% to 5%, which could lead to a more noticeable impact on final prices than in the Czech Republic, where the rate was increased.

Impact on External Price Referencing for Medicines

The reduced VAT rate in Slovakia, however, will not affect the external price referencing (EPR) of medicines, used by some countries to set maximum prices and reimbursement levels in their markets. The VAT change does not reflect in EPR because the reference price is almost universally based on the manufacturer’s price.

At the same time, this change offers an opportunity to compare tax policies across the EU, where VAT rates on medicines and medical devices vary significantly. For example, according to data from EFPIA (European Federation of Pharmaceutical Industries and Associations) as of January 1, 2024, Spain applies a 4% VAT rate on medicines, while Denmark has a standard rate of 25%.

Stay tuned to our website for more updates on legislative changes and their impact on healthcare in the EU.

The European Health Data Space should lead to the empowerment of citizens and support for research and innovation.

EU residents will have more control over their health data, being able to access it electronically and share it across borders. This is particularly beneficial for cross-border healthcare, allowing individuals to access medical records and receive care seamlessly throughout the EU.

The EHDS promotes the secondary use of health data for research, innovation, and policy-making. Researchers and innovators will be able to access health data more easily and securely, which could drive the development of new treatments, medical devices, and AI applications.

The main objectives of the European Health Data Space (source: excerpt from the Communication from the Commission to the European Parliament and the Council: The European Health Data Space: Harnessing the power of health data for people, patients, and innovation):  

CTIS byl zřízen farmaceutickým zákonem v rámci Nařízení o klinických studiích (Nařízení (EU) č. 536/2014) a po 30. lednu 2025 kompletně nahradí původní systém pro klinické studie EudraCT (Databáze klinických studií orgánů pro regulaci léčiv Evropské unie).

Evropská léková agentura (EMA) průběžně publikuje zprávy, jak proces přechodu na nový systém pokračuje.

V předchozím článku jsme ukazovali, jaká byla situace v únoru 2024, v tomto článku jsme informace o počtu podání a rozhodnutí o přechodu aktualizovali ke konci srpna 2024.

Obr. č. 1 – Změny v počtu podaných žádostí, resp. v počtu podání, kde již bylo rozhodnuto, v porovnání s předchozím měsícem

CTIS was established by pharmaceutical law in the Clinical Trials Regulation (Regulation (EU) No 536/2014) and will completely replace the previous system for clinical trials EudraCT (European Union Drug Regulating Authorities Clinical Trials Database) after 30th January 2025. CTIS supports interactions between clinical trial sponsors (researchers or companies that run a clinical trial and collect and analyse the data) and regulatory authorities in the EU Member States and EEA countries, throughout the lifecycle of a clinical trial.

CTIS is guaranteed by European Medicines agency (EMA) and works in a secured workspace.

The important milestones for clinical trials:

• CT starts after 30^th January 2023 – the submission must be completed through CTIS
• CT ends before 30^th January 2025 – CT is maintained in EudraCT or national systems
• CT is expected to continue after 30^th January 2025 – transition from the EudraCT or national systems to the CTIS is necessary.

Based on the amendment to Act No. 235/2004 Coll., on Value Added Tax, as of January 1, 2024, there has been a change in VAT rates, particularly impacting the increase in prices and reimbursements for medicinal products. In the infographics, we will illustrate how the individual rates have changed and examine the international comparison to assess the impact on the Czech Republic.

While the standard VAT rate remains at 21 percent, the original reduced rates of 15 percent (for medical devices) and 10 percent (for medicinal products) have been unified into a single 12 percent rate. The newly introduced zero rate applies exclusively to books, although the inclusion of medicinal products could have been possible in line with European legislation.

The infographics provides an overview of the changes in rates as follows: