EU Hospital Generic Tenders

James BurtVice President, HospitalsAccord Healthcare

PDIG10th Nov

Hospital MedicinesHospital acquired drugs account for approximately 20-25% of global drug spend*

Typically dominated by injectable and high potency forms

Products are typically small volume, high unit value items

Often purchased via tender processes orchestrated by professional buyers

Often additional safety or usage considerations exist

*IMS, all available countries, 2009 sales value

Retail Channel Hospital Channel

Injectable Oral Other

Hospital Therapeutic ClassesGenerics represent approximately only 8-12% of the cost of hospital medicines*

However, IMS tends to over estimate generic prices

The hospital generics value pool is dominated by oncology and systemic anti-infectives**

UK hospital market 2009 IMS = €5.27BGeneric ~ 15%UK tends to have lower brand prices and IMS tends to over estimate generic prices

*IMS Value, Q4 08 Euro/MNF - 17 EU Hospital Markets, **UK data IMS 2009

Generic Branded Unclassified

Types of Hospital Marketsfew annual/bi-annual tenders,

compliant/inflexible,transparent, efficient distributionNordics, UK, Netherlands,

many tenders (>150), reasonable compliance, transparency poor, influencers unclear,

pricing/ reimbursement complex, changing rules

France, Italy, Poland

hybrid regional tenders, hospital contracts and ‘spot’ business

Spain, Austria, Ireland, Portugal

No tenders, physician influence high (DE private sector/BE total), range important as bundling common

Germany, Belgium, Switzerland

Tender Longevity:

Supply periods vary by country from 2 weeks 4 years most common 12 months, calendar year cycle typical: i.e.

summer submission autumn adjudication winter start

Short tenders: emergency tenders in UK/Netherlands/

Denmark, cover patent expiry until regular cycleRetail tenders in Nordics, 3mths 2

weeksImplications:

Supply chain difficulty (OOS common), user/patient confusion, increased work load for adjudicators (suit commodity products), lower price pressure

Long tenders:Spain: typically 3 years, UK/Netherlands: often 2 years, France: military 4 yearsImplications:

helpful to supply chain, higher price pressure, difficult to estimate future COG movement

Notice period:Notice period varies from 1 day 6 months (i.e. adjudication to 1st supply)most common 1-2 months, Manufacturing lead times can be up to 6 months (API order delivery of final released product)

Short: France/Portugal: just assume stock availableSweden: Halland tender 2 weeks notice given

in 2011Implications:

If tender is large, can be very difficult to pre-empt without large risk of write offsWorking capital considerationsStocking from previous session

Long:Denmark: Oncology tender, notification in

October 2011, first supply April 2012Netherlands: IZDN notice October, first supply

FebruaryImplications:

For major tenders essential to give sufficient time for supply chains to respondLosing company gets enough time to utilise stock on hand

Number and Frequency

Low number of tenders:Denmark: single national

tender (Kiwi like). 2+ supplier also ‘awarded’No alternative product

available if outage

High number of tendersPoland: up to 200 per monthHigh workload

Other systems:Portugal: listing, not awardMultiple awards, lack of

clarity on demand

5/85/8

150+150+

450+450+

150+150+

1000+1000+0+0+13+13+

1/211/21

1313

11

88

Non price criteria:

Many tenders now require additional information as part of the assessmentIn some markets these are weighted to build a final value (not cost) based assessment

ContaminationDenmark: 25% of assessment weight

Presentation RangeUK: common to exclude if not all availableSweden: reduced range = reduced score

Stability dataUK/Italy/Austria/Germany/Ireland: require

some additional post reconstitution/ dilution data

Denmark: Amgros initiated a consultation in Oct. Sweden: in scoring Supply performance

UK/Sweden can be an exclusion criteria

FormulationUK/Portugal/Netherlands: dual/triple awardsSweden: reduced score for powder vs solution

EnvironmentalSweden: exclusion assessments made on

environmental impact statements/reduction programs

Romania: recently required demonstration of ISO140001/18001 program Artwork

Denmark: Safe artwork design now makes up 15% of the assessment

UK: can be an exclusion criteria

COMPANY NAME

FULFILS ALL TENDER DEMANDS

PRACTICAL HANDLING

MIX-UP RISK

CONTAMINATION RISK

INFORMATION

ENVIRONMENTAL

MAX

20151055

COMP 1

YES

1515805

COMP 2

YES

15151040

COMP 3

YES

1015835

COMP 4

YES

106835

COMP 5

YES

1515845

PHAR

MAC

EUTI

CAL

ADEQ

UAC

Y

TOTAL PRICE OFFER 785,984 1,142,674 1,198,200 1,399,000 1,016,269

TOTAL

% NOT ACHIEVED

WEIGHT FACTOR

NEW PRICE

RANKING

2x

4311.4%

22.8%

965,637

1

4410.5%

21%

1,382,091

3

4113.3%

26.6%

1,517,720

4

3221.9%

43.8%

2,011,895

5

477.6%

15.2%

1,171,129

2

MO

DIFI

CATI

ON

Stockholm tenderNB: Prices in SKR

Skåne TenderCOMPANY NAME

Stability Data

Compatability Data

Range

Special Equipment

Inspection

Methotrexate,Cytarabine, 5FU,

Paclitaxel,Epirubicin,

Carboplatin,Topotecan

4,800

4,880

4,880

4,880

4,880

Gemcitabine, lipo-doxorubicin, oxaliplatin, Irinotecan

12,500

12,500

12,500

12,500

12,500

Fludarabine, Vincristine, Vinorelbine,Doxorubicin

Cisplatin

3,000

3,000

3,000

3,000

3,000

Missing Bar code OR VNR

Missing Barcode AND VNR

Clear readable label

Sheathing

Powder vs Solution

8,000

16,500

16,500

7,300

7,300

25,000

49,500

49,500

30,000

30,000

3,500

7,500

7,500

4,500

4,500

PRACTICAL HANDLING

MIX-UP RISK

CONTAMINATION RISK

INFORMATION

ENVIRONMENTAL

Security information

Extravasation information

5,400

5,400

15,000

15,000

2,000

2,000

Emetogenicity information 5,400 15,0002,000

Patient information

Environmental information

5,400

5,400

15,000

15,000

2,000

2,000

PVC present 11,000 21,0001,000

TOTAL 110,000 330,00050,000

NB: Prices in SKR

COMPANY NAME

PRESENTATION 1

PRICE RANKING: 45% OF TOTAL

PHARMACEUTICAL BROCHURE

STABILITY DATA, OFFICIALLY ACCEPTABLE

PACKAGING

VIAL AND FLIP OFF TOP

STRENGTH AND FORMS

PORTFOLIO

TECHNICAL RANKING: 55% OF TOTAL

COMP 1

€10.00

2VERY GOOD

24H OFFICIAL28 D UNOFFICIAL

VERY GOOD

VERY BAD

POOR

5

COMP 2

€8.80

5GOOD

35 D OFFICIALLY

GOOD

EXCELLENT

+2G

2

COMP 3

€10.90

4

GOOD

GOOD

5

COMP 4

€13.00

6

SOLUTION SOON

MEDIUM

3

COMP 5

€9.00

1

8

PRESENTATION 2 €32.00 €44.00 €39.90 €40.00 €30.00

CALCULATED SCORE

FINAL RANKING3.65

23.35

14.55

54.35

44.85

7

COMP 6

€12.00

3

6

COMP 7

€12.00

8VERY GOOD

EXCELLENT

EXCELLENT

1

COMP 8

€13.40

7

35 D OFFICIAL

EXCELLENT

POOR

4

€38.00 €60.00 €45.00

4.656

4.153

5.358

French example

NB: French Army Tender: not all French tenders the same

Other tender features:

There are a broad range of other tender features that procurement systems set differently Often the unintended consequences are not understood

Minimum Shelf life: Ukraine: require 80% of shelf life remainingMalta: 5/6ths shelf life remainingFrance: >3months remaining is OK

Samples:Spain/Malta: require local finished stockUK: flexible, will take other country stock, or

nude vials + artwork

Payment termsItaly: average >6months, Spain: regional but worst region >600days!Germany: <30 days

Bar codesSweden: required soon but scored now on vial.

Denmark: required from 2012France/Serbia/Turkey/Italy/Belgium : Mass

serialisation required on carton

Supply timesWest EU: mostly individual hospital orders on a

monthly cycle Bulgaria/Cyprus/Lithuania/Malta: often supply

is in quarterly or half year drops

CSRUK: green supply chain initiatives

Ideal system

Medium lengthRegional, not national or individual hospitalMultiple suppliers, not monopoly awardConsistent volumes i.e. not price listingSamples from other countries or electronic versions acceptableNotice period in keeping with lead timesConsistent and transparent weighting on non-price attributesReasonable payment termsSet shelf life remaining not % remaining

UK Report card

Cautionary tale

Procurement predominantly through group purchase organisations (GPOs)Bundling often evident with loss leading on some common productsProduct often unique to marketStock dumping common shortly after multi-market supply startsLimited number of ‘deep pocket’ players remainHigh volume + limited number of remaining players = high likelihood of shortages

Thank you!