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 = €5.27B

Generic ~ 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 cycle

Retail tenders in Nordics, 3mths 2 weeks

Implications:

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 years

Implications:

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 available

Sweden: Halland tender 2 weeks notice given in 2011

Implications:

If tender is large, can be very difficult to pre-empt without large risk of write offs

Working capital considerations

Stocking from previous session

Long:

Denmark: Oncology tender, notification in October 2011, first supply April 2012

Netherlands: IZDN notice October, first supply February

Implications:

For major tenders essential to give sufficient time for supply chains to respond

Losing 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 tenders

Poland: up to 200 per month

High workload

Other systems:

Portugal: listing, not award

Multiple 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 assessment

In some markets these are weighted to build a final value (not cost) based assessment

Contamination

Denmark: 25% of assessment weight

Presentation Range

UK: common to exclude if not all available

Sweden: reduced range = reduced score

Stability data

UK/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

Formulation

UK/Portugal/Netherlands: dual/triple awards

Sweden: reduced score for powder vs solution

Environmental

Sweden: 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

20

15

10

5

5

COMP 1

YES

15

15

8

0

5

COMP 2

YES

15

15

10

4

0

COMP 3

YES

10

15

8

3

5

COMP 4

YES

10

6

8

3

5

COMP 5

YES

15

15

8

4

5

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

DIF

ICAT

ION

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 RANKING

3.65

2

3.35

1

4.55

5

4.35

4

4.85

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

4.65

6

4.15

3

5.35

8

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 remaining

Malta: 5/6ths shelf life remaining

France: >3months remaining is OK

Samples:

Spain/Malta: require local finished stock

UK: flexible, will take other country stock, or nude vials + artwork

Payment terms

Italy: average >6months,

Spain: regional but worst region >600days!

Germany: <30 days

Bar codes

Sweden: required soon but scored now on vial. Denmark: required from 2012

France/Serbia/Turkey/Italy/Belgium : Mass serialisation required on carton

Supply times

West EU: mostly individual hospital orders on a monthly cycle

Bulgaria/Cyprus/Lithuania/Malta: often supply is in quarterly or half year drops

CSR

UK: green supply chain initiatives

Ideal system

Medium length

Regional, not national or individual hospital

Multiple suppliers, not monopoly award

Consistent volumes i.e. not price listing

Samples from other countries or electronic versions acceptable

Notice period in keeping with lead times

Consistent and transparent weighting on non-price attributes

Reasonable payment terms

Set 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 products

Product often unique to market

Stock dumping common shortly after multi-market supply starts

Limited number of ‘deep pocket’ players remain

High volume + limited number of remaining players = high likelihood of shortages

Thank you!