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12–14 March 2019Manila, Philippines
Meeting Report
WORKSHOP ON MEDICINES PRICE NEGOTIATIONS IN THE
WESTERN PACIFIC REGION
Wor
ksho
p O
n M
edic
ines
Pric
e N
egot
iatio
ns in
the
Wes
tern
Pac
ific
Regi
on12
–14
Mar
ch 2
019
Man
ila, P
hilip
pine
s
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
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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
Email: [email protected]
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
Email: [email protected]
Mr WENG Linjia
Deputy Division Director
National Health Care Security Administration
Xicheng District
Beijing
Tel no: +86-10-89061340
Fax no: +86-10-84061288
Email: [email protected]
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
Email: [email protected]
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
Email: [email protected]
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
Email: [email protected]
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
Email: [email protected]
MONGOLIA Mr Altankhuyag CHULUUNBAT
Director General
General Authority for Health Insurance
Ministry of Health
Chingisiin urgun chuluu
Ulaanbaatar 14210
Tel no: +976-7010 0005
Email: [email protected]
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
Email: [email protected]
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
Email: [email protected]
Mr DIONG Tza-Kai
Specialist
Agency for Care Effectivenss
Ministry of Health
College of Medicine Building
16 College Road, Singapore (169884)
Email: [email protected]
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
Email: [email protected]
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
Email: [email protected]
2. TEMPORARY ADVISERS
Dr Nikolai TSYGANOV
Director
PBS Pricing and Managed Access Section
Department of Health
Sirius Building, Furzer Street
Woden ACT 2605
Canberra
Australia
Tel. no.:+612 6289 3315
Email: [email protected]
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
Email: [email protected]
21
Ms Netnapis SUCHONWANICH
Advisor
Health Intervention and
Technology Assessment Program
12 Soi Nonthaburi 6/6 Yaek 1
Nonthaburi, Thailand
Tel. no.: +66847510944
Email: [email protected]
3. OBSERVERS
DEPARTMENT OF
HEALTH,
PHILIPPINES
Mr Jeffrey CASTRO
Senior Health Program Officer
Pharmaceutical Division
Department of Health
Manila
Email: [email protected]
Ms Vanesa SAULOG-OBERA
Supervising Health Program Officer
Pharmaceutical Division
Department of Health
Manila
Email: [email protected]
Ms Anne Julienne GENUINO
Senior Health Program Officer
Health Technology Assessment Unit
Department of Health
Manila
Email: [email protected]
Ms Diana Beatriz BAYANI
Health Technology Assessment Unit
Department of Health
Manila
Email: [email protected]
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
Email: [email protected]
4. SECRETARIAT
WHO/WPRO Dr Socorro ESCALANTE (Responsible Officer)
Coordinator
Essential Medicines and Health Technologies
World Health Organization
Regional Office for the Western Pacific
United Nations Avenue
Manila
Tel no.: + 63 2 528 9846
Email: [email protected]
Dr Po-Lin CHAN
Medical Officer
HSI/AIDS
World Health Organization
Regional Office for the Western Pacific
United Nations Avenue
Manila
Tel no.: +632 5289750
Email: [email protected]
Ms Cheryl Valerie LEGASPI
Consultant
Essential Medicines and Health Technologies
World Health Organization
Regional Office for the Western Pacific
United Nations Avenue
Manila
Tel. no.: +632 5289823
Email: [email protected]
Ms Charisse TAN
Consultant
Essential Medicines and Health Technologies
World Health Organization
Regional Office for the Western Pacific
United Nations Avenue
Manila
Tel. no.: +632 5289821
Email: [email protected]
23
WHO/HQ Mr Andrew RINTOUL
Scientist
Innovation Access and Use
Essential Medicines and Health Products
Access to Medicines, Vaccines and Pharmaceuticals
World Health Organization
Geneva
Tel no.: + 41 22 791 1032
Email: [email protected]
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
- Dr Andrew Rintoul and Dr Socorro Escalante
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
- Dr Andrew Rintoul and Dr Socorro Escalante
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
- Dr Andrew Rintoul and Dr Socorro Escalante
- 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
- Dr Andrew Rintoul and Dr Socorro Escalante
- 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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