NATIONAL PHARMACEUTICAL PRODUCTS PRICING AND CONTAINMENT ...

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NATIONAL PHARMACEUTICAL PRODUCTS PRICING AND CONTAINMENT POLICY

REPUBLIC OF RWANDA

MINISTRY OF HEALTH

October 2020

FOREWORD The development of this National Pharmaceuticals Pricing Containment Policy has been referring on the National Pharmacy Policy and informed by other guiding documents such as the National Strategy for Transformation (NST1), the Health Sector Policy 2015, Fourth Health Sector Strategic Plan (HSSP) IV and the Rwanda Pharmaceutical Sector Strategic Plan 2018-2024. The overall goal of this policy is to increase control over the pharmaceutical costs in the health sector as well as to improve the monitoring of the supply chain related costs. This Policy focuses on supporting the achievement of Universal Health Coverage; increasing funding for medicines; strengthening partnerships and collaboration for health; and on increasing the capacity of the health sector to fulfil one of its mandate of ensuring that Rwandan people have access to safe, efficacious, affordable and good quality medicines. This Policy was developed through a consultative process under the leadership of the Ministry of Health and it involves other stakeholders including other relevant Ministries and public agencies, public health insurances, administrative districts, health facilities and RMS branches), Health Professional Bodies, Development Partners, academic institutions and private sector (private medicines warehouses and retail pharmacies) and Civil Society Organisations representing consumers.

I would like to acknowledge the contribution of institutions, organizations and individuals to the development of this policy. Thanks to all public institutions, civil society organizations and development partners who provided their expertise in the development of this policy as well.

Special thanks to the United States Agency for International Development (USAID) for the financial support and valuable technical expertise provided throughout the whole process of the development of this policy. I urge that we continue to join hands as we move towards the implementation of this policy. Dr. NGAMIJE M. Daniel Minister of Health

Foreword

Strong public health supply chains require trained and skilled staff who are both familiar with the standard operating procedures required for each logistics function and are also empowered to participate in decision and policy-making processes related to health supplies and supply chains. A lack of trained staff with the right skills is a frequent cause of supply chain system breakdown and poor performance, ill- functioning product management, and, ultimately, product stock outs and expiries. This is compounded by a lack of recognition among many health institutions of the vital role supply chain personnel play in the performance of health systems.

In all public institutions; current supply chain workers are recruited based on being a pharmacist or nurse. Many nurses and pharmacists are asked, at some points in their career, to fulfill supply chain tasks. Job descriptions for supply chain cadres are not widely available, and those that do exist are not standardized, although the Ministry of Health (MOH) has select supply chain job descriptions at the central level (procurement, quantification, warehousing, distribution, etc.).

Lack of the competency models for supply chain results in: 1) inability to base workforce planning, performance management, training, career path, and job descriptions on supply chain knowledge, skills, and ability standards; and 2) ad hoc (or even absent), sometimes subjective employee development and, consequently, an inability to strategically allocate appropriate human resource funds to those areas and skills most essential to supply chain human resources.

Training of some store managers, pharmacists, and lab technologists are carried out with the support of MOH and other stakeholders, and there is a designated training of pharmacists. Development partners also support the pre- and in-service training of supply chain managers at the national, district, and health facility level. However, health supply chain cadres at lower levels do not have any standardized materials or training manual for in service training. This compromises the quality and capacity of skills provided to facility staff.

The ministry of Health is pleased to introduce the first training manual intended to be used by supply chain cadres for in-service training at service delivery points, for self-learning, and on job training during supervision. This manual will serve as a standard tool that can be used not only to build capacity but as a source for identifying supply chain management best practices at service delivery points in Rwanda.

I would like to urge all stakeholders from government institutions to use this manual for the purpose intended for. I also appreciate the pharmaceutical sector development partners for their continued support to Rwanda’s health development.

Zachee IYAKAREMYE Permanent Secretary

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1 TABLE OF CONTENTS

1 TABLE OF CONTENTS ...................................................................................................................... iii

2 ABBREVIATIONS AND ACRONYMS .............................................................................................. v

3 DEFINITIONS OF TERMS ................................................................................................................. vi

I. INTRODUCTION ................................................................................................................................. 1 1.1 Scope ........................................................................................................................................... 1 I.2. Rationale ........................................................................................................................................ 3

II. SITUATION ANALYSIS ...................................................................................................................... 4 II.1. Pharmaceutical products pricing policy practices worldwide ................................................. 4 II.2. Context of Pharmaceutical products pricing policies in Rwanda ........................................... 4

II.2. 1. Pharmaceutical market .................................................................................................... 4 II.2.2. Pharmaceutical suppliers .................................................................................................. 5 II.2.3. Current Price Level ........................................................................................................... 5 II.2.4. Pharmaceutical related data .............................................................................................. 6 II.2.5. LEGISLATION AND REGULATION ..................................................................... 6 II.2.6. Insurance And Reimbursement Policies ........................................................................... 7

II.3. Challenges and gaps .................................................................................................................... 8

III. POLICY ORIENTATION ..................................................................................................................... 9 III.1. Vision ........................................................................................................................................... 9 III.2. Mission ........................................................................................................................................ 9 III.3. policy objective/goal ................................................................................................................... 9 III.4. Guiding principles ...................................................................................................................... 9 III.5. Strategic policy Directions ......................................................................................................... 9

III.5.1. regulations and measures that have a direct impact on the price .................................. 10 III.5.2. Regulations and measures related to the use of pharmaceutical products ..................... 10 III.5.3. Regulations and measures related to data management and transparency .................... 10 III.5.4. Regulations and measures related to policy implementation management and coordination ............................................................................................................................... 10

IV. GOVERNANCE FRAMEWORK .......................................................................................................... 11 IV.1. Organization & Management of sector to deliver results ..................................................... 11

1. Ministry of Finance and Economic Planning and the Ministry of Trade and INDUSTRY ............................................................................................................................... 11 2. Ministry of Health ................................................................................................................. 11 3. Rwanda Food and Drugs Authority: ..................................................................................... 11 5. Rwanda Biomedical Center (RBC) .................................................................................... 12 6. Rwanda Health Insurance Association (RHIA). ................................................................ 12 7. Pharmaceutical suppliers (wholesalers and retailers) ......................................................... 12 8. Consumers .......................................................................................................................... 12

IV.2. Management and Stewardship structures ................................................................................... 12

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IV.3. Partnership and Coordination structures .............................................................................. 14 IV.4. IMPLEMENTATION PLAN .................................................................................................. 14

IV.5. Monitoring and Evaluation and accountability mechanisms ............................................. 1 IV.6. Auditing and inspection mechanisms ................................................................................ 1

IV. Conclusion ............................................................................................................................................. 1

V. Bibliography........................................................................................................................................... 2

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1 ABBREVIATIONS AND ACRONYMS

ATC Anatomical Therapeutic and Chemical Classification BUFMAR Bureau des Formations Médicales Agréées du Rwanda CBHI Community Based Health Insurance schemes EAC East African Community e-LMIS Electronic Logistics Management Information System FEAPM Federation of East African Pharmaceutical Manufacturers GoR Government of Rwanda HAI Health Action International HSSP National Health Sector Strategic Plan INCOTERM International Commercial Terms MMI Military Medical Insurance MOH Ministry of Health NPC National Pharmacy Council OECD Organization of Economic Cooperation and Development PRIMS Pharmaceutical Regulatory Information Management System RAMA La Rwandaise d’Assurance Maladie RBC Rwanda Biomedical Center RDB Rwanda Development Board RHIA Rwanda Health Insurance Association RMS Branch RMS Ltd branch RMS Ltd Rwanda Medical Supply Ltd Rwanda FDA Rwanda Food and Drugs Authority USAID United States Agency for International Development

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3 DEFINITIONS OF TERMS

For the purpose of this policy the following terms and definitions apply:

1. Pharmaceutical product: any substance capable of preventing, treating human or animal diseases and any other substance intended for administration to a human being or an animal in order to diagnose diseases, restore, correct or carry out modification of organic or mental functions. It also means products used in disinfecting premises in which food and drugs are manufactured, prepared or stored, cleaning hospitals, equipment and farmhouses.

2. Pharmaceutical price: Value component of pharmaceutical expenditure. Typically, it is indicated per pack, but it can also refer to items in a pack or to standard units. It can be indicated for different price types.

3. Manufacturer price: The sales price charged by the manufacturer of the medicines 4. International wholesale (also: international broker) price: The sales price charged by

the international wholesaler or the broker 5. INCOTERMS: International Commercial Terms that are used to define which

international supply chain costs are included in the manufacturer, international wholesaler or broker price.

6. Wholesale import or landed cost price: The sales price charged by the vendor (manufacturer, international wholesaler or broker) increased by the costs to ensure that the product reaches the wholesalers’ warehouse. These costs can include transport, insurance, clearance related costs, taxes, import levies and others, depending on the INCOTERM of the vendor’s sales price.

7. Wholesale price: The price charged by wholesalers to the retailers (usually retail pharmacies). It is based on the ex-factory price and additionally includes any remuneration for pharmaceutical wholesale (e.g., in the form of international supply chain costs and wholesale mark-up).

8. Retail price: The price charged by retail pharmacies to the general public. It is based on the wholesale price plus a mark-up.

9. Reimbursement price: The reimbursement price is the maximum amount paid for a medicine by a third-party payer, in this case the public and private health insurance companies.

10. Margin: The percentage of the mark-up that is profit. 11. Mark-up: The mark-up is the percentage of the purchasing price added on to get the

selling price. It includes the purchaser’s costs such as salaries, stock holding costs, taxes, overheads, depreciation, margin and others.

12. Pricing policy: a statement to guide decisions and achieve rational outcomes taken by government authorities to set the price of medicine as part of exercising price control.

13. External price referencing: The practice of using the price(s) of a medicine in one or several countries in order to derive a benchmark or reference price for the purposes of setting or negotiating the price of the product in a given country.

14. Internal price referencing: The practice of using the price(s) of identical Pharmaceutical products (ATC 5 level) or similar products (ATC 4 level) or even with therapeutic equivalent treatment in a country in order to derive a benchmark or reference price for the purposes of setting or negotiating the price or reimbursement of the product in a given country.

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I. INTRODUCTION

Pharmaceutical products are essential to quality health care services. They contribute to reducing morbidity and mortality rates and enhance quality of life. Ensuring access to quality pharmaceutical products is an essential component of health system strengthening and primary health care reform programs throughout the world.

Health Sector Policy, National Pharmacy Policy and the Fourth National Health Sector Strategic Plan 2018 -2024 (HSSP IV) have highlighted the gap of pharmaceutical pricing regulations and the importance of ensuring the affordability of quality Pharmaceutical and medical products in Rwanda ”.1 2

Developing and implementing a pharmaceutical pricing and cost containment policy will assist the health sector to achieve its vision. This policy will contribute:

1. To contain costs related to pharmaceutical products in the face of possible price increases, increasing demand and limited health and insurance budgets

2. To ensure the affordability of pharmaceutical products for the population by reducing out-of-pocket expenditure.

Pharmaceutical expenditure is a function of volume and price of pharmaceutical products. Regulating the prices is therefore only one of many ways to contain pharmaceutical costs. WHO has developed a number of internationally accepted practices to regulate prices and to contain costs. They recommended to use a combination of different interventions that (i) target regulating prices and that (ii) influence demand.

However, there are still few interventions to regulate prices to contain costs, and there is need to promote confidence in generics use in both public and private sector. The largest public health insurance does not have price ceilings for the reimbursement of pharmaceutical products. Other public and private health insurance companies do have price ceilings.

With the recent creation of Rwanda Food and Drug Authority (Rwanda FDA) in 2018, the Government of Rwanda (GoR) has a suitable administrative and technical mechanism to prepare, implement and monitor pharmaceutical products pricing policy.

Ministry of Health (MOH) should further develop non-price related cost containment measures that target the demand side. These measures aim at the increased use of, and confidence in, generic medicines in the public and the private sector. This should be done in collaboration with the public and private health insurance companies.

1.1 SCOPE

The pharmaceutical pricing and cost containment policy applies to all pharmaceutical products marketed in Rwanda.

1 National Health Sector Plan 2018 – 2024, chapter 9.3 Health products, Pharmaceuticals and Commodities, page 46. 2 One of the strategies to achieve this objective of the National Pharmaceutical Policy (NPP) is to “Develop and regularly review a pricing policy and ensure its implementation”. See page 11 of the NPP.

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This policy includes, but is not limited to, the development and implementation of the following measures:

- Using external and internal references pricing to:

o Calculate, negotiate or define maximum sales prices at moment of registration

o Calculate, negotiate or define reimbursement levels of individual Pharmaceutical products or classes of Pharmaceutical products, for the Health Insurances

- Regulating the mark-ups applied by all wholesale and retail suppliers in the public and the private sector

- Promotion of the prescription, use and distribution of generic Pharmaceutical products by:

o Allowing for generic substitution

o Organizing public awareness and promotion campaigns

o Making prescription using International Non-proprietary Name obligatory (where possible)

- Ensuring that cost, pricing, sales, distribution, consumption and distribution data are captured in accessible databases

- Investing in the accessibility and uniformity of the existing databases (Pharmaceutical Regulatory Information Management system (PRIMS), the electronic Logistics Management Information System (e-LMIS) and the health insurance companies’ databases) to allow for comparability and transparency

- Continuing to build up the capacities and skills necessary to do economic and pharmaco-economic analysis

- Increasing transparency by making manufacturers’ prices, landed costs, sales prices and mark-ups accessible to relevant stakeholders

- Allowing the public and private health insurance companies access to relevant import related data to facilitate the calculation of reimbursement levels

- Encouraging and formalizing the collaboration between Rwanda FDA, Public and private health institutions and insurance companies in order to achieve routine exchange and analysis of cost, price and dispensing data.

- Developing expertise with the use of technology

- Developing any other measure that may have a positive influence on the management and control of the prices and costs of pharmaceutical products that are marketed in the public and private sectors.

The Government of Rwanda already uses a number of international best practices to manage the costs of pharmaceutical products such as international open tendering, adoption of a National Essential Medicines list, a National Formulary List and Standard Treatment

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Guidelines, and the reduction or elimination of taxes and levies on pharmaceutical products. These existing measures are considered to be part of this policy.

This pharmaceutical pricing and cost containment policy will be implemented by the Rwanda FDA.

This policy provides guidance on the establishment of governance structure such as a pharmaceutical products pricing advisory committee with the mandate of reviewing pharmaceutical products pricing legal frameworks and suggest policy recommendations to the leadership of the heath sector.

I.2. RATIONALE

Costs of Pharmaceutical products constitute a significant part of the overall health care costs. This was realized in the early seventies of last century by industrialized countries. As a response, those governments started creating mechanisms aimed at containing pharmaceutical costs.

The expected economic growth in the coming years is producing a growing demand for health care and high expectations of its citizens. Issues such as chronic illnesses, increasing prevalence of non-communicable diseases, reduction of external funding and growing use of new and often costly health technologies, put upward pressure on the health care costs. The correlation between economic growth and health spending is described in more detail in a recent WHO publication (see Text box 1 below).

Text box 1: Economic growth and health spending

These developments will result in significantly higher government and private health insurance companies’ costs and may subsequently lead to higher patient contributions through increased ‘ticket moderateur’ (copayment) and increased insurance premiums.

The effects of some of the measures already in place, such as VAT exemption and zero import tax, are not certain. In the absence of regulated mark-ups in the private sector part of their beneficial effect may not have been passed on to the purchasers or to the patients.

Taking into account the anticipated growth of the market and the uncertain effects of some of the current measures, it is imperative that the government take additional and complementary measures to the ones already in place, to contain, manage and control

- Total health spending is growing faster than gross domestic product, increasing more rapidly in low- and middle-income countries (close to 6% on average) than in high income countries (4%).

- Health system resources are coming less from households paying out-of-pocket and more through pooled funds, in particular from domestic government sources.

- External funding represents less than 1% of global health expenditure and is a small and declining proportion of health spending in middle income countries, but it is increasing in low income countries.

Source : Xu K, Soucat A & Kutzin J et al. Public Spending on Health: A Closer Look at Global Trends. Geneva: World Health Organization; 2018 (WHO/HIS/HGF/HF Working Paper/18.3). Licence: CC BY-NC-SA 3.0 IGO.

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pharmaceutical product prices and costs. This will be done through a combination of measures that address (i) the prices and (ii) the demand.

II. SITUATION ANALYSIS

II.1. PHARMACEUTICAL PRODUCTS PRICING POLICY PRACTICES WORLDWIDE

Most countries implement measures to contain pharmaceutical costs. In most middle- and high-income countries, governments have some form of Pharmaceutical product pricing policy. A 2011 WHO/Health Action International (HAI) publication shows that all Organization of Economic Cooperation and Development (OECD) member states with the exception of Japan, South-Korea and the USA have regulated the wholesale mark-ups, the retail pharmacy mark-ups, or both. For low- and middle-income countries, 27 countries out of a sample of 60 have regulated wholesale or retail mark-ups.3

In many high-income countries some form of external reference pricing is used to define maximum manufacturer sales prices. Public and private health insurance companies use different reimbursement policies to manage pharmaceutical costs. Measures directed at taxes and levies and some form of competition policy are also common.4 Increasing transparency by publishing different prices is used to increase awareness and competition in several countries.

Scientific evidence on the effect of the various measures, especially in low- and middle-income countries, is scarce.

II.2. CONTEXT OF PHARMACEUTICAL PRODUCTS PRICING POLICIES IN RWANDA

II.2. 1. PHARMACEUTICAL MARKET

The Health Sector Strategic Plan IV 2018 – 2024 puts the cost of medicines, commodities and supplies in 2018 at 121,425 million RWF and at more than double that amount (248,809 million RWF) in 2024.5 This corresponds with a compound annual growth rate of 12.5%.

Other sources put the pharmaceutical market in Rwanda at 75 million USD in 2014 (composed of originator products, branded and unbranded generics).6 The compound annual growth rate 2007 – 2014 is estimated at 16%.7 According to the Rwanda Development Board (RDB), Rwanda imported pharmaceutical products worth 45.8 million USD per annum in the years 2009-2015.8

3 WHO/HAI Project on Medicine Prices and Availability. Review Series on Pharmaceutical Pricing Policies and Interventions. Working Paper 3: The Regulation of Mark-ups in the Pharmaceutical Supply Chain. 2011 4 WHO Guideline on Country Pharmaceutical Pricing Policies. 2016 5 Health Sector Strategic Plan IV 2018 – 2024, page 58. 6 Branded generics = generics with a specific trade name. Unbranded generics = use the international non-proprietary name and the name of the company. Source: oecd.org 7 Federation of East African Pharmaceutical Manufacturers (FEAPM), power point presentation, 2017. It is not clarified whether the 75 million refers to import value or sales value 8 Rwanda Development Board, ‘Doing Business in Rwanda’, 2017 presentation

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It is estimated that, in value, the market share of generic pharmaceutical (unbranded generics and branded generics) in Rwanda is around 54%, while the market share of originator/innovator pharmaceutical products is around 46%.9 In the public sector, generic pharmaceutical are used and a mix of generic and branded pharmaceutical products are used in the private sector. Overall, the confidence of the public and prescribers in the quality of generic pharmaceutical products still needs to be increased. Regulatory interventions related to the promotion of the use of generic pharmaceutical products in Rwanda are still few so far.

II.2.2. PHARMACEUTICAL SUPPLIERS

Rwanda Medical Supply Ltd (RMS Ltd) supplies pharmaceutical products exclusively to the public sector.

They currently supply an estimated 30-40% of the public sector needs. RMS Ltd branches, Referral Hospitals and specialized hospitals procure the pharmaceutical products that are not available at the RMS Ltd from private wholesales pharmacies.

Currently 118 private wholesalers are registered with the Rwanda FDA. Of those, an estimated 20 to 30 regularly import pharmaceutical products from abroad. Referral hospitals import pharmaceutical products as well.

The current number of retail pharmacies is 448. They source their pharmaceutical products from the private wholesales pharmacies.

II.2.3. CURRENT PRICE LEVEL

Public sector

To evaluate the level of the pharmaceutical products sales prices in the Rwanda market place, the 2015 International Medical Products Guide (IMPG) has been used.10

For the year 2018, the average sales prices of a sample of pharmaceutical products at the RMS Ltd are at 77% of the international median reference prices in the IMPG. The average of the sales prices of BUFMAR are at 66% of the average of the median prices. This positive outcome is probably a result of the international open tendering method that both RMS Ltd and BUFMAR use.

The RMS Ltd, the RMS Ltd Branch and the health facilities use, respectively a mark-up of 15%, 20% and 20% respectively to cover their operational and other costs.

Overall, the final medicine prices in the public sector can vary greatly because of the variety of sources (public and private suppliers). The mark-up levels in the public sector are not supported by a costing study nor are they regularly updated.

Private sector

It is not possible to compare the private sector sales prices with international references because there are too many different sources and they are too varied. No formal mark-ups

9 FEAPM 2017 10 http://mshpriceguide.org/en/home/

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exist, although a 20% mark-up for wholesalers (per wholesaler, depending on the number of wholesalers used in the supply chain) and a 40% mark-up for retail pharmacies is used as a guidance. The actual mark-up levels in the private sectors are not verified and their level is left to the individual company.

II.2.4. PHARMACEUTICAL RELATED DATA

II.2.4.1. Public sector

The PRIMS is managed by the Rwanda FDA and is used, among other matters, for the registration of Pharmaceutical products, the application of import visa and import licenses. It contains much relevant data. Its main function currently is as a data repository. Before the PRIMS is utilized as an analytical tool, access to the data has to be restructured and the quality of the data has to be improved.

The e-LMIS is managed by the MOH. It registers the pharmaceutical product supply flows in the public sector from the RMS Ltd to the RMS Ltd Branches and via the health facilities to the patients. It is complete in terms of the type data that it registers. The captured data is not yet reliable because of human error when entering the data in the system.

CBHI, RAMA and MMI:

These health insurance institutions routinely receive data on prices and pharmaceutical quantities dispensed and consumed from the public and private facilities by way of the invoices that are sent by the facilities. They still have challenge to carry out detailed analysis of prices and consumption on more than an aggregate level.

II.2.4.2. Private sector

Private health insurance companies

The private health insurance companies manage databases that capture reimbursement data at an aggregate level.

Private pharmaceutical suppliers

There is one private sector database that is publicly accessible. It is called ISHYIGA. It shows the availability of pharmaceutical products at the retail pharmacies that are part of the system. It also shows their average price. It does not show the pharmaceutical product prices per retail pharmacy. There are no complete aggregate databases at wholesale or retail level.

II.2.5. LEGISLATION AND REGULATION

Currently, there is no national level law or regulations that regulate wholesale or retail pharmaceutical product prices or mark-ups. Pharmaceutical products are exempted from value added tax (Chapter 2, Article 6, Point 15h).11 The tax exemption of pharmaceuticals and other health products is approved by the Ministry of Finance and Economic Planning on

11 Law n° 37/2012 of 09/11/2012 on the code of Value Added Tax

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the request of the Ministry of Health in.12 At EAC level, a 0% import tariff has been agreed upon.13

The law no 003/2018 of 09/02/2018, in article 2 establishing Rwanda FDA and assigns the Authority to regulate food and drugs: “Powers of the Rwanda FDA are as follows: formulate regulations and guidelines for regulating the manufacture, import and export, distribution, sale and use of regulated products under this Law”.14

The 2016 National Pharmaceutical Policy refers to the need for a pharmaceutical pricing policy and mentions the development of a pricing policy as one of its strategies.15

The policy links the need for a strategy to mitigate the risk that prices of health products may become too high and therefore unaffordable for the majority of the population. The HSSP IV also mentions the need for a pricing policy.

II.2.6. INSURANCE AND REIMBURSEMENT POLICIES

More than 90% of the population is covered by health insurance. The large majority (85%) is covered by the CBHI. Up to 10% is covered by RAMA, Military Medical Insurance (both public) and private health insurance companies.

CBHI members (except for the destitute and indigents) are required to pay a contribution of 200FRW at primary healthcare level and a fixed percentage of the costs when receiving care at the other health care levels. For the other health insurance companies, the co-payment varies.

The CBHI reimburses the health facilities for the pharmaceutical products that they have dispensed to the patients. The pharmaceutical products dispensed by the health facilities come partly from RMS Ltd, BUFMAR and partly from the private sector wholesalers (with unpredictable prices). Medicine prices can vary largely. The CBHI reimburses the full amount of the costs of medicines as submitted by the health facilities.

The other health insurance companies (RAMA, MMI and the private companies) are associated in the Rwanda Health Insurance Association (RHIA). They reimburse the health facilities and the retail pharmacies for dispensed pharmaceutical products using the RHIA Reimbursable Drug List. This list is updated every six months. The list is a tool to partially control the costs.

The CBHI only reimburses essential generic pharmaceutical products dispensed at the public health facilities. The other health insurance companies reimburse all pharmaceutical products on the RHIA list which includes originator products, branded and unbranded generics. They have no written policy to promote the use of generics.

12 Guidance document on tax exemptions of Pharmaceuticals and other health commodities, MOH, 29 October 2014. 13 East African Community Customs Union. Common External Tariff 2017 Version. Annex 1 to the protocol on the establishment of the East African Community Customs Union 14 Law No 003/2018, Chapter II, Article 9, Point 1: « Powers of Rwanda FDA are as follows: 15 National Pharmacy Policy, Ministry of Health, April 2016

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II.3. CHALLENGES AND GAPS

The main challenges in the pharmaceutical private and public market

- Government of Rwanda has no control over the manufacturer’s prices, only wholesalers to negotiate competitive prices for imported products. Because of the relatively small size of the market this is not always successful, especially for private sector importers.

- The prices of pharmaceutical products in the Rwandan market place can vary greatly between private sector suppliers as well as over time because of

(i) changes in the manufacturing or international wholesaler or broker’s prices and because of

(ii) absence of mark-up control.

- There is no transparency in the pricing structure across the supply chain, especially in the private sector.

- Wholesaler mark-ups are applied multiple times when the supply chain includes transactions between various wholesalers before the pharmaceutical products reach the beneficiary.

- RMS Ltd Branches have to purchase part of their supplies from the private sector and have little influence over the purchase price.

- The general public and many prescribers have a preference for branded pharmaceutical products because they do not trust the efficacy of generic pharmaceutical products.

Main gaps:

- There is no specific policy or guideline to promote the prescription, use and consumption of generic pharmaceutical products including on the use of International Non-proprietary Name (INN) for pharmaceutical products.

- Accessibility to data (reliability, ease of use, electronic access) is limited and does not allow for a detailed analysis of the cost and price of the medicine quantities distributed and dispensed.

- The health insurance companies’ databases do not collect detailed data on the pharmaceutical products’ price and prescribed or dispensed quantities.

- There is limited analysis of the Products Regulatory Information Management System (PRIMS), e-LMIS and health insurance companies’ data.

- Absence of harmonized codification system for pharmaceutical products.

- The mark-ups in the public sector do not use a regressive percentage mark-up approach

- The mark-ups in the private sector are not well regulated and can vary greatly.

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- The level of reimbursement prices used by the RAMA, MMI and the private health insurance companies are not regularly updated according to the fluctuation of prices on the market.

III. POLICY ORIENTATION

III.1. VISION

The Rwandan population’s health is improved where pharmaceutical products prices are regulated to ensure the affordability of pharmaceutical products available on Rwanda market.

III.2. MISSION

The mission of the pricing policy is to regulate pharmaceutical products prices in order to ensure continuous accessibility and affordability of pharmaceutical products to the Rwanda population.

III.3. POLICY OBJECTIVE/GOAL

The overall goal of this policy is to increase control over the pharmaceutical costs in the private and public sectors as well as to improve monitoring of the supply chain related costs in order to ensure quality, affordable and efficacious medicines and medical products for all Rwandans

III.4. GUIDING PRINCIPLES

The policy is based on the following guiding principles: 1. The Right to Health: Access to affordable and quality medicines is an integral part of

the fundamental right to health. The policy provides strategies to ensure equitable access to affordable pharmaceutical products for all citizens.

2. People-centered services: The pricing policy ensures universal demand and access to affordable quality and safe pharmaceutical products with focus to the well-being of individuals and communities.

3. Essential medicines: defined as those that satisfy the priority health care needs of the population. They are intended to be available within the context of functioning health systems at all time with assured quality and good price the individual and the community can afford.

III.5. STRATEGIC POLICY DIRECTIONS

To enable the Government of Rwanda to regulate the prices of pharmaceutical products in the public and private sector by applying appropriate measures and increase transparency.

To contain the current and future growth of pharmaceutical costs will ensure access and availability to the widest range of pharmaceutical products and financial viability for both private and public sector economic operators involving procurement, supply and dispensing of pharmaceutical products. The competent authority shall establish regulation to enforce the pharmaceutical pricing and cost containment.

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The policy directions s can be summarized in four strategic areas with a focus on regulations and measures as listed below. These regulations and measures will be introduced over time and they include, but are not limited to, the following:

III.5.1. REGULATIONS AND MEASURES THAT HAVE A DIRECT IMPACT ON THE

PRICE

- Regulation of mark-ups in public and private sectors

- Using internal and external reference pricing to determine ‘acceptable’ price levels for imported pharmaceutical products

III.5.2. REGULATIONS AND MEASURES RELATED TO THE USE OF

PHARMACEUTICAL PRODUCTS

- Actively promoting the use of generic pharmaceutical products by:

o Allowing or obliging generic substitution

o Publicity and awareness campaigns

o Collaborating with the public health insurance institutions to differentiate reimbursement levels for generic and branded pharmaceutical products

o Increasing awareness amongst prescribers and consumers

- Actively promoting rational prescription

- Promote the use of International Non-Proprietary Names throughout the public and private supply chains including the use of standardized codification

III.5.3. REGULATIONS AND MEASURES RELATED TO DATA MANAGEMENT AND

TRANSPARENCY

- The Rwanda FDA to amend the PRIMS to (i) allow for the inclusion of data on landed costs for all pharmaceutical products marketed in Rwanda and (ii) increase the ease of doing analysis of the available data and (iii) to introduce ‘fail safes’ to reduce data entry errors

- MOH shall continue investing in automation of supply chain system for both public and private sector to ensure the quality of the data quality inform the planning and decision-making processes

- To publish manufacturer, wholesale and retail prices as well as mark-ups on the Rwanda FDA website or any information sharing platform for accountability.

III.5.4. REGULATIONS AND MEASURES RELATED TO POLICY IMPLEMENTATION

MANAGEMENT AND COORDINATION

- The creation of a multi-sector and multi-stakeholder pricing committee to advise the competent authority on pharmaceutical pricing and cost containment policies

- Rwanda FDA is entrusted with implementation and enforcement of the policy.

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- To set up a routine system of data access, exchange and analysis between the relevant public and private institutions.

IV. IV. GOVERNANCE FRAMEWORK

IV.1. ORGANIZATION & MANAGEMENT OF SECTOR TO DELIVER RESULTS

1. MINISTRY OF FINANCE AND ECONOMIC PLANNING AND THE MINISTRY OF

TRADE AND INDUSTRY

These Ministries will be consulted before a pricing policy measure is implemented as far existing country macroeconomic and trade policies are concerned.

2. MINISTRY OF HEALTH

The Ministry of Health shall provide the leadership and oversight coordination in terms of policy and strategy formulation related to the pharmaceutical products pricing policy. They shall also be responsible to ensure the oversight and monitoring of the implementation of its associated regulations and measures. In order to maintain access to pharmaceutical products and to contain overall pharmaceutical costs for the public and private sector, the MOH responsibilities shall be:

- To develop and adopt the pharmaceutical pricing and cost containment policy; - To review the pharmaceutical pricing and cost containment policy; - To oversee the implementation of the measures initiated under this policy; - To act on the advice offered by Rwanda FDA; - To develop and implement non-price related cost containment measures aimed at

managing demand for pharmaceutical products;

3. RWANDA FOOD AND DRUGS AUTHORITY:

Rwanda FDA shall be responsible for the implementation of the pharmaceutical pricing policy.

They will be responsible for the daily management of the policy, strategies design and priority setting, financial management and audits. The Rwanda FDA is also responsible for all technical matters linked to price related regulations and measures under the pharmaceutical pricing and cost containment policy. The main responsibilities are:

- To coordinate the implementation of the price related measures initiated under the pharmaceutical pricing policy

- To establish pricing implementing regulations.

- To establish the Pharmaceutical Pricing Committee under the guidance of the Minister responsible for Health;

- To propose changes to the pharmaceutical pricing policy to the Ministry of Health;

- To ensure monitoring and evaluation of all pharmaceutical prices on the market;

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- To communicate the prices of the pharmaceutical products to the public and stakeholders;

4. Pharmaceutical Pricing Committee shall be responsible for:

1. Providing independent advice to the Rwanda FDA in all matters related to pharmaceutical pricing implementation;

2. Reviewing and analyzing the prices and recommend for actions;

5. RWANDA BIOMEDICAL CENTER (RBC)

It is in their interest to procure quality assured pharmaceutical products for the best prices. Their responsibilities are:

- To procure essential pharmaceutical products through international open tendering;

- To store, sell and distribute the procured pharmaceutical products to the RMS branches through a pull or push system;

6. RWANDA HEALTH INSURANCE ASSOCIATION (RHIA).

The main responsibilities of RHIA in the implementation of this policy are:

- To comply with the approved product list and prices;

- To contribute to setting up of the prices of pharmaceutical products

- To participate in price related negotiation and regulation activities.

7. PHARMACEUTICAL SUPPLIERS (WHOLESALERS AND RETAILERS)

The main responsibilities of Pharmaceutical suppliers in the implementation of this policy are:

- To abide by the pharmaceutical pricing policy measures and Rwanda FDA regulations;

- To collaborate through RHIA to promote data exchange and standardized reimbursement ceilings;

- To provide price, costing and supply chain information to the Rwanda FDA.

8. CONSUMERS

The main responsibility of consumers in the implementation of this policy are:

- To provide information (access, affordability etc.) to the Rwanda FDA through individual or their organizations umbrella when requested and unsolicited.

IV.2. MANAGEMENT AND STEWARDSHIP STRUCTURES

1. Price related measures and regulations

MOH shall be responsible for the stewardship of this policy. Rwanda FDA shall be responsible for the implementation of the pricing policy and its measures. It shall ensure responsible planning and management of resources associated with the policy and the pricing policy measures.

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The Rwanda FDA will prepare an annual report and disseminate to relevant institutions

Figure 1 below shows the various levels of authority to ensure a proper governance structure for this policy:

Level 1: Pharmaceutical Pricing Unit prepares proposals for pricing measures

Level 2: Pharmaceutical Pricing Committee validates the proposals

Level 3: Rwanda FDA validates the proposals that have been received from the pharmaceutical pricing committee

Level 4: MOH provides guidance on the implementation of the proposals that have been received from Rwanda FDA.

Figure 1: Decision flow of pharmaceutical pricing implementation

2. Demand related measures and regulations

The additional cost containment measures (not price related but rather focusing on the demand) fall under the responsibility of the following two organizations.

3. Ministry of Health

Promoting the use of generic pharmaceutical products and improving the use of Standard Treatment Guidelines is the responsibility of the Ministry of Health. Improving the quality of the data available in the health system through e-LMIS is also the responsibility of the Ministry of Health.

4. Health insurance institutions/companies

Establishing reimbursement policies (e.g. type of products or reimbursement ceilings) to contain the aggregate pharmaceutical expenditure is first and foremost the responsibility of the public and private health insurance companies.

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IV.3. PARTNERSHIP AND COORDINATION STRUCTURES

The policy organ and implementing agency shall collaborate with the public and private health insurance institutions for purposes of exchange of data, data analysis, impact analysis, market intelligence and monitoring and evaluation of the implementation of the policy.

IV.4. IMPLEMENTATION PLAN The implementation plan contains measures that affect (i) the prices and (ii) the costs. The preparation and implementation of these measures takes time. Some can be started within one year; others will start later. Within one year: The measures that are presented in this chapter can be developed in the short term. More than one year: Other measures require more time and resources. These are measures such as the use of External Reference Pricing A Gantt chart has been developed for all the activities and the main responsible institutions that include Ministry of Health, Rwanda FDA, Rwanda Biomedical Center, Health Insurances and other stakeholders. Detailed implementation plan is presented in the following table:

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TABLE ON IMPLEMENTATION ACTIVITIES Proposed measure Activity Responsible for

the activity 2020 2021

Aug Sept Oct Nov Dec Jan Feb Mar Apr May June July Aug Sept Oct

Adopt policy Adoption of the pharmaceutical pricing containment policy MOH

Develop pharmaceutical pricing regulation guidelines

Development of pharmaceutical pricing regulation guidelines Rwanda FDA

Avail pricing positions within Rwanda FDA

Develop terms of reference pricing unit including staffing requirements Rwanda FDA Develop terms of reference of staff pricing unit Organize work schedule

Create a pharmaceutical pricing advisory committee

Develop terms of reference pharmaceutical pricing advisory committee: role and responsibilities, membership, … Rwanda FDA Rwanda FDA board of directors to adopt terms of reference Formal creation of the advisory committee First meeting advisory committee

Develop the Mark-up regulation

Develop terms of reference for (i) costing study and (ii) pricing study (WHO/HAI methodology) necessary to determine the mark-up levels Rwanda FDA Adoption of the terms of reference by Rwanda FDA Organize team (experts/donor support) to conduct the (i) costing study and (ii) pricing study Conduct both studies

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Many nurses and pharmacists are asked, at some points in their career, to fulfill supply chain tasks. Job descriptions for supply chain cadres are not widely available, and those that do exist are not standardized, although the Ministry of Health (MOH) has select supply chain job descriptions at the central level (procurement, quantification, warehousing, distribution, etc.).






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Proposed measure Activity Responsible for


Aug Sept Oct Nov Dec Jan Feb Mar Apr May June July Aug Sept Oct Conduct ABC analysis of import prices Develop proposal as to which products will be subject to mark-up control Present proposal for mark-up levels to pharmaceutical pricing committee Present proposal for mark-up tiers to pharmaceutical pricing committee Adoption by pricing committee and Rwanda FDA Stakeholder consultation Proposal formally submitted to the MOH Public announcement of introduction of maximum mark-ups with 6 months grace period Grace period Implementation of the mark-ups

Registration of landed cost price

Formulate a requirement to have the importers register the landed cost price of imported products

Rwanda FDA+Wholesale pharmacies

Ensure that PRIMS allows for registration of landed cost price per smallest unit of the product Formally inform the importers of the requirement to register the landed cost price per smallest unit when applying for an import license

Data base PRIMS: Rwanda FDA

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Aug Sept Oct Nov Dec Jan Feb Mar Apr May June July Aug Sept Oct management - Introduce validation

measures to improve quality data entry - Introduce verification procedures - Add an analytical module to facilitate analysis - Ensure that PRIMS allows for the registration of landed cost price per smallest unit of the product e-LMIS RBC - Improve validation of data entry - Improve validation of entered data at central level

Increased transparency and increased data access

Develop terms of reference for information sharing platform/committee with stakeholder membership MOH Create the platform/committee Develop terms of reference for data availability and sharing study Defining which data can be accessed by insurers while maintaining data confidentiality Proposal for what information to be made available by whom, to whom and in what form: data availability and sharing policy Develop agreement between Rwanda FDA and RHIA and CBHI to make data exchange official Presentation of policy to

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Aug Sept Oct Nov Dec Jan Feb Mar Apr May June July Aug Sept Oct information sharing platform Adaption of the data availability and sharing policy Develop terms of reference to improve the use of PRIMS: analytical module Rwanda FDA Ensure that PRIMS has an accessible interface for analyzing and publishing prices and price related data Determine access to e-LMIS data

Promotion of generic pharmaceutical products

Develop terms of reference on promotion of generic medicines MOH Form a multi-stakeholder team for the promotion of generic pharmaceutical products To develop annual plan 2020 with promotional activities such as: Through insurers: - lower co-payment - limiting the reimbursement to lowest cost generic Through demand measures targeting prescribers - distribution of printed materials - through professional meetings and organizations - continuing medical education

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Aug Sept Oct Nov Dec Jan Feb Mar Apr May June July Aug Sept Oct - engaging opinion leaders - academic detailing and educational outreach - specific training sessions - audit and feedback Through demand measures targeting patients and consumers - public information campaigns Through regulatory interventions - Allowing pharmacists to substitute - Making prescribing using INN mandatory

Use of Internal reference pricing: CBHI

To start defining reimbursement ceilings for pharmaceutical products

MOH+RBC+RwandaFDA+Health insurances

Develop a detailed procedure to introduce and manage IRP: - which pricing data are going to be used for IRP How this data is going to be collected When is it going to be collected How to define the reference price for each product (average, median, sample etc.)

Internal reference pricing: all insurers

RHIA, MOH and Rwanda FDA to agree on pricing date sharing All RHIA to use Rwanda FDA PRIMS pricing data to establish reimbursement ceilings every 6 months

Harmonized Develop and adopt a Rwanda FDA

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Aug Sept Oct Nov Dec Jan Feb Mar Apr May June July Aug Sept Oct codification system

codification system Introduce the codes in PRIMS Introduce the codes in e-LMIS Introduce the codes with RMS Ltd, RMS Ltd Branch and BUFMAR

External reference pricing: maximum sales price

Activities to be determined

Rwanda FDA National level framework contracts

Depends on the configuration of the 'new' RMS Ltd and RMS Ltd Branch

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IV.5. MONITORING AND EVALUATION AND ACCOUNTABILITY MECHANISMS

MOH shall ensure that Rwanda FDA put in place adequate mechanisms to implement this policy as well as to monitor and evaluate its impacts in order to assure continuous improvement and adaptation. The impact of the various measures on the availability of pharmaceutical products on the market and the price development of products will be closely monitored by Rwanda FDA.

IV.6. AUDITING AND INSPECTION MECHANISMS

Rwanda FDA shall be responsible to develop auditing and inspection mechanisms to ensure that pharmaceutical suppliers and pharmaceutical outlets in the public and the private sectors will comply with the relevant measures.

V. CONCLUSION

Regulations of medicine prices and measures to address cost containment in the public and private sector are required to ensure universal access to health services. In light of the expected future economic growth that shall be accompanied by an increase in overall pharmaceutical expenditure, it is timely to start the regulation of prices of pharmaceutical products.

It is required to establish framework that influences the regulation of price from manufacturers and wholesalers and also through financial and professional measures affecting the demand of pharmaceutical products.

It is also required to ensure effective functioning pharmaceutical product pricing committee with a wide governmental and non-governmental representation.

For any regulation or measure to succeed there are a number of necessary conditions that have to be in place. One of the main conditions is the availability and accessibility of data is necessary. The data required are mostly available in the PRIMS and the e-LMIS and the databases of the various public and private health insurance companies.

The data are necessary for the initial analysis and setting of mark-ups. In addition, monitoring and evaluation as well as inspection and auditing are indispensable activities which can only be undertaken when availability and access to data is ensured.

Finally, finding a balance between the management of the pharmaceutical costs for the government, private health insurance companies and patients on one hand and the profit interests of the pharmaceutical suppliers on the other hand is essential.

Through the national pharmaceutical products pricing containment policy, the Government of Rwanda is committed to ensure the affordability of quality pharmaceutical products in Rwanda.

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VI. BIBLIOGRAPHY

Year Title Authors / organization / source

Rwanda specific documents 2010 Rwanda Community based health insurance policy Ministry of Health

2012 Law Nº 03/2012 of 15/02/2012 governing narcotic drugs, psychotropic substances and precursors in Rwanda Gazette

2014 An Overview of Healthy System and Insurance in Rwanda S. Letitan 2015 Health Financing and Sustainability Policy Ministry of Health

2016 National Pharmacy Policy Ministry of Health 2016 Health Insurance Profile Rwanda USAID 2017 Fourth Health Sector Strategic Plan July 2018 - June 2024 Ministry of Health

2018 Law Nº 003/2018 of 09/02/2018 establishing Rwanda Food and Drug Authority and determining its mission, organization and functioning

Gazette

International articles and documents

2013 Policy options for pharmaceutical pricing and purchasing issues for low- and middle-income countries

Tuan Anh Nguyen, Rosemary Knight, Elizabeth Ellen Roughead, Geoffrey Brooks and Andrea Mant

2013 The Market Dynamics of Generic Medicines in the Private Sector of 19 Low- and Middle-Income Countries between 2001 and 2011- A Descriptive Time Series Analysis

Warren A. Kaplan, Veronika J. Wirtz, Peter Stephens

2014 Pharmaceutical policies: effects of reference pricing, other pricing, and purchasing policies (review)

Acosta A, Ciapponi A, Aaserud M, Vietto V, Austvoll-Dahlgren A, Kösters JP, Vacca C, Machado M, Diaz Ayala DH, Oxman AD

2015 Does Reference Pricing Drive Out Generic Competition in Pharmaceutical Markets? Evidence from a Policy Reform

Kurt R. Brekke, Chiara Canta and Odd Rune Straume

2015 Pharmaceutical policies- effects of cap and co-payment on rational use of medicines

Luiza VL, Chaves LA, Silva RM, Emmerick ICM, Chaves GC, Fonseca de Araújo SC, Moraes EL, Oxman AD

2015 Pharmaceutical pricing and reimbursement policies- perspectives for the future

Andrew L. Gray

2016 Policies to control prices of medicines: does the South African experience have lessons for other African countries Skhumbuzo Ngozwana

2016 Pricing strategies for pharmaceuticals in developing countries what options do we have - GaBI Journal copy

Nada Moustafa Abdel Rida, MSc Candidate, Professor Mohamed Izham Mohamed Ibrahim, PhD

2016 Stakeholder preferences about policy objectives and Sabine Vogler, Nina

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Year Title Authors / organization / source

measures of pharmaceutical pricing and reimbursement Zimmermann, Katharina Habimana

2017 Comparing Generic Drug Markets in Europe and the United States- Prices, Volumes, and Spending

Olivier J. Wouters, Panos G. Kanavos, Martin McKee

2017 Efficacy of international approaches to medicine price regulation and control

Mohammad Bashaar, Mohamed Azmi Hassali, Fahad Saleem, Alian A ALrasheedy, Vijay Thawani, Zaheer-Ud-Din Babar

2017 Prices and availability of locally produced and imported medicines in Ethiopia and Tanzania

M. Ewen , W. Kaplan, T. Gedif, M. Justin-Temu, C. Vialle-Valentin, Z. Mirza, B. Regeer, M. Zweekhorst and R. Laing

2017 Systematic review of pharmaceutical pricing policies in developing countries.pdf

Nada Abdel Ridaa , Mohamed Izham Mohamed Ibrahima, Zaheer-Ud-Din Babarb and Yaw Owusu

2019 Medicine price surveys, analysis and comparisons. Evidence, methodology and guidance

Edited by Sabine Vogler

World Health Organization, Health Action International

2011 Working paper 1: External Reference Pricing J. Espin, J.Rovira, A.Olry de Labry

2011 Working paper 2: The role of health insurance in the cost-effective use of medicines. May 2011

Laura Faden, Catherine Vialle-Valentin, Dennis Ross-Degnan, Anita Wagner

2011 Working Paper 3: The Regulation of Mark-ups in the Pharmaceutical Supply Chain

Douglas Ball

2011 Working paper 4: Competition Policy Loraine Hawkins 2011 Working paper 5: Sales taxes on medicines A Creese

2013 Working paper 6: the role of health technology assessment in medicine pricing and reimbursement P. Whyte, C. Hall

2016 WHO Guideline on Country Pharmaceutical Pricing Policies

WHO

2018 Public Spending on Health: A Closer Look at Global Trend Ke Xu et al.

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