Industry Trend Analysis - A Recap On The Pharmaceuticals & Healthcare Outlook For 2017: Central & Eastern Europe - JAN 2018

BMI View: The need for sustainable expansion of healthcare access has transformed the CEE pharmaceuticals market in 2017. There has be en a greater focus on cross-border communication and collaboration within the pharmaceutical sphere in order to negotiate lower prices for medicines, improve and harmonise pharmaceutical policy and reduce barriers to trade. In addition, there has been a concerted effort to advance legislation in response to the challenges posed by the increasing demand for higher quality medicines while economic constraints remain.

At the end of 2016, we set out a number of expectations for the year ahead in our annual review of the Central and Eastern Europe (CEE) pharmaceuticals and healthcare sector ( see ' Pharmaceuticals & Healthcare Outlook For 2017: Central & Eastern Europe ' , November 23 2016). We have selected the two key trends and reviewed the progress of each. This article notes our views and details any developments that support or confirm our outlook. Overall, both of these themes have played out, with a significant amount of activity across the region underlying this. However, we note that these themes are unlikely to be specific to 2017 alone; we anticipate continued activity in both sub-regional cooperation and legislative development through 2018 and beyond.

Sub-Regional Cooperation

BMI View: Transnational agreements within the pharmaceutical sector will be a central theme for the CEE region in 2017. There has been a significant focus on the efficiency of healthcare spending within the region as governments attempt to sustainably expand healthcare access. These sorts of collaborative initiatives will manifest primarily - but not exclusively - in the form of joint negotiation on medicine prices. Such cooperation will assist these countries in improving both the quality and quantity of medicines available in the market, while also reining in expenditure necessitated by ongoing austerity measures.

  • In March 2017, Ministers of Health from Lithuania, Croatia, Slovenia, Czech Republic, Poland, Hungary and Slovakia held an informal meeting to discuss joint procurement of medicines.

  • In May 2017, the Ministries of Health for the Baltic States (Estonia, Latvia and Lithuania) agreed to formulate common policies to shape health policy. Such common policies include promoting healthy eating and discouraging alcohol and tobacco consumption to reduce mortality from non-communicable diseases.

  • In May 2017, Ministers of Health from a number of European countries participated at a Round Table with the heads of European pharmaceutical companies. At this meeting, representatives from Romania, Malta, Portugal, Cyprus, Greece, Italy, Spain and Ireland signed a cooperation agreement (the Valletta Declaration) to increase patient access to innovative medicines and other health technologies, and established a technical committee to identify the potential for further cooperative arrangements to exchange information and best practices related to price negotiation on joint procurement. Additional meetings throughout the year have been held to identify priority areas for cooperation.

  • On May 6 2017, the single medicine market covering the Eurasian Economic Union (EAEU) officially came into force with a basic set of regulations covering the circulation of medicines across the region, consisting of Armenia, Russia, Kazakhstan, Kyrgyzstan and Belarus. Also in May 2017, the major association of drug manufacturers in these EAEU countries launched the Eurasian Pharmaceutical Alliance (EAFA) which will aim to optimise the collaboration between regulators, manufacturers and distributors operating in the market.

  • In June 2017, it was reported that the joint procurement of pneumococcal vaccines by Latvia and Lithuania will result in savings of 15%.

  • In June 2017, the Ministers of Health of Greece, Cyprus and Israel met to form a tripartite cooperation in the field of health. The three countries will exchange information, expertise and good practices to enable more effective management of health issues.

  • Throughout 2017, Belarus has sought to form cooperative agreements with other nations to reduce the cost of medicines on the Belarusian market, enabling greater access. In June 2017, Israel and Belarus held discussions over a future trade partnership and the potential for joint ventures in drug production. Throughout 2017, discussions were held between Indian and Belarusian representatives to increase cooperation between the two countries; India is already committed to constructing three drug factories in Belarus over the coming years in joint ventures. Also, in October 2017 the medicines agencies of Belarus and Moldova signed a memorandum of cooperation in the field of medicines to deepen trade relations and increase cooperation between the two agencies with respect to the harmonisation of drug authorisation procedures.

  • In July 2017, the Medicines and Medical Devices Agency of Moldova (AMDM) and the Department of Pharmaceutical Industry of the Republic of Belarus signed a memorandum of cooperation to strengthen relations between the drug regulatory agencies.

  • In September 2017, at the 67th session of the WHO Regional Committee for Europe, cooperation between EU member states with respect to pharmaceutical policy was discussed. This discussion centred on policy changes that could enable consistent access to quality, safe and effective medicines and faster access to novel drugs. The discussion also highlighted the potential for voluntary cross-border cooperation with fellow EU member states. The Greek Minister of Health highlighted that the universal access to both essential and innovative medicines is a crucial aspect of the WHO's Health 2020 strategy and supported the concept of transnational cooperation.

Advancement Of Pharmaceutical Legislation

BMI View: In 2017, pharmaceutical legislation in the CEE region will advance towards Western counterparts as governments attempt to better regulate the market in order to improve access to higher quality medicines for a greater proportion of the population. This theme will play out in a number of different manners, dependent on the current state of each country's pharmaceutical market development. The more developed EU member states will seek to improve access to medicines, while in the less developed markets, broadly located further to the east, legislative changes will focus on the implementation of basic pharmaceutical policy.

  • The long-awaited single, unified law on the protection of industrial property rights entered force in January 2017, having been ratified by the Turkish Parliament in December 2016. This law will adopt tighter regulations for the protection and enforcement of intellectual property rights and better aligns the Turkish patent regime with its obligations as part of the European Patent Convention. In addition, In February 2017 a New Decree Regarding Pricing of Pharmaceuticals was published, abolishing the Former Pricing Decree.

  • In January 2017, it was reported that Croatia may liberalise its over-the-counter (OTC) medicine market. However we note that since this report there have been no indications of any changes to the regulation of this sector from the Croatian Agency for Medicinal Products and Medical Devices (HALMED).

  • In January 2017, Kazakhstan adopted new rules governing the procurement of medicines for the state-funded health insurance fund (STRK). These regulatory changes aim to improve the mechanism of drug procurement through increased transparency and reducing costs and administrative barriers. Also in February 2017, it was revealed that the Ministry of Health was developing a draft law on the regulation of prices in pharmacies. According to the Ministry of Health, pricing policies will be implemented starting in October 2018 with regulation of non-prescription medicines sold from private pharmacies, and expanded to all prescription medicines by 2023. In the first step of this process in September 2017, the head of the Ministry of Health's drug policy group outlined the basic details of the developed draft law, ' On Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan Concerning the Circulation of Medicines and Medical Products'. This draft law will implement a regressive mark-up scheme for retail and wholesale medicines.

  • In February 2017, the Armenian health minister announced that parliament would consider amendments to the country's Law On Medicines to enforce greater control over the entire supply chain of pharmaceuticals in the country in order to bring Armenian medicines in line with international standards. In May 2017, the country's National Assembly adopted these amendments, which, it is hoped, will allow domestic manufacturers to market their products internationally. According to the Deputy Minister of Health, some drugs will be classified as prescription-only to prevent the negative consequences of self-treatment, licensing will be obligatory for manufacturers of medicines and mechanisms will be introduced to regulate medicine prices. The amendments will also harmonise regulations with EAEU members to enable access to the EAEU single medicines market.

  • In February 2017, the EU granted Belarus EUR3.6mn (USD4.1mn) for a project to strengthen the country's drug quality control system in order for the country's pharmaceutical inspectorate of the Ministry of Health to join the Pharmaceutical Inspection Co-operation Scheme (PIC/S). Moreover in July 2017, President Lukashenko ordered the constant monitoring of medicine prices to maintain them at affordable levels and to take steps to reduce prices where costs are higher than in neighbouring markets.

  • In February 2017, an amendment to the Czech Republic's Pharmaceutical Act was signed by the President. This amendment enabled the Ministry of Health to categorise certain pharmaceutical products as 'at risk of shortage' and then temporarily ban the export of these medicines. This is aimed at ensuring adequate supply of medicines to the Czech population at all times. In addition, on June 30 2017, the Chamber of Deputies approved the draft amendment to Act No 48/1997, which ensures a reduction in drug allowance limits, increasing access to medicines for the elderly and children.

  • In February 2017, amendments to Lithuania's Pharmacy Act were proposed. These amendments would see the prices of reimbursed medicines reviewed four times a year, enabling a quicker response to price changes around Europe. The proposed amendments also included regulations aimed at promoting the sale of cheaper medicines in Lithuania (rational prescription). On July 3 2017, these alterations to the pricing mechanism for reimbursed drugs were introduced. Generic medicines prices at more than 10% above the reference price (calculated from a basket of eight CEE countries) will not qualify for reimbursement, forcing drugmakers to provide discounts. The introduction of these new laws has resulted in a significant reduction in patient co-payments and drug prices. In addition, the government proposed reducing the VAT on non-reimbursed prescription medicines; these drugs will benefit from a reduced-rate 5% VAT (down from the standard-rate 21%) bringing them in line with reimbursed medicines. Furthermore, in September 2017, the State Agency for Medicines (SAM) proposed a reduction to the co-payment for fully reimbursed medicines, setting a limit of EUR3.93 (USD4.61)

  • In February 2017, the Polish government adopted a draft law amending the Law on Health Care Services Financed from Public Funds and Certain Other Acts which enables patient access to medicines that are not reimbursed if there is no suitable medicine available to treat a life-threatening disease.

  • In Kyrgyzstan, proposed amendments to pharmaceutical pricing legislation, limiting the retail mark-up to 20% of the wholesale price, were discussed at a meeting of the Jororku Kenesh Committee on Constitutional Legislation. In February 2017, the WHO country office in Kyrgyzstan held a policy dialogue on new laws under discussion to regulate pricing and procurement of medicines. The WHO stated it is in full support of these regulatory developments, noting that they would be a turning point for the strengthening of the healthcare sector, and will continue to support the rapid and smooth adoption of the laws. We note that there has since been little mention of these proposals.

  • In March 2017, a parliamentary committee on health discussed the plans to amend Azerbaijan's Law On Medicines; a draft law is due to be drawn up and discussed by parliament. Also in June 2017, changes were proposed to the Code of Administrative Offenses, which would tighten regulations surrounding advertising campaigns for medicines. We note that there have been no developments on the proposed amendments to the Law On Medicines since.

  • In March 2017, the Polish Ministry of Health announced the expansion of its 75+ drug programme, which provides certain medicines to people over the age of 75 free of charge. The list of medicines was expanded to include some drugs treating glaucoma, Parkinson's and high cholesterol. Throughout the year - every two months - the list has been further expanded to include more medicines to treat cardiovascular diseases - for the treatment of hypertension and ischemic heart disease. Initially, only human insulins and some drugs treating Parkinson's and chronic obstructive pulmonary diseases were available. In September, the Minister of Health noted that more than 2.2mn people had benefitted from the program, accounting for 20mn prescriptions.

  • In March 2017, Romania's Ministry of Health signed two ministerial orders to enable greater access to medicines in the market by ensuring wholesalers maintain an adequate stock of medicines. Also in March 2017, Romania simplified access to reimbursed and free medicines for a wide range of diseases including cancers, rare diseases, obesity, cardiovascular disease and diabetes (among others). Moreover, in October 2017 the Ministry of Health announced that the prices of 55 drugs had been reduced by between 10% and 80% year-on-year. These medicines are subject to cost-volume contracts and address conditions such as hepatitis C and cardiovascular diseases. The savings made by these price cuts will reportedly be spent on covering the costs for other treatments provided by the healthcare system.

  • In March 2017, the Serbian government published a draft law on Pharmaceutical Activities for public debate. We note that the Ministry of Health has not yet published any additional information regarding this law.

  • As part of the Ukrainian government's drug policy reform, the Council of Ministers approved a number of bylaws representing a major overhaul of the regulatory framework for medicine pricing and reimbursement in 2017. Pricing regulations were introduced which included the use of reference pricing and pharmaceutical mark-up controls, and VAT on medicines was also reduced. Medicine reimbursement was also launched in April 2017 treating cardiovascular diseases, asthma and Type II diabetes; the list has since been expanded. According to analysis in the months after the introduction of the reimbursement scheme, consumption of these drugs had risen significantly.

  • The new Polish Pharmacy Law (7 April 2017) took effect in June 2017, but will only apply to new pharmacies. This law made changes to the operating permission of pharmacies in Poland, restricting the geographic and demographic limits on new pharmacies and limiting the right to operate pharmacies to authorised pharmacists.

  • A new Law on Medicines was developed by the Moldovan Ministry of Health in early 2017 to replace the outdated Law No 1409-XIV (December 1997 Law On Medicines) and will require amendments to Law No 1456-XIII (May 1993 Law On Pharmaceutical Activity). This will allow the recognition of medicines authorised in the EU for fast-track approval, among other changes. Also, in September, the Moldovan Ministry of Health, Labour and Welfare held a policy dialogue with the Regional Office of the WHO for Europe on intellectual property (IP) rights in the field of medicines. Recommendations were made for the improvement of the IP environment in the context of the negotiation process for EU accession.

  • In July 2017, the Slovakian Ministry of Health proposed an increase to the pharmacovigilance threshold for inclusion in the list of medicinal products covered by the public health insurance system, enabling access to previously unavailable medicines. The Ministry also proposed a reduction in reimbursed medicine co-payments.

  • In May 2017, the Ministry of Health of Uzbekistan drafted a bill amending its pharmaceutical legislation. In August 2017, the Resolution 'On Additional Measures to Improve the System of Providing the Population with Medicines and Medical Products' was introduced, providing a wide-ranging number of regulations, such as fixed wholesale and retail prices for drugs and VAT exemptions for domestically-produced drugs.

  • In mid-2017, the Bulgarian Ministry of Health implemented a centralised electronic medicine tendering system to procure drugs for hospitals. This is estimated to save a reported 5-10% of medicine costs through large-volume orders and the increase in transparency of drug prices. Moreover, in August, a draft amendment to the Medicines Bill was presented. The main change in this bill is the introduction of a 'compassionate use' clause, which will enable access to medicines with no suitable alternative on the market.