Saudi Pricing Guidelines and SThe Proposed New Pricing System

Hajed M. Hajed, PhD.Hajed M. Hajed, PhD.Director of Registration Department

Saudi Food and Drug Authority (SFDA)

h h h @ fdhmhashan@sfda.gov.sa

Outline

Pricing History and Legal Background - Saudi Arabia

Current Pricing Guidelines

Proposed New Pricing System

Pricing History and Legal Background -Saudi ArabiaSaudi Arabia

Pricing Regulations

• Article 12:

Pricing Regulations

- Calculation of drug price is based on Ex-factory or

Cost, Insurance and Freight (CIF) price into Saudi

Arabia in the currency of the country of origin or theArabia in the currency of the country of origin, or, the

currency specified by the Ministry of Health.

- The price will be revised on regular basis.

Pricing History and Legal Background -Saudi Arabia (Cont.)Saudi Arabia (Cont.)

• Article 14:

- Un-priced pharmaceutical products should not beUn priced pharmaceutical products should not be

available for public.

Pricing History and Legal Background -Saudi Arabia (Cont )Saudi Arabia (Cont.)

ActionYear 1954 Pricing regulations were initiated1961 Profits have been determined1961 Profits have been determined 1966 The monetary aid was suspended 1974 The monetary aid was returned1974 The monetary aid was returned1989 Pricing regulations have been modified200 f f2005 Profits have been modified

Current Pricing GuidelinesCurrent Pricing Guidelines

GenericألدويةاGeneric productsوي

الجنيسة التي األدويةCombined products

Innovated patented

d tاألدوية المبتكرة

األدوية التيتحتوي على أآثر من مادة

الة ف products فعالة

Products that Under license ة ال ة لهااأل التي Products thatاألدوية

have specific advantages

Locally manufactured

products

األدوية المصنعةمحليًا

ه ي وي خاصية عالجية

مميزة

Products with different

package sizes

األدوية التي لها package sizesتراآيز و أحجامand strengthsم

مختلفة

Current Pricing Guidelines Common Pricing Requirements and Criteria

• Ex factory price

Common Pricing Requirements and Criteria

• Ex-factory price.

• Wholesaler price.

• Public (retail) prices.

• Cost , Insurance and Freight (CIF).

• The price in an official pricing references (if available)• The price in an official pricing references (if available).

• Therapeutic significance.

Innovated PatentedPatented

Products with

N Si il Si ilNo Similar Product on the

SimilarProduct on theProduct on the

Saudi MarketProduct on the Saudi Market

Current Pricing Guidelines Innovated Patented ProductsInnovated Patented Products

Innovated Patented Products With No Similar Product on the S di M k t

Common Saudi Market

pricing criteria

Pricing of these productsthese products

Least prices i thin the

reference countriescountries

Current Pricing Guidelines Innovated Patented Products (Cont.)Innovated Patented Products (Cont.)

Innovated Patented Products With Similar Product on the S di M k t

B fi

Saudi Market

Common pricing

Benefits vs.

Pricing of criteria Risks

these products

Prices of C t fPrices of the similar products

Cost of therapeutic

iproducts regimen

Current Pricing Guidelines Generic ProductsGeneric Products

Common pricing

f

p gcriteria

Pricing of these products

Generic Pricing

N.B.: the least price should be selected.

Pricing Schemes

Current Pricing Guidelines Generic Products (Cont )

Pricing of generic products has three schemes:

Generic Products (Cont.)

Pricing of generic products has three schemes:

A. Products Manufactured Locally.y

B. Products Manufactured Japan, EU, USA.

C. Products Manufactured in Other Countries.

Price of innovated product – 30 % 1st generic product

Price of 1st generic product – 10 %2nd generic product

Current Pricing Guidelines Under License Locally Manufactured Products

Is the innovated

Under License Locally Manufactured Products

Pricing methodology Is the innovated

product registered in KSA?

Type of product

The same price of registered innovated YesLocally

produced under productproduced under license product

The Innovated Patented Products pricing guideline

should be appliedNo

Price of registered innovated product - 10% YesSecond brand

product

Current Pricing Guidelines Products with Different Package Sizes or Strengths

Dosage Form Difference in Package Size % of Price Reduction1:2 12%

Products with Different Package Sizes or Strengths

Tablets - Capsules1:21:31:41:5

12%14%15%16%

Ointments – Creams – Topical Medications

1:21:31:41:5

12%24%27%30%

Oral Solutions1:21:31:41:5

13%15%18%20%1:5 20%

Suppositories1:21:31:41

13%16%20%24%1:5 24%

Ampoules1:21:31:4

15%20%20%

1:5 20%

Current Pricing Guidelines Products with Different Package Sizes or Strengths (Cont )

Dosage Form Difference in Strengths % of Price Reduction

Products with Different Package Sizes or Strengths (Cont.)

Tablets - Capsules1:21:31:4

18%24%30%1:4 30%

Oral Solutions1:21:3

15%20%

1:4 30%

1:21 3

14%20%Ampoules 1:3

1:420%25%

1:2 20%Suppositories – Topical

Medications

1:21:31:4

20%25%30%

Current Pricing Guidelines Products with Different Package Sizes or Strengths (Cont )

Examples:

Products with Different Package Sizes or Strengths (Cont.)

Dosage Form Difference in Package Size % of Price Reduction

1:2 (20 40 tablets) 12% (50 88 SR)

p

Tablets 1:2 (20 – 40 tablets)1:3 (20 – 60 tablets)

12% (50 – 88 SR)14% (50 – 129 SR)

Dosage Form Difference in Strengths % of Price Reduction

1:2 (20 40 mg) 18% (50 82 SR)Tablets

1:2 (20 – 40 mg)1:3 (20 – 60 mg)

18% (50 – 82 SR)24% (50 – 114 SR)

Current Pricing Guidelines Products with Different Package Sizes or Strengths (Cont )Products with Different Package Sizes or Strengths (Cont.)

Exceptional Cases:

• If the concentration of injectable products is by measured by units, then they will be priced per unit.

• Dosage forms which are not mentioned in the previous tables, they will be priced according to guidelines for pricing the innovated patented products.

Current Pricing Guidelines Products That Have Specific AdvantagesProducts That Have Specific Advantages

• The Ministry of Health has the right to increase the

product's price by 5-30% more than the original productproduct s price by 5-30% more than the original product

taking into consideration the price increment in the

country of origin in addition to the countries in which

the product is marketed in.

Current Pricing Guidelines Fixed Combination

Fixed Combination Drug Product Price

Fixed Combination

Fixed Combination Drug Product Price

P i f 1st A ti I di t + P i f 2nd A ti= Price of 1st Active Ingredient + Price of 2nd Active Ingredient – 15-25%

N.B: Taking into consideration the strength of the active i di t i h d tingredient in each product.

Current Pricing Guidelines Re-Pricing Guidelines for Registered Products

1. Review the exportation (CIF) prices for the registered

Re-Pricing Guidelines for Registered Products

p ( ) p gproducts every 3 years.

2. The following points are considered when revisingproducts' prices:A. The price of the product in 30 countries.B. Therapeutic significance and availability of alternativesC If h d ' i h h d i h fC. If the product's price has changed in the country of

origin and other countries.D The new price should not exceed 70% of the innovatedD. The new price should not exceed 70% of the innovated

product's price.

The Proposed New Pricing SystemThe Proposed New Pricing System

The Proposed New Pricing SystemPricing System ComponentsPricing System Components

1 . Guideline

C P i i C it i• Common Pricing Criteria.

• Ceiling priceCeiling price.

• Re-pricing of innovated product when the patency ended.

• Frequency of re-pricing.

• Flat rate in concentration for chronic diseases.

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The Proposed New Pricing SystemPricing System Components (Cont )Pricing System Components (Cont.)

2. Pricing Team

3. Data base for reference pricing

4. Pharmacoeconomics4. Pharmacoeconomics

5. Negotiation

6. Checking product availability in the market

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The Proposed New Pricing SystemGuideline Common Pricing Criteria

• Ex-factory price.Guideline – Common Pricing Criteria

• Wholesaler price.• Public (retail) prices.

C t I d F i ht (CIF)• Cost, Insurance and Freight (CIF).• The price in an official pricing references (if available).• Th ti i ifi• Therapeutic significance.

• Development of a new mechanism to obtain and check• Development of a new mechanism to obtain and checkdrug prices from 41 countries.

• Obtain drug prices from international drug pricing databases

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pricing databases.

The Proposed New Pricing SystemGuideline Common Pricing Criteria (Cont )

• Proposed new list of reference countries

Guideline – Common Pricing Criteria (Cont.)

• Proposed new list of reference countriesCountry Country Country Country

Algeria AustraliaA ti

Czech RepublicDenmark E t

Italy Japan J d

Mexico MoroccoP l dArgentina

Bahrain Belgium

EgyptFinland France

Jordan KuwaitNew Zealand

Poland South Africa Spain

Bosnia and HeerzegovinaBrazil Bulgaria

Germany GreeceHolland

NorwayOman Portugal

Sweden Switzerland Tunisia g

Canada Cyprus

Hungary Ireland

gLebanonMalaysia

Turkey U.A.E.U K

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U.K

The Proposed New Pricing SystemGuideline Innovated ProductsGuideline – Innovated Products

The Innovated Product price after registering andmarketing the 1st Generic:marketing the 1 Generic:

= Innovated Product Price 20 30%= Innovated Product Price – 20- 30%

(after 1 year of the decision of registering of generic product)(after 1 year of the decision of registering of generic product)

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The Proposed New Pricing SystemGuideline Generic products

We have 2 options for pricing generic products:

Guideline – Generic productsp p g g p

Option 1:

The price of innovated product – 20-30% Innovated

The new price of innovated product – 15 % 1st generic product

The price of 1st generic product – 10 %2nd generic product *

* Each generic product registered will be at least < the previous one by 10%.

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y

The Proposed New Pricing SystemGuideline Generic products (Cont )

Option 2: (Ceiling Price)

Guideline – Generic products (Cont.) p ( g )

Pricing MethodologyProduct Order

The price of innovated product – 20-30% Innovated

The new price of innovated product 15 %1st Generic The new price of innovated product – 15 %

The price of 1st generic product – 10 %2nd Generic

The price of 2nd generic product – 10 %3rd Generic

The price should be < 3rd Generic ProductFollowing Generic The price should be < 3 Generic Product

(Open for Suggestions)

Following Generic Products

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The Proposed New Pricing SystemGuideline Generic products (Cont )Guideline – Generic products (Cont.)

Pricing Methodology

Product Type

Product Registration Sequence MethodologyTypeRegistration Sequence

Will be dealt with as innovated product

Generic Product1st innovated productProduct1

Will be dealt with as 1stInnovated Generic productProduct2nd

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The Proposed New Pricing SystemGuideline Second Brand Products (locally manufactured)Guideline – Second Brand Products (locally manufactured)

NotesPricing methodologyGuidelinesIf the innovated Price of registeredCurrent product is registered

in KSA

Price of registered innovated product - 10%

Current

During the patent period protection

As the innovated product

ProposedProposed After the patent

period protectionAs the 1st Generic

Product period protectionProduct

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The Proposed New Pricing SystemGuideline Products That Have Specific AdvantagesGuideline – Products That Have Specific Advantages

The ministry of health has the right to increase the product's price by 5-30% more than the original product taking into consideration the price increment in the country of origin in addition to the countries in which the product is marketed in.

The pricing of these products will be based on the results of the Pharmacoeconomics studies analysis and

therapeutic value.

31

The Proposed New Pricing SystemGuideline Fixed Combination

Fixed Combination Drug Product Price

Guideline – Fixed Combinationg

= Price of 1st Active Ingredient + Price of 2nd Active Ingredient – 15-25%

N.B: Taking into consideration the strength of the active ingredient in each product.g

We suggest the following changes:

1. The pricing of these products should based on the common pricing criteria.

2. The committee may reduce the price by 15 – 25% of the combination of drug prices if necessary.

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g p y

The Proposed New Pricing SystemGuideline Different Package Sizes and StrengthsGuideline – Different Package Sizes and Strengths

The current tables will be adapted with minimum changes.

The Proposed New Pricing SystemGuideline Different Package Sizes and Strengths (Cont )

Table (A): Same Package Size with Different Strengths

Guideline – Different Package Sizes and Strengths (Cont.)

Dosage Form Difference in Strengths % of Price ReductionStrengths

1:21:3

18%24%

Tablets - Capsules1:31:4

> 1:4

24%30%30%

1:21:3

15%20%

Oral Solutions1:31:4

> 1:4

20%30%30%

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The Proposed New Pricing SystemGuideline Different Package Sizes and Strengths (Cont )Table (A): Same Package Size with Different Strengths (Cont.)

Guideline – Different Package Sizes and Strengths (Cont.)

Dosage Form Difference in Strengths % of Price ReductionStrengths

A l

1:21:3

14%20%Ampoules 1:3

1:4 > 1:4

20%25%25%

Suppositories –1:21:3

20%25%

Topical Medications 1:4> 1:4

30%30%

35

The Proposed New Pricing SystemGuideline Different Package Sizes and Strengths (Cont )

Table B: The Same Strength with Different Package Size

Guideline – Different Package Sizes and Strengths (Cont.)

Dosage Form Difference in Package Size % of Price Reduction

Tablets - Capsules

1:21:31:4

12%14%15%Tablets - Capsules 1:4

1:5>1:5

15%16%16%

Ointments – Creams – Topical Medications

1:21:31:4

12%24%27%Medications 1:5

>1:5 30%30%

The Proposed New Pricing SystemGuideline Different Package Sizes and Strengths (Cont )Table B: The Same Strength with Different Package Size (Cont.)Guideline – Different Package Sizes and Strengths (Cont.)

Dosage Form Difference in Package Size % of Price Reduction1:21:3

13%15%

Oral Solutions1:31:41:5

>1:5

15%18%20%20%1:5 20%

Suppositories

1:21:31:4

13%16%20%Suppositories 1:4

1:5>1:5

20%24%

24%1 2

Ampoules

1:21:31:41:5

15%20%20%1:5

>1:5 20%

The Proposed New Pricing SystemGuideline Re pricing of Patent Products

- Prices revision will be based on the common

Guideline – Re-pricing of Patent Products

pricing criteria.

- The products will be re-priced every 5 years

instead of 3 yearsinstead of 3 years.

- However, they will be re-priced before the end of

this period (5 years) in the following cases: • If there is less CIF to other countries.

• If there is less public (retail) prices in other countries.

The Proposed New Pricing SystemPricing Team

• Pricing Team:

Pricing Team

c g ea- Is a group of expert in drug pricing nominated and

working for SFDA.g- Different expertise such as pharmacoeconomist,

pharmacist and economist. p

• Aim of the Pricing Team: g- Evaluate pricing data submitted by the

pharmaceutical companies and SFDA pricing unit p p p gsuggestion.

- To provide recommendation about drug pricing.p g p g

The Proposed New Pricing SystemPricing Team (Cont )

• Mechanism for Pricing Decision

Pricing Team (Cont.)

• Mechanism for Pricing Decision

The pricing documents will be submitted to SFDA and- The pricing documents will be submitted to SFDA and take its legal channel through the approval system.

- Pricing unit will come-up with suggested price and it will submit it to the pricing committeewill submit it to the pricing committee.

Different experts in the pricing committee will review- Different experts in the pricing committee will review the relevant documents.

The Proposed New Pricing SystemPricing Team (Cont )Pricing Team (Cont.)

- The price decision will be forward to the company after the approval of the registration committee.

- The company has the right to ask for a meeting with the pricing committee to negotiate the price.

The Proposed New Pricing SystemPharmacoeconomics EvaluationPharmacoeconomics Evaluation

• Pharmacoeconomic evaluation will be used as tool in pricing determination.pricing determination.

• The SFDA would recommend inclusion in nationalThe SFDA would recommend inclusion in national formulary based on pharmacoeconomic evaluation and product price.and product price.

The Proposed New Pricing SystemPrice NegotiationPrice Negotiation

• Early negotiation of product pricing with company. y g p p g p y

• Discuss drug basket deal with company for innovated g p yproducts.

The Proposed New Pricing SystemProduct Availability in Saudi MarketProduct Availability in Saudi Market

• Pricing of generic products will depend on products g g p p pavailable in the Saudi market.

• All products imported or produced locally should be registered in SFDA database.g

The Proposed New Pricing SystemProducts Prices Database MedPrice

• SFDA developed electronic database to collect both

Products Prices Database - MedPrice

• SFDA developed electronic database to collect both regional and international drug prices.

Database Name:Middle East Medicine Pricing Database MedPriceMiddle East Medicine Pricing Database – MedPrice.

Database Objectives:j- To have reliable and un-biased source for medicine

prices. p

- To have updated information on drug prices.p g p

The Proposed New Pricing SystemProducts Prices Database MedPrice (Cont )Products Prices Database – MedPrice (Cont.)

Criteria for countries to join:• It is a free services for participated countries.p p

• Countries must nominate contact person(s)Countries must nominate contact person(s) with an official authorization letter.

• Countries must submit and update their own pricing data on a regular basis.

The Proposed New Pricing SystemProducts Prices Database MedPrice (Cont )Products Prices Database – MedPrice (Cont.)

• Utilization of the database by pharmaceutical companies (not free service).companies (not free service).

• Demonstration for MedPrice database.

Thank YouThank You