July 20, 2018 Sean Skulski

The Effect of Reference Pricing in the Gulf Central Committee Countries

A Pricentric Brief

by Sean Skulski

Background of the GCC-DR

As the price for pharmaceuticals continued to rise, the Gulf countries sought to harmonize efforts to control costs. Formed in May 1999, the Gulf Central Committee for Drug Registration (GCC-DR) aimed to provide Gulf countries with safe and effective medicines at reasonable, more affordable prices. Initially, the GCC-DR consisted of Saudi Arabia, Kuwait, Qatar, Bahrain, Oman, and the United Arab Emirates (UAE), until 2003, when Yemen joined the coalition as a member in Health Council.

The GCC countries saw the need for more reasonably-priced drugs with increased urban development and, consequently, societal changes incited by greater wealth and more comfortable lifestyles for citizens, which led to increased consumption of drugs for health problems such as diabetes and cardiovascular diseases. The BGG countries sought to elevate domestic production of pharmaceuticals to help combat high pricing, but a lack of resources has kept domestic production simmering in a nascent phase. Because of this, these countries still import 90% of consumed drugs; however, the UAE has recently has made strides in establishing local biotechnology production facilities.

GCC Pricing Procedures: Saudi Arabia is at the Center

Saudi Arabia and its neighbors depend on one another to obtain reasonable and fair pricing from the pharmaceutical industry, although Saudi Arabia serves as a key central figure within the external reference pricing scheme of the GGC; its cohorts rely on the price of drugs in the Arabian country when conducting their individual reference pricing. While Saudi Arabia is relied on by its neighbors, the country looks to Europe, among other Middle Eastern countries, to establish a price during the drug approval process and every five years after then, when health technology regulators, such as the Saudi Food and Drug Authority, reconsider pharmaceutical product registration.

Despite the GCC-DR, Alliance Life Sciences Consultant Nidhi Patel stated, “GCC countries do not have the same registration dates for drugs.” She added, “This fact makes it very important for drug makers to launch new drugs at a higher price first in GCC countries with more PPP (Purchasing Power Parity). When launching a drug in other GCC countries, in most cases, pharmaceutical companies will have to register with the same price later due to the Price Harmonization Process.” As part of the Price Harmonization Procedure, once a drug has been affected by a price change, it automatically initiates a knock down effect, and the change is reflected in the reference countries.

In general, Saudi is known for requesting the lowest marketed price among the countries in its reference basket, though this policy is flexible in some cases. Yet nonetheless, Saudi Arabia is keen on a rate lower than in Middle Eastern countries outside the GCC (Lebanon, Morocco, etc.).

Besides fellow GCC countries such as Bahrain, Kuwait, Oman, and the UAE, Saudi Arabia’s published reference basket of countries includes: Algeria, Australia, Argentina, Belgium, Canada, Cyprus, Denmark, Egypt, Finland, France, Germany, Greece, Holland, Hungary, Ireland, Italy, Japan, New Zealand, Norway, Portugal, Lebanon, Spain, Switzerland, and the UK. More recently, Saudi Arabia has added the following countries to its reference basket: Bosnia, Brazil, Bulgaria, the Czech Republic, Malaysia, Mexico, Morocco, Poland, South Africa, South Korea, Tunisia, and Turkey.

The Cost of Herceptin: A Study

To view how the price of drugs fares in Saudi Arabia, let’s examine the MNF Cost (EUR) of Herceptin 1 Lyophilized Powder Vial 7.2 ML 150 MG across an array of Saudi’s reference countries, including countries known for higher-drug prices (i.e. Germany), along with those known for low-priced drugs (i.e. Greece). Roche’s Herceptin (trastuzumab), listed as one of World Health Organization’s most effective and safe medicines needed across the globe, is an injectable, monoclonal antibody indicated in the treatment of breast, stomach, and esophageal cancer. As such, it is available world-wide, albeit not always in the same presentation as listed above.

In Saudi Arabia, the current MNF cost of Herceptin is 337.22 EUR, a rate beat out only by Turkey, which boasts an MNF cost for Herceptin of 233.05 EUR. Despite this, Saudi Arabia has a lower rate for the drug than Bulgaria (425.84 EUR), Greece (473.03 EUR), and Hungary (479.99 EUR), countries known for low-priced drugs in Europe. Moreover, Saudi Arabia’s MNF cost of Herceptin is the lowest of the GCC (666.07 EUR in Bahrain and 666.10 EUR in Oman), and among other Middle Eastern Countries, like Morocco (403.54 EUR).

 

Until April 2018, the MNF Cost (EUR) of Herceptin 1 Lyophilized Powder Vial 7.2 ML 150 MG in Saudi Arabia was 688.62. In light of this, it’s evident that both Bahrain and Oman had referred to Saudi Arabia when establishing the price of the drug. Since September 2015, the MNF Cost (EUR) of Herceptin 1 Lyophilized Powder Vial 7.2 ML 150 MG in Bahrain has been 666.07, while in Oman, the cost has been 666.10 since June 2017. Once these two countries sought reductions in price, Saudi Arabia, having crossed over the five-year threshold, re-evaluated the price of Herceptin to ultimately establish a lower cost (i.e. 337.22 EUR). Thus, it can be expected that Bahrain and Oman will soon enter negotiations to claim a lower MNF rate for the previously mentioned presentation of Herceptin.

Biosimilars in Saudi Arabia

Worldwide, there are over 18 biosimilars to trastuzumab either already approved, seeking approval, or in the pipeline. Biosimilars to trastuzumab, such as Amgen’s Kanjinti and Pfizer/Hospira’s Trazimera, have been approved in Europe, thereby affecting pricing for the reference product (Roche’s Herceptin), as European countries have regulatory procedures in place and undergo varied forms of reference pricing, both internal and external, when a branded biologic has a “generic” available.

To create a pathway for biosimilars, in December 2010, the Saudi Food and Drug Administration published official guidance on the approval and use of biosimilars, a pointed legislative move to grant the Arabian Peninsula access to cheaper, more affordable biologic medicine, albeit “generics” biologics.

Janssen’s Remicade (infliximab) serves as proleptic vessel through which we can explore biosimilar uptake and the effect of biosimilars on pricing. Remicade is an intravenously-administered, chimeric monoclonal antibody that targets the tumor necrosis factor alpha (TNF-α) to treat autoimmune diseases. Currently, Remicade is currently indicated in the treatment of chronic inflammatory diseases, including ankylosing spondylitis, rheumatoid arthritis, ulcerative colitis, psoriatic arthritis, Crohn’s disease, and psoriasis.

The price of Remicade within the GCC countries (when available) is lowest in Saudi Arabia, and higher in the UAE. The price of Saudi Arabia was recently cut in May 2018; previously, the MNF cost in EUR had been set at 390.18, as of February 2015. And historically, the price of Remicade has dropped across the GCC as harmonization pricing procedures took place. Saudi Arabia was the first country to initiate price reduction, and price reductions of the MNF cost of Remicade 1 Lyophilized Vial 10 ML 100 MG across the GCC followed suit. As such, it can be expected that the price of the drug in the UAE is due to drop, for Saudi Arabia now has a much lower MNF cost. In this case, due to political issues within the Arabian Peninsula, the price of the drug in Qatar could remain circumspect.

In Saudi Arabia, a biosimilar to Remicade, Celltrion’s Remsima, found approval in July 2016, and the MNF price for Remsima 1 Lyophilized Powder Vial 10 ML 100 MG since the biosimilar’s advent has remained at 302.54 EUR. When Remsima entered the Saudi market, its reference drug Remicade, for the same presentation, had an MNF cost of 390.18 EUR. It’s evident that the arrival of a biosimilar cut the price of the reference product in Saudi Arabia. Once Remsima is available in Saudi Arabia’s fellow GCC countries, it can be expected that infliximab will be available at a much more affordable cost, and that the reference product, Remicade, will undergo price cuts.

Future changes

Upon publication of this article, the UAE released new policy and regulation guidelines for the pricing of drugs, with a focus on biosimilars. As such, it is expected that drug prices in the UAE will soon undergo significant change. It is still too early to examine the effect of these new regulatory guidelines, but for example, biosimilar drugs pricing is now specified by adopting the lesser price of the following prices: calculating 70% of the Cost, Insurance, & Freight (CIF) price approved for the innovative drug before deduction, ex-factory price in the country of origin, CIF price proposed by the company, the median CIF price approved for the drug in the list of international reference countries for registration and pricing, or guidance on sale price for public in the country of origin.

While the knockdown effect will still affect pricing within the GCC countries as part of the Price Harmonization Procedure, the UAE’s new regulations will be a new factor in the establishment of price, and it can be expected that once Remsima enters the market, the price may differ from forecasted numbers if a lesser price option exists that was not previously available.

All data is courteous of Pricentric One. Data and charts used a 30-day Currency Exchange Average in EUR. Further details on each country examined in this article, along with IRP rules, can be found under the “Country Overviews” module in Pricentric One.

References

Abdulaziz, A. (2017). Future of the pharmaceutical industry in the GCC countries. Integr Mol Med, 4(4), 1-3. Retrieved from https://www.researchgate.net/publication/318883684_Future_of_the_pharmaceutical_industry_in_the_GCC_countries

Alhomaidan, A.M., Alnutaifi, F.S., Aljuffali, I.A., & Al-Howaimel, N.A. (2016). Pricing of biosimilars in Saudi Arabia. Generics and Biosimilars Initiative Journal 5(1), 27-29. Retrieved from http://gabi-journal.net/pricing-of-biosimilars-in-saudi-arabia.html

Generics and Biosimilars Initiative Online. (2018). Biosimilars of trastuzumab. Retrieved from http://www.gabionline.net/Biosimilars/General/Biosimilars-of-trastuzumab

Generics and Biosimilars Initiative Online. (2011). Saudi Arabian guidelines for biosimilars. Retrieved from http://www.gabionline.net/Guidelines/Saudi-Arabian-guidelines-for-biosimilars

Ladrón de Guevara, P. (2014). Implications of the GCC Price Harmonization Process. Retrieved from https://www.fdanews.com/ext/resources/files/08/08-14-ALSWhitePaper.pdf

UAE Ministry of Health. (2018). Pricing guidelines: Public health policy & licensing sector drug department. Downloadable (in Arabic) under “Pricing Guidelines Drug Department” at http://www.mohap.gov.ae/en/OpenData/Pages/default.aspx