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INTERNATIONALMASTERSINHEALTHECONOMICSANDPHARMACOECONOMICS

Eduardo Jorge Monteiro Tavares 1

INTERNATIONAL MASTERS INHEALTH ECONOMICS ANDPHARMACOECONOMICSTERM PAPER

Evaluation of the impact of the

Implementation of a Reference Pricing

System in the Total Expenditure with Drugs

by the National Public Health Insurer (INPS)

in Cape Verde.

2011

EDUARDO TAVARESContinuing Education Institute (IDEC) of Pompeu Fabra Univertity (UPF)

Research Centre for Economics and Health (CRES-UPF)

2011


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Evaluation of the impact of the implementation of a

Reference Pricing System in the total expenditure with drugs

by the National Public Health Insurer (INPS) in Cape Verde.


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Index

Index.........................................................................................................03

Abbreviations Index.....................................................................................04

Tables Index...............................................................................................04

Figures Index..............................................................................................05

Abstracts....................................................................................................06

Objectives..................................................................................................07

Background and Bibliographical Review...........................................................08

The Pharmaceutical Market in Cape Verde.......................................................11

The Reimbursement System in Force in Cape Verde.........................................15

The Price Definition Criteria...........................................................................19

The Proposition of a New Reimbursement System Based on Reference Prices.......20

Comparison of the Portuguese RPS with the Proposed RPS for Cape Verde..20

Data..........................................................................................................22

Methods and Analysis...................................................................................22

Examples of Calculations to Estimate Insurer Savings with the New RPS..24

Results.......................................................................................................26

Discussion of the Results..............................................................................30

Futures perspectives of improvement of the study............................................32

Bibliographical References.............................................................................33


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Abbreviations Index

API Active Pharmaceutical Ingredient

ARFA Drugs Regulatory Agency

DGF General Directorate of Pharmacy

EMPROFAC National Public Enterprise for Importation and Distribution of Pharmaceutical

Products

FOB Free On Board

INPHARMA National Pharmaceutical Industry

INN International Non-proprietary Name

INPS National Public Health Insurer

RPS Reference Pricing System

WHO World Health Organization

Tables Index

Table 1: Principles of drug reimbursement systems.

Table 2: Examples of the calculations to estimate the insurer savings for each regimen and

grade of the copayment system.

Table 3: Impact on the INPS. Means, Standard Deviation and Sampling Error Estimations for

Insured People.

Table 4: Impact on the INPS. Correlation between the methods before and after the

application of the new RP System for Insured People.

Table 5: Impact on the INPS. t-test obtained in the SPSS for Insured People.

Table 6: Impact on the INPS. Means, Standard Deviation and Sampling Error Estimations for

Pensioners.

Table 7: Impact on the INPS. Correlation between the methods before and after the

application of the new RP System for Pensioners.

Table 8: Impact on the INPS. t-test obtained in the SPSS for Pensioners.

Figures Index

Figure 1: The flowchart of the pharmaceutical market in Cape Verde.


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Abstracts

This paper focuses primarily on the definition of a drug reimbursement system for

Cape Verde and to measure the impact of its implementation in the National Public

Health Insurance Institution (INPS). For that were used an ex-ante descriptive

analysis, which focused on a sample of all pharmacotherapeutic groups drugs

covered by the public national insurance system in the year of 2007. The ex-ante

examination studies of effectiveness, efficiency, impact and sustainability are both

based on forecasts and prospects. Its aims are to conduct a baseline study or to

establish indicators.

It were simulated the impact on drug prices of the new methodology of prices

definition, which is still in its implementation. Finally, were simulated the impact of

drug copayment system proposed in spending on medicines by INPS.

The study concluded that the implementation of a copayment system based on

drug reference pricing seems to bring significant savings on drugs copayment to

the managing body of the INPS due to a lower baseline for drugs copayment.

Although, there is no sufficient evidence that the proposed system will bring an

additional global saving to the drugs copayment system, taking into account that

the parameters surrounding the implementation of the new reimbursement system

were not measured in this study.

Key words: reference pricing system, reimbursement system, generic drugs,

copayment.


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Objectives

General Objectives:

To design, analyse and interpret, from a critical point of view, a reasonable

system for drugs reimbursement in Cape Verde.

Specific Objectives:

a) Evaluate the impact of the implementation of this system in theexpenditure with drugs by the INPS;

b)Get the monetary value of the difference between the systems.


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Background and Bibliographical Review

There are five preferred vectors of intervention to ensure the sustainability of the

expenditure on drugs: the pharmaceutical industry, the wholesalers, the

pharmacies, the prescribers and the consumers.

The operation of the pharmaceutical industry, wholesalers and pharmacies tend to

be imposed through administrative measures which directly affect the price and the

marketing margins of drugs. The intervention on prescribers can take the form of

mandatory prescription by INN, which favours the penetration of generics on

consumption, since the intervention on consumers can take place through

mechanisms to make them sensitive to drug prices, leading to rational decision

making at the time that medicines are purchased.

The main objective of the reference pricing system used, over the years, in several

countries is to ensure the control on public spending on medicines, the rational use

of drugs and to increase the medicines access. The reference pricing systems have

in common that they are based on technical criteria defined on the retail prices of

certain classes or groups of drugs.

With the introduction of this system it is intended to contribute to the promotion of

rational restraint on pharmaceutical spending, either by encouraging the decrease

in the prices of branded drugs or by encouraging the increase in the use of

generics. However, the prevailing notion is that the expenditure control is limited

and occurs in the short deadline, giving rise to a situation of increase in

pharmaceutical expense that tend to perpetuate the long term.1

This objective can be achieved by setting a ceiling for the price of one of the same

drugs. As quoted by Schneeweiss2, there is no evidence that a drug has greater

1 Ioannides-Demos LL, Ibrahim JE, McNeil JJ. Reference - Based Pricing Schemes Effect on

Pharmaceutical Expenditure, Resource Utilization and Health Outcomes. Pharmacoeconomics 2002;20(9): 577-91.2Schneeweiss S, Maclure M, Dormuth C, Avorn J.Pharmaceutical cost containment with reference based

pricing: time for refinements. Journal of Canadian Medical Association 2002; 167(11): 1250-1.


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effectiveness or is associated with a more limited profile of toxic effects, for other

drugs with lower prices, and therefore the difference in prices should not be subject

of public funding. The same author supports this line when he states in another

article3 that adoption of the RPS in British Columbia, Canada for inhibitors of

conversion of angiotensin did not provide substantial evidence regarding

discontinuation of treatment, nor as negative repercussions on the use of services

or on health spending. Kanavos and Reinhardt4 further develop this view of

thinking, adding that the design of a centralized RPS should consider other policies

measures of the drug, exacerbating the innovation in drug therapy, with the

exclusion of these drugs under patent from the RPS. Danzon5

also mentioned that

the equity and efficiency associated with public funding, are guaranteed when the

drugs covered by RPS are perfect substitutes of each other, i.e., when the

chemicals are similar.

The reimbursement by RPS is, in fact, the example of a process of public funding

that has shown results in curbing pharmaceutical expenditure growth6, without

jeopardizing the quality of the care, when measured through the adverse effects

related to the health of patients or for the use of more expensive health care.7

However, this cannot be accepted unanimously among the researchers, since it was

observed different results on the effect of RPS over pharmaceutical spending.8

3Schneeweiss S, Walker AM, Glynn RJ, Maclure M, Dormuth C, Soumerai SB. Outcomes of ReferencePricing for Angiotensin Converting Enzyme Inhibitors. The New England Journal of Medicine 2002;346(11): 822-9.

4 Kanavos P, Reinhardt U. Reference Pricing for Drugs: is it compatible with US Health Care? Health

Affairs 2003; 22(3):16-30.

5 Danzon P. Reference Pricing: Theory and Evidence. In: Lpez-Casasnovas G, Jonsson B. Reference

Pricing and Pharmaceutical Policy Perspectives on Economics and Innovation. Springer Verlag Ibrica,Barcelona. 2001.

6 Schneeweiss S, Maclure M, Soumerai SB. Prescription duration after drug copay changes in older

people: methodological aspects. Journal of American Geriartrics Society 2002; 50: 521-525. 7 Schneeweiss S, Soumerai SB, Maclure M. Reference Drug Pricing. Canadian Medical Association

Journal; 167(2): 126-127.

8 Kalo Z, Muszbek N, Bodrogi J, Bidl J. Does therapeutic reference pricing always result in costcontainment? The Hungarian evidence. Health Policy 2007; 80: 402-412.


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Indeed, the RPS have shown a high potential for cut in prices but, as noted by

Master Ferrandiz, the RPS has not revealed the same impact on the control of

pharmaceutical spending.9

There is documented evidence which reflects that the implementation of the same

system in different countries does not guarantee obtaining similar results.10

So the question remains... Does that reimbursement system (which will be

proposed forward), just as the international evidence, allow the reduction of drugs

expenditure by the public insurer in Cape Verde?

9Mestre Ferrandiz J. Reference prices and generic medicines: what can we expect? Journal of Generic

Medicines 2003; 1(1):31-38.

10Mrazek M. Comparative approaches to pharmaceutical price regulation in the European Union. Croatian

Medical Journal 2002; 43(4):453-461.


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The Pharmaceutical Market in Cape Verde

Since 1976 the Cape Verdean pharmaceutical sector, meets a new phase, according

to the pharmaceutical policy defined on the basis of the WHO recommendations,

developed in the same year and whose objectives were:

1. To ensure a sufficient supply of affordable medicines and improve the methods of

buying and storage;

2. To promote an efficient and regular distribution;

3. To ensure the effectiveness, safety, acceptance and rational use of drugs;

4. To develop a national technological capacity;

5. To create and develop a dynamic local production.

THE DRUGS CIRCUIT

PRODUCTION

This sector experienced a development in 1991, date of the creation of INPHARMA

Laboratories a Luso-Cape Verdean Company composed by public and private

capital.

The locally manufactured drugs, by agreement with the National Public Enterprise

for Importation and Distribution of Pharmaceutical Products (EMPROFAC), are not

imported. Despite the monopoly, INPHARMA did not neglect its responsibility to

produce products with quality at affordable prices.

To encourage the acceptance of INPHARMA products, EMPROFAC set a retail margin

of 35% versus 30% over imported products. INPHARMA products are distributed by

EMPROFAC to the private sector and directly to health facilities, since 1999, by

conjoint decision between the Ministriesof Health and Industry.

INPHARMA's sales are primarily intended for the private market which accounted

for 87% of total sales in 2000. Regarding the fact that the public sector has a very


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limited budget and the consumption of, in particular, injectable products and others

not locally manufactured are certainly the explanation for this orientation towards

the private market. For products in hospital packs for the public sector, INPHARMA

products are not always competitive.

IMPORTATION

The importation segment is a State monopoly played by EMPROFAC, whose

activities extend to public and private sectors.

Characterization of the system of importation:

- Importation of only drugs listed on the National List of Drugs, unless authorized

by the General Directorate of Pharmacy for medical reasons or research.

- Importation of a maximum of three products by reference (a molecule or

combination of molecules) for a dosage form and strength, except those imported

for health facilities in hospital packs.

- Acquisition through an annual international concourse for the products to hospital

facilities.

- Transportation provided by sea, except in cases of urgency and products that

require refrigeration (vaccines and reagents).

- Direct purchase from qualified suppliers for the private sector must have a

package labeling and patient information leaflet in Portuguese, which limits the

acquisition to Portuguese suppliers only. This limitation leads to some situation that

the importer has to acquire drugs at higher prices.

- Requests are annual for indicative quantities. Orders and deliveries are made four

times per year which allows adjusting the quantities to actual consumption.

- Selection based on confidence in partners.


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DISTRIBUTION

EMPROFAC is the only wholesale distributor who owns two stores: Praia and

Mindelo which supply respectively the Leeward and Windward Islands.

Aside from drugs representing 83% of sales, EMPROFAC distributes other health

products as well.

FINANCING

The State, as in the whole world, is involved in financing of health services and

medicines. This role, reserved to the State, is a result of, in one hand, the society

reorganization of Health as a fundamental right of the population and, on the other

hand, because the private market may not be able to guarantee quality or

solidarity.

In addition to State, the funding of medicines is done by the INPS and the users.

Since 1996, the INPS become the first source of drugs funding. Created in 1983, it

had a major impact in the pharmaceutical sector to the extent that the INPS

insured population to have copayment of drugs not only on the National List of

Drugs, as well as those imported in exceptional cases by permission of the General

Directorate of Pharmacy.

PRICES

TheSystem of Medicine Prices, in accordancewith article20 of Decree Law n.

3/93of15/2/93, is fixedby a joint decree of the Government Cabinet members

responsible for the Health Sector and Industry and Trade. Without a price

regulation system, theimported drug priceswere set byEMPROFAC,in accordance

with the rates approved by the supervising Ministry (Ministry of Trade and

Industry), which are as follows:

Marginsofpharmacies andretailsales:


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-Imported Drugs-30% of the purchase price

-National Drugs-35% of the purchase price

These margins are respected to the extent that the price is written on a sticker

affixed to theboxesbyEMPROFAC.

For products soldper unit(case ofhospital packs) themarginshould bedecreased

by 10%but usually thisrule is notmet and thepercentage appliedishigher.

EMPROFAC Margins:

- Salesto the Public Sector-15% of the cost price

-Sales toPrivate Sector-20% of the cost price(imported products)

-15% of the cost price(domestic products)

The margins are applied on the Free On Board (FOB) price plus 22,5% for

expenses. The drugsare freeof customs duties.

The Drugs Regulatory Agency (ARFA)

Thecurrentmarket situationand prospects ofits development in thewake of the

measuresprovided for in the liberalizationof the economy,determined theneed

for the creationofa regulator in order to implementa transparent and effective

regulatory frameworkthat safeguards theinterestof operators andconsumers.

Since the market can not exercise its regulatory role and considering the

pharmaceutical market characteristics, where key-playersof the system createa

structuralimperfectionin the market,ARFA comesto replace itsregulatory action.

As regulator, exercising technical and economic regulation - test efficiently and

effectively that operators (producers, importers and distributors) complies with

technical standards established by the State, that prices are adequate for the

producer/distributor andconsumer andthere is a good price/quality balance.


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The flowchart below describes the pharmaceutical market circuit in Cape Verde:

Figure 1: The flowchart of the pharmaceutical market in Cape Verde.

The Reimbursement System in Cape Verde

The reimbursement system plays a crucial role in shaping the consumption of drugs

and consequently the costs of financing them. There are several types of systems

of drug reimbursement around the world. Demonstrations are shown in the

following table:

Production (INPHARMA) Importation (EMPROFAC)

Distribution EMPROFAC

Central Hospitals Pharmacies Statal Drug Depositories

Health Care Facilities

Population


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INTERNATIONAL MASTERSINHEALTHECONOMICSANDPHARMACOECONOMICS


Country Proportion of

drug payable

by patient

Basis of

reimbursement

calculation

Reimbursement

affected by severity of

illness or

effectiveness of

medical product

Reimbursement

to children

different from

reimbursement to

adults

Patients

wealth affects

the

reimbursement

System

recognizes

other special

groups

Ceiling set to

patients

payments

RP

System

Belgium Percentage Prescription Yes Yes No No yes yes

Denmark Percentage Drug purchase

costs over 12

months

Yes Yes No Yes yes yes

Germany Fixed Package size No Yes yes Yes yes yes

Iceland Fixed +

percentage

Prescription Yes No No Yes yes yes

Portugal Percentage Prescription Yes No yes Yes No yes

Spain Percentage Prescription Yes No No Yes yes yes

Sweden Percentage Drug purchase

costs over 12

months

No Yes No No yes yes

Cape Verde Percentage Prescription Yes No No Yes No No

Table 1: Principles of drug reimbursement systems.


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In Cape Verde the structure of the pharmaceutical market is potentially adverse to

the implementation of some of the reimbursement systems listed in table 1. The

smallness of the market is such that at the national level there is only one producer

and one importer who is also in charge of the wholesaling and distribution.

The national drug reimbursement system is totally based in the drug prices that are

defined by the exclusive importer. The composition of those prices is made by a set

of factors like the price of acquisition in the international markets, the shipment

cost, the insurance fees and custom expenses. On top of all those values, an

additional commercialization margin of 22.5% for the importer and, subsequently,

30% for the pharmacies is incorporated. It is on that final value that the National

Insurer has to pay the fixed percentage in each case:

1. General Regimen ensured people and family:

In the procurement of medicines for insured assets and family members, the

National Public Insurer participate with a percentage of their selling price to the

public, according to the supports and conditions as stated below:

a) Grade A - 90%b) Grade B - 75%c) Grade C - 50%d) Grade D - 25%

2. Special Regimen - pensioners and family:

The reimbursement of the drug cost by the National Public Insurer for pensioners

receiving a pension value equal to or greater than two and a half times the

minimum remuneration stipulated by the Government, applicable to officers of the

Public Administration, rounded to the thousands of shells immediately bottom, is as

follows:


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a) Grade A - 95%b) Grade B - 85%c) Grade C - 60%d) Grade D - 35%

It is the user responsibility, in both General and Special Regimens, the payment of

the remaining amount of the purchase price of the drug.

The drug reimbursement value currently in use in Cape Verde is based on co-

payment by the consumer that focuses on the price fixed by the importer

(EMPROFAC), without observing if the medicines are generic or not. The main

problem of this system is, undoubtedly, in one hand, the aversion that is created in

relation of generic drugs acquisition, since the consumer is almost indifferent in

terms of the amount reimbursed to acquire a brand name or a generic drug. On the

other hand, along the time, the drugs importer have imported almost exclusively

branded drugs creating on the consumers loyalty to these brands, which further

hinders the penetration of generic drugs in the market.

The main problem to implement a reimbursement system, in this scenario, is also

the fact that the importer hardly ever imports the same brand and generic drugs

concomitantly. For example, it is very unusual to see in the market both the brand

and generic paracetamolat the same time. This issue excludes the possibility of

free choice of drugs by the consumers. The pharmacies usually do the drugs

substitution in accordance with which one that is present at that moment in the

country, without taking in consideration whether drug name presented in the

doctors prescription is branded or generic.


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The Price Definition Criteria

Historically, the importer and producer of drugs in Cape Verde are those

responsible for the pricing of their drugs, according to the importation costs and

logistics, which were incorporated in the cost of transportation and insurance as

well as the companies own inefficiency.

In 2009, through a Decree-Law of the Government, it was established the criteria

for the pricing of medicinal products through an independent system, where the

base price is calculated based on prices in international markets, to which are

added marketing margins and rates in force in Cape Verde. A novelty of this system

is that now there is a clear differentiation in the calculus of the prices of generic

drugs compared to brand name drugs. Prices of generic drugs must be at least 35%

lower compared to the reference brand name drug to the same API, strength and

dosage form.

The price definition criteria are not completely implemented at the present

moment.


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The New Reimbursement System (proposal)

The best option to implement a reimbursement system for drugs would be the use

a reimbursement system based on the pricing criteria (Decree-Law n 22/2009,

from July 6). The terms of this piece of legislation establish that the price of generic

drugs should be, at least, 35% lower, compared to the price of the reference drug

(a brand name drug). If we establish that the percentage that should be

reimbursed by INPS has to take into account the price of the generic medicine

approved by the regulatory entity, for the same API, strength and dosage form, it is

possible to correct two main situations in the pharmaceutical system: the capture

and imprisonment of national public insurance provider by the economic operator

that imports and distributes the medicines in the market (the insurance entity funds

fixed percentages on variables values established by the economic operator) and

the establishment of a fair copayment mechanism that arouses in consumer the

consciousness (moral hazard) when acquiring drugs.

My proposition is to maintain the classification of the copayment system like it is

defined above, including the percentages for each grade. The only change will be

the base on that the copayment is made: from thats established by the importer

(EMPROFAC) to thats defined to generic drugs by the regulatory entity (ARFA).

Comparison between the Reference Pricing Systems of Portugal with the

Proposed for Cape Verde

The RPS applied to Portugal has sets of drugs known as a Homogeneous Groups.

Each Homogeneous Group is a set of drugs with the same qualitative and

quantitative composition in active pharmaceutical ingredients, dosage form,

strength and route of administration, which includes at least one generic drug on

the market.11

11Decree-Law, n 270/2002, from 2/12/2002.


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For each Homogeneous Group, the reference price corresponds to the higher retail

price of the generic drugs on the market which integrates the group.

The States reimbursement in drug prices covered by the Homogeneous Groups

takes place according to their regimen or grade in the reimbursement system.

General Regimen:

Grade A - 95%

Grade B - 69%

Grade C - 37%

Grade D - 15%

Special Regimen. For pensioners whose total annual income does not exceed 14

times the minimum wage in Portugal:

Grade A - 100%

Grade B - 84%

Grade C - 52%

Grade D - 30%

Despite some similarities (establishing regimens and levels of reimbursement), it

may already be listed some RPS differences between Portugal and that one

proposed for Cape Verde, including the reimbursed percentage by the national

copayment systems.

In addition, the proposed RPS does not have the figure of Homogeneous Groups,

since the prices of generic drugs with the same qualitative and quantitative

composition of API, dosage form, strength and route of administration are

calculated in the same way by the regulatory agency, which means that all of these

generics have the same price.


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Data

In this paper it was used information of the total national consumption of medicines

in terms of quantities and prices. It was also used information on the total amount

of reimbursement of drugs by the INPS, on general and special schemes.

Given that the pricing system is still being implemented, the prices used to assess

the impact of the definition price system in 2007 drug prices are those already

calculated by the regulator12, although not in force.

The interval time under study began in January 2007 and ended in December 2007.

The sample consisted on drugs of all the pharmacotherapeutic classes covered by

the social security system in Cape Verde in the study period.

Exclusion criteria included drugs without the minimum information required and

those not covered by the copayment system.

The sample size is 444 drug presentations. The selection of 2007 for the study was

due to the accessibility of data necessary for this purpose.

For the purposes of simulation, the data were disaggregated according to the

schemes (general and special) and grades of reimbursement (A, B, C and D) for

each of the schemes in force in 2007.

Method of Analysis

The analysis of trends in pharmaceutical spending has been conducted taking into

account the segment corresponding to the total public spending.

It was considered the segment at the national expenses of the breakdown in

expenses associated with the pharmaceutical market covered by both general and

special reimbursement regimens.

12In accordance with the Decree-Law n 22/2009, from 06 July 2009.


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Given that there was a lack of specific data in relation to the amount reimbursed in

the various grades and regimens of the national system of reimbursement, weights

were calculated for the simulation of the probabilities of acquiring drugs by INPS

beneficiaries with active rights (active ensured, pensioners and families). These

weights reflect, by a purely statistical view, the likelihood of a recipient of the

reimbursement system (active or retired insured and their families) to purchase the

drugs in the market, in relation to total population. It is important to state that it

was not taken into account the reflection of socio-economic conditions on drug use

resulting on whether or not the person is a beneficiary of the system.

Statistical tests were performed with SPSS software support, version 19, as an

instrument of calculation. The statistical t-test were conducted for paired samples,

allowing inferences about the equality of the means of two paired samples, where

each case was analyzed twice, before and after the intervention, to test the

hypothesis that the difference is zero or not.

The hypotheses to be examined are:

The Shapiro-Wilk testwas not conducted due to the fact that the sample is much

higher than 50.

The confidence interval used was 95%.

H0: 0 - a = d= 0

Ha: 0 - a = d 0


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Examples of the calculations to estimate insurer savings:

1. Calculation of weights used to determine the proportion of people who obtain medicines through the INPS copayment system:

a) Insured People = number of insured people/ total population = 112,535 / 491,419 = 0.23 (23%);

b) Pensioners = number of pensioners /total population = 0,025 (2.5%).

2. Determination of the amounts reimbursed by the INPS in the current system (year 2007):

a) Insured People= estimated amount of drugs purchased by insured people X unit price of the drug (defined by EMPROFAC) X %

reimbursement by the INPS in the copayment grade;

b) Pensioners = estimated amount of drugs purchased by pensioners X unit price of the drug (defined by EMPROFAC) X % reimbursement

by the INPS in the copayment grade.

3. Determination of the amounts reimbursed by INPS in the proposed system:

a) Insured People = estimated amount of drugs purchased by insured people X unit price of generic drugs (defined by ARFA) X %

reimbursement by the INPS in copayment grade;

b) Pensioners = estimated amount of drugs purchased by pensioners X unit price of generic drugs (defined by ARFA) X % reimbursement

by the INPS in the copayment grade.


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The table below shows some examples of these calculations:

INN INPS

Grades

EMPROFAC

Prices

ARFA

Prices for

Generic

N of sold

packages

N of

packages

purchased

by Insured

People

N of

packages

purchased by

Pensioners

Copayment by

the INPS on

packages

purchased by

Insured

People

(EMPROFAC

Prices)

Copayment by

the INPS on

packages

purchased by

Pensioners

(EMPROFAC

Prices)

Copayment

by the INPS

on packages

purchased by

Insured

People (ARFA

Prices)

Copayment

by the INPS

on packages

purchased by

Pensioners

(ARFA Prices)

Acetazolamida A 6,91 0,54 137 31,51 3,43 195,98 22,49 15,28 1,75

Albendazol B 2,47 1,26 6288 1446,24 157,20 2675,67 329,61 1368,48 168,58

Cloranfenicol C 1,05 0,71 7023 1615,29 175,58 849,65 110,82 576,72 75,22

Piracetam D 7,27 6,37 359 82,57 8,98 150,14 22,85 131,57 20,02

Table 2:Examples of the calculations to estimate the insurer savings for each regimen and grade of the copayment system.


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Results

- Impact on the INPS:

The results seem to point, in the first instance, to a considerable decrease in the

expense of the INPS in reimbursement of medicines. The range is from -30.12% in

both the General and Special Regimens.

General Regimen for Insured people and their families:

Paired Samples Statistics

Mean N Std.

Deviation

Std. Error

Mean

Pair 1 INPS_EMPROFAC_Insu

red

1987,07 444 5174,53 245,57

INPS_ARFA_Insured 1388,66 444 2842,51 134,90Table 3: Impact on the INPS. Means, Standard Deviation and Sampling Error Estimations for Insured

People.

In the observed sample, the mean value obtained respectively before and after is

equal to 1987.07 and 1388.66. The standard deviations and the stability measures

of the mean values presented in two paired samples have very different

distributions. In both cases the standard deviation and the standard error mean are

lower before the intervention.

Paired Samples Correlations

N Correlation Sig.

Pair 1 INPS_EMPROFAC_Insured &

INPS_ARFA_Insured

444 0,858 0,000

Table 4: Impact on the INPS. Correlation between the methods before and after application of the new

RP System for Insured People.

The level of significance associated with this test on the correlation is 0.000, lower

than the type I error of the analyst, 0.01, 0.05 or 0.10, showing that the correlation

of 0.858 is significant and that there is a high positive linear association between

scores on two occasions. This high correlation makes advantageous the use of the

t- test for paired samples rather than the same test for independent samples, thus

obtaining a smaller variance in the data.


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Paired Samples Test

Paired Differences t df Sig.

(2-

tailed

)

Mean Std.

Deviation

Std.

Error

Mean

95% Confidence

Interval of the

Difference

Lower Upper

Pair 1 INPS_EMPROFA

C_Insured

INPS_ARFA_Ins

ured

598,41 3101,57 147,19 309,12 887,69 4,065 443 0,000

Table 5: Impact on the INPS. t-test obtained in the SPSS for Insured People.

The t-test has an associated level of significance equal to 0.000, which takes the p

< 0.01, to the rejection ofH0. In fact, the confidence interval ranges from 309.12

to 887.69, not including zero.

SPSS calculated the t-test by entering the sample standard deviation equal to

3101.57, without the need to correct the value given the fact that the sample is

large.

It can be concluded as soon as the difference of 598.41 is significantly different

from zero, indicating that the implementation of a new drug reimbursement system

based on reference prices for generic drugs calculated by the regulatory agency

(ARFA) may bring positive results in terms of savings on the part of national health

insurance, because it leads to a drop in the reimbursement of 79, 7% of the drug

sample.


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Special Regimen for Pensioners and their families:

Paired Samples Statistics

Mean N Std.

Deviation

Std. Error

Mean

Pair

1

INPS_EMPROFAC_Pensio

ner

247,66 444 637,15 30,24

INPS_ARFA_Pensioner 173,75 444 350,79 16,65Table 6: Impact on the INPS. Means, Standard Deviation and Sampling Error Estimations for

Pensioners.

Paired Samples Correlations

N Correlation Sig.

Pair 1 INPS_EMPROFAC_Pensioner &

INPS_ARFA_Pensioner

444 0,856 0,000

Table 7: Impact on the INPS. Correlation between the methods before and after application of the new

RP System for Pensioners.

Paired Samples Test

Paired Differences t Df Sig.

(2-

tailed)

Mean Std.

Deviati

on

Std.

Error

Mean

95% Confidence Interval

of the Difference

Lower Upper

Pair 1 INPS_EMPROFAC_

Pensioner

INPS_ARFA_Pensi

oner

73,91 382,40 18,15 38,25 109,58 4,073 443 0,000

Table 8: Impact on the INPS. t-test obtained in the SPSS for Pensioners.

In the case of Pensioners, the statistical results obtained are in all the cases very

similar to those obtained for the Insured People. Thus, we can consider that the

fact that there are different regimens and grades of reimbursement of drugs are

maintained in the proposed system, little or nothing affects the partial results of the

analysis.


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- Impact on the cost transferred to the patient

With the available data it was not possible to calculate the impact on the cost

transferred to the patient via higher values of effective copayment. To do that

analysis, it would be necessary to obtain data with the binary classification of drugs

in the sample, distinguishing them as generic or branded, once the prices of drugs,

both generic and branded products, changes with the implementation of a new

system of prices definition, which is not based on cost of acquisition, transport,

insurance, marketing margins and other costs that make the price charged by the

importer of drugs. Decree-Law No. 22/2009 uses two reference countries13 for

setting prices for brand name drugs and generics, and generic drug prices must be

less than the price of brand-name drug in at least 35%. Moreover, it is even

possible to say that there will be an increase in the amounts reimbursed by

copayment system beneficiaries, due to the change of two variables simultaneously

(system of drug pricing and reimbursement system of medicines), which directly

affect the prices of drugs (branded and generic), as well as the basis for

reimbursement (from any medicine to generic drugs only).

- Monetary value of the difference between before and after the intervention

Sum of the total sample expenditure before intervention = 992.223,25

Sum of the total sample expenditure after intervention = 693.712,18

Difference between the scenarios = 298.511,07

13Reference Countries: Portugal and Spain.


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Discussion of the Results

The fact that two interventions were simulated simultaneously can be a source of

bias results. Ideally, the mechanism for setting up drug prices should be previously

implemented and their impact on the reimbursement system fully considered, so

that later, on basis of solid evidence, to analyze the impact of using the price of

generic drugs as basis for the copayment in the reimbursement system of

medicines.

Another factor of uncertainty in the results is the lack of concrete data on the

behavior of drug users in the amount of drugs consumed, since the implementation

of a reimbursement system that causes considerable reductions in the drugs prices

will also reflect in an unknown fringe of the population that previously had no

access to medicines. Depending on the size of this fringe, the savings made by

INPS through the implementation of the new system as well as their new socio-

economic framework in relation to the affordability of medicines, it may be contrary

to the trend of reducing expenditure because of the increased amount of drugs

consumed.

The use of weights was an alternative to the lack of data on the differences in

behavior of the insured population in relation to the population not covered by

social security system. Probably there are significant differences in behavior that

are due primarily to greater accessibility by the beneficiaries of the reimbursement

system.

The perception is that the beneficiaries of the system, theoretically privileged, will

be able to purchase more medicines, which should be reflected positively in the

amount of drugs consumed, when compared with the non-beneficiaries of the

copayment system.

However, it is important to consider that the conclusions obtained contain

limitations. There are limitations of the formation of the sample, since it was not


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considering the entire market segment covered by de copayment system, but only

the drugs that had all the basic information necessary for the development of this

work, even though this fringe corresponds to more than 70% of this segment.

The fact that there are only one importer and one producer is translated to a lack of

competition in the market. The importation restrictions of no more than three

specialties for each API, strength and dosage form should be considered in the

proper functioning of proposed system, since it has direct influence on the free

choice of drugs by consumers.


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Conclusion: Future Perspectives of study improvement

Medicines are central axis in the system of health care. However, the efficiency and

equity in access to medicines are directly linked to the reimbursement system

implemented.

The design of a system of reimbursement of drugs requires a set of complementary

measures that should be adopted by different operators in the pharmaceutical

sector in order to be truly sustainable and provide acceptable levels of health care

benefits to citizens.

In the particular case of Cape Verde, the reimbursement system has proved to be

considerably unbalanced, due to the fact it does not take into account clear criteria

and independence of the criteria baseline application. The lack of consistent data

and detailed information about the operations over the years since its creation are

factors that tend to perpetuate the functioning of this unbalanced and

unsustainable system. It has been noted an effort by the managing body of the

INPS to create and implement information systems that would allow, in the medium

term, to obtain accurate information that can support in-depth analysis of the

current system and from there to propose more efficient and sustainable systems,

adapted to the reality of the country.

It is neither appropriate, nor acceptable, to make the implementation of principles

and outcomes associated with its implementation and functioning elsewhere. There

are multiple variables in the pharmaceutical system of each particular country that

may modify the response to the implementation of an RPS. Thus, it becomes

imperative to examine all the local conditions associated with implementing a new

RPS.

Finally, it should be noted that this work is not a conclusion but the beginning of a

study that is intend to refine, improve the quality of information and processing of

data and further analysis.


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