The 2014 Reform of the Spanish Reference Pricing System

The Spanish reference pricing system has been recently reformed with the introduction into Spanish legislation of Royal Decree 177/2014, 21 March, regulating the reference pricing system and the medicines homogeneous groups in the National Healthcare System(the “Royal Decree”) and the Ministerial Order SSI/1225/2014 (the “Order”), which develops the former. 
 
The need for the reform is justified in the preamble of the Royal Decree, which stresses the need to adapt the legal framework of the reference pricing system to some legal changes that have taken place at national and European Union (“EU”) level in recent years and to the evolution of the pharmaceutical market.  In addition, the preamble emphasises the need to update the regulations in order to place biosimilar medicines and generics on the same footing. 
 
In addition to the measures concerning the reference price system and the homogeneous groups, the Royal Decree also regulates some information systems to be applied for the purpose of managing the pricing system for medicines and medical devices, and it establishes the Nomenclator (i.e. the official catalogue of medicine products) as the official data base for the reimbursement system of the National Health System.
 
The main changes introduced by the Royal Decree and the Order are summarised below. 
 
The Spanish reference pricing system on medicines was legally first regulated by Law 13/1996 dated 30 December, and it has now been place for more than 15 years.  Its aim is to reduce the public expenditure on medicines by fixing the reference price for every presentation of a medicinal product, that is to say, the price that will be financed by the Spanish National Health System (“SNHS”). 
 
The different presentations are grouped in reference groups.  Each reference group is formed by two or more presentations of medicines which (i) are funded by the SNHS, (ii) are commercialised and (iii) have the same active ingredient and the same method of administration.  Furthermore, it is a requirement that each reference group contains at least one presentation of a medicinal product in its generic or biosimilar form.  However, this last requirement will not be applied if the medicine or its main active ingredient has been authorised in Spain or in any other EU Member State for at least 10 years and there is another product in the group different from the original or its licenses. 
 
As mentioned above, one of the requirements for a presentation to be included in a reference group is to be commercialised.  This provision finally recognizes what had been a constant request from the industry, supported by court decisions, that is the need to exclude from this system presentations which are not commercialised.  In this regard the regulation provides that the products whose authorisation has been revoked or suspended or whose commercialisation has ceased will not be taken into consideration for the purpose of forming the reference groups. 
 
Furthermore, it sets out the rules to calculate the reference price (based on the lowest cost of treatment daily of the presentations included in the reference group) and establishes a minimum threshold price of €1.60 in case that the reference price resulting from applying such rules results to be inferior to such threshold (this threshold however will not apply if the product is actually commercialised at a lower price, or if a product with a lower price is commercialised in another EU Member State).  There is a special rule for determining the price (the industrial weighted reference price) in particular cases, i.e. for products with special dosages for serious diseases or products whose prices have been reviewed in the past two years for lack of profitability and that, if subjected to the general reference price system, would not be economically viable.
 
The reference price system is scheduled to be updated on an annual basis by establishing the new reference groups, the reference prices of those new groups, revising the existing reference prices and, when applicable, eliminating those reference groups which no longer meet the requirements for their existence. 
 
On the other hand, the Royal Decree regulates the system of homogeneous groups of medicines.  Homogeneous groups operate at a different level that reference groups.  While, as mentioned above, the purpose of reference groups is the determination of a reference price, homogeneous groups operate at the level of prescription and dispensation of medicines. 
 
Each homogeneous group is formed by different presentations of medicines which (i) are funded by the SNHS, (ii) have the same active ingredient and the same dosage, content, pharmaceutical form and method of administration, and also that (iii) are interchangeable when dispensed.  Once the homogeneous group is formed the minor price, which is the lowest of all prices of the medicines contained in the group when it is formed, is established.  Thereafter there is the possibility for a voluntary reduction of prices by the laboratories.  The minor price will be updated every quarter so the then lowest price will become the new minor price of the group.  The system offers an incentive for the reduction of prices since the dispensation rules set forth by the law favor the dispensation of products with the lowest price within the homogeneous group.
 
One of the most controversial areas of the current system as established by the Royal Decree and developed later by the Order has been the creation of reference groups for biosimilar medicines.  It has been argued in particular that under the new regulations biosimilar products receive a similar treatment than the one given to generics when it is generally accepted that there are important differences between those type of products: while generics are exact copies of the original medicines, not such identity exists in the case of biosimilar products.  As a result, for example, unlike generics biosimilar products are not interchangeable: under the Medicines Law (Law 29/2006 dated 26 July) and the regulations that develop it (Order SCO/2874/2007) biosimilar medicines are recognised not to be automatically interchangeable for dispending purposes by the pharmacists.  Along the same lines, in accordance with Royal Decree 8/2014 dated 7 February, in case of biological medicines the prescription must specify the trademark of the product rather than the name of the active ingredient.
 
With respect to biosimilar products it is a shared view that the current legal framework in Spain is incomplete and lacks coherence.  In this regard, a proposal has been approved at the Spanish Parliament requesting the Government to regulate those products.  As an example of the current situation, in Article 85 of the Medicines Act it is provided that if a product is prescribed by active ingredient the pharmacist must dispense the product having the lowest price within the same homogeneous group and, if the price is the same, the generic or biosimilar product in that group.  However this provision is not coherent with the rest of the regulation on biosimilar products because, as mentioned above, no prescription by active ingredient applies to biosimilar products and also biosimilar products should not be part of a homogeneous group since they are not interchangeable.  It would be desirable that this situation on biosimilar products is clarified. 
 
 
Mr. Llevat is head of the Intellectual and Industrial Property Practice and coordinates the firm’s Life Sciences Practice group.
 
He has broad experience in advising clients on transactional and litigation issues in the life sciences field, particularly in connection with IP rights and regulatory matters.
 
He is consistently ranked as leading IP practitioner by directories such as Chambers, Expert Guides, Who’s Who Legal, European Legal Experts, Best Lawyers, IAM 1000, Managing Intellectual Property, World Trademark Review, Legal 500 and Leaders League.
 
Jorge Llevat
Partner
Intellectual and Industrial Property, Media and Data Protection
 
jorge.llevat@cuatrecasas.com
 
Tel: +34 932 905 585
Fax: +34 932 905 569
Paseo de Gracia, 111
08008, Barcelona, Spain
 
Ms. Barnola is an associate lawyer in the Intellectual and Industrial Property and Data Protection Practice. She has experience in advising Spanish and foreign companies, especially from the biotechnology and pharmaceutical sector, on intellectual property and data protection issues.
 
She has written a number of articles and publications on topics related to industrial and intellectual property rights, as well as on data protection and pharmaceutical law.
 
PAULA BARNOLA
Associate
Intellectual and Industrial Property, Media and Data Protection
 
paula.barnola@cuatrecasas.com
 
Tel: +34 932 905 585
Fax: +34 932 905 569
Paseo de Gracia, 111
08008, Barcelona, Spain