Portugal is a relatively small country, with about 10.3 million inhabitants. The main indicators of public health have registered a positive and steady evolution over the last decade. According to the most recent data (2016), average life expectancy at birth is 80 years old, and is increasing, just like life expectancy at 65 years old, and the infant mortality rate is per 2.9 live births in 1000.
Adjustments in the health system have yielded life year gains in respiratory, digestive, and infectious diseases.
Some indicators, however, raise concerns.
Portugal suffers from the ailments that are associated with an ageing and decreasing population.
Healthy life years are steadily decreasing. Chronic diseases are growing factors of mortality. Heart diseases, cancer, respiratory, nutritional, endocrine and metabolic diseases are the greatest causes of premature mortality, and still play a significant role in later deaths. Risk factors, such as inadequate eating habits, hypertension, smoking, and high body mass greatly contribute to this outcome.
The Portuguese Health System is thus a mature, complex, and rather successful structure that – as with many other developed countries – is now faced with the consequences of its success.
Higher life expectancy is associated with an ageing demographic, and an increase in health-related costs. The better the system becomes, the harder it is to ensure its sustainability.
Policies are headed towards preventing diseases rather than curing them. While innovation is commendable, the State is not focused on rewarding innovative therapies, but rather in taking steps to guarantee that they are not necessary.
Pricing and reimbursement of medicines is therefore perceived as a double-edged sword: while it satisfies basic needs of citizens, and fulfils fundamental duties from the State, it should be achieved without excessive sacrifice of a declining Public Budget. Public regulators very much agree that this paradox should not be settled at the taxpayer’s expense. Pressure on innovators is therefore at its highest.
In what the legal regulatory framework is concerned, the Portuguese legal framework follows the EU legislation closely. Decree-Law 176/2006, of 30th August, consolidated in one single piece of legislation the regime applicable to, among others, the marketing authorisation, manufacture, import, export, marketing, classification, labelling, promotion and pharmacovigilance of medicines, transposing into Portuguese Law several directives, including Directive 2001/83/EC, as amended (the Directive).
Pricing and reimbursement, in contrast, are exclusively dealt with at the national level, being beyond the scope of EU legislation, with the exception of transparency measures and procedural requirements provided for in Council Directive 89/105/EEC, of 21st December 1988, relating to the transparency of measures regulating the pricing of medicinal products for human use (“Transparency Directive”).
The general regime applicable to pricing and reimbursement is provided for in Decree-Law 97/2015, of 1st June, as amended. This diploma approved SiNATS, the National System of Evaluation of Health Technologies, congregating in one single piece of legislation topics related with pricing and reimbursement of pharmaceuticals. This general framework is complemented by several Ministerial Orders and densified by the Portuguese Agency’s – Infarmed – Autoridade Nacional do Medicamento e Produtos de Saúde, I.P. (“Infarmed”) – Practice and Informative Notes.
In addition to technical health regulation, Infarmed’s powers cover pricing and reimbursement. Price approval of prescription products, including products for hospital use, is also attributed to this Agency. Infarmed plays a significant role in the reimbursement of medicines, being the entity responsible for conducting the relevant procedures and proposing decisions to the Ministry of Health.
The classification of medicines is identical to that arising from EU legislation.
Two major classifications exist: prescription; and non-prescription products.
Medicines are subject to medical prescription where they (a) are likely to present a danger either directly or indirectly, even when used correctly, if utilised without medical supervision, (b) are frequently and to a very wide extent used incorrectly, and as a result are likely to present a direct or indirect danger to human health, (c) contain substances or preparations thereof, the activity and/or adverse reactions of which require further investigation, or (d) are to be administered parenterally.
Prescription medicines are then divided into sub-categories, including, for renewable delivery, special medical prescription and restricted medical prescription for use in certain specialised areas. Concerning this last subcategory, products will be classified as subject to restricted prescription when, in general terms, the respective use is reserved for a hospital setting or require special supervision throughout the treatment.
Prescription products can only be sold in pharmacies or, in the case of a restricted medical prescription, dispensed and/or exclusively at a hospital setting (including hospital pharmacies).
In turn, all medicines which do not meet the criteria to be classified as subject to medical prescription are classified as non-prescription products.
Under this broad classification of medicines – subject to medical prescription or not – medicines can be of several types, depending essentially on the marketing authorisation (hereinafter “MA”) procedure followed and composition of the product.
The following types may be identified:
Branded medicines are divided into six sub-categories: (a) full application; (b) well-established use applications; (c) fixed combination applications; (d) informed consent applications; (e) hybrid applications; and (f) biosimilar applications.
Full application products are commonly known as “reference medicines”, i.e. medicines which have been granted an MA by a Member State or by the European Medicines Agency (“EMA”) based on a complete dossier, i.e. with the submission of quality, pre-clinical and clinical data. These medicines may be biological or not, depending on their composition.
Products arising from well-established use applications are those regarding the results of preclinical and clinical trials which are replaced by detailed references to published scientific literature if it is demonstrated that the active substances of the product have been in well-established medicinal use within the community for at least 10 years, with recognised efficacy and an acceptable level of safety.
Fixed combination applications are those related to medicines containing active substances used in the composition of authorised medicines but not hitherto used in combination for therapeutic purposes. In these cases, the results of new pre-clinical tests or new clinical trials relating to that combination must be provided, it not being, however, necessary to provide scientific references relating to each individual active substance.
There are also the so-called informed consent applications, in which following the granting of an MA, the authorisation holder allows use to be made of the pharmaceutical, non-clinical and clinical documentation contained in the dossier of its medicinal product with a view to examining subsequent applications relating to other medicinal products possessing the same qualitative and quantitative composition in terms of active substances and the same pharmaceutical form.
Hybrid applications, which rely in part on the results of pre-clinical tests and clinical trials for a reference product and in part on new data, differ from generic applications in that the results of appropriate pre-clinical tests and clinical trials need to be submitted. This occurs in the following circumstances: where (i) the strict definition of a generic is not met; (ii) bioavailability studies cannot be used to demonstrate bioequivalence; and (iii) there are changes in the active substance(s), therapeutic indications, strength, pharmaceutical form or route of administration of the generic compared to the reference medicine.
Finally, there are the biosimilars, i.e. biological medicines, similar to a reference biological product but which do not meet the conditions of the definition of generic medicinal products, owing to, in particular, differences relating to raw materials or differences in the manufacturing processes of the similar biological medicine and the reference biological medicine, and, therefore, the results of appropriate pre-clinical tests or clinical trials relating to these conditions must be provided.
All the above categories are considered as “branded products” for the purposes of pricing and reimbursement rules, with the exception of biosimilars in respect of which a specific regime exists.
Generics are products which have the same qualitative and quantitative composition in active substances and the same pharmaceutical form as the reference medicines, which are or have been authorised for no less than eight years in a Member State or in the community. The applicant is not required to provide the results of pre-clinical tests and clinical trials, provided bio-equivalence with the reference medicinal product is demonstrated by appropriate bio-availability studies.
In terms of pricing and reimbursement, the following categories are relevant, the rules differing depending on which category the product falls under: (a) branded products (which include: full applications; well-established use applications; fixed combination applications; informed consent applications; and hybrid applications); (b) generics; and (c) biosimilars.
Generics are subject to specific pricing and reimbursement rules.
The critical distinction for the purposes of reimbursement is whether the product is subject to medical prescription or not.
Whereas non-prescription medicines are not subject to price control and, as a rule, are not eligible for reimbursement, save in exceptional circumstances, prescription medicines are subject to a price control regime and are eligible for reimbursement. This principle applies to all types of products identified above (i.e. branded, generics, biologic and biosimilar).
The payer varies depending on the product’s classification.
Non-prescription products and medicines subject to common medical prescription, renewable and special medical prescription can be purchased directly by individuals – should they be sold in street pharmacies – and by private hospitals and national health service hospitals (“NHS Hospitals”) for internal use. Restricted medical prescription products are only purchased by hospitals, be it private or NHS Hospitals, with patients having access to these products via the hospital pharmacies.
Should the product be reimbursed, part or the whole of its sales price is borne by the Health Ministry’s share of the State Budget.
A distinction should be drawn between products which are to be sold and dispensed at street pharmacies and those which are to be sold to NHS Hospitals.
The first follow a reimbursement procedure. The second follow a very similar procedure with a view to being sold in NHS Hospitals – the so-called prior evaluation procedure.
The ratio underlying both procedures is, in essence, the same: evaluating whether, in light of the therapeutic alternatives, it is justifiable from an economic and therapeutic perspective for the State to purchase the product – be it via reimbursement or through the budget of NHS Hospitals.
The reimbursement procedure is initiated by the MA holder, or its representative, before Infarmed. The MA holder is encumbered with demonstrating that the product fulfils the criteria for reimbursement: i.e. that the medicine is innovative, or therapeutically equivalent to current alternatives and presents an economic advantage. This being the general principle, the law further lists the situations which can give rise to reimbursement and specifies the criteria which should be met – particularly to demonstrate the economic advantage.
The reimbursement request should be accompanied by a comprehensive set of documents, comprising both technical and scientific information about the product that demonstrates its efficacy, safety, and effectiveness for the claimed therapeutic indications and an economic evaluation study. Such a study is not required for generics, which follow a simplified procedure.
In fact, reimbursement of generics is subject to specific rules strictly linked to the respective price – be it by comparison with the reference medicine or other reimbursed generics, depending on how many generics are already present in the market.
The same logic applies to the reimbursement of biosimilars: a price is also set for reimbursement purposes. The first biosimilar will be reimbursed should its price not exceed 80% of the price of the reference biologic product. Said percentage decreases to 70% should there be more biosimilars in the market representing at least 5% of the market share of the respective active substance.
The reimbursement procedure is conducted before Infarmed. The Ministry of Health, however, is responsible for the reimbursement decision, although said power may be delegated to the Infarmed.
Reimbursement may be subject to the execution of a contract between the MA holder and Infarmed which sets forth the terms and conditions subject to which a reimbursement depends upon. These conditions may include:
- a maximum amount of public expenditure with the product, considering the number of patients and applicable therapeutics;
- consequences of exceeding this maximum amount, such as the MA holder being required to (i) pay back the amounts in excess, and (ii) lower the price of the product concerned or of other products;
- existence of a limited period of time, elapsing which the amount of reimbursement is reduced with a consequent reduction of the price of the product or the product is delisted; and
- risk sharing arrangements.
Even though the execution of a reimbursement contract is not mandatory, in the case of innovative products, Infarmed typically chooses to execute a contract with the MA holder. If Infarmed proposes to enter into a reimbursement contract, negotiations should be concluded in 30 days. In practice, however, contract negotiations take significantly longer.
Although contracts are bilateral, reimbursement is a unilateral decision, which almost entirely depends on Infarmed’s discretion. Accordingly, Infarmed has an exceptional edge in contract negotiations.
While MA Holders may try to influence the reimbursement decision or contract – especially, the maximum amount of public expenditure with the product – through negotiation, the decision ultimately depends on Infarmed and on its assessment, taking into account available public funds or budgetary concerns, of the market and the product’s expected performance.
The MA Holder should be able to demonstrate that the medicinal product complies with the reimbursement criteria at all times.
Infarmed can exclude medicines fromreimbursement, or change their reimbursement conditions upon re-evaluation of market conditions – especially if new medicines that are either therapeutically innovative or economically advantageous in relation to the reimbursed medicine.
The situations that may trigger exclusion from reimbursement or the change in reimbursement conditions are provided for in the law. Amongst these we find, for instance: the medicine becoming less effective in relation to other reimbursed medicines with the same therapeutic purpose; consumption data demonstrating that the medicine has been used off-label, in indications that are not covered by the reimbursement; the price of the product becoming 20% higher than non-generic reimbursed alternatives; and the medicine no longer being subject to medical prescription or changing its classification to restricted medical prescription. Illegal promotional practices may also determine exclusion from reimbursement.
As noted above, prescription medicines must undergo a prior evaluation procedure with a view to being bought by NHS Hospitals – unless otherwise decided by the Ministry of Health or Infarmed, should the Ministry delegate the competence to take this decision. Non-prescription products may also be subject to such a procedure if their sales volume to NHS Hospitals is very significant.
The purpose of the prior evaluation procedure is very similar to that of the reimbursement procedure: the applicant must demonstrate that the medicine is innovative, or therapeutically equivalent to current alternatives and presents an economic advantage. Also, and similarly to what happens with reimbursement, the law specifies the criteria which should be met for a favourable decision to be awarded – particularly so as to demonstrate the economic advantage.
If favourable, the prior evaluation decision sets a maximum price of acquisition for NHS Hospitals and entails the execution of a contract between the MA holder and Infarmed. These contracts, further to being entered into for a fixed term, can provide for conditions similar to those we have seen above for reimbursement. The most common ones are the establishment of obligatory discounts over the maximum sales prices and the setting of a maximum amount of public expenditure with the purchase of the product which, if exceeded, should be paid back by the MA holder.
Medicines subject to prior evaluation cannot be purchased by NHS Hospitals until a favourable decision is issued and a valid contract executed. In exceptional circumstances, for example, in the absence of a therapeutic alternative and should the patients’ life be at risk, and on a case-by-case basis, Infarmed may authorise the purchase of these products.
Rules of procedure specify clear deadlines for issuing a reimbursement and a prior evaluation decision: (a) 30 business days, for generics and biosimilars; (b) 75 business days, for new therapeutic indications of an active substance which is already reimbursed; and (c) 180 business days, for new active substances. These deadlines are suspended and extended if, during the process, Infarmed asks for additional elements from the applicant, or opinions from independent Committees.
Decision deadlines are merely indicative, with no consequences arising from non-compliance thereto. Should a decision not be issued within these timeframes, the applicant cannot assume that its product has been reimbursed or approved – neither can it assume that it is not. Unfortunately, reimbursement and prior evaluation procedures of innovative products, both new active substances and new therapeutic indications, take far more time than that provided for in the law.
Negative decisions in the context of reimbursement and prior evaluation procedures are subject to appeal.
MA holders are entitled to file an administrative appeal before Infarmed or the Ministry of Health – depending on whom issued the final decision. This appeal, which is not mandatory to resort to judicial action, has extremely limited chances of success. A judicial challenge before administrative courts is also admissible, even though the court’s powers are limited to judicial review. A judicial claim can take as much as two years to be decided in the first instance.
The general rule is for reimbursement to be set as a percentage of the maximum public sales price of the product.
The reimbursement amount is set in one of four tiers, ranging between 15–90% of the product’s maximum public sales price (15%, 37%, 69%, 90%). A Ministry of Health Order provides the pharmacotherapeutic groups that correspond to each reimbursement tier – so the reimbursement tier in which medicines are included depends on the diseases they are indicated to treat. The reimbursement tier rises in accordance with the priority the Government assigns to the treatment (or access to treatment) of a certain disease.
In addition to this general regime, medicines can be included in special or exceptional reimbursement regimes, which may follow specific rules and set specific reimbursement amounts. Specially or exceptionally reimbursed medicines are usually reimbursed in full, and concern specific diseases which raise significant health concerns. HIV and Hepatitis medicines, for instance, benefit from a special reimbursement regime and are dispensed at no cost to patients at NHS Hospital pharmacies.
Medicines subject to medical prescription (yet not restricted medical prescription), both generics and non-generics, must undergo a price approval procedure before Infarmed prior to being launched in the market. Price approval – contrary to reimbursement – is a condition to market the product.
In the context of the price approval procedure, a maximum sales price is approved, which, in the case of branded products, is determined by reference to the wholesale price applied in three reference countries. The reference countries are defined annually (in 2018: Spain; France; and Italy). The maximum sales price cannot exceed the average of the wholesale price applied in the reference countries (with exclusion of applicable margins and taxes). If the medicine does not exist in the reference countries, the price cannot be higher than the price of identical or essentially similar medicinal products in those markets (excluding generics). If such a product does not exist, the price should not be higher than the price of identical or essentially similar products in the national market. If similar medicines are not marketed in Portugal or the reference countries, the price cannot be higher than the price in force at the country of origin. This maximum sales price is subject to annual revision according to the same criteria.
Branded medicinal products subject to medical prescription which are not reimbursed and are sold before NHS Hospitals are also subject to a price approval and annual revision procedure. The logic, similarly to what happens with retail pharmacy products, is that in comparison with the price applied in three reference countries, it is the same as those defined for the pharmacy setting. However, in the case of these products, the maximum sales price to hospitals cannot exceed the lowest wholesale price applied in three reference countries.
The maximum sales price of generics, in turn, is set by reference to the price of the reference medicine. The price of the generic cannot exceed 50% of the maximum sales price of the reference medicine or 25% of that price, should the reference product’s wholesale price be lower than €10. Generics are also subject to an annual price revision. Under said revision, the price of the generic should continue to maintain the same price difference vis-à-vis the reference product.
The price of the generic may, however, be affected for reimbursement purposes.
In fact, the placement of a generic in the market gives rise to the creation of a “homogeneous group”, composed of branded medicines and generics (with the same active substance, dosage, method of administration and pharmaceutical form). The creation of the “homogeneous group” triggers the approval of a reference price for the products which make part of said group. The reference price corresponds to the average of the retail sales price of the five lowest-priced products included in the group. Following approval of the reference price, the maximum amount of reimbursement for products included in the group will be determined by applying the applicable reimbursement percentage to the reference price. With a view to being reimbursed, the maximum sales price of generics entering the market after the group’s creation must be at least 5% lower than the price of the cheapest generic already in the group (up to the limit of 20% of the reference medicine’s maximum sale price). This successive lowering of the price of generics and of the reference price leads to significant savings in expense with reimbursement, but also to a substantial gap between over the counter prices of generics and branded medicines.
Finally, generics which are not reimbursed and are sold to NHS Hospitals are also subject to a price approval and revision procedure. Under this regime, the price of the generic should be at least 30% lower than the price of the reference product.
While biosimilars are not subject to a specific price approval procedure, price control of these products is set within the context of the reimbursement procedure. As noted above, reimbursement of a biosimilar can only be approved if the respective price does not exceed 80% of the reference medicine’s price.
Similarly to what happens with generics, a biosimilar entering the market also triggers the creation of a “homogeneous group”, and of a reference price as well. Two differences occur. Reimbursement of similar biological medicines can only be approved if their price does not exceed 80% of the reference medicine’s price, and, in case a “homogeneous group” with at least one biosimilar medicine already exists, the price of the following biosimilar cannot exceed 70% of the reference medicine’s price.
Lastly, discounts can be granted throughout the medicine’s marketing circuit (manufacturer, wholesaler and pharmacy). However, discounts can only be granted in relation to the non-reimbursed part of the sales price of the medicinal product.
As noted above, Portugal follows a referencing system in what price definition is concerned.
Limiting public expenditure is therefore done, on the one hand, through price control and, on the other, through reimbursement or prior evaluation procedures – in general terms, market access. The major factor influencing market access is cost. Rather than assessing the medicine’s performance and market behaviour independently, public authorities are compelled to lower maximum amounts of public expenditure, based almost exclusively on the budget that is allocated for the expense of medicinal products.
Although the launching of a generic in the market does not directly affect the price of the reference medicines, competition of generics and therapeutic alternatives – particularly if cheaper – greatly influence the sales of the branded products.
This is achieved through several means:
- Firstly, through the renegotiation of the maximum public expenditure levels provided for in reimbursement/prior evaluation contracts.
- Secondly, as a result of substitution. In fact, the general rule, in which generics are concerned, is for mandatory substitution.
Prescription of medicines should be done by the International Non-proprietary Name (“INN”) – although the brand of the product may be added. Once generics are placed in the market, the rule is that of substitution and the physician is only allowed to prevent substitution in the limited and exceptional cases provided for in the law. Similarly, pharmacists, when confronted with a prescription, are required to inform patients of the existence of products with an identical active substance, pharmaceutical form, dosage and presentation of the prescribed product, as well as whether these are reimbursed and those which have the lowest sales price. Pharmacies should have available for sale at least three products with the same active substance, pharmaceutical form, dosage and presentation, between the five products with the lowest sales price. Unless the patient chooses otherwise, the pharmacist should dispense the medicine with the lowest price. The patient is further entitled to replace the prescribed product with one with that has the same active substance, pharmaceutical form, dosage and presentation unless the physician has prevented substitution. Even in the latter case, the patient may choose to replace the product for a cheaper product if the circumstance on the basis of which the physician prevented substitution was due to the fact that the product was destined to a long-term treatment (i.e. that which is anticipated to last over 28 days).
On the other hand, and concerning NHS Hospitals, medicines are purchased pursuant to mandatory public procurement procedures. Supply contracts awarded through these procedures are overwhelmingly awarded to the bidder with the lowest price – meaning that generics and biosimilars are expected to take over the market as soon as they begin marketing. Several instructions have also been directed to NHS Hospitals with a view to increasing the purchase of biosimilars.
Finally, the Ministry of Health has taken measures to ensure that NHS Hospitals and Services can begin purchasing generics and biosimilars as soon as they enter the market.