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Surprising Poland

This country is following its own path to prosperity, supporting innovation and drug prices

A jack in a box holding a Poland flagThose interested in Poland may find aspects of its economy and pharmaceutical market most unexpected.

In the mid-1990s, Poland was booming so fast it was referred to as Europe's tiger economy. Expectations are more realistic today but, despite persistent high unemployment, there is no denying that its finances are in a better shape than many in the West. It was the only one of the 27 EU Member States not to be in recession in 2009.

Sales of medicines have shown steady year-on-year improvement over the past decade, achieving 13.1 per cent growth in 2003 and exceeding +9 per cent in each of the past three years (the second highest growth rate in Europe after Spain). Total market value today, at manufacturer selling prices, is about PLN19bn, the equivalent of more than $6bn, putting it by size ahead of the Netherlands and just behind Belgium.

Government support
While more and more European countries are enacting emergency measures to rein in the growth in their public drugs bill, via price cuts, price freezes, statutory rebates and demands for Health Technology Assessments (HTA), Poland is seeking to improve conditions for the innovative manufacturer. Government proposals have been tabled to develop more precise and transparent criteria for price setting, to simplify the reimbursement system and to make provision for risk-sharing deals. However, the timelines to introduce, or even discuss, these measures have already been delayed, but this is normal practice for Poland.

Of the 2009 out-of-hospital sales total, prescription medicines partially reimbursed by the National Health Fund (NFZ) accounted for 46 per cent, prescription medicines fully paid by patients for 19 per cent, with OTCs/parapharmaceuticals making up the balance of 35 per cent. The patients' share of the PLN11.7bn outlay on reimbursed products was 30 per cent, taking their total financial burden on medicines to a remarkable 68 per cent, and this in a country with a universal public health insurance system. Part of the reason is zero or low levels of reimbursement for many medicines, but other factors include consumers' preference for more expensive products from the West and the ignorance of doctors on actual costs and reimbursement conditions.

Admission to reimbursement is controlled by the Ministry of Health. As a first step in the process, medicines are divided into two main categories: products available to all insured people (with three levels of reimbursement of 100 per cent, 70 per cent or 50 per cent) and products available to patients with specific chronic diseases (with four levels of reimbursement of 100 per cent, PLN3.20 flat sum, 70 per cent and 50 per cent). The entire reimbursed market is also subject to reference pricing principles.

Maximum reimbursement amounts or price ceilings exist for single products, groups of products with the same active ingredient, or for groups of products containing different active ingredients with a similar pharmacological activity. If the price limit of the product dispensed is lower than the maximum public price then the patient has to pay the difference on top of the co-payment share. So, for Product X, subject to general reimbursement at 70 per cent:
• Public price = PLN50
• Price limit = PLN40
• Patient has to pay 30 per cent of PLN40 (=PLN12) plus PLN10 (difference between public price and price limit) = PLN22. 

A 2005 OECD survey of 33 European countries put Polish drug prices in 32nd place, ahead of Macedonia. While average prices may be low, this is not true of all products. In fact the market has supported 18 parallel importers (the same number active in Germany), which undercut Polish domestic prices with medicines bought cheaper in other parts of Europe.

Parallel exports are a far bigger problem for the R&D industry than parallel imports. This was one important factor behind AstraZeneca's decision to move to direct-to-pharmacy (DTP) distribution in Poland, which represents the only example of exclusive DTP in Europe outside of the UK. The scheme was declared illegal by the Chief Pharmaceutical Inspectorate, but, after modification, persists.

Generics account for 84 per cent of sales volume. Only Russia has a higher generic presence. Poland did not enact patent law protecting pharmaceutical products until 1993 and is still delaying the introduction of data exclusivity (this should have become obligatory at the time of EU accession in 2004). Yet the Poles' preference for medicines from the West meant only one Polish-owned company – Polpharma – ranked among the top 10 by 2009 sales with six of the remaining nine positions filled by research-based multinationals of European origin. The apparent anomaly of strong multinational presence and high generic use can be explained by some multinationals in Poland having strong generic (eg Novartis) or OTC (eg GSK) interests, with sanofi-aventis involved in both sectors.

In addition, ACE-inhibitors are the largest class in value terms and, of these, the two leading originator brands already face extensive generic competition. In total, cardiovasculars account for 27 per cent of the retail market by value and a surprising 55 per cent of the reimbursed sector, in terms of defined daily doses. Despite newer anti-cancers making up all seven most-used drugs in hospitals in 2009, Poland has among the lowest rates of cure for cancer in Europe. This is partly through late diagnosis, due to both long delays before the patient is able to visit a specialist and to cultural inhibitions about the disease.

Traditionally, the key to market access for a prescription drug was simply to get it on the positive (or reimbursement) list. This, by law, should be updated four times a year, but this has never been achieved. Indeed, with the exception of four ACE-inhibitors and six sartans included for the first time in the October 2005 positive list, no other new active ingredients were listed between January 1999 and March 2007. Things have improved since and the newer, pricier and most important medicines (especially anti-cancers and rare disease treatments) that have little chance of being placed on the positive list because of cost-effectiveness hurdles may benefit instead from central NFZ funding via therapeutic programmes.

Drug costs
With reimbursement limited, Polish patients are very sensitive to drug costs.  Those who might expect to pay the official co-payment for their prescription not only might pay just part but can sometimes even obtain cash rebates from the pharmacy in addition to the medicine being dispensed free of charge. This is because approved public prices are maximum ones, as are trade margins.

Manufacturers of products facing strong generic competition usually offer financial incentives to pharmacies via their wholesalers and wholesalers can add in discounts and loyalty bonuses of their own. Pharmacies are not obliged to apply the statutory co-payments for reimbursed products in full, and the existence of discounts/rebates/free stock from suppliers and the competitive pressures on the trade that comes from having almost 13,500 pharmacies for only 38 million inhabitants make it worthwhile for patients to shop around for the best deal.

When new molecular entities eventually get on to the positive list, sales volume invariably benefits. A price cut may be sought by the reimbursement authorities in many other countries as a trade-off, but remarkably there were at least 130 presentations added to Poland's positive list for the first time between 2007 and end-2009 that experienced price increases, a few as high as 300 per cent.

Modern-day Poland is indeed worth more than a second look.

The Author
Donald Macarthur
is a pharma business analyst and the author of the report 'Pharmaceutical Pricing, Reimbursement and Distribution in Poland: 2010 and Beyond'.
His work is accessible at www.justpharmareports.com

To comment on this article, email pme@pmlive.com

25th November 2010

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