Good and bad news for pharma on reference pricing in Spain

Planned reforms to Spain’s internal reference pricing system—the cornerstone of the country’s pharmaceutical cost-containment strategy for the last 20 years—are mixed news for the research-based pharmaceutical industry. Companies will welcome a safeguard for new active substances but deplore the prospect of reference pricing of entire pharmacological classes in some circumstances.

The Spanish reference pricing system is somewhat unusual (though by no means unique) in not restricting reference pricing to off-patent drugs. Reference pricing can be imposed after a drug has been marketed in any EU member state for at least 10 years (11 years if it has been approved for additional indications) and/or if it faces generic or biosimilar competition in Spain. However, the Ley de Presupuestos 2021 (Budget Act 2021) will amend this rule.

The new law confirms that the default basis for setting reference pricing groups is Anatomical Therapeutic Chemical (ATC) level 5 and identical method of administration. In most cases ATC5 corresponds to active substances. For some medicines (e.g., blood clotting factors), however, drugs with different active substances are included in the same ATC5 group. In such circumstances, a new active substance could currently be approved by the European Medicines Agency under the centralised authorisation procedure and immediately face reference pricing at generic or biosimilar price levels in Spain, prompting the manufacturer to avoid launching the drug in Spain. Therefore, the government will discontinue reference pricing of drugs that have patent protection in all EU member states.

On the other hand, the government has indicated that it plans to open up the possibility of creating reference pricing groups at the pharmacological class level (ATC4). The circumstances in which reference groups would be created at this level have not yet been specified.

Outlook and implications for the pharmaceutical industry

The research-based pharmaceutical industry will welcome the news that new active substances approved by the EMA and subject to patent protection throughout the EU will not face the threat of reference pricing. Without this concession, manufacturers would likely be unwilling to launch drugs exposed to reference pricing not just because revenue in Spain would be depressed by generic-level prices, but also because of the risk of parallel exports and the threat that other countries that use Spain as a comparator for external reference pricing purposes would cut their prices to similar levels.

Manufacturers will be much less pleased by the prospect of reference pricing at ATC4, even if the mechanism is used only in limited circumstances. This change could mean that drugs that are patent-protected in Spain but not in some other EU countries could be included alongside off-patent drugs in a reference pricing group, thereby reducing their reimbursable prices to the level of generics. In addition, the Autoridad Independiente de Responsabilidad Fiscal (AIReF; Independent Authority for Fiscal Responsibility) has suggested that a change to the reference pricing system would allow for tendering at the pharmacological class level.

Further changes to the reference pricing system seem likely in the coming years. The Dirección General de Cartera Básica de Servicios del Sistema Nacional de Salud y Farmacia (DGCBSF; Directorate General for the Basic Portfolio of SNS and Pharmacy Services) is working with the Comité Asesor para la Financiación de la Prestación Farmacéutica (CAPF; Advisory Committee for the Financing of the Pharmaceutical Benefit) on an exhaustive review of the reference pricing system with a view to amending it.