WHITE PAPER ON. Public Procurement of Biological Medicines

Transcription

1 WHITE PAPER ON Public Procurement of Biological Medicines

2 JUNE 2015

3 Table of contents Executive summary Introduction EU policy framework Procurement of biological medicines: current practice Introduction Assessment criteria used in the EuropaBio review Types of public procurement of biological medicines Single winner-takes-all v. multiple winners, multiple choices Price-based evaluation v. value-based evaluation p. 6 p. 8 p. 9 p. 11 p. 11 p. 13 p. 14 p. 15 p Combination of types of public procurement some illustrative examples p Cross-border joint procurement Key EuropaBio recommendations Annexes Case studies Template Research Questionnaire p. 20 p. 23 p. 26 p. 28 p References p. 38 3

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6 1. Executive summary In February 2014 the EU adopted a new legislative package on public procurement. Member States are expected to transpose the EU Directives by 18 April The transposition of these new rules in national law offers a timely opportunity to address issues related to the application of the public procurement rules for the purchase of complex medicinal products, namely biological medicines, including vaccines. This White Paper aims at presenting the key findings of research conducted by EuropaBio between September and November 2014 on national practices for procuring biological medicines across the European Union (EU). This research is based on the direct feedback of EuropaBio member companies participating in public tenders in 14 countries in the European Economic Area (EEA) and on a review of the existing literature on public procurement rules. The input of EuropaBio member companies on national procurement was collected based on a detailed questionnaire (see Annex I and II) and analysed by a group of EuropaBio experts. The internal EuropaBio research reveals that in recent years national public authorities are increasingly using public procurement to purchase medicinal products. Tendering practices differ considerably across national jurisdictions in Europe. To assess such a complex and fragmented landscape, EuropaBio developed a specific analytical framework based on a number of assessment criteria. Although the overarching parameter to assess procurement practices across Europe is access to treatments for patients, a number of additional specific criteria were identified by EuropaBio experts, as follows: competition; access to multiple therapeutic solutions; change of therapy for treated patients; interchangeability/assessment of therapeutic equivalence; award criteria; transparency. Our research has led us to the definition of three recurring types of public procurement: 1. Single winner-takes-all v. multiple winners, multiple choices; 2. Price-based evaluation v. value-based evaluation; 3. Cross-border joint procurement. Building on its own analysis, EuropaBio was able to draw some key recommendations to guide the future procurement of biological medicines (see box on next page). EuropaBio is ready to contribute to any stakeholder dialogue that the European Commission and any other institutions would put in place, including any other rules falling under the competence of the EU such as the cross-border joint procurement rules under Decision 1082/2013/EU 6

7 on serious cross-border threats to health. EuropaBio is committed to making sure that public procurement rules are appropriately implemented and used to provide European patients with the best available therapies on the market. EuropaBio public procurement recommendations Public tenders for biological medicines, including vaccines, should: 1. Reflect patients needs and allow freedom of choice for doctors/patients, by ensuring that treatment options are not limited and decisions can always be made by a physician in consultation with patients; 2. Respect physicians prescribing authority as regards decisions to keep treated patient with their current treatments; 3. Take into account the complexity of manufacturing practices for biological medicines, and thus allow for sufficient lead times; 4. Be awarded based on careful consideration of additional criteria besides price; 5. Foster fair market competition and innovation. 7

8 2. Introduction The adoption of the new European legislative package for public procurement in February sets a more efficient and flexible framework for the public procurement of goods, works and services across the Union. While the competent authorities are working towards the transposition of these rules into national law by April 2016, there is a need to consider how these will apply to the procurement of complex products such as biological medicines and to explore whether the development of sector-specific recommendations for transposition is needed. These recommendations could guide the relevant national competent authorities in the effective application of the new rules. The report starts with a summary of the new legislative package for public procurement, with a focus on its relevance for biological medicines, and previous EuropaBio positions on the matter. The following section introduces an analytical framework to describe national practices for the procurement of biological medicines across Europe and then provides concrete examples drawn from the experience of EuropaBio members. The final section describes in more detail the key EuropaBio recommendations for the procurement of biological medicines, including vaccines. 8

9 3. EU policy framework In February 2014, the EU adopted the legislative package on public procurement which aimed at an in-depth modernisation of public procurement in the EU. The objectives behind this package of legislations were two-fold: 1) an increase in the efficiency of public spending; and 2) supporting common societal goals through a better use of public procurement. Member States are expected to transpose the Directives by 18 April The new package, which applies to the procurement of goods, works and services, modernises and adds flexibility to previous rules dating back to It also allows for the inclusion of common societal goals in the procurement process, such as environmental protection, social responsibility, innovation, combating climate change, employment, public health and other social and environmental considerations. EuropaBio assessment EuropaBio members welcome the new directives on public procurement as they promise to simplify and modernise the existing rules. In particular, EuropaBio welcomes the following provisions of relevance for the public procurement of biological medicines: Simplification of procedures: The new Directive introduces a number of simplified rules and procedures, including an Innovation Partnership to fill innovation gaps in the market and a negotiated procedure without prior publication 2. The latter applies in case products are, for example, only supplied by one economic operator in order to ensure the protection of exclusive rights such as intellectual property rights. Updated award criteria: By clearly recommending the Most Economically Advantageous Tender (MEAT) criterion 3, public authorities are requested to place more emphasis on quality, environmental considerations and social aspects or innovation, in particular taking into account the price and life-cycle cost of what is procured. While until now the focus was placed on the lowest price criteria, with the reinforcement of the MEAT criteria in the new Directive the best value for money can be achieved by taking into account common societal goals. 9

10 Benefits for Small and Medium Size Enterprises: The revised rules facilitate the access of SMEs to public procurement, for instance by dividing contracts into lots and by reducing requirements for participation. Sound procedures and governance: Member States are asked to ensure that the procurement procedures are transparent and properly monitored, with an implementation report transmitted to the European Commission every three years. 10

11 4. Procurement of biological medicines: current practice 4.1. Introduction About biological medicines A biological medicine is a product whose active ingredient is a biological substance. The latter is material that is produced by or extracted from a biological source and that needs a combination of physico-chemical- and biological testing for its characterisation, quality determination, production process and production control. As biotechnologyderived medicines comprise proteins that would be digested and would never reach the site of action when taken orally, biological medicines are typically administered by injection or infusion. Biological medicines include products developed by DNA recombinant technology or antibody methods, vaccines and products derived from human blood and human plasma 4. Being produced by living systems, biotechnology-derived medicines are highly sensitive to minor changes in their physiological environment, thus meaning that their physicochemical and biological attributes are more variable than traditional small-molecule pharmaceuticals. This makes them more difficult to characterise and replicate. In turn, this also has implications in the way these products are procured, stored and dispensed to patients. One of the most common examples of biological medicines is vaccines. Vaccines are used to produce or improve immunity against a particular disease by inoculating killed or weakened disease-causing micro-organisms in the human body: in this way the production of antibodies is stimulated. Because of their nature, vaccines, as other biological products, require specific and careful handling at all stages. About biosimilars Three decades on after the first biological medicines were launched, exclusivity rights on the early biological medicines have begun to expire, paving the way for the introduction on the global market of off-patent versions of biologic medicines, i.e. biosimilars. The latter are developed to be similar to an existing biological medicine (the reference medicine ) and are marketed once the exclusive rights have expired 5. Biosimilars assessed by the EMA are approved if they have demonstrated similar quality, safety and efficacy as the reference medicine 6. However, their approval does not include any recommendation regarding their interchangeability or substitutability with the originator product they reference. Decisions of interchangeability and/or substitution rely on national competent authorities. Public procurement has been defined as buying pharmaceuticals by purchasers like public hospital associations on the basis of a often strictly defined tendering procedure with granting of the contract to the pharmaceutical company/importer who offered the best bid. 7 For the purpose of this White Paper, we will follow this definition. 11

12 Within Europe, many countries use public procurement for the provision of medicinal products and particularly in hospital settings. These procurement practices include both small chemical molecules and biological medicines 8. Because the organisation of national healthcare systems varies greatly across Member States, the practice of public procurement for medicines also differs considerably across national jurisdictions. Such practices range from largely public to largely private funding, with the UK National Health Service having the highest percentage of government funding, to countries such as Cyprus and Italy where many hospitals are receiving more substantial funding from the private sector. 12

13 4.2. Assessment criteria used in the EuropaBio review To evaluate the public procurement situation in Europe more easily, it is important to highlight some underlying trends. Based on its own research and analysis, EuropaBio has elaborated the following six assessment criteria: EuropaBio Assessment Criteria Available Attributes & Attributes Weight Best Practice Attributes Competition: sets out the degree to which the tender provided a single winner or multiple winners Single winner = 0 Multiple winners = 1 Multiple winners Access to multiple therapeutic solutions: determines whether, after the public procurement process is completed, patients have (or continue to have) access to multiple therapeutic choices or if (as a consequence of the award decision) they are restricted to the treatment offered by the winner of the tender Restricted = 0 Allowed = 1 Allowed Change of therapy for treated patients: reflects whether the affected patients already undergoing the treatment have it substituted after the public procurement process is completed or if they have the option of keeping with the same therapeutic plan Limited doctors discretion = 0 At doctors discretion = 1 At doctors discretion Interchangeability / assessment of therapeutic equivalence: assesses whether the procurement rules are based on interchangeability 9 or not, i.e. assesses if tenders acknowledge inherent differences among biological medicines or if they are arbitrarily grouped together regardless of whether an assessment of therapeutic equivalence exists Not mentioned = 0 Mentioned = 1 Mentioned 13

14 EuropaBio Assessment Criteria Available Attributes & Attributes Weight Best Practice Attributes Award criteria: takes into account the criteria used by the purchasing agency in evaluating and awarding the tender, including whether there was a narrow focus on best price/lowest costs or whether the procurement procedure takes into account multiple factors, including quality, capacity, credibility, etc. Price only = 0 Qualitative criteria and price = 1 Qualitative criteria and price Transparency: evaluates whether the process by which the public procurement was conducted was perceived as transparent Low = 0 Up to Standard = 1 Up to Standard The EuropaBio evaluation of the case studies included in Annex was conducted by applying the 6 criteria above. Case studies scoring 5/6 or above in the grid above were deemed welldesigned/well-implemented tenders and therefore labelled best practices. Case studies scoring between 4/6 and 5/6 were deemed good, but improvable, therefore labelled good practices. Case studies below 4/6 were deemed not well-designed/wellimplemented tenders and therefore labelled bad practices Types of public procurement of biological medicines Based on examples collected among EuropaBio and the assessment criteria identified above, three types of public procurement of biological medicines in Europe were identified: 1. Single winner-takes-all v. multiple winners, multiple choices; 2. Price-based evaluation v. value-based evaluation; 3. Cross-border joint procurement. Examples of countries are included at the end of each section. It should be noted that one country can fall within different types of public procurement. This complexity is illustrated in the section 4.4 related to Combination of types of public procurement. 14

15 Single winner-takes-all v. multiple winners, multiple choices The single winner-takes-all This represents the cases where the tenders result in a single winner and which consequently lead to a limited (single) treatment choice as well as treatment substitution of patients already on other therapies. There are circumstances where single winner leads to single choice of therapy for new patients but not to treatment substitution for existing patients. This is the case in Italy, where the country s law requires (for public health reasons) that treated patients are not switched to another therapy, thus ensuring continuity of treatment. An important consideration within this type is that the interchangeability of biological medicines is often not taken into account in the procurement. In one case of winnertakes-all such as in Hungary there is a clear consideration of the interchangeability of the biological medicines whereas in many recorded cases, the interchangeability (or lack thereof) was clearly neglected. The winner-takes-all type restricts choice and can lead to automatic substitution of therapies without consent from a physician. This practice has potential negative consequences for patient safety as it can lead to switching of medicines without a clear medical reason. It is inappropriate for biological medicines and may lead to potential negative health outcomes, or even adverse reactions, for patients. Ultimately, the public procurement of biological medicines should always foster physicians freedom of prescription choice by ensuring that a number of therapeutic options are available to appropriately treat patients. In this type of procurement, procurers become dependent on the single winner (and supplier); hence, vulnerable to potential shortages in medicines in case the single supplier experiences unexpected circumstances. The winner-takes-all type of tender can have direct impact on the market. By limiting the number of providers, it can impact competition and distort market efficiency. In addition, a single market provider increases the risk of shortages given the difficulty to manufacture biological medicines. The impact on market competition with this procurement type is particularly acute when it is coupled with so-called decentralised forms of tender organisation. In this sub-type, procurement practices may take the shape of (individual) negotiations between suppliers and local purchasing groups/hospitals, rather than competitive tenders. Arguably, in these (decentralised winner-takes-all) procurement sub-types the level of market competition is 15

16 significantly lower than in more centralised (competitive) winner-takes-all tenders. In cases of perceivably biased negotiations, this may even lead to potential suppliers pulling out of the competition. Ultimately, designing and organising tenders that enable free competition is crucial in order to maintain full participation of market players and therefore delivering the best available products to the patients. In a few cases, where multiple winners each dominate a certain portion of the market (when a tender is divided in lots), some patients are forced to switch treatment without prior decision from a physician. This is the case in some examples from Poland and the UK where each winner gains its own lot, leading to a re-shuffle in the number of patients per treatment in order to fulfil the quantity requirements. The European countries that broadly fall under this type are: Cyprus, Germany, Hungary, Netherlands, Poland, Spain and the UK. Multiple winners, multiple choices This type is defined by tenders that lead to multiple winners and thus offer patients and their physician s therapeutic choices. There is no clear pattern identifiable that interchangeability of biological medicines (or lack thereof) is taken into consideration within these types of tenders. The European countries that broadly fall under this type are: Croatia, Italy, Norway, Portugal, Slovenia and Spain Price-based evaluation v. value-based evaluation Price-based evaluation Price based evaluations are procurements that are evaluated and awarded on the sole criterion of the cheapest price. This type of tender is primarily used as a cost-containment tool and aimed at reducing the costs of a product. It does not take into account other potential evaluation factors such as quality or the reliability of supply. Price-based evaluation is more prevalent in single-winner-takes-all situations than in multiple-winners/multiple-choices situations. This is an understandable correlation considering that the procurer in this type aims to select the single cheapest provider. Only if two or more providers offer almost identical low prices, in some instances, the purchasing authority may consider other award criteria such as quality. 16

17 The price-based evaluation has a strong drawback: medication or vaccination is not selected based on patient s needs of various therapeutic options, quality of supplier and predictability of supply or its clinical attributes, but on its price tag. In addition, lowest price does not automatically imply best value for public money. The European countries that broadly fall under this type are: Cyprus, Denmark (to some extent), Germany, Hungary, Italy, Norway, Poland, Portugal, Slovenia and the UK. Value-based evaluation This type reflects procurements that are evaluated and awarded based on multiple criteria in addition to price. These criteria include quality, capacity, assurance, credibility of the supplier, and suitability of the product for the treatments, among others. This type of evaluation is preferred for biologics in particular over the simple price/cost-based evaluation for a number of reasons. Firstly there is a higher regard for the inherent complexities of biological medicines, including suitability of the medicine for the patient; secondly there is a stronger adherence to product labels and to clinical practice guidelines. Thirdly, while considering (life-cycle) costs instead of price it provides a more comprehensive cost-effectiveness analysis and allows for better estimation of the budget impact and therefore is more valuable for the procurer. The only caveat is when a value-based evaluation eventually leads to a single-winner-takes-all scenario, as this could restrict the options for the patient. In some cases, such as Denmark, while value-based evaluations are undertaken, price often remains the main final criteria for awarding a tender. The European countries that broadly fall under this type are: Denmark (to some extent), Ireland, Italy (to some extent), Spain and the UK. 17

18 4.4. Combinations of types of public procurement some illustrative examples To illustrate the types described above, two relevant examples will be presented in this section, integrating each of the main types. Detailed characteristics about the examples below are available in the annex of this report: A. Slovenia (centralised procurement, winner-takes-all, price/cost-evaluation) In 2014, the Slovenian Ministry of Health set out a public procurement for the supply of erythropoietin (a hormone that controls red blood cell production). The reasoning behind the tender was a reduction in costs of medicine spending as well as a reorganisation of procurements of medicines used in hospitals. The tender was centrally organised, designed, and evaluated by the scientific committee of the Ministry of Health. The evaluation criterion for the tender was price/cost. In this instance, both the reference product and its biosimilars compete for the same patients with the bidders bidding for predefined lots. With the best price winning the lot, the winner is granted the entire market and patients as well as physicians are confined to a single treatment choice. Existing patients treatments are changed in favour of the medicine of the winner of the tender. As such, any issues related to the possible lack of interchangeability were ignored. As the tenders of these lots take place every six months, it creates complex situations on treatment continuance and product traceability. The proceedings were deemed non-transparent due to their complexities and disregard for the different types of medicines. 18

19 This practice does not appear to take innovation into account, which is a fundamental issue for the biopharmaceutical sector, where certainty about the reward of innovation is a key element, particularly for the survival of SMEs. This practice does not appropriately account for patient s needs either. Potentially, this practice may lead to situations where patients under successful treatment are substituted at pharmacy level. B. Ireland (decentralised, multiple winners & multiple choices, value-based evaluation) In 2013, Ireland conducted a local procurement for the Supply of Filgrastim 30MU and 48MU solution or concentrate for injection. The reason for the tender was to reduce the spending on medicines by a hospital pharmacy. The evaluation of the proposals of the bidders was value-based, with a weighted assessment palette including a 40% weight on price, 30% on product quality, and 30% on product suitability to meet the needs identifed by the purchasing authority. The decentralised procurement featured a tender designed and awarded by the local hospital via its internal pharmacist (looking after tender design only) and the Haematologist and Pharmacy Business Manager (making final decision). The tender led to multiple winners, with the award distributed 70%, 20%, and 10% among the various winners. As such, patients had multiple choices to choose from for their treatment. Moreover, this ensured that patients were not forced to substitute their current treatment. Admittedly, the procurement was technically facilitated by the fact that the tender was for filgrastim molecules only, therefore the available suppliers licensed on the Irish market were also limited. However, this does necessarily imply that multiple-winners tenders cannot be successfully organised for other or broader therapeutic classes. 19

20 5. Cross-border joint procurement At a general level, cross-border joint procurement is the purchase of a good by two or more public purchasing authorities from different Member States through a joint call for tender. While today there is no experience with cross-border joint procurement in the EU, it may be possible that some Member States start using this instrument in the future. Medicines can be jointly purchased cross-border via two different legal mechanisms: Article 5 of the decision on cross-border health threats: originally, the mechanism was designed to address urgent needs associated with an emergency pandemic context (e.g. H1N1) where fast access and global availability to a specific medicinal product were critical constraints. The current Joint Procurement Agreement (JPA) allows for the tendering of countermeasures for communicable diseases 10. With regard to medicines, it is arguably limited to communicable diseases only; and EU (general or internal market) procurement rules: this mechanism already existed under the old public procurement rules, but has been simplified under the new rules to ensure that Member States can easily bundle tenders of simple products which do not require very technical specifications. As stated in recital 2 of Directive 2014/24/EU on public procurement, the new EU procurement rules were revised also in order to support the achievement of smart, sustainable and inclusive growth while ensuring the most efficient use of public funds. In general, principles applying to national public procurement of biological medicines should also apply to cross-border joint procurement but considering the multi-national aspect of this instrument, the following additional principles should be considered: The practice of forum shopping between jurisdictions should be regulated so as to respect national health policy objectives and to avoid detrimental effects on patient access and clinical outcomes. In cross-border procurement agreements under the EU general procurement rules, it is foreseeable that contracting authorities select the national jurisdiction that has the most favourable rules and procedures to achieve their objectives. Given that European healthcare systems are different in terms of health policy objectives and patient care delivery mechanisms, it is important that joint cross-border public procurement agreements take into consideration such diversity and lay ground rules on both the procurement objectives and the best applicable jurisdiction. 20

21 In circumstances where the EU plays a role in joint cross-border procurement, the principles regulating the competence area of Member States should be respected: subsidiarity and proportionality are fundamental principles which guarantee that action at EU level is justified in light of the national situations 11 and limited to what is necessary to achieve the objectives of the Treaties 12. It is important, for instance, that, when a JPA mechanism is used, Member States carefully assess whether this new purchasing practice distorts competition compared to existing practices and alternative purchasing mechanisms available in the country. If Member States have not experienced any difficulties in procuring medical countermeasures, the use of the JPA may in fact undermine otherwise functioning competition in the domestic market. In the context of the Decision on serious cross-border threats to health, serious public health issues should be addressed in a holistic way: joint cross-border public procurement alone cannot address public health issues and should be accompanied by other public health measures, such as prevention and health promotion programmes. In the case of vaccines, the lack of coordination of national immunisation programmes between countries and the lack of coverage within countries should be addressed first, to reduce inequalities of access to vaccination. Joint cross-border public procurement should not create a situation of European monopoly, and should create a level playing field for all potential providers. The experience with the joint purchase of vaccines 13 shows that market specificities (for example, small number of suppliers with limited volume and a high fixed cost of production) can lead to suppliers being pushed out of the market. Joint procurement should allow for multiple/ split winners to ensure fair competition and avoid negative impact on market structure. Access to joint cross-border public procurement should also be encouraged for innovative small and medium sized enterprises (SMEs) by, for example, avoiding the creation of unnecessary administrative requirements. 21

22 Regardless of the procedure, ultimately, it is of paramount importance that no cross-border joint procurement mechanism creates additional delays in the process of getting innovative treatments to patients. In case JPAs are initiated, it is crucial that the additional JPA procedures are integrated into the overall timelines for pricing and reimbursement of medicinal products, as mandated by EU and national laws, and do not unduly extend the amount of time patients have to wait before accessing medical treatment. 22

23 6. Key EuropaBio recommendations Based on both the examples collected by EuropaBio member companies in several countries from the European Economic Area (EEA) and the types defined in the previous chapter, some key recommendations for the appropriate procurement of biological medicines can be drawn for the benefit of future procurers and regulators. They are summarised below: Recommendation 1: Tenders should reflect patients needs and allow freedom of choice for doctors/patients, by ensuring that treatment options are not limited and decisions can always be made by a physician in consultation with patients. Two biological medicines are not identical: public procurement should take into consideration the diversity of therapeutic needs of patients. In order to ensure that procured medicines meet the needs of patients, any grouping of medicines in a potential tender lot, even more so when these are biological medicines, should only include products that are therapeutically equivalent. Physicians freedom of choice and accurate patient information should be promoted by tenders: The relationship between patient and healthcare professional is crucial for ensuring the best treatment/care decisions and health outcomes for each patient. All available therapeutic options should be discussed thoroughly and healthcare professionals should ensure that patients understand the options, relative benefits and risks. Public procurement used for the purchase of biological medicines should provide for a sufficiently broad choice of medicinal products: ideally a variety of medicines should be available for physicians and patients instead of a single medicine. Public procurement should foster this diversity of suppliers by ensuring the final allocation of contract is not limiting doctors/patients to one treatment choice. 23

24 Recommendation 2: Tenders should respect physicians prescribing authority as regards decisions to keep treated patients on current treatments The fact that biological medicines cannot be simply interchanged needs to be reflected in the design of public procurements. Ultimately, the public procurement of biological medicines should always foster physicians freedom of prescription choice. Treated patients should not be switched: it is important that public procurement does not lead to the unintended switch of a treated patient to another biological medicine during the course of his/her treatment. As such, winner-takes-all tenders should be avoided, so that treatment options are not limited and decisions can always be made by a physician in consultation with patients. Recommendation 3: The complexity of manufacturing biological medicines should be considered in procurement processes and sufficient lead times should be granted Public procurement should take into account the complexity of biological manufacturing and allow for sufficient stability and predictability: Biological processes are highly specialised and time-consuming. For example, in the case of vaccines and other biological medicines, time between reception of raw materials to final packaging and shipment can take from 3 months (e.g. proteinreplacement therapies) to 26 months (e.g. complex vaccines) depending on the complexity of the product. It is therefore paramount that tender contracts are sufficiently stable and accurately predict demand over a sufficiently long period of time in order to guarantee stable supply. Recommendation 4: Price should not be the only decision-making criterion Public procurement decisions should be based on a variety of criteria: the allocation of final contracts should not be based only on price or cost, but should take into account the overall value, such as the reliability of supply, characteristics of the products (for example the ease of route of administration or the value for patients and healthcare systems). The introduction of the concept of Most Economically Advantageous Tender (MEAT) criteria with best price/ quality ratio in the revised EU general public procurement rules is a first step toward the full inclusion of quality criteria in public procurement. Criteria such as environmental impact, social aspects, quality or technical merit among others should generally be considered when procuring biologics. 24

25 Recommendation 5: Public procurement should foster fair market competition and innovation Growth, competitiveness and innovation should be key political drivers underpinning public procurement practices: all national public procurement practices should support the long-term EU policy objective to foster innovation, growth and competitiveness (Europe 2020) by ensuring that innovation is valued and appropriately rewarded. Public procurement applied to biological medicines should be considered as a tool for fair competition to foster incentives for innovation and ensure sustainable market conditions: There needs to be a balance between short-term cost savings and longer-term incentives for innovation. In this context, the bundling of on- and offpatent biological medicines in a single tender should be avoided. Procurement of on-patent (or innovator) biological medicines should generally be made by way of the negotiated procedures. Preliminary discussions with the different bidders help ensure that the needs of purchasing authorities are met: purchasing authorities should engage with bidders in preliminary market discussions to better evaluate the potential offers. An early dialogue would also ensure that the purchasing authorities may access at the right time and place any potential commercially confidential information which they may later need to assess while reviewing the different offers. Finally, such a dialogue may help to assess the constraints on manufacturing and supply capacity for a tender this is especially true in the field of vaccination where the manufacturing process (and therefore lead times) can be particularly complex. Volume commitments from purchasing authority: purchasing authorities should provide guidance on the volume commitment as part of the tender announcement so that the manufacturer has a good understanding of what volumes are being asked by the purchasing authority over the tender duration. Fair and transparent competition between potential providers should be encouraged: calls for tender should be designed in such a way that they guarantee fair competition between all potential suppliers. Transparency, including of the definition of eligibility criteria and the decision-making process leading to the award decision, should be a critical feature of every tendering process. 25

26 7. Annexes Source: examples reported by EuropaBio members companies based on their experiences as bidders (anonymised as per EuropaBio antitrust rules and to respect commercial confidentiality). Table of contents Country where tender took place Tender Date Tender Scope EuropaBio Evaluation 1. Croatia 2014 Regional Best 2. Cyprus 2014 National Good 3. Denmark 2013 National Good 4. Germany 2014 National Bad 5. Hungary 2014 National Bad 6. Ireland 2013 Local/Hospital Best 7. Italy 2014 Regional Best 8. Netherlands 2014 National Bad 9 Norway 2014 National Bad 10. Poland 2014 Local/Hospital level Bad 11. Portugal 2012 National Bad 12. Slovenia 2014 National Bad 13. Spain 2013 / 2014 National and regional Bad 14. & 15. UK 2008 / 2009 Regional Bad 26

27 Legend Case Study Number Country Year National / Regional procurement Description Short description of some specific features of the tender at hand. EuropaBio assessment EuropaBio Assessment Criteria Available Attributes & Attributes Weight Competition: sets out the degree to which the tender provided a single winner or multiple winners Access to multiple therapeutic solutions: determines whether, after the public procurement process is completed, patients have (or continue to have) access to multiple therapeutic choices or if (as a consequence of the award decision) they are restricted to the treatment offered by the winner of the tender Change of therapy for treated patients: reflects whether the affected patients already undergoing the treatment have it substituted after the public procurement process is completed or if they have the option of keeping with the same therapeutic plan Interchangeability/assessment of therapeutic equivalence: assesses whether the procurement rules are based on interchangeability 9 or not, i.e. assesses if tenders acknowledge inherent differences among medicines small molecules or biological medicines or if they are arbitrarily grouped together regardless of whether an assessment of therapeutic equivalence exists Award criteria: takes into account the criteria used by the purchasing agency in evaluating and awarding the tender, including whether there was a narrow focus on best price/lowest costs or whether the procurement procedure takes into account multiple factors, including quality, capacity, credibility, etc. Transparency: evaluates whether the process by which the public procurement was conducted was perceived as transparent Single winner = 0 Multiple winners = 1 Restricted = 0 Allowed = 1 Limited doctors discretion = 0 At doctors discretion = 1 Not mentioned = 0 Mentioned = 1 Price only = 0 (or also price mainly ) Qualitative criteria and price = 1 Low = 0 Up to Standard = 1 EuropaBio evaluation Best practice 5/6 Good practice 4/6 Bad practice < 4/6 27

28 7.1. Case studies Case Study 1 Croatia 2014 Regional procurement Description This tender aimed at selecting a supplier for a variety of products, divided into different lots. As required by law, the procurement of biological medicines in Croatia is carried through an annual routine hospital tender. Led by a hospital tender commission, this regional procurement is split into different lots comprising different medicines. Generally, lots are specified by Anatomical Therapeutic Chemical (ATC) Classification System 14 and/or International Non-Proprietary Names (INN). In the case of originator biological medicines and their follow-on biosimilars, both products were separated into two lots specifying quantities for the originator medicines and for quantities for any new patients. For each lot, the winners are selected on the basis of a best price selection criterion. EuropaBio assessment EuropaBio Assessment Criteria Available Attributes & Attributes Weight Competition Multiple winners = 1 Access to multiple therapeutic solutions Allowed = 1 Change of therapy for treated patients At doctors discretion = 1 Interchangeability/assessment of therapeutic equivalence Not mentioned = 0 Award criteria Qualitative criteria and price = 1 Transparency Up to Standard = 1 EuropaBio evaluation Best practice 5/6 28

29 Case Study 2 Cyprus 2014 National procurement Description This tender aimed at selecting a supplier for biological medicines in the therapeutic areas of rheumatology, gastroenterology & dermatology for new patients. A second tender was issued for existing patients treated with biological medicines indicated for the same therapeutic areas. It was designed and run by the Pharmaceutical Services Unit and the Tender Committee of the Ministry of Health. EuropaBio assessment EuropaBio Assessment Criteria Available Attributes & Attributes Weight Competition Single winner = 0 Access to multiple therapeutic solutions Allowed = 1 Change of therapy for treated patients At doctors discretion = 1 Interchangeability/assessment of therapeutic equivalence Mentioned = 1 Award criteria Price only = 0 Transparency Up to Standard = 1 EuropaBio evaluation Good practice 4/6 Case Study 3 Denmark 2013 National procurement Description This tender aimed at selecting a supplier of healthcare products addressing anaemia. The tender was organised by AMGROS, the pharmaceutical procurement service for the five regional authorities in Denmark. The tender was primarily based on price, although other criteria (inherent quality, shelf-life, etc.) were also marginally considered. EuropaBio assessment EuropaBio Assessment Criteria Available Attributes & Attributes Weight Competition Multiple winners = 1 Access to multiple therapeutic solutions Allowed = 1 Change of therapy for treated patients At doctors discretion = 1 Interchangeability/assessment of therapeutic equivalence N/A Award criteria Price only = 0 Transparency Up to Standard = 1 EuropaBio evaluation Good practice 4/6 29

30 Case Study 4 Germany 2014 National procurement Description This tender aimed at selecting a supplier for some retail anti-inflammatory products. It was organised by Retail Sick Funds. Although sometimes framed as most economically advantageous tenders, the contracts were awarded just on price (even where factors such as supply reliability were used as entering criteria). Prescriptions are made by INN and the pharmacists provide the product provided by the tender winner, leading to potential treatment substitutions. EuropaBio assessment EuropaBio Assessment Criteria Available Attributes & Attributes Weight Competition Single winner = 0 Access to multiple therapeutic solutions Restricted = 0 Change of therapy for treated patients Interchangeability/assessment of therapeutic equivalence Limited doctors discretion = 0 N/A Award criteria Price only = 0 Transparency Up to Standard = 1 EuropaBio evaluation Bad practice 1/6 Case Study 5 Hungary 2014 National procurement Description This tender aimed at selecting a supplier for TNF inhibitor treatments. It was organised by the National Sick Fund in collaboration with the Ministry of Health and the Ministry of Finance. All products could compete but the single winner determined the medicine for new patients (or treatment substitution to those who did not receive the therapy in the past 12 months). Previously used treatments would therefore be scaled back. Switch was not allowed for this tender. EuropaBio assessment EuropaBio Assessment Criteria Available Attributes & Attributes Weight Competition Single winner = 0 Access to multiple therapeutic solutions Restricted = 0 Change of therapy for treated patients Limited doctors discretion = 0 Interchangeability/assessment of therapeutic equivalence Mentioned = 1 Award criteria Price only = 0 Transparency Up to Standard = 1 EuropaBio evaluation Bad practice 2/6 30

31 Case Study 6 Ireland 2013 Regional procurement Description This tender aimed at selecting a supplier for a biological molecule called a granulocyte colony-stimulating factor (G-CSF) and in various dosage. It was organised by the hospital pharmacy, in particular by the local Pharmacy Business Manager and the Haematologist. It was limited to G-CSF molecules at the time authorised only on the Irish market. The tender criteria were based on price, product quality, and product suitability. Furthermore, the tender was awarded to different bidders, based on splitting the business on a respective 70, 20, and 10 percent basis. There was no forced treatment substitution. EuropaBio assessment EuropaBio Assessment Criteria Available Attributes & Attributes Weight Competition Multiple winners = 1 Access to multiple therapeutic solutions Allowed = 1 Change of therapy for treated patients At doctors discretion = 1 Interchangeability/assessment of therapeutic equivalence Award criteria N/A Qualitative criteria and price = 1 EuropaBio evaluation Best practice 5/6 Transparency Up to Standard = 1 Case Study 7 Italy 2014 Regional procurement Description This tender aimed at selecting a supplier for a biological molecule called Erythropoietin (EPO). It was organised by a combination of regional payers, hospital pharmacists, and an appointed administrative director. It was split in two lots based on the status of the target population for the supplied product, i.e. on treated and off-treatment patients prior to the tender. In this tender, treated patients were allowed to stay with previous treatment. EuropaBio assessment EuropaBio Assessment Criteria Available Attributes & Attributes Weight Competition Multiple winners = 1 Access to multiple therapeutic solutions Allowed = 1 Change of therapy for treated patients At doctors discretion = 1 Interchangeability/assessment of therapeutic equivalence Mentioned = 1 Award criteria Qualitative criteria and price = 1 Transparency Up to Standard = 1 EuropaBio evaluation Best practice 6/6 31

32 Case Study 8 Netherlands 2014 National procurement Description This tender aimed at selecting a supplier for some respiratory medicines with inhaler device. It was set up by the healthcare insurers (HCIs) and open to multiple potential suppliers. The focus of the tender was lowering prices and led to a situation of winner takes all, which led to treatment substitution. As doctors and pharmacists were strongly guided by the HCIs to prescribe the preferred medicine, chronic COPD/Asthma patients were switched to another device by doctors prescription or by pharmacist dispensing behaviour while co-payment increased for patients seeking alternative treatments. EuropaBio assessment EuropaBio Assessment Criteria Available Attributes & Attributes Weight Competition Single winner = 0 Access to multiple therapeutic solutions Restricted = 0 Change of therapy for treated patients Interchangeability/assessment of therapeutic equivalence Limited doctors discretion = 0 Not mentioned = 0 EuropaBio evaluation Bad practice 1/6 Award criteria Price only = 0 Transparency Up to Standard = 1 Case Study 9 Norway 2014 National procurement Description This tender aimed at selecting a supplier for a range of medical products. It was organised by Norway s national tender organisation (LIS) in cooperation with regional health authorities. It sought to reduce prices on every tendered product except anti-inflammatory, multiple sclerosis and some cancer therapies. Although it did not recommend automatic substitution, in practice doctors are encouraged to follow the recommendations from the national authorities. EuropaBio assessment EuropaBio Assessment Criteria Available Attributes & Attributes Weight Competition Multiple winners = 1 Access to multiple therapeutic solutions Change of therapy for treated patients Interchangeability/assessment of therapeutic equivalence N/A Limited doctors discretion = 0 Not mentioned = 0 Award criteria Price only = 0 Transparency Up to Standard = 1 EuropaBio evaluation Bad practice 2/6 32

33 Case Study 10 Poland 2014 National procurement Description This tender aimed at selecting a single supplier of biological medicines treating rheumatoid arthritis and other inflammatory diseases. The tender originated from a specific request by the Ministry of Health to the Public Procurement Office. In general, in Poland public procurement is not centralised and each hospital sets out its own public tenders. The tender is evaluated on a price-criterion, leading to situation where a single winner takes all the market based on price. Regarding these particular biological medicines, the tenders are organised according to the Ministry of Health guidelines hospitals have to buy the less costly version of the medicine, leading to nonmedical switching of treatment. EuropaBio assessment EuropaBio Assessment Criteria Available Attributes & Attributes Weight Competition Single winner = 0 Access to multiple therapeutic solutions Allowed = 1 Change of therapy for treated patients Interchangeability/assessment of therapeutic equivalence Limited doctors discretion = 0 Not mentioned = 0 EuropaBio evaluation Bad practice 2/6 Award criteria Price only = 0 Transparency Up to Standard = 1 Case Study 11 Portugal 2012 National procurement Description This tender aimed at selecting a supplier for erythropoiesis-stimulating agents (ESAs). It was organised by the National Authority of Medicines and Health Products INFARMED and the centralised purchasing agency (SPMS). The tender grouped together the different ESAs into lots of medicines at ATC level 4 or higher. The three offers with the lowest prices were considered by the SPMS. The tender inappropriately grouped together different biologics into the same group, thereby ignoring product differences. There was potential for treatment substitution as hospital administrations mainly aim to buy what is included in national catalogue, which can change after tenders. It focused only on the price criterion rather than on the most economically advantageous criteria. EuropaBio assessment EuropaBio Assessment Criteria Available Attributes & Attributes Weight Competition Multiple winners = 1 Access to multiple therapeutic solutions Restricted = 0 Change of therapy for treated patients Interchangeability/assessment of therapeutic equivalence Limited doctors discretion = 0 Not mentioned = 0 EuropaBio evaluation Bad practice 2/6 Award criteria Price only = 0 Transparency Up to Standard = 1 33