Italy To Consult On Pricing Transparency Requirements

Draft guidelines due out for consultation this week in Italy are expected to shed more light on what companies will have to reveal during pricing and reimbursement negotiations.

Italy looks for more transparency on medicine pricing

Pharmaceutical companies should this week learn whether they will be expected to reveal confidential pricing arrangements agreed in other countries when seeking reimbursement for new drugs in Italy. The Italian medicines agency and pricing and reimbursement body, AIFA, is due to consult on a draft decree that sets out guidelines on how changes to the pricing and reimbursement system will work in practice.

Changes to Italy’s pricing and reimbursement system were outlined in an earlier decree that was signed by ministers in August 2019 and published in the Official Gazette in July 2020. The overarching goal of the decree was to reduce expenditure and cut the cost of medicines.

The decree formally shifts the pricing and reimbursement system to one where companies must demonstrate that their new product offers added therapeutic value over existing therapies. (Also see "Italy: Added Benefit Will Be Key To Reimbursement" - Pink Sheet, 17 Oct, 2019.)

It also forces a greater degree of transparency on companies and obliges them to reveal the public subsidies they have received for developing products that are under review for reimbursement by the national health system. (Also see "New Italian Pricing Decree To Drive R&D Transparency" - Pink Sheet, 18 Oct, 2019.) 

However, many details on how the changes are to be enacted were lacking from the decree published in July. A forthcoming decree containing guidelines on how the new rules will work in practice aims to remedy this. The draft decree is expected to be published for consultation on 16 September.

Confidentiality

The decree published in July requires that companies seeking reimbursement for a product provide information on sales data and marketing costs in Italy as well as information on prices of the product in other countries.

However, it fails to specify whether confidential contracts must be disclosed, according to Roberto Cursano, a partner who leads the Italian Pharmaceuticals & Healthcare Department at law firm Baker McKenzie “We expect that the new decree will shed more light on the economic data that will be requested by AIFA in the negotiation process,” he said.

There could be big ramifications for companies if they are forced to disclose pricing agreements inked in other markets. It is common practice for companies to offer discounts on list prices, but they insist on confidentiality to prevent other markets referencing these lower, discounted prices, said Cursano.

It will therefore be important for pharmaceutical companies to take part in the consultation, said Cursano. “The content of the decree is already unfavorable to companies … this consultation in my opinion could only be an opportunity for companies to try to somehow mitigate the very strong obligations imposed by the decree,” he said.

Cursano also believes that other EU member states will follow Italy and demand more transparency on pricing from pharmaceutical companies. “This is something inevitable,” he said.

Indeed, the Valletta group, made up of 10 countries, including Italy and Spain, two of Europe’s biggest markets, has been calling for a “paradigm shift” in pricing transparency. (Also see "EU Valletta Alliance Ups The Ante On Drug Pricing Transparency " - Pink Sheet, 24 Jul, 2019.)

It is very difficult for companies to prepare for such disclosures and if companies are forced to reveal details of confidential agreements, they may stop offering rebates and discounts altogether, warned Cursano.

According to Riccardo Ovidi, an associate at Baker McKenzie in Italy, the forthcoming draft decree is also expected to contain more information on the method for assessing therapeutic value. In particular, it will provide more detail about how companies are expected to demonstrate added therapeutic value and about the products that should be used in comparisons.

The consultation is expected to close on 30 September and AIFA is expected to publish a new decree detailing final guidelines in October.

The first decree was published in the Official Gazette on 24 July and is not enforceable until the subsequent decree is published. Meanwhile, prior legislation, Determination No. 3/2001 of the Inter-ministerial Committee for Economic Planning, will remain in place.