Saudi Arabia Rolls Out New Pricing Guidelines

PRICENTRIC BRIEF:

• On January 14, 2021, the Kingdom of Saudi Arabia introduced new pricing policy, updating guidelines for determining the prices of medicines and reorganizing the Kingdom’s reference basket
• The Kingdom’s updated reference basket now includes Australia, Austria, Belgium, Brazil, Canada, France, Hungary, Ireland, Italy, Japan, Jordan, Lebanon, Netherlands, Portugal, South Africa, South Korea, Sweden, Switzerland, the United Arab Emirates (UAE), and the United Kingdom
• According to EVERSANA Data Analyst Aatiqah Thanvi, “As part of their 2030 reforms, [Saudi Arabia] has introduced flexible pricing measures which make the market more appealing for companies to launch in Saudi Arabia first. They are allowing companies more flexibility in terms of price, which was never the case. Pricing mechanisms such as risk-sharing agreements are now being widely used, advantaging orphan drugs (e.g. fast-track process but also price premiums). More importantly, they are becoming the literal king in the region, as they are becoming more HTA-focused (budget-impact, cost-effectiveness models used to establish price). Saudi even has an informal cost-effectiveness threshold”

THE DETAILS

RIYADH, Saudi Arabia – The Kingdom of Saudi Arabia (KSA) has introduced new pricing policy, updating guidelines for determining the prices of medicines and reorganizing the Kingdom’s reference basket.

These changes took effect on January 14, 2021.

In regard to reference pricing (IRP), Saudi Arabia has shrunk its basket from 30 countries to 20, removing Algeria, Argentina, Bahrain, Cyprus, Denmark, Egypt, Germany, Greece, Kuwait, New Zealand, Oman, Spain and Turkey, and adding Brazil, Austria, South Africa. The Kingdom’s updated reference basket now includes Australia, Austria, Belgium, Brazil, Canada, France, Hungary, Ireland, Italy, Japan, Jordan, Lebanon, Netherlands, Portugal, South Africa, South Korea, Sweden, Switzerland, the United Arab Emirates (UAE), and the United Kingdom.

Of note, Saudi Arabia may review its reference basket on a case-by-case or per-product basis and could pick a country where the product has been launched that is not included in the basket.

When it comes to pricing innovative drugs, the Saudi Food and Drug Administration (SFDA) can pursue either following the company’s proposed export price, which will most certainly lead to negotiations and could result in a reduced price, or clinical comparison studies and pharmacological economics with registered therapeutic alternatives, as long as the price of the therapeutic alternative does not exceed the equivalent, neither in Saudi Arabia or its reference countries.

For the latter option the pricing committee can pursue, budget impact models are crucial for achieving a higher price against therapeutic alternatives.

If a therapeutic alternative is not available or registered in Saudi Arabia, the Kingdom will look at the product price based on weight in countries where it is marketed, and the committee will consider the use of economic models (health technology assessment; HTA) to support a high price.

These pricing rule changes extend to combination preparations, as well as generics and biosimilars. For combinations, the price should not exceed that of the price of the first preparation including add-ons.

The prices of first generics and biosimilars have been set with a mandated discount that applies for subsequent products as well.

For generics, the price of the innovator and all concentrations and packages will be reduced by 25% upon the advent of the first generic product. The first generic cannot exceed 70% of the price of the innovator, whereas the second will be priced at 65% and the third 60% of that price.

For biosimilars, the innovator – again, all concentrations and packages – will be reduced by 20% upon the advent of biosimilar competition. Similarly to generics, the first biosimilar’s price cannot exceed 75% of the registered price of the reference product before the mandated reduction, and the prices of the second and third biosimilars, should be 65% and 55% of that price, respectively.

Price reviews can occur every two years if the medicine is “expensive,” and companies can request a new price if their drug is registered if prices change elsewhere, in the country of origin or where it’s marketed, or the company can justify a price change.

According to an experienced local Saudi healthcare access and pricing expert interviewed by EVERSANA, “With the present guidelines, SFDA has oriented its decision making towards more value-based assessment, without unlocking fully from the IRP system. Main changes include the engagement of health economic studies and anchoring to local comparators, whereas the reference list was reduced to 20 countries.

“Other innovative clauses favor early registrations in Saudi Arabia within the global submission plans of the industry, and also favor orphan and innovative medicines through a fairer pricing mechanism. SFDA certainly did not neglect increasing budget savings by presenting clauses that (1) endorse local manufacturing, (2) augment the brand price decrease after first generic entry, and (3) include new repricing mechanisms.

“With the present guidelines, and understanding the impact of the Saudi pricing on MENA and beyond, SFDA is sending a message that KSA is holding a strong position as an influential global player in the healthcare and pharma industry; better said, as ‘Price Makers instead of Price Takers,'” concluded the expert.

EVERSANA Data Analyst Aatiqah Thanvi added, “Saudi has finally excluded countries such as Egypt, Turkey, and Argentina in their reference basket, which have caused extreme downward price impact. But one should not forget: Saudi, as a country, is very informal and, therefore, upon establishing the list price, they may look outside the reference basket on a case-by-case basis.”

Thanvi further stated, “As part of their 2030 reforms, they have introduced flexible pricing measures which make the market more appealing for companies to launch in Saudi Arabia first. They are allowing companies more flexibility in terms of price, which was never the case. Pricing mechanisms such as risk-sharing agreements are now being widely used, advantaging orphan drugs (e.g. fast-track process but also price premiums). More importantly, they are becoming the literal king in the region, as they are becoming more HTA-focused (budget-impact, cost-effectiveness models used to establish price). Saudi even has an informal cost-effectiveness threshold.”