At the time of writing, pharmacies must be owned by a qualified pharmacist. However, the Ministry of Health has passed a new law allowing ownership of a pharmacy to have no constraints other than a maximum number of four pharmacies per owner, pending publication in the official Journal of the Portuguese Republic. It will still be mandatory to have a technical director with a degree in pharmaceutical sciences in each pharmacy. Pharmaceuticals that require prescription can only be sold in a pharmacy. In 2005 a major change occurred in the OTC market, as it has undergone a double liberalization: OTC products have to be registered with the regulatory institute for the pharmaceutical sector, INFARMED, and can now be sold in specialized stores, which no longer need to be pharmacies, and prices are no longer fixed. In addition to this, the location of pharmacies is still highly regulated. There are a maximum number of pharmacists permitted in each community. The Ministry of Health decides whether there is a need for a new pharmacy in an expanding residential area. In the first instance there must be proof of at least 4000 new clients, and there must be no other pharmacy within 200 metres of the proposed site. Thus, established pharmacists have a considerable degree of monopoly over the prescription drug market. Despite the changes that have occurred or have been announced by the Ministry of Health, there is as yet no change in the enforcing of demo-geographic constraints for the opening of new pharmacies.
There is currently a limited service within hospitals for dispensing prescriptions to outpatients. Only those pharmaceuticals which carry no coinsurance are allowed to be dispensed. The idea of extending pharmacy services in hospitals to allow direct sales by the NHS was debated within the Ministry of Health, and a Decree-Law was enacted in December 2006 establishing the possibility of retail pharmacies (open to the population) located in public hospitals being contracted out to private management. Similarly, in health centers only those vaccinations which are provided free of co-insurance are dispensed directly by the health centre. Otherwise, patients have to take their prescriptions to a private pharmacist, whether or not they receive the prescription from a NHS doctor in a health centre or from an outpatient department of a hospital.
Pharmaceutical co-insurance
Prescribed drugs are subject to variable patient co-insurance based on effectiveness criteria, with full payment required for those pharmaceuticals deemed to have little or no clinical value. Since 1992, there have been three categories of NHS co-insurance. Pensioners with a maximum annual income of up to 14 times the national minimum monthly wage are eligible for a lower level of co-insurance on pharmaceuticals, according to the Decree-Law 129/2005. Since 1999, some pharmaceuticals have been under periodic re-evaluation for efficacy patterns, resulting in the removal of nearly 100 products from the reimbursement list (see Table 6.1). Pharmaceuticals used by some highly vulnerable groups of patients are fully paid for by the NHS. The following therapeutic categories are fully covered:
In 1995 a new policy was introduced whereby private sector prescriptions were subject to cost sharing by the NHS (Decree-Law 272/95). The rationale of this reform was to reduce the number of private prescriptions being taken to PCCs to be repeated on a NHS prescription.
Regulation and control of pharmaceuticals
Since 1990, several legislative changes have resulted from the implementation of European Commission (EC) Directives, such as that to guarantee the quality and safety of pharmaceuticals. In addition, public information and education programmes on the rational use of pharmaceuticals were developed and cost containment policies were adopted. INFARMED was established in 1993.
Since 1994, its remit has been widened to cover not only pharmaceuticals, but also medical equipment and other medical products. INFARMED is responsible for approving all pharmaceuticals to be reimbursed by the NHS and for setting co-payment levels. It has introduced some cost–effectiveness measures into the pharmaceutical assessment procedures, and it can request cost–effectiveness studies to justify the reimbursement of new pharmaceuticals. In 1999 the Government issued official guidelines about how best to carry out
Cost–effectiveness studies. This initiative decisively increased the utilization of efficiency criteria in reimbursement decisions concerning pharmaceuticals. The guarantee system for the quality and safety of pharmaceuticals is a complex one and is not limited to the industrial process. Owing to the unique features of the pharmaceutical market, decisions are not made under normal market conditions. Pharmaceutical production is controlled by a strong system of regulation. The following authorities enforce the standards for the quality and safety of pharmaceuticals.
Pharmaceutical expenditure and policy
Portugal’s pharmaceutical expenditure (excluding hospital consumption) was approximately 2.1% of GDP in 2006, which was very high compared to other OECD countries. However, the country ranks lower in terms of pharmaceutical expenditure per capita, at 421 US$ PPP (OECD, 2006). There is a national formulary of pharmaceuticals, which is only used by NHS hospitals for inpatient prescriptions. This does not extend to PCCs or outpatient services. Guidelines on prescribing behaviour are issued to doctors, and directors of PCCs are encouraged to draw up local formularies. However, these measures are simply guidelines and are not mandatory. The lack of a national drug list for ambulatory care, together with the powerful influence exerted by the industry on doctors, could explain the high levels of expenditure on pharmaceuticals (as a proportion of GDP). Portugal has made attempts to control expenditure on pharmaceuticals through agreements with industry, but some have been unsuccessful. In 1997 al budget cap was introduced as a means of controlling cost. This was the result of a voluntary agreement between the Government and the pharmaceutical industry in which the industry agreed to pay back to the NHS 64.3% of any excess between 4% and 11% above the 1996 expenditure, creating a perverse incentive to inflate expenditure over the limit even further. By the middle of the first year of this initiative, growth in expenditure on pharmaceuticals was already up by 16%.
In 2001 and 2002, the dimensions of pharmaceutical packages were extensively revised, according to their routine usage, resulting in smaller packages of pharmaceuticals for short-term and intensive use and bigger ones for pharmaceuticals used by chronic patients (with a 3-month treatment standard duration). Increasing the use of generics has been one of the most relevant cost-control goals of pharmaceutical policy in Portugal. Alongside several public information campaigns about the advantages of generics, in 2000 the price of generics was lowered from 20% below the original product price to 35% below (until 2007). The reimbursement rate was also increased by 10% (until 2006) to provide a consumer incentive towards generics. In 2001, a law was passed stating that medical prescriptions should be prescribed according to the international common designation (ICD) or generic name, but allowing doctors to add the brand name. This rule applies only to pharmaceuticals with generics on the market, not those still under patent protection. In 2002, another important change was made: doctors’ prescriptions can be replaced with a cheaper generic by the pharmacist. To make such replacement possible the doctor has to fill in a special indication in the prescription form authorizing the generic, or leave it blank. All these progressive changes, and the setting up in Portugal of the largest generics companies, led to a big increase in the utilization of generics. The most updated data show that in February 2007 generics represented approximately 17% (in value) of all reimbursed pharmaceuticals (INFARMED, 2007).
Nevertheless, in 2002, there was an 8% increase in pharmaceutical expenditure, the same as in 2001. However, generics have only a 10% market share in terms of volume, probably because the regulations requiring generics to have prices 35% lower basically deterred entry into many active ingredient submarkets, particularly those with lower prices. Another aspect of pharmaceutical policy implemented is the use of reference pricing for pharmaceutical reimbursement. Since 1991 (Decree-Law 72/91) the price of pharmaceuticals has been established using an artificial price based on comparisons with other countries. An attempt was made in 1998 to introduce reference pricing and this was implemented in 2003. This system groups pharmaceuticals according to their active ingredients and sets a reference price for the group (often the average or lower-priced pharmaceutical in the group). The method is only to be applied to the products that have a generic formulation on the Portuguese market, leaving out the pharmaceuticals under patent protection. The reference price is set at the highest price of generics. A substantial reduction in prices of the brand name products without patent protection is expected by the Government, considering the previous experiences in other countries. The available evidence suggests that a considerable number of products had a price reduction.
The reference pricing system has since been adjusted several times, and can be adjusted every three months (Portela, Pinto, 2005). In February 2006 the Ministry of Health signed a protocol with the Association of Pharmaceutical Companies (APIFARMA, Associação Portuguesa da Indústria Farmacêutica) regarding the growth of expenditure on pharmaceutical products. The main objective of the protocol is containment of NHS pharmaceutical expenditure. Both ambulatory and hospital pharmaceutical markets are included in the protocol. It establishes ceilings for expenditure growth, involving the return of excess spending to the Government by the pharmaceutical companies if limits are exceeded. The protocol should be in place for the period 2006–2009. However, the administrative price reduction in pharmaceutical prices of 6% (in 2006 and 2007) renders the protocol less effective. Other recent changes in pharmaceutical policy have included (a) the administrative decrease by 6% of pharmaceutical prices for 2006 and 2007; (b) the change of administrative prices from fixed to maximum prices (allowing pharmacies to pass on to patients any discounts obtained at the wholesale level); and (c) the abolition of an extra reimbursement rate for generics that was created with the goal of stimulating the growth of generics, since that objective is considered to have been achieved. As of March 2007, the Government enacted new rulings related to the way prices of new pharmaceutical products are determined and established maximum (not fixed) prices. It is stated that pharmaceutical products sold in Portugal cannot have a price higher than the average of four reference-country prices (Spain, France, Italy and Greece). Until this new regulation, the price in the Portuguese market could not be higher than the minimum price of the same product in three reference countries (Spain, France and Italy). Pharmaceutical prices will be checked annually to ensure adherence to this new regulation.
Where the price of new generic pharmaceutical products is below ?10, it needs only to be 20% below the price of the corresponding brand name drug, in all presentations. Promotion of further generic pharmaceutical penetration into the market is the motivation behind the policy that sets a price reduction of 5% for generics with a market share in the range above 50% and below 60%; a 4% price reduction whenever the generics market share is in the range above 60% and below 70%; and a 3% price reduction in the cases where generics account for more than 70% of the market share (Portaria No. 300-A/2007). This policy has the aim of obtaining the largest gains when generics are more important. From a dynamic perspective, this introduces an incentive for companies to be more aggressive competitors, as generics gaining market share from brand name pharmaceuticals are “rewarded” with smaller price decreases.
 | From the HiT (Healthcare Systems in Transition) of Portugal (2007) [pdf, 1MB] | |
