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Hospital MedicinesHospital acquired drugs account for approximately 20-25% of global drug spend*
Typically dominated by injectable and high potency forms
Products are typically small volume, high unit value items
Often purchased via tender processes orchestrated by professional buyers
Often additional safety or usage considerations exist
*IMS, all available countries, 2009 sales value
Retail Channel Hospital Channel
Injectable Oral Other
Hospital Therapeutic ClassesGenerics represent approximately only 8-12% of the cost of hospital medicines*
However, IMS tends to over estimate generic prices
The hospital generics value pool is dominated by oncology and systemic anti-infectives**
UK hospital market 2009 IMS = €5.27B
Generic ~ 15%
UK tends to have lower brand prices and IMS tends to over estimate generic prices
*IMS Value, Q4 08 Euro/MNF - 17 EU Hospital Markets, **UK data IMS 2009
Generic Branded Unclassified
Types of Hospital Marketsfew annual/bi-annual tenders,
compliant/inflexible,transparent, efficient distributionNordics, UK, Netherlands,
many tenders (>150), reasonable compliance, transparency poor, influencers unclear,
pricing/ reimbursement complex, changing rules
France, Italy, Poland
hybrid regional tenders, hospital contracts and ‘spot’ business
Spain, Austria, Ireland, Portugal
No tenders, physician influence high (DE private sector/BE total), range important as bundling common
Germany, Belgium, Switzerland
Tender Longevity:
Supply periods vary by country from 2 weeks 4 years
most common 12 months,
calendar year cycle typical: i.e.
summer submission autumn adjudication winter start
Short tenders:
emergency tenders in UK/Netherlands/ Denmark, cover patent expiry until regular cycle
Retail tenders in Nordics, 3mths 2 weeks
Implications:
Supply chain difficulty (OOS common),
user/patient confusion,
increased work load for adjudicators (suit commodity products),
lower price pressure
Long tenders:
Spain: typically 3 years,
UK/Netherlands: often 2 years,
France: military 4 years
Implications:
helpful to supply chain,
higher price pressure,
difficult to estimate future COG movement
Notice period:Notice period varies from 1 day 6 months (i.e. adjudication to 1st supply)
most common 1-2 months,
Manufacturing lead times can be up to 6 months (API order delivery of final released product)
Short:
France/Portugal: just assume stock available
Sweden: Halland tender 2 weeks notice given in 2011
Implications:
If tender is large, can be very difficult to pre-empt without large risk of write offs
Working capital considerations
Stocking from previous session
Long:
Denmark: Oncology tender, notification in October 2011, first supply April 2012
Netherlands: IZDN notice October, first supply February
Implications:
For major tenders essential to give sufficient time for supply chains to respond
Losing company gets enough time to utilise stock on hand
Number and Frequency
Low number of tenders:
Denmark: single national tender (Kiwi like). 2+ supplier also ‘awarded’
No alternative product available if outage
High number of tenders
Poland: up to 200 per month
High workload
Other systems:
Portugal: listing, not award
Multiple awards, lack of clarity on demand
5/85/8
150+150+
450+450+
150+150+
1000+1000+0+0+13+13+
1/211/21
1313
11
88
Non price criteria:
Many tenders now require additional information as part of the assessment
In some markets these are weighted to build a final value (not cost) based assessment
Contamination
Denmark: 25% of assessment weight
Presentation Range
UK: common to exclude if not all available
Sweden: reduced range = reduced score
Stability data
UK/Italy/Austria/Germany/Ireland: require some additional post reconstitution/ dilution data
Denmark: Amgros initiated a consultation in Oct. Sweden: in scoring
Supply performance
UK/Sweden can be an exclusion criteria
Formulation
UK/Portugal/Netherlands: dual/triple awards
Sweden: reduced score for powder vs solution
Environmental
Sweden: exclusion assessments made on environmental impact statements/reduction programs
Romania: recently required demonstration of ISO140001/18001 program
Artwork
Denmark: Safe artwork design now makes up 15% of the assessment
UK: can be an exclusion criteria
COMPANY NAME
FULFILS ALL TENDER DEMANDS
PRACTICAL HANDLING
MIX-UP RISK
CONTAMINATION RISK
INFORMATION
ENVIRONMENTAL
MAX
20
15
10
5
5
COMP 1
YES
15
15
8
0
5
COMP 2
YES
15
15
10
4
0
COMP 3
YES
10
15
8
3
5
COMP 4
YES
10
6
8
3
5
COMP 5
YES
15
15
8
4
5
PHAR
MAC
EUTI
CAL
ADEQ
UAC
Y
TOTAL PRICE OFFER 785,984 1,142,674 1,198,200 1,399,000 1,016,269
TOTAL
% NOT ACHIEVED
WEIGHT FACTOR
NEW PRICE
RANKING
2x
4311.4%
22.8%
965,637
1
4410.5%
21%
1,382,091
3
4113.3%
26.6%
1,517,720
4
3221.9%
43.8%
2,011,895
5
477.6%
15.2%
1,171,129
2
MO
DIF
ICAT
ION
Stockholm tenderNB: Prices in SKR
Skåne TenderCOMPANY NAME
Stability Data
Compatability Data
Range
Special Equipment
Inspection
Methotrexate,Cytarabine, 5FU,
Paclitaxel,Epirubicin,
Carboplatin,Topotecan
4,800
4,880
4,880
4,880
4,880
Gemcitabine, lipo-doxorubicin, oxaliplatin, Irinotecan
12,500
12,500
12,500
12,500
12,500
Fludarabine, Vincristine, Vinorelbine,Doxorubicin
Cisplatin
3,000
3,000
3,000
3,000
3,000
Missing Bar code OR VNR
Missing Barcode AND VNR
Clear readable label
Sheathing
Powder vs Solution
8,000
16,500
16,500
7,300
7,300
25,000
49,500
49,500
30,000
30,000
3,500
7,500
7,500
4,500
4,500
PRACTICAL HANDLING
MIX-UP RISK
CONTAMINATION RISK
INFORMATION
ENVIRONMENTAL
Security information
Extravasation information
5,400
5,400
15,000
15,000
2,000
2,000
Emetogenicity information 5,400 15,0002,000
Patient information
Environmental information
5,400
5,400
15,000
15,000
2,000
2,000
PVC present 11,000 21,0001,000
TOTAL 110,000 330,00050,000
NB: Prices in SKR
COMPANY NAME
PRESENTATION 1
PRICE RANKING: 45% OF TOTAL
PHARMACEUTICAL BROCHURE
STABILITY DATA, OFFICIALLY ACCEPTABLE
PACKAGING
VIAL AND FLIP OFF TOP
STRENGTH AND FORMS
PORTFOLIO
TECHNICAL RANKING: 55% OF TOTAL
COMP 1
€10.00
2VERY GOOD
24H OFFICIAL28 D UNOFFICIAL
VERY GOOD
VERY BAD
POOR
5
COMP 2
€8.80
5GOOD
35 D OFFICIALLY
GOOD
EXCELLENT
+2G
2
COMP 3
€10.90
4
GOOD
GOOD
5
COMP 4
€13.00
6
SOLUTION SOON
MEDIUM
3
COMP 5
€9.00
1
8
PRESENTATION 2 €32.00 €44.00 €39.90 €40.00 €30.00
CALCULATED SCORE
FINAL RANKING
3.65
2
3.35
1
4.55
5
4.35
4
4.85
7
COMP 6
€12.00
3
6
COMP 7
€12.00
8VERY GOOD
EXCELLENT
EXCELLENT
1
COMP 8
€13.40
7
35 D OFFICIAL
EXCELLENT
POOR
4
€38.00 €60.00 €45.00
4.65
6
4.15
3
5.35
8
French example
NB: French Army Tender: not all French tenders the same
Other tender features:
There are a broad range of other tender features that procurement systems set differently
Often the unintended consequences are not understood
Minimum Shelf life:
Ukraine: require 80% of shelf life remaining
Malta: 5/6ths shelf life remaining
France: >3months remaining is OK
Samples:
Spain/Malta: require local finished stock
UK: flexible, will take other country stock, or nude vials + artwork
Payment terms
Italy: average >6months,
Spain: regional but worst region >600days!
Germany: <30 days
Bar codes
Sweden: required soon but scored now on vial. Denmark: required from 2012
France/Serbia/Turkey/Italy/Belgium : Mass serialisation required on carton
Supply times
West EU: mostly individual hospital orders on a monthly cycle
Bulgaria/Cyprus/Lithuania/Malta: often supply is in quarterly or half year drops
CSR
UK: green supply chain initiatives
Ideal system
Medium length
Regional, not national or individual hospital
Multiple suppliers, not monopoly award
Consistent volumes i.e. not price listing
Samples from other countries or electronic versions acceptable
Notice period in keeping with lead times
Consistent and transparent weighting on non-price attributes
Reasonable payment terms
Set shelf life remaining not % remaining
UK Report card
Cautionary tale
Procurement predominantly through group purchase organisations (GPOs)
Bundling often evident with loss leading on some common products
Product often unique to market
Stock dumping common shortly after multi-market supply starts
Limited number of ‘deep pocket’ players remain
High volume + limited number of remaining players = high likelihood of shortages
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