The Office of the Auditor General of the Republic announces that the Special Report on "Audit of the Health Insurance Agency" prepared by the Office of the Auditor General has been posted today on the Office's website.
Under the "microscope" of the Audit Office was put the process of drawing up the List Z of the OAS, which includes inpatient consumables and their reimbursement costs, the legality of the participation of the OAS in it, as well as the process for determining the prices of drugs in Phase 1 of the GHS (outpatient services), which includes the reimbursement costs of these drugs, and the Contributions/Supplements for each drug.
The Audit Office characterizes the procedure followed by the OAI for the establishment of List G as completely undocumented and non-transparent, which makes it unacceptable.
In fact, it states that the Agency could have secured lower prices for the items on the list in question, for the benefit of its policyholders, while maintaining the desired levels of quality.
In addition, it is stated that there was a delay in the inclusion of innovative medicines in the list of medicines reimbursed by the Agency, which are being handled/approved by the Names Claims Committee (NCC) until their inclusion. It notes that the delay seems to favour the pharmaceutical companies since, as the Agency itself informed, they are delayed in coming back with revised proposals
Also, the Memorandum of Understanding signed between the Agency and the Marketing Authorisation Holders and/or Suppliers of Pharmaceutical Products seems to be in the interests of the suppliers. As stated in the report, the MOU includes provisions that lock in the prices of pharmaceutical products for 12 months, and set limits/barriers to reducing the price of an existing product during the 12 months, or listing a new one at a price lower than the cheapest. They thus prevent any competition that might exist to the benefit of the GHS and its insured, both in terms of cost reduction and the inclusion of new generic medicines in the list under consideration.
It is worth noting that at the end of each finding/recommendation of this Report, the position/comments of the GAO on these are summarised with the corresponding comments of the Audit Office, and in Annex 3 the response of the GAO with its comments/opinions on the Report, which was sent to the GAO prior to its publication, is reproduced in full.
YOU CAN VIEW THE FULL REPORT HERE
The major findings of the audit are summarized below:
A. Bb][C][D]
- [*]While the procedures for establishing lists of medical devices and sanitary products, including List G, the cost or part of the cost of which is covered by the OAI, are defined in the 2019 Internal Regulations of the General Health System and until their issuance, the Agency issues circulars for each applicable practice for the information of stakeholders, for the matter under consideration, the Agency has already implemented a practice for which the relevant circulars have not only not been issued within a reasonable period of time, but until the preparation of this Report, neither circulars nor the relevant Regulations have been submitted to us.
What did the EY recommend: We recommended that the Agency should prepare as soon as possible the required relevant Regulations, Decisions and Circulars, in order to safeguard the interests of the Agency as well as the legality and transparency of its relevant actions.
- The Agency, through a more rational and structured procedure characterised by the element of transparency and healthy competition, on the basis of examples from other countries to which it has itself referred us, and with more timely action, could secure lower prices for the items on the list in question, for the benefit of its policyholders, while at the same time maintaining the desired levels of quality.
What did EY recommend: We recommended that, in the event that it is confirmed that the procedure for drawing up the list in question does not fall within the scope of the Regulation of Public Procurement Procedures and Related Matters Law No. 73(I)/2016 and, consequently, it is not required to conduct tenders under the aforementioned Law for the award of the relevant contracts, the negotiations should be conducted within the framework of a defined procedure which is in line with the basic principles governing the public procurement procedure.
- The extremely tight time-frame given by the Agency for the price-fixing procedure for the list in question, only five days, of which only three were working days since there was a weekend, was insufficient for the completion of such a complex procedure, even when compared with the procedure followed in other European countries to which the OAY itself referred us. The Agency's invocation of the pressing timetable cannot be an excuse, since the second and final phase of the implementation of the GHS, which included, inter alia, inpatient health care, was defined from the start of the GHS and, therefore, the delay seems to be the fault of the Agency itself.
What did the EY recommend: We recommended that the Agency, when reviewing List G, should act in a timely manner so that it has the necessary time to achieve the best possible results, to the benefit of all parties involved and of its budget, which, being global, is affected by every action of the Agency.
- On the basis of the information/documents provided to us by the Agency, the procedure followed for drawing up List G, when compared to what other European countries, which the Agency itself refers to, apply, is, in our view, completely undocumented and non-transparent, which makes it unacceptable.
What the EY recommended: We recommended that the Agency study the possibility of setting up a special committee, which would operate on the model of other European countries, involving experts - depending on the subject matter from outside OAI, as independent members, and which would act as an evaluation committee both for existing consumables on List G and for new requests for inclusion of new consumables, negotiate prices and the type of contract to be signed as appropriate, and, proceed to the submission of complete
- Whereas in the OAI's Catalogue G of other European countries, to which the OAI itself referred us, the medical devices, which are excluded from inclusion in the closed consolidated hospital bill of the respective medical act (DRG) and reimbursed additionally and separately, refer to highly specialised devices, innovative and very high cost products, in order to support innovation and accelerate the adoption of new technologies and the supply of optimised products, the OAI's List G includes several common/usual products, the cost of which starts from very low levels, with the cheapest being as low as EUR 23. SPECIAL REPORT OAY/02/2022 3
What EY recommended: We recommended that the Agency, when reviewing List G, should thoroughly consider, through a structured process, limiting the products included in it to highly specialised, innovative and very high cost products, so as to achieve the above objectives that such lists aim to achieve in other national health systems, while reducing costs through transparent centralised purchasing procedures for all participating health care providers.
- The Agency's position that it is not responsible for monitoring the unfair methods that suppliers may use in order to promote the use of their own products cannot be accepted since, as the Agency responsible for handling the SHI funds paid by the insured persons, it must monitor and ensure that its actions and decisions deter the occurrence of such phenomena.
What the EY recommended: We recommended that the Agency put in place appropriate safeguards to prevent/deter but also to diagnose and take appropriate corrective action in cases where unfair methods, which suppliers may engage in to promote their own products, are identified, with a process as clearly articulated as possible, with clear roles and responsibilities of those involved, with transparency and ex ante determination of measures/actions in cases where a fraudulent attempt and/or exploitation of the internet is identified
B. Procurement of medicines in Phase 1 of the GHS
- On the basis of the information submitted to us by the Agency, it does not appear that the prices of the medicines in question were negotiated, but that the prices were based on the Maximum Wholesale Prices (MRLs) of the medicines, with additional storage/handling charges, and discounts calculated in order to maintain the last corresponding total expenditure before the implementation of the GHS.
The above procedure does not ensure that the lowest possible prices have been secured for the benefit of the Agency's global budget and, by extension, its policyholders, given that the MFIs were setting retail prices and, by extension, the total cost of out-of-pocket drug costs in the private sector in the pre-GSF period, and that these costs constituted approximately 50% of the total out-of-pocket drug costs for private and public sector beneficiaries, with private sector beneficiaries being only 20% of the total population.
The above is confirmed by the increase in the total cost of procurement of Phase 1 drugs in the post-GESY period, compared to that of the pre-GESY period in the year 2018, of 16.5% and 21% , for the years 2021 and 2022 respectively, rates which are high, if it is taken into account that the cost of the OAS does not include the cost of the contribution paid by insured persons in the event that they do not choose the cheapest medicine from the category of medicines prescribed to them.
What the EY recommended: We recommended that the Agency establish processes that focus on patient-centred free access to pharmaceutical products, but at the same time ensure that medicines are secured through transparent and competitive processes, where possible, between medicines that provide equivalent treatments, and through sharing experiences and developing common strategies based on best practice with other national health systems management authorities.
- The Memorandum of Understanding signed between the Agency and Marketing Authorisation Holders and/or Pharmaceutical Suppliers includes provisions which lock in the prices of pharmaceutical products for 12 months, and set limits/barriers to reducing the price of an existing product during the 12 months, or listing a new product at a price lower than the cheapest. These provisions are, in our view, heterogeneous in that they safeguard the interests of suppliers by ensuring stable prices for 12 months, while preventing any competition that might exist for the benefit of the GHS and its policyholders, both in terms of cost reduction and the inclusion of new generic medicines in the list in question.
What the EY recommended: We recommended that the Agency, when reviewing the list under review, based also on the practices of other countries/national health system management authorities and other relevant stakeholders, negotiate to improve the above terms of the MOU to be consistent with the intended objectives of keeping as many drugs as possible on the market and promoting competition among suppliers for the benefit of the GHS and its insured.
- We noted a delay in the inclusion of innovative drugs in the reported list of drugs reimbursed by the Agency, which until their inclusion are handled/approved by the Names Claims Committee (NCC). The delay seems to favour pharmaceutical companies since, as the Agency itself has informed us, they are delayed in coming back with revised proposals after the initial proposal submitted to them by the Agency in the context of the updating of the protocols by the Pharmaceutical Advisory Committee (PAC). This applies mainly to products which are already used by a large number of patients, since companies are not prepared to offer significant discounts or to give the possibility of obtaining prices which compare favourably with SPECIAL REPORT OAY/02/2022 5 We note that, pursuant to Article 35(3) of the General Health System Law No.89(I)/2001, the Agency is obliged to notify the applicant for inclusion of a medicinal product in the list of medicinal products of the decision of its Board of Directors within 90 days from the date of submission of the application.
What the EC recommended: We recommended that the Agency should expedite the review of the protocols for medicinal products, where necessary, to include innovative medicinal products in the list, based on practices used by countries with much greater experience in implementing national health plans, and that it should also study the existing relevant European Regulations in order to identify the possibility of cooperating with other Member States on the above issue, with a view to expediting the procedures. At the end of each finding/recommendation in this Report, the position/comments of the OAI on these are summarized with the corresponding comments of our Office, and Annex 3 contains the reply of the OAI with its comments/opinions on our Report, which was sent to the OAI prior to its publication, in full.
Contents of this article including associated images are belongs Cyprus Times
Views & opinions expressed are those of the author and/or Cyprus Times
Source- [*]While the procedures for establishing lists of medical devices and sanitary products, including List G, the cost or part of the cost of which is covered by the OAI, are defined in the 2019 Internal Regulations of the General Health System and until their issuance, the Agency issues circulars for each applicable practice for the information of stakeholders, for the matter under consideration, the Agency has already implemented a practice for which the relevant circulars have not only not been issued within a reasonable period of time, but until the preparation of this Report, neither circulars nor the relevant Regulations have been submitted to us.
