Originator’s price in the context of the maximum permitted mark-up calculation

 The purpose of the new price regulation was to better reflect the actual set-up of distribution models of pharmaceutical firms and to remove interpretation uncertainty relating namely to the originator’s price in the context of the maximum permitted mark-up calculation.

In general, the originator will continue to be the holder of a registration decision, if the medicine is registered, or an importer or local producer if it is used as part of a specific medical programme. However, namely the newly defined another person introducing a registered medicine to the market is relevant to the pharmaceutical industry and medicinal product distributors. Under the new price regulation, it is a person “authorised for distribution activities introducing registered medicinal products that are produced in bulk to the market in the Czech Republic who is not in a position of a registration decision holder and does not supply the medicinal products to their registration decision holder“.

Pursuant to the new price regulation, the maximum mark-up will be determined as a percentage calculated based on the price actually applied by the originator or another person introducing a registered medicine to the market in the Czech Republic, denominated in CZK excluding VAT.

Discounts and bonuses in a distribution chain

Other news in the price regulation includes a specific provision focusing on discounts and bonuses. Under the price regulation, any financial performance “that is provided in connection with supply or may be connected with a specific supply of a paid medicine (…) if it is possible to clearly define and allocate the performance amount to a specific individual item on a tax document as of the date of taxable supply, irrespective of whether it is provided or received immediately after the taxable supply date or in another period“ should be reflected in the price of the medicine.

Inclusion of a specific provision regulating bonus schemes in the price regulation reflects the increased attention paid to this issue by the Ministry of Health in recent months. It was preceded by Minister’s instruction 13/2018 – Selected principles of transparent management of organisations managed directly by the Ministry of Health in purchasing goods and services issued in April 2018, defining the rules for accepting, treating and reporting bonuses and discounts by medical institutions managed directly by the Ministry of Health. The price regulation only adopts the principles of personalised bonuses expressed in the instruction.

Effective date of the new regulation

Although the regulation was published on 14 December 2018, it will come into effect as early as at the beginning of 2019. In this respect, pharmaceutical companies and medicine distributors will be under pressure as they are required to review their price models over the Christmas holidays in order to achieve compliance with the price regulation starting from 2019.