2. International Pharmaceutical Federation (FIP) International Summit on Medicine Shortages

3. Reasons for medicines shortages WORKSHOP 1 – DEMAND (and ECONOMIC) REASONS EMA PAULINO (FACILITATOR)

4. Reasons for medicines shortages (120’) 1.Introduction to the workshop format (5’) 1.Introduction of participants (15’) 2.Introduction to the topic (5’) 3.Group discussion – Major categories - reasons and contributing factors (15’) 4.Small group discussions – Each category – reasons and contributing factors (40’) 5.Group discussion and workshop 1 wrap-up (40’)

5. International Summit on Medicines Shortages

7. PHARMACEUTICAL GROUP OF THE EUROPEAN UNION (PGEU) “The medicines supply chain is highly complex and its efficiency relies on the performance of each individual supply chain actor including raw material suppliers, manufacturers, wholesalers, community pharmacies and intermediaries. If there is a disruption at any point of the supply chain, shortages can occur.”

8. Reasons for Medicines Shortages - Demand CategoriesSub-categories Which medicines?

9. Reasons for Medicines Shortages - Demand CategoriesSub-categories Which medicines? Shifts in Demand – Population/Society 1. Emerging markets (increased demand, lower supply, increased incentive to manufacture; 2. Natural disasters/War (exceptional); 3. National Health Systems (government/3 rd party-payers vs out-of-pocket) 4. “Value of quality” – prices too low to support manufacturing – decrease innovation; 5. Harmonization Shifts in Demand – Supply Chain 1. Value in the system – payers and patients (low prices?); 2. Movement towards formularies and clinical guidelines (e.g. NICE); 3. Parallel trade (price differences) creates distortions; 4. Stockpiling (speculating/grey market); 5. Reference based pricing; 6. Cross-subsidization with non-drug products – artificially low prices; 7. New remuneration model for pharmacy

10. Reasons for Medicines Shortages - Demand CategoriesSub-categories Which medicines? Shifts in Demand – Health System 1. Tendering for sole source contracts (exclusion of other players in the market) – reduces alternatives, changes manufacturing priorities, changes country’s “standing” in priority of access; 2. Inadequate forecast of demand in payers contracts – pull resources from other lines to meet contractual obligations; 3. Clinical practice and guidelines changes (little time to meet demand), latest “clinical trials” – quick change by clinicians; 4. Integration or lack thereof of jurisdictional or health buying group policies; 5. Decisions on who must hold stock and for how long (community service obligation? / different intervention points /industry, wholesaler, purchaser?)

11. Solutions and recommendations for medicines shortages - Demand (180’) 1.Introduction to the workshop format (10’) 2.Summary of yesterdays’ groups discussions (10’) 3.Small group discussions – Each category – solutions and recommendations (60’) a)Solutions b)Recommendations (3-4) c)Prioritization 4.Group discussion and workshop 1 wrap-up (60’) a)Recommendations (6) b)Prioritization

17. Solutions and recommendations - Demand file://localhost/Users/emapaulino/Desktop/2013.06.20_Ma iling_Farmácias.pdf

18. Solutions and recommendations - Demand CategoriesSolutions Recommendations Shifts in Demand – Population/Society 1.Globalisation of GMP standards to minimize fragmentation (allows re- allocation) 2.Develop global critical medication list (include 2 API sources, 2 manufacturers) – value delivered by protection price (minimum cost per unit of issue) – shared risk 3.Pooled global risk and build manufacturing capacity redundancy – incentive programs

19. Solutions and recommendations - Demand CategoriesSolutions Recommendations Shifts in Demand – Health Systems 1.TENDER CONTRACTS 1.Multi-source contracts 2.Duration 3.Conditions of contracts clearly stipulated upfront 4.Knowledge on “other” evaluation criteria apart from price 2.FORECASTING 1.Understand “influencers” (market dynamics, historical accuracy) 2.Joint effort 3.CHANGES IN GUIDELINES 1.Structured/Planned/Global context 1.Multi-source contracts with contingency plans (criteria not solely on price) 1.Involve all stakeholders for more credible forecasts, based on reliable information

20. Solutions and recommendations - Demand CategoriesSolutions Recommendations Shifts in Demand – Health Systems 4.JURDISDICIONAL HEALTH BUYING GROUPS 1.Transparency 5.ESTABLISH SAFETY STOCKS 1.Clearly defined throughout whole chain 4.COMMUNICATION (HOW, WHAT) 1.Public, Health professionals 2.Intra/Inter Country 3.Document current practice – Share best practices – Develop best practice model – Implement global best practice model to deal with medicines shortages

21. Solutions and recommendations - Demand CategoriesSolutions Recommendations Shifts in Demand – Supply Chain 1.Identify critical/medically necessary (definition?) medicines and assure production 2.Do not treat medicines as commodities. Need a new model of purchasing (role of government) 3.Partner Governments and Industry to accurately forecast demand and capacity (minimize distortions) 4.Subsidize (Government) IF rational and necessary

22. Solutions and recommendations - Demand Recommendations Preamble: Medicines not commodities / Free market does not apply Short-term (quick fixes) vs Long-term (strategies) 1.To establish a critical medicines supply list (which may vary within countries/regions) – incentive programs may need to be in place; 2.To make information available to decision-makers, other stakeholders and the public, on a regular basis, on: a.medicines needs (includes tenders/requests for proposals/contracts) b.existing stock throughout the whole supply chain c.best practices (tendering, dealing with shortages, etc) - benchmarking 3.To more accurately forecast (short-term – tenders, and long-term – emerging economies) a.framework for forecasting b.contingency plans, be aware/take into account possible distortions 4.To attribute value to quality a.build capacity redundancy (within same company and/or pooled with other companies) b.new model for purchasing/incentivising stakeholders i.promote multi source contracts (at least 2 APIs and 2 manufacturing sites) ii.not solely based on price (include quality, multi-source,…) 5.To institute global standards on: a.manufacturing requirements (GMP) b.regulatory (inspections, product approval, reciprocal recognition systems)