Regulation of drug prices II How are they regulated in Colombia?
By: Diana González-Bravo
Most of the countries of the European Union use a reference price system as a mechanism within their drug price regulation policy. Following this trend, for more than a decade Colombia has had a regulatory framework and tools to exercise better control of spending through the use of these policies.
As we previously addressed the issue of drug price regulation in Colombia, it is important to explain the basic concepts that support these policies.
Reference price (PREF)
To establish the reference price, the drugs must be grouped into subgroups, taking into account that they are of the same composition, concentration and pharmaceutical form (homogeneity). In Colombia it is considered that there is a homogeneous group of drugs with these 3 characteristics: composition, concentration and pharmaceutical form.
How is it calculated?
Through two alternative procedures:
- In the case of a homogeneous group, the reference price will be the median price of the drugs in the group
- If there is no homogeneity, the reference price will be taken based on the international reference price
In the first case, the unit price is calculated like this2:
- Unique Drug Codes (CUMs): Homogeneous drugs grouped together.
- The PREF calculation is made with commercial presentations that have reported sales to SISMED during the last year
- The unit price is determined (price per minimum unit of concentration) and will constitute the basis for comparison and calculation unit of the PREF
- Once the unit prices of all the presentations have been obtained, the median of the unit prices is calculated.
- The unit PREF is multiplied by the number of units that each commercial presentation has
To learn more about the regulation of drugs and medical devices in Colombia, do not miss the next entry in our blog.
–USEFUL CONCEPTS ON LAWS, CIRCULARS AND DECREES–
The legal framework of the Colombian Drug Price Policy is made up of three levels:
- Law: It is the main normative source of the Colombian Legal System, is issued by the Congress of the Republic (Legislative power). It is general and permanent in time.
- Decree: Decision issued by the Executive Power It is characterized by having a regulatory normative content, which is why it is considered in a hierarchy lower than the Law.
- Circular: Administrative Act, is considered as communication directed to superiors or inferiors transmitting instructions or decisions. It is characterized by being particular, since only forces the administrative bodies or officials to whom it is directed.
- Puig- Junoy, Jaume. Policies to promote price competition in the generic market: lessons from the European experience. Health Gazette. 2010. 24: (3) 194.
- Tobar Federico. International reference on drug price regulation policies. Final report of the Inter-administrative Agreement 292/197052 of the Ministry of Social Protection of the Republic of Colombia. November 24, 2011.