Netherlands new IRP rule to come into effect 1st October 2020

By Musa Kureshy, Business Development Manager

The impact of COVID-19 has been felt by every country and industry and the Netherlands was no exception. COVID-19 impactied drug manufacturing in China leading to it coming to a stand still and India implemented export restrictions on medicines to prevent a shortage domestically. This essentially caused a shortages and price increases globally for many medicines.

The new International Reference Pricing (IRP) rule for The Netherlands takes the current reference basket of countries (Belgium, France, Germany & UK) and swaps Germany for Norway. The reason for this being that in Norway medicine pricing is generally around 20% less than that of Germany. This change was in-line with the current government’s “Keep Medicines Affordable” proposal where amending the Medicines Pricing Act (WGP)(1) would lead to a reduction in medicines pricing through this IRP change and other measures.

This change was due to come into effect 1st April 2020, but due to the impact of COVID-19 leading to medicine shortages and price increases the implementation of this rule was postponed as its introduction could cause major price declines for medicines on the cheaper end of the market, primarily generics.
If the rule was implemented we could have seen potential price drops of generics of between 30%-70% which would have endangered the supply of these medicines to patients in The Netherlands.

The Ministry of Health, Welfare, and Sport has decided to implement mitigation measure to ensure these outcomes do not occur, which includes:

  • Maximum price decline of 10%
  • Manufacturers of medicine with a turnover of €1 million or less can ask the ministry to not apply WGP and hence the IRP rules

Once the newest rules come into effect in October 2020, it would be interesting to observe the immediate and longer-term impact on prices as well as on supply chain.

Source:

  1. Government of the Netherlands Website: https://www.government.nl/topics/medicines/keeping-medicines-affordable [Accessed on 20 August 2020]


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