Control of medicine prices

Circular 18 of 2024 was issued by the National Commission for Medicine’s and Medical Devices prices (NCMMDP) to modify the methodology for the control of medicines prices which was originally contained in Circular 03 of 2013.

The mentioned methodology can be summarized in the following six stages:

1. Relevant Market Definition:

All products with the same active pharmaceutical ingredient (defined through its Non Proprietary Name-INN); the same strength, the same “grouped” Pharmaceutical Dosage Form and the same administration route will belong to the same Relevant market.

2. Relevant Market Qualification:

This qualification will be performed by assigning scores to:

a. The market share, and

b. The market concentration (considering the IHH index)

If the result of the sum of a+b is between 5-8, the market will be included within the Direct Control Regime (Group A).

If the result of the sum is 2-4, the market will be included within the Surveilled Freedom regime (Group B).

If the IHH index is <2500, then the market will be automatically included withing group B.

Vital and Unavailable Medicines (those for Name Patient Supply) will be included in group A.

3. Offeror Price Calculation:

It will be determined by the ratio of total sales of each offeror in the relevant market divided by the quantities sold by the same offeror.

4. National Reference Price (NRP) Calculation:

Prices of the different offerors are organized from highest to lowest and percentile 90 will correspond to the NRP.

5. Base Price (BP) determination:

If the relevant market has only one offeror, the basis price will be the lowest price between the offeror’s price and the 20th percentile of the International Reference Price (IRP). BP={IRP20; Offeror Price}

In the previous methodology, the percentile assigned for IRP determination was the 25th percentile.

If the relevant market has 2 or more offerors, the base price will be the lowest price between the NRP and the 20th percentile of the International Reference Price. BP={IRP20; NRP}

The following will be considered reference countries Germany, Australia, Brazil, Canada, Chile, Ecuador, Spain, United States, France, Greece, India, Italy, Mexico, Norway, Panama, Peru, Portugal, United Kingdom and South Africa.

Argentina and Uruguay were excluded from the list of the previous methodology .

The referenced price must correspond to the same product commercialized in Colombia (manufacturer, brand name). If the price taken for reference belongs to another product, an adjustment percentage will be included in the determination.

IRP won’t be calculated if prices are available from less than 4 reference countries. In those cases, the Base Price will be NRP or IRP.

6. Maximum Sales Price (MSP):

This will be determined according to the following formula.

MSP=BP+Adjustment Margin (commercialization margin which may be international or national and published by the commission).

This MSP will be applicable to Primary and secondary transactions in the institutional and trade channels.

Prices at pharmacies and drug stores must be fair and coherent to the logistic costs.

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Circular 18 of 2024 represents a significant step in controlling medicine prices in Colombia. With its revised methodology, the National Commission for Medicine’s and Medical Devices Prices (NCMMDP) aims to ensure accessibility to quality medication for all citizens. By establishing clear criteria for defining relevant markets, calculating national and international reference prices, and determining maximum sale prices, transparency and fairness in the pharmaceutical market are promoted.

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