ISRAEL EXPLAINS DRUG PRICE CONTROL METHOD

Israel's Ministry of Health, after fixing the price for a new product, does not monitor the quantities sold, according to its latest annual report. However, it suggests that this monitoring is needed in order for the MoH to check whether there is a need to adjust the original calculation of costs supplied by the manufacturer, which is based on assumed quantities of sales. This way, the MoH would be able to assess the possibility of reducing a product's price, the State Comptroller says.

The other main finding in the report is that the Price Control Unit of the MoH does not use any of the information available from its own Supply Service (which buys drugs usually by tender for supplying to MoH hospitals). This, it suggests, could be used to examine whether the maximum prices it determines are reasonable in comparison with those paid by the Ministry's own supplies department. Such information, supplied to the State Comptroller's Office, showed that there is a "very large difference" between the two prices.

In this report, light is thrown on the dense and somewhat opaque subject of how prices are determined, says the Marketletter's local correspondent. For the purpose of setting the price of a drug, he says, the Ministry requires from the manufacturer: - a description of the new product; calculation of costs (accompanied by an accountant's certification); - latest audited balance sheet; -requested price; - the terms of supply and credit; - the names and prices of similar products on the market; and - the requested profit.