The Supreme Administrative Court of the Czech Republic (the “SAC”) addressed the issue of reimbursement of medical products in one of its recent decisions. In his decision, the SAC assessed the decision of the State Institute for Drug Control (the “SIDC”) of 5 September 2013, case SUKLS263940/2012 and came to several conclusions which are concerning the following areas: (i) review of the agreement on the agreed highest producers´ price by administrative authorities; and (ii) determination of the basic reimbursement of products during the vesting period. Below you can see a more detailed analysis of the assessed questions.
Review of the agreement on the agreed highest producers’ price by administrative authorities
In this matter, the SAC referred to an earlier judgment of the Constitutional Court of the Czech Republic, which stated that in relation to research in the public interest carried out at the determination of the amount and conditions of reimbursement of the medicinal product is the responsibility of the administrative authority (State Institute for Drugs Control) to verify, whether the agreement on the agreed price contains an obligation to ensure the availability of the product on the Czech Republic‘s market.
In this case, the administrative authority during the assessment of agreement on the highest price (i) did not consider whether there is a realistic presumption of actual availability of the reference product and (ii) if this agreement consists an obligation to ensure availability, (iii) nor did they verify whether the subject, which executed the agreement in last two years, had not committed an offence under Section 39q (1) letters b) and c) of the Public Health Insurance Act. According to the mentioned judgment of the Constitutional Court of the Czech Republic, administrative authorities have a legal obligation to assess the public interest, i.e. they have obligation to verify whether the agreement contains an obligation to ensure product availability and that even in a situation where they intend base from the presumption of the product availability. According to the SAC, if such an obligation was not explicitly agreed in the agreement, the presumption of the availability of the product cannot be applied and it cannot be guaranteed that this reference product will be actually present in the Czech Republic´s market. In the event that the administrative authorities did not verify whether the assessment agreement contains an obligation of availability and was based only on the presumption of availability, they would have acted in clear violation of the judgment of the Constitutional Court of the Czech Republic.
The SAC stated that the condition for applying the conclusive presumption of availability is that the relevant agreement on agreed price contains “unambiguous and undoubted commitment of the marketing authorization holder of the mentioned product, that he ensure availability of this product on the Czech Republic´s market in the sufficient amount throughout the efficiency of the agreement.”
Determination of the basic reimbursement of products during the vesting period
In the assessed situation, SIDC set out the amount of reimbursement of the medicinal product according to Section 39c (2) letter a) of the Public Health Insurance Act. Under other provisions of the mentioned Act by implementing legislation should be stipulated, among other things, the vesting period for assessing the availability and determining the price of the producer. By this regulation is a decree, which implements certain provisions of the Public Health Insurance Act, according to which the price of a product for determining the basic reimbursement of other products is found out to the extent of 21 days from the date of initiation of the subject administrative procedure.
It is also important, that the quoted decree in Section 12 (2) explicitly excludes thus defined the vesting period for the case of the procedure according to Section 39c (2) letters c) or d) Public Health Insurance Act, but not for the procedure pursuant to Section 39 (2) letter a) the same law, which the administrative authorities applied in this time assessed case. By the linguistic interpretation, the SAC came to conclusion, that is necessary to strictly distinguish between these two procedures.
The erroneous procedure had in the assessed case results that administrative authorities incorrectly came out when determining the reimbursement from agreement on agreed price with agreed delayed effectiveness. The price for the reference medicinal product, which was agreed in the agreement, became effective after the expiration of the vesting period of 21 days from the initiation of the administrative procedure, SAC nevertheless took this price into account when he was assessing the price. In addition, the consideration of the mentioned agreement was possible only due to incorrect official procedure of SAC, when the decision of SAC was not issued within the period stipulated by law. This resulted in the violation of the principles of legitimate expectations, transparency, and predictability of the result of administrative proceedings.
The Supreme Administrative Court of the Czech Republic, therefore by the new case law, that the basic reimbursement could not be set out on the basis of the price agreed in the agreement on the agreed price, whose effect was to occur in the future, even though this price was lower than the price of others products, which were included in the price comparison, but only prices, which were valid during the vesting period can be taken into account. According to the SAC “Although it is possible to understand the complainant´s point of view (SAC), according to which it may be more advantageous from the term of the public health insurance system and the interest of insured persons to take into account, when determining the price the current state, at the time, when the administrative decision is taking. However, during application of the relevant legislation, it cannot be disregarded that if the rules for determining the vesting period should fulfil their purpose, which consists, inter alia, in maintaining predictability and transparency of decision-making in a given area of the exercise of public authority, it must be in advance clearly determined the vesting period, which in addition shall be set out strictly and shall not allow any discretion of the administrative authority, that might in an unpredictable way affect to the rights of the parties in proceedings.”