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The OAU is in the crosshairs of the Auditor-“The procedure followed for List Z is unacceptable”

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Στο στoχαστρ&omicron ; Ελεγκτor ο ΟΑΥ-«Απαρàδεκτη η δι&alpha ;δικασΙα που ακολοyθησε για Κατα&lambda ;ογο Ζ»

The Audit Service considers unacceptable the procedure followed by the Health Insurance Organization (OHI) for the compilation of List Z, compared to what other European countries apply.< /p>

“Based on the information/documents provided to us by the Organization, the procedure followed for the compilation of List G, compared to what is applied by other European countries which the Organization itself refers to, is in our opinion without any documentation and transparency, which makes it unacceptable” refers to the Audit Service's Special Report on “Health Insurance Organization Audit” which has been posted on the Service's website.

In the Report it is stated that the OAU, within the framework of its responsibilities, draws up a list which includes in-hospital consumables and their compensation costs (List G) in the context of the implementation of the National Health Service. It also compiles, among other things, a list of the medicines of the 1st Phase of the NHS (outpatient provision of services), which includes the reimbursement costs of the said medicines, and the Contributions/Copayments for each medicine.

It is added that  while the procedures for drawing up lists of medical technology products and sanitary items, including List G, the cost or part of which is covered by the OAU, are determined by the General Health System Internal Regulations of 2019 and while until their publication the Organization issues circulars for each applied practice to inform the interested parties, for the matter under consideration the Organization has already implemented a practice for which the relevant circulars were not only not issued within a reasonable period of time, but until the preparation of this Report no circulars have been submitted to us either nor the relevant Regulations.

“We recommended to the Organization to prepare as soon as possible the required relevant Regulations, Decisions and Circulars, in order to safeguard the interests of the Organization as well as the legality and transparency of its relevant actions”.


Furthermore, the Report states that the Organization, through a more rational and structured process characterized by the element of transparency and healthy competition, based on the examples of other countries to which it referred us, and with more timely actions, could secure lower prices for the items in the catalog under reference, for the benefit of its policyholders, while at the same time maintaining the desired quality levels.

We recommended, it is added, in the event that it is confirmed that the process of drawing up the list in question does not fall within the scope of the Regulation of Public Procurement Procedures and Related Matters Law N.73(I)/2016 and, according to consequently, it is not required to conduct tenders within the framework of the above law for the conclusion of the relevant contracts, the negotiations to be conducted within the framework of a defined procedure which is proportionally consistent with the basic principles governing the process of concluding public contracts.

The Report adds that the extremely narrow time frames given by the Organization for the process of determining the prices of the list in question, only five days, of which only three were working days since there was a weekend, were insufficient for the completion of such a complex process , even compared with what is followed in other European countries to which the OAU itself referred us. He also notes that the invocation, on behalf of the Organization, of the pressing schedule cannot be an excuse, since the second and final phase of its implementation, which included, among other things, in-hospital health care and, as therefore, the delay appears to be the Organization's own fault.

The Audit Service recommended to the Agency, as during the review of List G, to act in a timely manner so as to have the required time to achieve the best possible results, for the benefit of all parties involved and also for its budget, which, being global , is affected by every action of the Organization.

“Based on the data/documents provided to us by the Organization, the procedure followed for the compilation of List Z, compared to what other European countries apply which the Organization itself invokes, is in our opinion completely unsubstantiated and non-transparent, which makes it unacceptable” he states and adds the following:

“We recommended to the Organization to study the possibility of setting up a special committee, which would function according to the standards of other European countries, in which experts – depending on the subject – outside the OAU, would participate as independent members, and which would act as an evaluation committee both for the existing consumables of List G, as well as for new requests that will be submitted for the inclusion of new consumables in it, to negotiate the prices and the type of contract to be signed depending on the case and, to proceed with the submission of comprehensive recommendations to the Board of Directors OAU, which will take the final decision as the competent body”.

The Report notes that while in the counterparts with List G of the OAH of other European countries, to which the OAH itself referred us, the medical devices, which are excluded from their inclusion in the closed unified hospital of the respective medical procedure (DRG) and are compensated additionally and separately, they concern very specialized, innovative and very high-cost products, with the aim of supporting innovation and accelerating the adoption of new technologies and the supply of optimized products, List G of the OAH includes several common/usual products, the cost of which starts from very low, with the cheapest amounting to just 23 euros.

EY recommended to the Agency that, during the revision of List G, it thoroughly studies, through a structured process, the limitation of the products that will be included in it to the very specialized, innovative and very high cost products, so that the above objectives are achieved in which such lists are intended and in other national health systems, while simultaneously reducing costs through transparent processes of centralized purchases, for all participating health providers.

He states that the Organization's position that it is not responsible for monitoring the unfair methods that suppliers may carry out, in order to promote the use of their own products, is not accepted since, as the competent Organization that handles the GeSY funds which are paid by the insured, he must monitor and ensure that his actions and decisions are preventive in terms of the appearance of such phenomena.

EY's recommendation is  as the Organization puts in place appropriate safeguards for the prevention/deterrence as well as the diagnosis and taking of appropriate corrective measures in cases where unfair methods are found, which may be used by suppliers to promote their own products, with as clearly formulated as possible process, with clear roles and responsibilities of the participants, with transparency and prior determination of the measures/penalties in cases of detection of fraud and/or exploitation of the process for the benefit of the participants and to the detriment of either the other participants or the Organization itself and by extension of his insured.

In relation to the supply of drugs of the 1st phase of the National Health Service, it states that based on the data that the Organization has submitted to us, it does not appear that the prices of the drugs in question were negotiated, but that the prices were based on the Maximum Wholesale Prices (MRP) of medicines, with additional charges for their storage/management, and the discounts calculated in such a way as to maintain the last corresponding total expenditure before the implementation of the NHS.

The above procedure, he notes, does not ensure that the lowest possible prices have been secured for the benefit of the overall Budget of the Organization and, by extension, its insured persons, if it is taken into account that the MHTs determined the retail prices and, by extension, the total cost of drug expenditures in the private sector during the pre-GeSy period, and that these expenditures constituted approximately 50% of total out-of-hospital drug expenditures for private and public beneficiaries, with private beneficiaries accounting for only 20% of the entire population.

He adds that the above is also confirmed by the increase in the total supply cost of Phase 1 medicines in the post-GeSy period, compared to that of the pre-GeSy period of 2018, of the order of 16.5% and 21%, for the years 2021 and 2022 respectively, percentages which are high, if it is taken into account that the cost of the OAH does not include the cost of the Contribution paid by the insured in case they do not choose the cheapest drug from the category of drugs prescribed to them.

It recommended that the Agency establish procedures that focus on the patient with free access to medicinal products, but at the same time ensure the safety of medicines through transparent and competitive, where possible, procedures between medicines that provide equivalent treatments, as well as through of sharing experiences and developing joint strategies based on best practices with other national health system management authorities.

In addition, it states that in the Memorandum of Understanding signed between the Agency and the Marketing Authorization Holders and/or Suppliers of Pharmaceutical Products, provisions are included which lock the prices of pharmaceutical products for 12 months, and set limits/barriers to the reduction of the price of an existing product by during the 12 months, or listing new at a price lower than the cheapest. In our opinion, the provisions in question are unfair, since they ensure the interests of the suppliers by ensuring stable prices for 12 months, while at the same time they prevent any competition that could exist for the benefit of GeSY and its insured, both in terms of reducing the costs, as well as the inclusion of new generic drugs in the list under reference.

EY recommended to the Organization that, during the revision of the list in question, on the basis of the practices of other countries/national health system management authorities and other bodies related to the subject, proceed with negotiations to improve the above terms of the Memorandum, in order to are consistent with the intended goals of keeping as many medicines as possible on the market and promoting competition between suppliers, for the benefit of the NHS and its insured.

In addition, EY found a delay in the inclusion of innovative drugs in the mentioned list of drugs reimbursed by the Organization, which until their inclusion are handled/approved by the Named Claims Committee (EOA). The delay, he says, seems to favor the pharmaceutical companies since, as the Agency itself informed us, they are delaying coming back with revised proposals after the initial proposal submitted by the Agency as part of the update of the protocols by the Medicines Advisory Committee (MEC). This, he notes, mainly concerns products that are already being used by a large number of patients, since companies are not willing to provide significant discounts or enable prices to be achieved that compare favorably between treatments, which based on the updated protocol are in the same line of treatment.

EY notes that  based on article 35(3) of the General Health System Law N.89(I)/2001, the Organization has an obligation to notify the decision of its Board of Directors to the applicant for the inclusion of a medicinal product in the list of medicinal products, within a period of 90 days from the date of submission of the application.

Recommended that the Agency expedite the revision of drug protocols, where necessary, to include innovative drugs in the list, based on practices used by countries with much greater experience in implementation of national health plans, and to also study the applicable European Regulations related to the subject, in order to determine the possibility of cooperation with other member states in the above matter, with the aim of speeding up the procedures.

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Source: www.reporter.com.cy

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