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Pricing and reimbursement
The general principle is that each laboratory may set the prices for the sale of its products. In October 2021, the new government put in place at the end of 2019, by means of the National Secretariat of Internal Commerce issued a resolution that establishes the ‘temporary fixation of maximum prices for sale to the consumer for all producers, marketers and distributors’ of 1,432 mass consumption products, including food, cleaning, hygiene and personal care products, throughout the national territory.
In addition, in November 2021 the government and the laboratories agreed to bring back the price of pharmaceutical products to the prices in force as of 1 November and to keep them unchanged until 7 January 2022. This measure was not renewed but instead the Ministry of Health issued Resolution No. 27/2022, by means of which, as the most relevant point, a list of active ingredients was approved for which reference prices shall be established according to certain calculations indicated by the Resolution. It was established that the fixed amount to be covered by health insurance entities for drugs containing these active ingredients is set at 70 per cent of the reference price. Therefore:
- those drugs containing such active ingredients whose retail selling price is lower than the reference price determined will be covered as follows:
- 70 per cent of the reference price by the health insurance entities; and
- 30 per cent of the retail selling price by the affiliate; and
- in the event that the retail selling price is equal to or higher than the reference price, only 70 per cent of the reference price shall be covered by the health insurance entities, and the difference shall be paid by the affiliate until the retail selling price is covered.
Since 1997 there has been an agreement in place for specific discounts on pharmaceutical products between all the laboratories that integrate the pharmaceutical industry and social security entities, some public, some controlled by unions and some private (also known as medical insurance companies). This agreement was terminated in 2019 and replaced by a similar one in which the different laboratories are the counterparties of the social security entities. In late 2019, it was the intention of the major social security organisations to enter into agreements with each laboratory, either through bids or contracts.
In addition to these agreements, the above-mentioned chambers entered into others with wholesalers and pharmacies to ensure the provision of products to affiliates throughout the country at the same price and with the same discounts.
Around the year 2000, the chambers also created a local company in which no chamber has a majority equity control (the auditing company), the purpose of which is to manage and audit the agreements entered. The creation of this company was authorised by the local antitrust agency.
Regarding the agreements, their purpose is not to supply products to social security entities, but rather to benefit the affiliates of the different entities with discounts on products prescribed by their doctors and sold by pharmacies that adhered to the agreement mentioned. Some entities have closed lists of doctors, or products or pharmacies, but in general the lists are very broad. Discounts vary according to the products involved. An important purpose of these agreements is to ensure the provision of products throughout the whole country at the same price, without prejudice to the chain of commercialisation or to the affiliates.
These discounts are made in each pharmacy on products sold from its own stock and, once audited, later compensated by the social security entity. This means that at the time the products are sold by each laboratory through the regular chain of commercialisation, it is impossible for them to know if the final destination of the products will be an affiliate to any social security entity or not.
No industry chamber negotiates prices of products on behalf of any laboratory. Prices are fixed by the laboratory and are published in specialised magazines. Discounts are calculated based on the published price (i.e., the price of the product for any person not belonging to any social security entity).
The real parties to the agreements are each laboratory and the social security entity. The chambers represent the laboratories for practical reasons. Laboratories must each ratify the agreement. If a laboratory does not want to enter into such an agreement, it may refuse to do so.
The following example illustrates how the system works. A product is prescribed by a qualified doctor to an affiliate. The affiliate goes to his or her usual pharmacy and acquires the product. The pharmacist will sell the product to the affiliate with discounts and inform the social security entity of the sale to obtain its approval. Assuming the prescription is approved, the entity will reimburse the pharmacy through the auditing company, which will check the amount received and pay the amount of the discount afforded by the social security entity to the laboratories, which will then issue credit notes in favour of the wholesaler and, further, from the wholesaler to the pharmacy to compensate the full amount invoiced and paid by the pharmacy and the wholesaler at the time the product was sold by the laboratory. This is a summarised explanation. Much of the system is currently managed technologically (e.g., affiliates have carnets, pharmacies use online systems) and, usually, reimbursements by social security entities are made every two weeks covering various sales, so in practice the system is a bit more complicated; however, the general principles work as explained.
Some products are not subject to discounts.
Wholesalers and pharmacies are also joined in chambers that are very active in the protection of their associates (the Argentine Pharmaceutical Confederation, the Argentine Federation of Pharmacy Chambers, the Association of Mutual and Union Pharmacies of the Republic of Argentina, the Association of Distributors of Medical Specialities, and others).
