On 22 September 2023, the Royal Decree of 13 September 2023 establishing specific rules on the public procurement of biological medicinal products was published in the Belgian State Gazette (“Royal Decree”). The Royal Decree’s legal basis was created last year when the Act of 18 May 2022 establishing various urgent regulations on health inserted a new Article 71bis in the Act of 14 July 1994 on compulsory insurance for healthcare and benefits (“Health Insurance Act”).
The purpose of this new set of rules is to compensate for the alleged lack of competition for biological medicines and the non- or sub-optimal use of public procurement rules in this respect. Despite many initiatives by the (former) Minister of Health, the uptake of biosimilars in Belgium has remained rather low. We summarise the new rules, which apply since 2 October 2023, for you as follows:
1. A new mandatory tender within 9 months after the first biosimilar is launched on the market
Article 1 of the Royal Decree requires that hospitals award a new tender for a biological medicine within 9 months after a first biosimilar has become reimbursable and available on the market. Please note that the mere organisation of a tender procedure is not sufficient to comply with this obligation. There should be an actual award decision within the stipulated deadline.
It remains possible for hospitals to request an exemption from the obligation if compliance is not deemed feasible by the hospital. Such a well-substantiated request for a deviation should be notified to the National Institute for Health and Disability Insurance (“NIHDI”) at least 1 month before the expiry of the above-mentioned 9-month-period. If the NIHDI considers the request for deviation to be unacceptable, then it must inform the Belgian Competition Authority, which can investigate the matter further. The Belgian Competition Authority will also publish a list of all notifications it has received in this respect from the NIHDI.
To anticipate the launch of a new tender in accordance with Article 1 of the Royal Decree, hospitals are obliged to include an early termination clause in each new contract that they enter into, which allows the hospital to terminate the contract if it is required to retender in accordance with Article 1 of the Royal Decree.
The absence of such an early termination clause (which can only be invoked for contracts concluded before 2 October 2023) and the financial consequences of early termination could be a reason for requesting a deviation from the obligation to retender within the imposed 9-month deadline.
2. Limitation of the duration of purchase contracts to two years
In accordance with Belgian public procurement legislation, both framework agreements and purchase contracts can be concluded for a period of 4 years. However, Article 2 of the Royal Decree limits the duration to two years. It remains possible for hospitals to include two extensions of one year, which are conditional upon no additional biosimilars being reimbursed within, respectively, the first two years and the third year after the first biosimilar will have become reimbursable and available on the market. The NIHDI will keep the hospitals updated by circular letter about the reimbursement of additional biosimilars.
3. Blacklisting of certain selection and award criteria and technical requirements
Following Article 3 of the Royal Decree, hospitals are no longer allowed to apply criteria that limit the competition between biological and biosimilar medicines, and this is irrespective of their qualification as selection, award or technical criteria.
Article 3 of the Royal Decree specifically blacklists the following criteria:
· criteria requiring that the medicinal product would have been available on the market during a certain period (e.g. criteria regarding minimum turnover during a certain period);
· criteria connected with additional services that are not related to the purchase (e.g. criteria relating to R&D, training, sponsoring, etc.);
· criteria related to the efficacy, safety or quality of the medicinal products since they have already been assessed by the European Medicines Agency at the time of the market authorisation;
· criteria requiring the provision of clinical switching data or financial support for clinical switching studies;
· criteria granting price discounts if several lots are awarded to the same tenderer if, for at least one lot, no competition is possible due to the protection of intellectual property rights;
· criteria including different means of administration and/or dosage in the same lot;
· criteria creating contractual links with other medicines.
4. Penalties for non-compliance with these rules
Although Article 37 §3 of the Health Insurance Act provided a legal basis to penalise hospitals who do not comply with the Royal Decree by reducing the lump sum of the insurance reimbursement by a certain percentage for a certain duration, the Royal Decree has not implemented such a penalty mechanism (or any other for that matter). It can, however, not be excluded that such a penalty might be incorporated at a later stage.
5. Takeaways
This is the first time in Belgium that public procurement rules have been “fine-tuned” for a specific sector, and, in this case, even for a specific category of medicines. Articles 1 and 2 of the Royal Decree certainly impose an additional administrative burden on hospitals’ purchasing departments as they will have to retender at a higher frequency.
For the suppliers, the Royal Decree has the negative consequence that they will no longer have 4-year supply contracts and can at any time be confronted with a mandatory retender due to the introduction of a new biosimilar. The shorter duration of the contract may have an impact on the competitiveness of the prices that suppliers can offer, which would therefore go against the Royal Decree’s aim to create more competition and lower prices. Next to that, the Royal Decree does not give any guidance on how to align its provisions with the therapeutic freedom of the prescribing doctors.
On the other hand, regarding the banned criteria, the Royal Decree only reiterates what is already not allowed under existing public procurement legislation. Article 3 should therefore have no real impact on hospitals’ existing tendering practices.
If you would like further information about this topic, then please do not hesitate to contact us.