1. Pricing and Reimbursement Policies 1

2. Pricing Policies Patented Medicines Maximum retail prices capped by Ministry of Economy (mainly for private sector) Use international reference pricing Calculated on basis of the average ex-factory price of the previous quarter in the six largest markets for a given product globally Governed by General Law on Health, Article 31 Lack of across-the-board compliance by pharmacies, poorly regulated Little competition in public sector prices for patented medicines (due to centralized purchasing price) 2

3. Generic Pricing Policies Pricing Public sector: no central price control, wide variation in prices by state or insurance scheme Private sector: generics/off-patent medicines no price control Policies Promoting the Use of Generics Federal Commission for the Protection against Sanitary Risks (COFEPRIS) creates Interchangeable Generics List Listed by INN, includes both generic and original products Public sector insurance schemes use list as well as National Formulary to encourage (but not require) generic prescription Generic consumption through public insurance coverage still limited 3

4. Reimbursement Policies All public institutions and insurance schemes governed by National Formulary (Cuadro Básico y Catálogo de Medicamientos) Set by National Formulary Committee (CICBISS) of the General Health Council (CSG) Dictates first, second and third lines of treatment 4-5 months for review and decision Listed by INN, each assigned a code Limits medicines available to 932 INNs (2011) based on market authorization and Economic Evaluation Study (EEE) Large majority are off-patent Published annually 4

5. HTA Policies Economic Evaluation Study (EEE) compares current standard treatment with product proposed for inclusion in Cuadro Básico Mandated by CICBISS Internal Regulation, Article 24 Submitted by company, CICBISS reviews according to CSG guidelines Must include at least 1 of the following comparisons: -Cost-minimization – cost savings compared to equally effective comparators -Cost-effectiveness – incremental cost-effectiveness ratio relative to GDP per capita per additional years of life -Cost-utility – same as above, using QALY as denominator -Cost-benefit – rate of return relative to public debt issued by Federal Government 5