Table 4.

Proposals on how to optimize tender procedures for off-patent biologicals and biosimilars, ensuring sustainable competition and associated savings in the long-term in the off-patent biologicals segment—five main avenues for optimization.

Tender practices should abide with the European Union and Member State rules on tendering. The involved actors, suppliers, purchaser bodies, payers, government and competition authorities, have a role to fulfil to ensure efficient, fair and transparent tender procedures for off-patent biologics and biosimilars. -Purchasers (hospital or procurement body): securing a transparent and efficiently managed process -Industry/suppliers: ensuring timely, non-disrupted and high-quality supply -Payers: establishing adequate incentives and resolving any counterproductive motivational schemes Government: enabling sustainable market competition, by implementing policies and tender structures with a long-term perspective. Stimulating market plurality and providing guidance to purchasers -Competition Authority: monitoring the correct application of tenders, by performing audits and following up purchaser adherence with laws on public procurement The proposals outlined below can be considered as a general set of principles that can inform the different actors involved on possible improvements. Depending on the tender organization and maturity of the respective country or setting, measures should be selected and tailored to the country’s context. Some of the proposed recommendations are based on existing best practices. Several countries, regions or hospitals have implemented already one or multiple of the proposed practices as outlined here.

1. Safeguarding a transparent, equal opportunity setting for all suppliers, with an appropriate use of award criteria

The tender procedure needs to be transparent and non-discriminatory with predefined rules and pathway, which are adhered to throughout the process -Contracts should be awarded on the basis of objective criteria that are compliant with the principles of transparency, non-discrimination and equal treatment (as stipulated in the EU Directive (§ 90)) [13], allowing an objective comparative assessment. -Other award criteria besides price that add value to the contract should be included, applying the Most Economically Advantageous Tender (MEAT) procedure as stimulated in the EU Public Procurement Directive [13], avoiding lowest bid procedures and stimulating suppliers to compete sustainably on more criteria - A clear framework regarding selection—and award criteria should be implemented and adhered to: ○ Selection and award criteria should be carefully formulated, to avoid that participants are excluded a priori or certain products are disadvantaged on improper grounds. Criteria for which longer market presence is required or would be advantageous should be avoided, as these could lead to unreasonable competition expulsion, disadvantaging recently launched products. ○ Only criteria that are related and proportionate to the subject matter should be included. Any criteria that could unreasonably limit competition or introduce bias should be excluded. The link with the subject matter should be clear. Caution should be exerted regarding requesting or offering additional services or benefits, and this should be strictly avoided if not directly related to the subject matter. ○ Only additional criteria that drive actual benefits (meaningful product differentiation, advantage for purchaser and/or patient) should be included. ○ Award criteria besides price should be proportionally rewarded based on the additional value created, as the provision of additional services increases investment for suppliers. This will also enable these criteria to truly play a role in the allotment. ○ Relevant experts should be integrated to identify appropriate award criteria. In countries where procurement is organized on a local or individual hospital level, governments should provide guidance to purchasers regarding the structuring of the tender and application of selection and award criteria. Here, a flexible/semi-structured tender template could be designed to guide purchasers but also allowing room for tailoring based on product—specific considerations and strategic differentiation. -Contracting authorities should timely and transparently inform possible competitors about the criteria that will be applied in the contract, by specifying the award criteria as well as the relative weight or the allocation of points given to each of those criteria in advance. -Linkage between contracts (e.g., offer of or request to supplier to provide rebates for previously delivered or contracted medicines or rebates on a related product, in case the tender contract is won) can impact the equal opportunity setting and limit competition. Offering extensive conditional rebates with dominant position of the originator can be considered as anti-competitive exclusion. -Avenues that provide anonymity throughout the procedure, such as requesting that bids are filed anonymously with coding identifier, should be applied where possible to avoid incumbent advantages [64]. -In the case of preliminary market consultations, these should guarantee that every supplier is treated equally and receives the same information. Although dialogue between purchasers and suppliers should generally be fostered to improve understanding of each other’s needs on an overarching level, no direct input should be sought on the structuring of the tender from a supplier, as this could introduce steering of the structure of the tender.

2. Fostering a timely opening of tender procedures, ensuring on-set competition

Tender procedures should be opened as soon as possible, to avoid delays in competition and market opportunity for biosimilar competitors: - Tender procedures should be prepared to timely open: ○ Systems should be prepared to organize tenders upon biosimilar market entry to reduce barriers to entry. A continuous re-opening of procedures with every new competitor entering the market should however be avoided, as this could introduce uncertainty in terms of volume and tender duration for the first tender winner(s) (lowering volume predictability) and also be burdensome for contracting authorities and industry. ○ Installing a shorter-term tender (e.g., 6 months) immediately upon market entry of the first biosimilar competitor(s), combined with a longer subsequent tender agreement, would allow immediate competition and market opportunity for the different competitors once the market has further crystalized in terms of number of available products. ○ Alternatively, a differentiated, product—specific approach in determining the appropriate term for opening a tender, taking into account the number of expected competitors, could be appropriate. -A specialist procurement office involving the appropriate expertise fields could play an important role in organizing and coordinating the timing and duration of tender procedures for products with biosimilar competition. Moreover, such expert coordination office, should apply a long-term view, taking future biosimilar market entry into account to advice on negotiated contract duration, avoiding blocking contracts at the time of biosimilar market entry. Such an expert procurement office should perform horizon scanning to identify the upcoming loss of exclusivity of reference products and anticipated biosimilar market entry dates. (cfr. infra, bullet D). Such expert procurement office or payers could also strategically set out incentive schemes to stimulate a timely opening of procedures, as needed. -A financial stimulus should be put in place to stimulate purchasing bodies/hospitals to organize tenders, aligning the incentives of the purchaser with these of the overall healthcare system (savings for healthcare budgets). -A tender duration between 12 and maximum 24 months would be desirable to stimulate market dynamics, while considering feasibility and avoiding frequent switching.

3. Ensuring and stimulating adherence to laws on public procurement

The rules on public procurement should be correctly applied: -Competition authorities should monitor and audit the correct, timely and transparent implementation of and adherence to the laws on public procurement by purchasers and investigate signals of anti-competitive conduct (e.g., conditional rebates). If needed, they should take appropriate measures, ensuring a timely opening of tenders and the application of appropriate award criteria. -Governments should provide feedback to purchasing bodies on performance and apply steering measures where needed. -For decentralized purchasing systems, the route of establishing a dedicated, independent and centrally coordinated expert panel (involving lawyers, physicians, pharmacists), to conduct the assessment, could be explored. The transferring of assessment to an independent central organ could improve objectivity of and ensure the appropriate expertise in the evaluation. -Stakeholders should be stimulated to actively report any signals of anti-competitive conduct to the competition authority. - Financing streams/structures of purchaser bodies and involved stakeholders should be reviewed, removing existing disincentives and introducing new incentives that are aligned with the overall healthcare system ○ Disincentives to organize competitive tenders or incentives that favour a specific product/preference for the originator/more expensive product should be removed. ○ Financial incentives schemes or other policies should be put in place: ▪ Top-down: such as lowering the reimbursement level of products that are open to competition to stimulate purchasers to timely organize competitive tender procedures. ▪ Stakeholder-involved: Savings from tender procedures could be allocated in part to remunerate HCPs for their time investment in switching, as part of a gain-sharing model. Such a gain-sharing model could motivate and involve stakeholders, increasing adherence to the tendered winner(s) and countering possible financial incentives and preferences to use the originator product. -In addition to motivating stakeholders via above mentioned incentive schemes, multi-winner tenders or tenders with a ranking of preferred products can help to increase physician adherence to the tender outcome (avoiding physicians’ use of the higher priced non-preferred product), as it may increase physicians’ freedom to choose between available products. Involving physicians in the tender procedures, e.g., in the Drug & Therapeutic committee is also considered important in this regard. -Authorities and governments should also support stakeholders with up-to-date guidelines for biosimilar use (e.g., on (multiple) switching) and develop policies and information campaigns to improve stakeholder confidence in biosimilars and increase awareness on their benefits. This may help lowering practical barriers associated with biosimilar use and uncertainty among stakeholders.

4. Securing an efficient process, improving plannability and ensuring timely product supply

The tender procedure needs to be efficiently managed, optimizing and reducing the administrative and time burden for both suppliers and purchasers, as well as increasing predictability and plannability for the supplier—supporting timely product supply. - The predictability and plannability of tender procedures and associated volumes to be supplied should be improved towards suppliers: ○ This includes setting of reliable estimates of volume to be supplied (with guaranteeing minimum volumes and a maximum cap), timely communication regarding the timing of tender procedures and making use of acceptable lead times to support suppliers to better forecast and anticipate on demand, as such reducing the risk of shortages. ○ In case of supply issues, penalties should be proportionate to the contract value and the cause of the inability to supply (force majeure/external reasons for which could not be controlled), ensuring a fair balance of risk and reward. In case of inability to supply volumes that are higher than estimated (e.g., not specified in procurement contract), the supplier should bear no (disproportionate) financial risk. ○ In some cases, a good strategy could be that tender procedures open up throughout the year, to spread commercial opportunity for suppliers and accommodate manufacturing capacity. - Expertise on procurement should be consolidated to actively guide purchasers in timely and efficiently setting up tender procedures ○ A dedicated, expert procurement office that consolidates knowledge, skill and experience with tender procedures should be available to support purchasers/procurement bodies with the timely planning and efficient organization of tender procedures. ○ Such a specialized procurement office should set out strategy, coordinate purchasers and tender procedures, perform horizon scanning to inform stakeholders on the upcoming loss of exclusivity of reference products and anticipated biosimilar market entry dates, prepare stakeholder guidance documents and monitor the number of competitors on the market. ○ Beyond coordinating the procurement strategy for products with anticipated biosimilar competition, the expert office should apply a long-term view and advice on contract length of new contracts, considering future market entries, avoiding “blocking” contracts at the time of biosimilar market entry, which would delay market competition. ○ Specific measures or a tailored approach could be applied to prepare for biosimilar market entry of a specific product (or product category) (as was done in several countries to prepare for adalimumab biosimilar market entry) or could be adjusted based on specific market dynamics. ○ Such an overarching expert office would also be beneficial in terms of consolidating efforts, avoiding duplication and professionalising the processes, as required by the increasingly complex structure of tender procedures. ○ Depending on the country, such expert centre could be established at national or regional level. -Tender procedures and documentation requests should be harmonized, simplified and made leaner to mitigate the administrative workload and increase efficiency, also reducing the possible sunk cost of participating suppliers. E-procurement should be wider used to allow information to be easily accessible throughout the tender procedure for both purchasers and suppliers. Beyond reducing the administrative burden, this will allow a higher traceability and transparency of procedures [24]. The process should also be streamlined in terms of the information which is believed to be essential. Operating on a larger scale by grouping purchaser bodies and the existence of an expert procurement office guiding procedures could benefit purchasers and suppliers in this regard.

5. Safeguarding long-term sustainable competition by stimulating market plurality

The tender procedures and overall procurement strategy need to take a long-term view into account, tailored to supporting long-term sustainability, providing commercial opportunity for multiple suppliers - Stimulating market plurality and multiple commercial opportunities for suppliers ○ Single-winner tenders can exclude non-winning competitors from the market for the duration for the tender contract, and long-term lead to reduced levels of competition. Ensuring market plurality is a cornerstone for a sustainable and competitive tender market and should be part of tendering strategy. Depending on market size and specific context (product volume), different scenarios can be appropriate and applied. Multi-winner tender can be organized on national level or regional level (if there is a sufficiently large scale), or markets could be divided into multiple commercial single-winner opportunities (e.g., on hospital network or regional level). ○ In the case of the scenario of multiple single or multi-winner opportunities across the market, a rotating system between regions or hospitals could be set up to increase dynamics and opening of commercial opportunities for suppliers over time. ○ Multi-winner tenders also provide price reductions on all tendered products and may increase the physician’s therapeutic freedom to choose between different products, as such avoiding physicians using a higher-priced non-preferred product. ○ The availability of multiple commercial products on the market may also help to mitigate possible supply issues. - Regular evaluation of the market situation and if needed revision of procurement and tendering mechanisms ○ Market dynamics such as the numbers of competitors and associated manufacturers should be reviewed on an annual basis and tendering policies should be reviewed in this context, avoiding market concentration and de novo monopolies