ISRAEL Law and Practice Contributed by: Lior Glassman, Matan Kovacs, Alexandra Cohen and Tamar Morag Sela, Reinhold Cohn Group
report regarding their profitability from the sales thereof. 8.2 Price Levels of Pharmaceuticals or Medical Devices The prices of medical devices are not controlled. As regards pharmaceuticals, the Supervision of Prices of Commodities and Services (Maximum Prices for Prescription Preparations) Order of 2001 noted in 8.1 Price Control for Pharmaceu- ticals and Medical Devices provides that the maximum price of prescription preparations is to be determined as an average of the lowest three prices for that preparation in the following countries: Belgium, the Netherlands, Hungary, Spain, France, the UK, and Germany. The order further provides that where that pre- scription preparation is not sold in three of the above-mentioned seven countries, the price of a given preparation would be set as the average of the prices thereof in the two countries in which it is being sold. Finally, where the preparation is sold in only one of the seven countries refer- enced by the order, that price alone would be used to set the maximum price for that prepara- tion in Israel. 8.3 Pharmaceuticals and Medical Devices: Reimbursement From Public Funds As mentioned in 1.1 Legislation and Regula- tion for Pharmaceuticals and Medical Devices , Israel nationalised its healthcare system in 1994 when it enacted the National Health Insurance Law of 1994. This law provides a lengthy list of all the healthcare services to which all residents of Israel are entitled, which is formally known as the “Health Service Basket” or – more commonly – the “Health Basket” .
Once a given medical device or pharmaceutical has been introduced into the Health Basket, it is subsidised by the State of Israel and provided by HMOs. In particular cases, patients may request reimbursement for pharmaceuticals or medical devices that are not included in the Health Bas- ket. Such requests are evaluated on a case-by- case basis by healthcare providers, who con- sider factors such as medical necessity, lack of alternative treatments, and clinical justification. 8.4 Cost-Benefit Analyses for Pharmaceuticals and Medical Devices The Health Basket is updated on a yearly basis, according to the recommendations of a public committee, which are then assessed by the gov- ernment before a decision is made. Given that the annual budget for this purpose is always limited, a cost-benefit analysis is always carried out. Specifically, the public committee must con- sider the benefits offered by a given prepara- tion or device against the costs thereof – both at the individual and the national level – and rank these prospective additions accordingly. In cer- tain cases, negotiations are carried out between the State of Israel and the companies to secure hedges, which would place a cap on the total cost incurred as a result of a company’s product being included in the Health Basket. A cost-benefit analysis is also carried out in a way whereby the maximum prices for prescrip- tion preparations are concerned. As noted in 8.1 Price Control for Pharmaceuticals and Medical Devices , it is permissible to set a higher price than that which would have otherwise been set if setting a lower price might cause the preparation not to be marketed in Israel.
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