Public Procurement for Biological Medicines in Belgium: The Royal Decree of 13 September 2023 opens the door for compulsory tendering when biosimilars enter the market. Can virtue afford to flirt with legality?

Pharmaceuticals 7 min
September 27, 2023

Introduction

The Royal Decree of September 13, 2023 (‘RD’), implementing Article 71bis, § 1, of the Belgian Act on Compulsory Health Care Insurance and Benefits (‘Wet betreffende de verplichte verzekering voor geneeskundige verzorging en uitkeringen’), which establishes specific regulations for public procurement concerning biological medicines, was published in the Belgian Official Gazette on September 22, 2023.

The impact of this Royal Decree on the sector could be significant, as it sets out specialized provisions for the procurement of biological medicines (and biosimilars) by Belgian hospitals. These regulations may aim to enhance transparency, competition, and cost-effectiveness in the acquisition of such critical healthcare products, potentially resulting in improved access to and affordability of biological medicines for patients and healthcare providers. Additionally, it may lead to a more structured and efficient approach to the procurement process within the healthcare sector.

Hospitals underutilized Belgian public procurement regulations

Article 71bis, now implemented in the RD, was introduced due to concerns that many Belgian hospitals were not effectively utilizing public procurement laws. This could lead to missed cost-saving opportunities, withdrawal of potential bidders, and a limited range of available products, increasing the risk of shortages.

Recent data from the National Institute for Health and Disability Insurance sheds light on the adoption of biosimilars in Belgian hospitals up to Q2 2022. Belgium continues to have low market shares for biosimilars compared to neighbouring countries, with slow progress indicating a lack of a significant shift toward biosimilars. Notably, some biosimilars have gained substantial market shares, possibly due to the withdrawal of originator products from public tenders. However, these high-market-share biosimilars often account for relatively small volumes due to competition within the same therapeutic category, challenging the sustainability of their dominance.

The report also points out that effective market dynamics in Belgium face challenges due to imbalanced award criteria, delayed tender openings after biosimilar market access, prolonged tender contracts, and overly complex tender procedures.

The current RD’s impact

This RD implements the provisions of Article 71bis specifically for biological medicines and appears to be a significant step taken by the Belgian government to address the lack of uptake of biosimilars in the Belgian healthcare system. It aims to promote competition, control costs, and ensure transparency in the procurement process for biological medicines.

Here are some key takeaways from the RD:

Mandatory Public Tender

Hospitals are now required to organize a public tender for biologicals with the same active substance(s) within 9 months following the entry into force of reimbursement for a biosimilar. This aims at promoting competition among suppliers. A hospital may, in duly justified cases, deviate from the 9 months-deadline. In such a case, the hospital shall notify the reason for such deviation to the Service for Medical Care of the National Institute for Health and Disability Insurance, (‘Dienst voor geneeskundige verzorging van het Rijksinstituut voor ziekte- en invaliditeitsverzekering’) no later than one month before the expiration of the deadline. The Service may determine the detailed rules for this notification. If the Service deems the justification insufficient, it shall notify the Belgian Competition Authority accordingly. The Competition Authority can, if necessary, initiate an investigation and, in that context, gather all necessary information, as provided for in the provisions of the Economic Law Code.

Critical observations

If the rationale of this obligation can easily be understood and/or could even be welcomed, its drafting lacks consistency and the concrete application of this provision will create more legal uncertainty than is reasonably admissible.

Triggering the tendering obligation in function of the arrival of a biosimilar with the only criterion of “sameness” in terms of “active substances” is clearly inoperative. A clear reference to the indication should also at least be included as criterion. The first contract may for instance have been granted to the first biological for indication(s) that are not covered by the marketing authorisation of the biosimilar.

Second, it is unclear why this obligation would only be triggered in the context of the reimbursement of a biosimilar (Art. 6bis, §1, al.8 of the Belgian Medicines Act of 25 March 1964). Why would this not also be justified when a “biogeneric” or a “copy” would be authorised and reimbursed in Belgium (Art. 6bis, §4 of the Belgian Medicines Act)?

Third, nothing is said if subsequent biosimilars would enter the market. Is the obligation of launching a public tender within 9 months of the reimbursement of a new biosimilar with the same active substances activated for the arrival of each new biosimilar with the same active substance(s)?

Many other questions could be raised, and it is mainly the question whether this provision would survive a judicial review on proportionality and equal treatment.

Early Termination Clause

Tender documents for biologicals must include a clause allowing for early termination if a new tender needs to be organized in accordance with the RD. This allows for flexibility in procurement. The Report to the King, accompanying the RD, clarifies the ratio legis. The intention is for existing contracts to terminate when the new contract is awarded to ensure the continuity of access to the relevant medicines. Most government contracts or agreements that hospitals currently have in place include termination clauses. These clauses can be utilized if, in accordance with this RD, a new contract is tendered/awarded. For government contracts or agreements lacking such a clause, this could be a basis for reporting an exception to the 9-month deadline and may be a factor considered in the assessment of the justification, in addition to potential financial consequences, for instance.

Maximum Tender Contract Duration

The maximum duration for tender contracts for biologicals is limited to 24 months, with the possibility of two extensions of up to 12 months each if no new biosimilars are reimbursed during that time. The aim is to strike a balance between having a contract duration that ensures continuity for patients, hospitals, and pharmaceutical companies, while also preventing contracts from being excessively long, thus allowing the market to open up to new suppliers.

Prohibited Selection Criteria

Art. 3 of the RD explicitly prohibits certain selection, award, or technical criteria that could hinder competition. The prohibited list includes:

  1. Criteria requiring a medicine to be on the market for a specific period.
  2. Criteria related to additional services unrelated to the procurement.
  3. Criteria related to the efficacy, safety, or quality of biological medicines.
  4. Criteria mandating the submission of clinical switch data or financial support for such studies.
  5. Provisions allowing price discounts in certain circumstances.
  6. Combining different administrations or dosages in the same lot, limiting competition.
  7. Contractual links with other medicinal products.

Penalties and Enforcement

The RD does not currently include penalties. As a result, companies might need to take independent action to ensure compliance with the rules, with the possibility of Belgian competition authorities becoming involved if the RD is disregarded.

In conclusion:

The clarification of the contract duration and of the selection and award criteria will definitely provide useful guidance for the hospitals.

The obligation to re-open competition after the arrival of a new reimbursed biosimilar is more ambiguous. If the aim of this provision may be virtuous, pushing biosimilar competition and forcing Belgian hospitals to duly apply the public procurement rules and principles, its concrete legal implementation contains substantial weaknesses and adds an additional layer of legal uncertainty in a market that desperately is looking for clarity.

Written by
Lora Arifagic
Lora Arifagic
I am an associate in the Regulatory, Public & Administrative Law department in our Brussels office.
Marc Martens
Marc Martens
About me As co-head of our International Life Sciences & Healthcare group and head of Bird & Bird's Regulatory, Public & Administrative Law group in Brussels, I provide cutting edge strategic and regulatory advice to our life sciences clients and represent them in litigation.

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