The Saudi Food and Drug Authority (SFDA) has implemented detailed guidelines to regulate pharmaceutical pricing in Saudi Arabia. These guidelines aim to ensure fair pricing, foster competition, and maintain affordability while supporting the availability of innovative treatments. Understanding the pricing laws and regulations before drug registration is essential since the application will contain the price certificate and other economic evaluation studies (EES).

The “Pricing Rules for Pharmaceutical Products” cover a range of drug types, including innovative, generic, biological, and biosimilar products. They outline specific processes for pricing combination drugs and periodic price re-evaluation. By accounting for pricing factors, SFDA’s guidelines ensure an equitable approach to pharmaceutical pricing that aligns public health priorities with industry standards.

In this post, we will list the key points of the pricing rules and summarize the Saudi-related pricing regulations.

SFDA Drug Pricing Criteria

When setting drug prices, the SFDA considers the following criteria: therapeutic value, existing alternatives, economic studies, and international reference pricing. Pharmaceutical companies must submit recent price certificates and may need to justify prices if they deviate from standards.

Innovative and Biological Products

Prices for innovative or biological drugs without local alternatives can be set based on international pricing. If local alternatives exist, prices should reflect clinical value and comparative studies. Locally licensed products from global companies are priced equally to innovative products during patent periods.

Generic Drugs Pricing

Generic drug pricing is set progressively lower than the original innovative product, with the first generic at 70%, the second at 65%, and subsequent generics at 60% of the original price. These reductions encourage cost-effective alternatives post-patent expiration.

Biosimilar Products

For biosimilars, the initial biosimilar product is capped at 75% of the biological product’s price, with further reductions for additional biosimilars. This ensures that prices for similar biologicals remain competitive.

Combination Drugs

Drugs combining multiple active ingredients are priced by adding the costs of individual components, particularly when combining previously registered drugs.

Special Cases

Certain drugs, such as those with unique therapeutic advantages, may receive a price premium. Additionally, a fixed maximum price is set, with companies permitted to offer lower prices if desired.

Exemptions

The SFDA may also exempt specific products from particular provisions to maintain market availability. The option to request not to price a pharmaceutical product is also available for products intended for NUPCO only.

Price Certificate

The SFDA requires applicants to include the Saudi price certificate (Form 16) in their application. This certificate reflects the following information:

Price in Country of Origin

Retail (public) price, ex-factory, and CEF price.

Proposed Saudi Price

The price proposed by the applicant for the product in Saudi Arabia

Price in Reference Countries

The authority requires reference prices for the same drug marketed in the following 16 countries: Australia, Austria, Canada, France, Germany, Hungary, Italy, Japan, Netherlands, Poland, Portugal, South Korea, Spain, Sweden, and the United Kingdom).

Drug Price Profit Margin

A specific governmental profit margin is defined for priced pharmaceutical products in Saudi Arabia. The distributor must import with the assigned CIF price, and then the warehouses (Wholesale) and Pharmacies (Public/Retail) must not exceed the below-defined markup percentages:

CIF Price	Wholesale Price	Public Price
SAR 50 or less	15%	20%
SAR +50 to 200	10%	15%
SAR +200	10%	10%

Drug Repricing

For marketed products, the MAH can request a price increase or decrease to the SFDA after two years of the last drug evaluation in response to significant economic factors or clinical trial developments. Price reductions upon re-evaluation are limited to 30%. Upon re-registration, prices may be adjusted further, with specific reductions if generic or biosimilar versions are available.

Price Appeal

Companies can appeal SFDA pricing decisions. They have two rounds to submit an appeal to the pricing committee and request a meeting to discuss and explain their point of view. All appeals should be submitted within the applicable timelines.

New Price Application

Companies must apply the new price resulting from repricing by SFDA or appeal within 180 calendar days. After that date, shipments must reflect the latest price on the product label (if printed), and the authority will automatically change the price in the database read by the DataMatrix Barcode.

Pricing Consultation

If you require a pricing consultation for your new drug submission or plan to submit a price increase request, we provide advanced pricing consultation and development of Economic Evaluation Studies (EES). Our team has a staggering success record in price adjustments in SFDA and the Gulf Health Council (GHC). Contact us