Evaluating the Impact of Saudi Arabia’s 2021 Pricing Policy on Drug Launch Delay

Abstract

Introduction: Timely access to affordable medicines is crucial for achieving overall health. While pricing policies aim to improve drug affordability, balancing cost containment and timely market access presents a challenge under these rules. In 2021, the SFDA launched a major pricing reform that implemented VBP for the first time and put a narrower scope around ERP. While the reform intended to introduce more flexible pricing by modifying the reference basket and shifting the focus from ERP alone, there is a growing concern that the recent update could be inadvertently delaying access for expensive drugs in particular. Thus, this paper aims to examine the 2021 pricing policy on drug launch timelines in Saudi Arabia, with a particular focus on whether expensive drugs are disproportionately affected. Methods: We analyzed drug approval timelines for 1,070 drugs that were approved in Saudi Arabia between 2016 and 2024. Drugs were benchmarked with global regulators from EMA, US FDA, and MEHRA to compare their first approval globally vs locally. The study uses a quasi-experimental difference-in-differences design to estimate the policy’s effect on launch delays, and drugs were categorized as “expensive” or “cheap” based on their median PPU. Results: Our findings show that while the overall launch delays declined over the study period, the 2021 policy reform was associated with significantly longer delays for expensive drugs, an average of nearly two years longer than cheap drugs post-policy. We also observe differences in launch timings across different ATC classes, with drugs under genitourinary system & sex hormones, systemic hormonal preparations, and sensory organs experiencing the longest delays ranging from 1.7-2.5 years, while antineoplastic and immunomodulating agents received a faster approval by over a year compared to the reference category (P<0.01). Notably, essential medicines showed significantly longer launch delays compared to non-essential medicines over the study period (β = 1.8, p < 0.01). Conclusion: The findings we observe in this paper underscore the complexities and sometimes unintended impacts of pricing policies. While the 2021 reform may have succeeded in offsetting the previous challenges related to ERP and expedited launch times, it appears to have created disproportionate challenges for expensive drugs. As Saudi Arabia progresses with its Vision 2030 health reforms, aligning pricing strategies with timely access to medications is crucial.