“The pharma environment is facing a terrible cocktail of unfriendly measures,” companies warn

Newsroom 25/02/2016 | 16:29

Last year was not an auspicious year for pharma companies, but their expectations for 2016 are equally grim, as they express deep dissatisfaction at the lack of predictability and transparency in Romania and warn that important issues, such as the clawback tax, the price methodology and the under-financing in the system should be tackled wisely, because they are putting a break on investments.

Otilia Haraga

 

“In 2016, we face similar challenges to those of the previous year. We would have liked to say that 2015 was the year in which the Romanian healthcare system came closer to European standards: a final health system reform, timely access for patients to innovative drugs, a workable and sustainable operational framework for the pharmaceutical market. Unfortunately, it is not the current reality,” Calin Galaseanu, president of the Romanian Association of International Medicine Manufacturers (ARPIM), tells BR.

He warns that “the pharma environment is facing a terrible cocktail of unfriendly measures which are indirectly affecting patients: the clawback tax – a super-taxation that is also mostly unpredictable and prevents further investments; a pricing methodology that actually generates shortages of medicines and unfairly references the price of innovative medicines to generics; a budget much less than that actually needed for treatment, frozen at the consumption level of 2012, leaving no room for innovation. The Romanian healthcare system is in a state of emergency and a hurry-scurry approach will not put the patient at the center,” he complains.

The ARPIM president is calling for “a comprehensive reconsideration of the entire mechanism.”

He points out that certain regulations should be “mandatory” if there is any intention to make the system work to the benefit of the patient. These include “a legislative frame for the continuous introduction of new medicines on the reimbursement list, a new mechanism for calculating the clawback tax, based on the real level of budget consumption, not the allocated budget in 2012, and a new pricing methodology that will stop the disappearance of medicines from the market.”

The clawback tax, which was first introduced in 2009, compels drug producers to return to the state a part of the profit made from the sale of compensated drugs- which exceeds the sum allocated by the state for these drugs- at the reference price at which they are bought by the consumer in the pharmacy (which also includes the margins of the distributor and the pharmacies.)

The tax, which also has been applied by other European states, has grown constantly over the past years and is very unpopular with pharma producers, who complain that it represents a very big chunk of their revenues. “The clawback mechanism is highly unsustainable, representing over a third of the industry’s income while no other fair and predictable mechanism is close to being considered,” according to Galaseanu.

According to a recent Cegedim market forecast, the increase of the total pharma market will be at most 1.1 percent this year, says Galaseanu.

Gábor Sztaniszláv, country director at Amgen Romania, tells BR that “ideally, the clawback tax should be eliminated, being introduced as an interim measurement initially, but if it stays, it should have a more predictable and transparent mechanism that should not affect the business environment and can be supported by the pharmaceutical producers. The clawback tax in its current calculation formula is unique in Romania as compared with other European countries who have managed to reach a formula that is both to the benefit of authorities and patients.”

Romania is among the block of  European countries with the lowest healthcare expenditures.

Barbara Cygler, general manager at GSK Romania, says that last year, the pharma market “continued to face a chronic under-financing, the funds allocated to healthcare as a percentage of the GDP were approximately 50 percent lower than the European average.”

The expenditure on healthcare will increase by 13.5 percent to RON 31.17 billion in 2016, so that it will come to represent 4.2 percent of the GDP this year, while last year, it represented 4 percent, according to media reports. Yet, Romania allocates much less money to healthcare compared to the European average of 6.5 percent.

Cygler adds that “Romania is last among EU member states in terms of health expenditure as a percentage of GDP. In this context, I believe that one of the main challenges in 2016 is the healthcare funding that must be correlated with the real needs of the patients,” she points out.

The government took steps last year to reduce the price of compensated drugs sold on the market in accordance with the lowest European benchmark, with the price going down by an average of 20 percent, according to media reports. The healthcare minister at that time said that Romanians cannot continue to pay for drugs at the same prices as in other European countries with a higher GDP than Romania. The measure, which was applied three years later than it should have been, according to media reports, did not go down well with pharma producers.

Quoting Cegedim statistics, Galaseanu comments that the price revision operated in July 2015 has already triggered a decrease in Q3 (9.9 percent versus Q3 2014), but a bigger impact is expected in 2016. Sadly, the 2016 healthcare budget does not cover any improvements, and the slight difference from 2015 is there merely to cover the salaries’ increase. Again, sadly, this measure alone will not stop the doctors’ migration,” he argues.

Amgen’s country director points out that the biggest challenge for the company in Romania remains the update of the reimbursement list and consequently patient’s access to the latest therapies. “We have products which are available in almost all other European countries for the patients while according to the current legislations of Romania, they most probably will be never be reimbursed here. Amgen has on the waiting list three products, which were registered in Romania 6 to 8 years ago. In the meanwhile, we launched several new innovative products. Unfortunately, Romanian patients could not benefit from our new treatments which are more efficient, increase the life expectancy and improve the quality of life,” he says.

“The legal framework has undergone several changes in the recent years and, the end of 2015, added to the general uncertainty and lack of predictability that the industry is facing. Together with the Foreign Investors Council, we built and launched a White Book through which the private sectors is engaging in  dialogue with the authorities and proposes a practical set of recommendations to the authorities, also on heath topics. The recent price alignment to the minimum European price, demonstrated the necessity of another regulation in order to have a reasonable pricing mechanism that will encourage innovation and access for the Romanian patients to the therapies,” says Cygler.

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