IHS Global Insight Perspective | |
Significance | The Polish Association of Pharma Industry Employers (PZPPF) has launched a strong attack on many of the measures in the reimbursement act currently going through the legislative process in Poland, which it believes will have very negative effects on its members. |
Implications | Principally, the PZPPF is opposed to the proposals in the act relating to the introduction of a new "payback" system for pharmaceutical companies supplying reimbursed drugs, and a 3% levy on the revenues of these companies, as well as the plan to fix drug reimbursement at 17% of overall public health expenditure. |
Outlook | Most of the measures in the reimbursement act are not expected to come into force until 2012, before which time some important changes could be made; much will depend on the position of the government concerning increases to overall healthcare spending. If significant increases are forthcoming, the reimbursement act will appear less of a threat; otherwise, it may be the case that pharmaceutical companies will be in line for considerable financial expenses from the requirement to cover any overspend on the drug reimbursement budget. |
The Polish Association of Pharma Industry Employers (PZPPF), the association that represents many of the leading generics producers in Poland, has given its official position on the reimbursement act, a major overhaul of regulations regarding pharmaceutical reimbursement in Poland that is currently at an advanced stage of the legislative process. In its regular newsletter on its website, entitled "Pigulka", the PZPPF considers many aspects of the reimbursement act and their predicted effect on the Polish pharmaceutical industry, as well as on access to medicines. Except for a couple of points, the PZPPF's stance on the act is almost wholly negative. The full newsletter is available, in Polish, here.
Stark Warning over Plan to Fix Reimbursement at 17% of Health Expenditure
One of the proposals in the act is for expenditure on the reimbursement of medicines to be fixed at 17% of overall public health expenditure. The PZPPF warns that this could have a devastating effect on access to medicines for Poles, at a time when the country's population is ageing rapidly and awareness of health issues is rising, with both of these factors leading to an increase in demand for medicines. The PZPPF reports that in 2008, expenditure on medicines amounted to 22.6% of overall public health expenditure, and although this seems to be quite a large amount, it is relative to the overall level of public health expenditure in the country, which is comparatively low when set against that of neighbouring countries such as Hungary and Slovakia. On the basis of data from the Organisation for Economic Co-operation and Development (OECD), the PZPPF calculates that drug reimbursement per citizen in Poland stood at US$66 in 2007, compared with US$186 in Hungary and US$208 in Slovakia. In Poland, the proportion of the reimbursed drug bill covered from out-of-pocket payments is reported to have reached 30% in that year, compared with 19.9% in Hungary and 13.4% in Slovakia.
Total public drug reimbursement expenditure during 2009 in Poland reached 10.4 billion zloty (US$3.43 billion), which represented 18.91% of the total public health budget. The PZPPF estimates that if the measure reducing expenditure on reimbursement to a fixed 17% of the public health bill annually was brought into effect, then this expenditure would fall to below 9.4 billion zloty. Furthermore, the PZPPF argues that, if spending on medicines used in therapeutic programmes and chemotherapy is omitted, then spending on reimbursement of prescription drugs accessed in pharmacies would fall from its current level of 11.2% of overall health spending (in 2010) to 9.9%, and then 8.4% in the following years.
Strong Opposition to Planned "Payback" System and 3% Levy on Medicine Sales
In the reimbursement act, not only is it planned to set drug reimbursement expenditure at the fixed level of 17% of the overall health budget, it is also proposed that any spending over this level should be covered by pharmaceutical companies. The PZPPF is strongly opposed to this proposal, for several reasons. It accuses the Polish Ministry of Health of making errors in its preparation of this measure, because according to the PZPPF, the justification given for this 17% level is that it was taken from a comparison with OECD countries; the PZPPF says this is incorrect, as the meaning of the proportion of health spending dedicated to drug reimbursement is modified by the relative wealth of comparison countries, and the overall amount they spend on public healthcare. So, for example, in the United Kingdom in 2008, pharmaceutical spending as a percentage of overall healthcare spending was 11.8% (according to OECD figures), but healthcare spending was 8.7% of GDP, and pharmaceutical spending per person was US$368, whereas in Poland, public expenditure on healthcare hardly exceeds 5%, and pharmaceutical spending per person stands at US$95 (also OECD data).
The PZPPF stresses that 17% is a very low "ceiling" for pharmaceutical spending in Poland, and also criticises the formulation of this "payback" system, stating that it is formulated in a way that is different from other countries in which such systems are in place, which is also unfavourable to Polish drug producers. The association calls for generics producers to be exempted from this payback system, as is the case in France. Additionally, it calls for the cost of medicines used in therapeutic programmes and chemotherapy covered by the Polish National Health Fund (NFZ) to be exempted from the system. It also wants the risk of the drug budget being exceeded to be shared by producers and the payor (the NFZ). Finally, it proposes that payback should only be applied once the reimbursed-drug budget for a particular year has been exceeded by more than 5%.
PZPPF Says 3% Levy Will Reduce Profits by One Quarter
Additionally, the plan in the reimbursement act to apply a 3% levy on the revenue of producers of drugs used in the Polish state drug reimbursement system is strongly criticised by the PZPPF. The money due to be collected from this levy is planned to be spent on comparative drug studies, which the PZPPF considers to be a plan that severely lacks transparency. Moreover, it estimates that this 3% levy will result in a reduction in the profits of drug producers in Poland by one quarter. It proposes that the levy be reduced to 1%, and that incentives also be introduced for companies engaged in research and development activities.
Outlook and Implications
Although the PZPPF's concerns regarding the proposal to fix drug reimbursement expenditure at 17% of overall healthcare expenditure are understandable, it has to be emphasised that this may not turn out to be as significant a problem as it envisages, if the expectations of some observers in Poland are realised and there are increases in overall health expenditure well above inflation in the coming years. However, if overall public health expenditure—the NFZ's budget—does not rise faster than inflation, there may indeed be a cause for concern for drug producers.
As it is hardly likely that there will be a reduction in demand for medicines in Poland, consumption is almost certain to increase; if the 17% proposal is introduced, it could in theory result in pharmaceutical producers covering a considerable amount, in the event that overall expenditure rises only gradually. Although it is widely acknowledged in Poland that out-of-pocket spending on medicines has already reached a level beyond which any increases would be difficult to sustain, the Polish government just may be looking to the pharmaceutical industry to help plug the gaps in funding.
The PZZPF's criticism of the reimbursement act is very strong, as it believes that these measures will have an overwhelmingly negative effect on its members. In its newsletter, it states that in Hungary, drug makers are only required to cover the overspend in the case that it exceeds the allocated budget by 9% or more, arguing that the solutions being put forward in Poland are the harshest in the European Union. However, as has been reported previously, most of these measures are now slated to come into effect in 2012, before which time there will be plenty of negotiations and opportunities for changes. The fact that there will be a general election in Poland before that date may also be significant, although it is very unlikely that the current government party will be voted out, meaning that in some form or other, this legislation will go through, with the groundwork to be done in the course of the next year (see Poland: 12 November 2010: Polish Reimbursement Act Likely to Come Into Force in 2012 After Negotiations with Drug Producers).