After months of anticipation, the Romanian Ministry of Health has introduced its revised clawback system, which is a very negative development for the country's pharmaceutical industry.
IHS Global Insight Perspective | |
Significance | Romania's Ministry of Health introduced the updated clawback system on 1 October, which is already the subject of considerable controversy among stakeholders in the Romanian pharmaceutical industry. |
Implications | Romania is under pressure to cut its deficit, and the country's government is seeking opportunities to make savings in any conceivable way, but considering the very small level of spending on healthcare in general—and consequently on pharmaceuticals—the system introduced is unduly harsh. |
Outlook | It is being predicted that the value of the Romanian pharmaceutical market from the perspective of producers will decline by around 30% as a result of the clawback system; it is likely, however, that the outrage within the industry will result in some lively discussions with the government over the coming weeks, and some adjustments to the system in due course. |
New Clawback System Finally Introduced
The Romanian Ministry of Health (MoH) has finally introduced the long-anticipated changes to the clawback system for pharmaceutical companies supplying medicines reimbursed by the Romanian National Health Insurance House (CNAS), with the new system coming into effect by ordinance from 1 October. The system obliges pharmaceutical companies to pay back—on a quarterly basis—any expenditure on pharmaceutical reimbursement in excess of the amount approved in the budget for this purpose, with medicines used in both the primary- and secondary-care context included.
Payment will be due from companies on the basis of their market share. The value that each producer will be obliged to pay will be communicated by the CNAS, according to an established mathematical formula. In its press release introducing the new payback system, the Romanian MoH provides a hypothetical example of how the system will work: if a budget of 100 million lei (USD30.7 million) is allocated to drugs in a particular quarter and the actual consumption amounts to RON150 million, the pharmaceutical companies will have to pay back 33%, or RON50 million.
Minister Says System Will Bring Budget Control
Romanian health minister Ladislau Ritli is quoted as saying that the new system will have the effect of regulating and controlling the budget, unlike the previous version of clawback, under which he says only 5% of the forecast revenue was collected. Ritli gives the example of oncology, stating that in 2010, there was a 20% increase in the consumption of oncology drugs by value, while morbidity was only up by 8%. According to the MoH's press release, the funds collected will be used to ensure that medicines included in national health programmes can be provided to patients with no co-payments.
Drug Makers, Patient Groups Speak Out Against Clawback
Unsurprisingly, the pharmaceutical industry in Romania is strongly against the revised clawback system, with representatives of the Romanian Association of International Drug Manufacturers predicting that the value of the Romanian pharma market could decline by as much as 30% as a result of its introduction. Considering that the annual budget allocated to drug reimbursement stands at around RON4.4 billion and actual consumption amounts to around RON6.1 billion, this would leave them with a clawback bill of around RON1.7 billion. As reported by Romanian medical news provider Romedic, head of the National Association for the Protection of Patients Vasile Barbu has questioned the justifications used by the Romanian authorities for the implementation of the new system—namely that spending on pharmaceuticals has to be kept under tighter control—in the context of Romania having among the lowest annual spending on medicines per capita in Europe, at EUR60 (USD79.3) compared with the average of EUR450 for the whole continent.
Outlook and Implications
After months of anticipation over what shape the new clawback system would take, it is clear that the system introduced is worse than many had predicted for the pharmaceutical industry. Judging by the many comments and statements made by stakeholders since the announcement of the system's methodology was made, there is a degree of incredulity that after all the recent measures, and in the context of the chronic payment delays for reimbursed drugs, such a system could be introduced. With Romania coming under pressure to make the necessary economies in order to satisfy its international creditors in the International Monetary Fund, it is looking for efficiencies wherever available. There are a complex set of inter-related issues at play in the Romanian pharmaceutical sector though, and this system could push it to the brink of near collapse unless it is modified in some way.
The one uniting theme across the many interrelated issues at play in the Romanian pharmaceutical sector is the completely insufficient amount of money in the system: Romania dedicates among the smallest amount to public healthcare of any EU country. It is hard to escape the sense that the Romanian authorities are simply attempting to shift a considerable proportion of the reimbursed drug budget onto the pharma industry. It can be expected that the Romanian pharmaceutical industry will react decisively in opposition to this new system, and that there will be much debate and disagreement between the two sides before arriving at an imperfect compromise.