IHS Global Insight Perspective | |
Significance | The Italian government has announced measures that will result in an estimated reduction in pharmaceutical expenditure of US$ 1.68 billion, as part of its recently approved 24-billion-euro austerity package. |
Implications | The measures will affect producers of both innovative and generic drugs; wholesalers and pharmacists are also affected, with mandatory margin cuts. |
Outlook | There is likely to be a period during which the various groups within the Italian pharmaceutical industry protest against the measures, which will adversely affect them all to varying degrees. |
As part of the 24-billion-euro (US$29.82 billion) austerity package recently announced by the Italian government, a series of measures intended to make 1.35 billion euro of savings on pharmaceutical expenditure by the Italian national health service (SSN) in 2010–12 have been announced, reports Italian newspaper Il Sole 24 Ore.
Measures to Affect Generics and Innovative Drugs Producers
Under the measures, there will be price tenders organised by the Italian pharmaceutical agency AIFA for the supply of a number of generics to be reimbursed under the SSN; Additionally, prescription drugs will be limited to the cheapest versions, reports Italian news agency AGI. According to Italian health minister Ferruccio Fazio, this measure is designed to reduce out-of-pocket spending by Italians, although Fazio also expects it to yield substantial savings for the SSN. The measure has been met with opposition by Farmindustria, the association representing innovative pharmaceutical producers, the source reports. Additionally, it is reported that a renewal has been proposed for the 12% reduction in generics prices introduced after the earthquake in the Abruzzo region last year, although it is unclear whether such a decrease has actually been approved by law.
Federfarma Plans Protest As Wholesale Margins Cut 3.65%
Among the main measures announced is a 3.65% reduction in pharmaceutical wholesaler margins. There has been a reaction to this already from the Italian association of pharmacists, Federfarma, which has warned that the reduction in margins will pass on directly to pharmacies, and that up to 2,000 pharmacies could be threatened with bankruptcy as a result, reports Italian news agency ANSA. The source reports that Federfarma's president, Annarosa Rocca, has stated that pharmacists are ready to engage in some form of action in protest against the measure, demanding that a fairer division of the cuts be found.
Pharmacies will also contribute to providing more savings under the measures, with the transfer of the dispensing of drugs from hospitals to pharmacies worth around 800 million euro annually, reports Il Sole 24 Ore. This implies more thorough monitoring of the dispensing of these drugs, resulting in fewer inconsistencies and less waste.
Cuts in SSN Medical Staff, But No "Super-Ticket" for Specialist Visits
Thousands of doctors are expected to lose their jobs as a result of the wider cuts in healthcare spending, reports Reuters. The plan of introducing the so-called "super ticket"—under which visits to medical specialists would require a co-payment of up to 10 euro—have been rejected.
Outlook and Implications
Discussions on which cost-cutting measures to include in the austerity package from the healthcare sector have been in progress for a while (see Italy: 26 May 2010: Pharmaceutical Spending to Be Affected by Italian Austerity Measures). Measures have already been imposed recently in four regions as a response to their inability to keep healthcare spending down (see Italy: 18 May 2010: Italian Regions Denied Extra Funds to Cover Healthcare Debt As Patients Pay 32% More for Prescription "Tickets").
The introduction of price tenders for the supply of generics—to be carried out by AIFA—is in the same vein as the discount contracts in force in Germany for generics reimbursed by sickness funds. Such a measure is almost sure to result in further reductions in the prices of generics in Italy, as the effectiveness of tenders in reducing prices has been proven in other countries. For generics producers, they can be damaging though, limiting the possibilities for market access, and forcing them to reduce their prices, sometimes to unsustainable levels.
The measure regarding prescription of the cheapest version of a drug appears to mean that doctors will be further encouraged to prescribe the cheapest drugs; in any case, it is sure that these measures will mean an increase in generic substitution in Italy. Already, a number of regions have introduced recent measures under which reimbursement is only given for the cheapest drug in a therapeutic reference group. This move will adversely affect innovative producers, whose off-patent drugs will only be available to patients with a larger co-payment. However, given that only 40% of the volume of the off-patent market in Italy is accounted for by generics (data from 2009), compared with over 70% in Germany or Poland, such a move was always going to be likely in the context of Italy's economic difficulties.
Representatives of different sectors of the Italian pharmaceutical industry—pharmacists, subsidiaries of international companies, and generics producers—have already made their opposition to particular measures known, and it can be expected that some weeks of protest and heated discussion will follow. However, the cuts are inevitable, in some form or another, and they are the latest in a series of European countries, following recent measures adopted in Greece and Spain (see Greece: 5 May 2010: Temporary Blanket Drug Price Cuts Will Have Dire Consequences, Warns Greek Pharma Association and Spain: 25 May 2010: Spanish Government Replaces Linear Drug Price Cuts with 7.5% Discount on Innovative Medications for Autonomous Communities).