IHS Global Insight Perspective | |
Significance | New regulations on the establishment of drug prices in Romania mean that the price of generics launched on the market will have to be no more than 70% of the price of the originator drug, an increase from the present level of 65%. Biosimilars are to be priced at 80% of the price of the originator product. |
Implications | The changes in the regulations on the pricing of generics come after criticism that drug prices in Romania were excessively low compared with surrounding states, and that this was promoting parallel trade and negatively affecting pharmacies and distributors. |
Outlook | The changes may stabilise the situation in the Romanian pharmaceutical market, although its main problem remains a chronic lack of funds from the national state budget. Without an improvement in this area, the pharmaceutical industry in Romania faces a very difficult 2010, irrespective of changes to the method of setting drug prices. |
Romania's ministry of health (MoH) has announced changes to the regulations for the setting of drug prices in the country, which will update the most recent changes implemented in April 2009. Most significantly, the changes will mean that the price of generics being introduced on to the Romanian market will have to be no more than 70% of the price of the originator product, rather than 65%, as previously. Provision is made for biosimilars in the new regulations, and it is stipulated that biosimilars must be priced at no more than 80% of the price of the original biotech product. There are also new regulations to be introduced regarding the international price referencing system.
Main Aspects of New Regulations, due for Introduction in April 2010 |
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Source: Official Gazette of the Romanian government |
Changes Expected to Result in Increase in Drug Prices
The changes are predicted by head of the Romanian Association of International Medicines Manufacturers Dan Zaharescu to result in a 5% increase in the price of drugs in Romania, reports Romanian economic news provider, Wall Street. The exchange rate at which the price of drugs is to be calculated is expected to be between 4 lei (US$1.42) and 5.25 lei, which would result in a rise in the price of drugs for Romanians if there is any sharp drop in the value of the lei, the source reports.
Outlook and Implications
The changes in regulations concerning the setting of the price of generic drugs are a response to the criticism levelled at the Romanian MoH for the system that is currently in place, which has resulted in an increase in parallel-trade activity, as the prices of generics in Romania fall to a level that is lower than in a number of surrounding countries (see Romania: 3 November 2009: Romanian MoH Plans Changes to Increase Price of First-to-Market Generics). The very low price of generic drugs, which make up the vast majority of drugs provided under the Romanian health insurance system, has also been one cause of the problems of pharmacies and pharmaceutical distributors in the country, who have seen their profitability severely dented as a result.
The establishment of a new exchange rate at which the price of drugs will be calculated is likely to be a cause of relief for international companies selling their products in Romania. Many international companies have incurred considerable losses to their profitability as a result of the current regulation that means the price of drugs is calculated on the basis of an exchange rate of 4 lei to the euro, whereas the rate of the lei has been closer to 4.25 euro in recent months.
Meanwhile, although the changes are expected to stabilise the pharmaceutical market in Romania, there are concerns that the price of some drugs could rise excessively, with increases of as much as 217% for some drugs predicted by experts, reports Romanian news provider Gardianul. Moreover, the Romanian budget for healthcare in 2010 looks far from sufficient, and there are concerns being expressed by opposition politicians in the country that money for healthcare will run out by July (see Romania: 6 January 2010: Romanian Health Minister Sets Out MoH's Plans for 2010, Only Slight Increase in Spending Planned).
The introduction of a new regulation on the establishment of prices for biosimilars indicates that the market for these drugs is due to develop in Romania, as the Romanian MoH seeks more cost-containment options in its pharmaceutical policy.