Global Insight Perspective | |
Significance | The State Institute for Drug Control has found that many Czech medicines have higher prices than their equivalents in the European Union. |
Implications | The prices of 80% of the pharmaceuticals on the market in the Czech Republic will be cut. The move may be politically motivated and coincides with the filling of a petition for the abolition of healthcare fees by patient organisations to the Czech Lower House. |
Outlook | Whereas patients would certainly welcome the government's decision, the pharmaceutical sector, especially domestic generics industry that relays principally on the Czech market, will be most badly hurt. |
Czech Government to Slash Drug Prices
In an unprecedented move, the Czech government has decided to cut the prices of roughly 80% of pharmaceuticals present on the market, reports Dow Jones. The State Institute of Drug Control says that the decision came as a result of a comparison of prices of drugs with other European Union (EU) countries. Marek Snajdr, deputy Health Minister told the source, "There is no reason for the Institute not to use its mandate and eliminate the premium [paid for drugs] compared with other EU markets." The Institute is currently completing the price comparison with eight other European countries. So far, Dow Jones reports, around 15% of medicines on the Czech market may have their prices elevated, compared to around 4,000 pharmaceuticals that are expected to have their prices reduced.
Commercial medicinal products are subject to price regulation, with prices updated annually. Since 1997, the Czech Ministry of Finance has set the maximum ex-manufacturer price for products that have a marketing authorisation. In the price-setting process, international reference pricing is used. The Ministry of Finance looks at the lowest price from the following markets: France, Greece, Hungary, Poland, Slovakia, and Spain. Currently, reimbursement is based on categories of active ingredients, with the list reviewed by the Categorisation Committee of the Health Ministry twice a year, depending on inflation and exchange rates. Internal referencing is used for determining the maximum reimbursement price that health insurance funds pay. The reimbursement price is set as the lowest price of products considered to be of therapeutic equivalence.
Patient Organisations Lodge Petition Against Healthcare Fees
The Czech Lower House has received a petition on behalf of the Czech Patients' Association, signed by 78,000 citizens, against healthcare fees and privatisation in healthcare, reports CTK Daily News. Since 1 January 2008, Czech citizens are obliged to pay a 30-koruna (US$1.46) fee per prescription, payable directly in pharmacies. Additionally, a 30-koruna fee is paid for visiting a general practitioner (GP), specialist, dentist, clinical psychologist, or clinical speech therapist. Also, a payment of 60 koruna is mandatory per in-patient day in hospital, with a 90-koruna fee for first-aid service and in-patient emergency-service visits. The reform limits the annual sum in fees payable by one patient to 5,000 koruna (see Czech Republic: 3 September 2007: Co-Payments to Be Introduced Czech Republic in 2008).
Only recently the government coalition reached an important compromise on abolishing healthcare fees for newborn babies and for children under the age of six years, with a reduction of the 5,000 koruna annual limit to 3,000 koruna for children under 15 years (see Czech Republic: 3 June 2008:Czech Government to Abolish Healthcare Fees for Newborns, Set to Cap Fees for Under-15s). Once again the healthcare fees are set to be the subject of heated debate in parliament during the coming months.
Outlook and Implications
This latest move to cut the prices of around 4,000 medicines is damaging to the pharmaceutical sector in the Czech Republic, a market dominated by cheaper generics (by volume). Most affected will be the smaller generic companies that are heavily dependent on the domestic market. Following the Czech Republic's accession to the EU, generic manufacturers have been faced with additional costs for supplying bioequivalence data for any new generic product they intend to register. Also, the share of generics in the country has been declining in recent years, under pressure from imports of expensive, branded pharmaceuticals. It remains to be seen whether a more formal international pricing system will be introduced; so far the lowest price among the reference group of France, Greece, Hungary, Poland, Slovakia, and Spain has been used for the purposes of price-setting. Further expected regulatory changes are an improvement of transparency and a greater role of the Institute of Drug Control, which could take over the Ministry of Finance's role in pricing.
The decision to undertake massive drug price cuts comes at a time when public's anger over healthcare fees is rising, and the government's move could well be politically motivated. The Czech centre-right government is faced with continuing opposition from two junior coalition parties, the Christian Democratic Union (KDU-CSL) and the Greens (SZ). The much debated legality of the healthcare fees in relation to the Czech constitution has now been cleared, with the Constitutional Court's ruling in favour of healthcare fees, which are expected to make a significant contribution to the government's cost-containment policy (see Czech Republic: 3 January 2008: New Czech Co-Payments to Yield Over US$200 mil. Annually).