Hungarian patients consider that they are paying more for medicines out-of-pocket at pharmacies, despite large overall price cuts due to the blind-bid tender system. Separately, the National Health Insurance Fund's drug spending in January–April was significantly over-budget.
IHS Global Insight perspective | |
Significance | Patients in Hungary consider that they are spending moreout-of-pocket on prescription medicines than before, in spite of the overall falling price of medicines, thanks to the blind-bid tender system. Also, the National Health Insurance Fund (OEP) overshot its drug reimbursement budget quite considerably in the first four months of 2013. |
Implications | In actual fact, the amount being spent by patients overall in out-of-pocket payments on prescription drugs is going down, but reimbursement of prescription drugs and overall consumption is falling even faster; consequently, OOP payments per prescription drug package are higher. |
Outlook | Hungarian pharmaceutical companies face difficulties in keeping their medicines within the preferred price range of the OEP, which would guarantee higher reimbursement rates, and they face strong price competition from cheaper products from Asia. The OEP's drug budget overshoot, meanwhile, is no surprise, considering the overly ambitious spending-reduction targets the fund has set for drug spending in recent times – it is likely that this will be a trend repeated across the whole of the year. |
Drug prices fall, but patients are still hit in the wallet
According to a survey carried out by the Hungarian healthcare research institute GKI-EKI, the results of which were revealed in April, two-thirds of the Hungarian population feel that they are paying more in out-of-pocket (OOP) payments for medicines than in previous years – despite the fact that the blind-bid tenders for off-patent medicines in place in the country since the latter half of 2011 have resulted in considerable reductions in drug prices. In an article published on the website of the Hungarian Pharmaceutical Manufacturers' Association (MAGYOSZ), attributed to the head of the association, Dr. Lívia Ilku, it was stated that during the course of 2012, the prices of around 2,300 drugs fell as a result of the blind-bid tenders.
The reason for the perceived increase in OOP payments, according to Dr. Ilku, is because under the blind-bid tender system, if a price is offered for a product which is above the "preferred" price range, then its reimbursement declines by 15%. Thus, the producer may place a bid which represents a significant reduction in the price of a given product, but if it is not within this preferred range – currently a maximum of 10% higher than the reference price in a therapeutic group – then the reimbursement is reduced by 15%, and patients have to cover this sum with OOP payments.
Domestic companies cannot compete on price with Asian producers
Dr. Ilku poses the question of why domestic pharmaceutical companies do not reduce their prices further in order to be placed within the preferred price range, emphasising that these companies employ workers in Hungary, and they have to pay them Hungarian wages, and so their products cannot be expected to match the prices of products from some Asian manufacturers operating in low-cost production markets. She once again states that there is a danger that domestic producers will be forced to withdraw products from the Hungarian market, arguing that the increased amounts being paid out in OOP payments by patients is unsustainable.
OEP drug reimbursement exceeds budget in January–April
Separately, over the course of the first four months of 2013, Hungary's National Health Insurance Fund (OEP) had a positive financial balance of around HUF40 billion (USD177.22 million), according to Hungarian medical news provider, Weborvos. This is because revenues to the fund were slightly higher than anticipated, and expenditure slightly lower, the source reports. Significant savings were made in the areas of outpatient and inpatient care, while revenues were higher than anticipated by HUF11.7 billion. However, in the case of pharmaceutical reimbursement spending, the planned level was in fact exceeded, by as much as HUF21.4 billion. As a direct consequence of this, the revenue received by the OEP from payments from pharmaceutical companies relating to reimbursement was higher than anticipated by HUF7.5 billion. Spending on medical devices was also higher than planned, by HUF2 billion.
Outlook and implications
There has been a steady rise in the proportion of the cost of prescription medicines covered by patients' OOP payments in the past few years in Hungary, which is the subject of increasing concern for many stakeholders. A recent report has shown that, in fact, overall OOP payments for prescription drugs fell in 2012, but the proportion of the cost of prescription drugs covered by OOP payments in that year actually increased – this is because the level of reimbursement expenditure – and the level of overall consumption – fell even more sharply (see Hungary: 26 February 2013: OOP drug spending in Hungary rises to 48% of total market in 2012). Thus, OOP payments per prescribed drug package are actually higher, but because consumption is down, the overall amount is lower.
Theoretically, patients should be able to reduce their OOP spending on prescription medicines to an even greater extent; however, many opt to continue with medicines which they are used to taking, accepting the increase in the price, rather than swapping to unfamiliar brands. Having said this, there has been in recent times a marked increase in the number of patients willing to accept cheaper options (see Hungary: January 23 2013: Hungarian patients becoming increasingly likely to accept cheaper option at pharmacies). This is obviously an issue for Hungarian producers, which are increasingly active in seeking more lucrative markets outside of their home country to compensate for losses at home.
The fact that the OEP spent more than budget on pharmaceuticals in the first four months of 2013 is no surprise, considering the fact that the OEP's budgets in the past year or so have all been significantly overshot, as the Hungarian government has been overly ambitious in its savings targets. On the one hand, this benefits the pharmaceutical industry, as sales are higher, but on the other, it is negative, because of the higher payments it has to make back to the OEP.