Insights from The Pharma Market Access and Pricing Summit Asia by our analyst Sophie Cairns who is at the event https://t.co/PZVhsvm4E0
Is healthcare reform in the cards with new socialist government in Spain
Ten weeks after the unseating of Spain's former Prime Minister (PM) Mariano Rajoy, following a no confidence vote on 1 June, it is clear that the cabinet of the Socialist Workers Party (Partido Socialista Obrero Espanol: PSOE)'s Pedro Sánchez is going to struggle to pass any major reforms. With only 84 of 350 seats in the lower chamber of parliament, the PM recently lost a key vote on the proposal to increase the national budget deficit targets, and has already been accused of withdrawing from some of his early promises such as revoking the 2012 labor market reform. However, all of this does not seem to discourage Sánchez, who declares that he intends to serve a full term in office and will not call early elections. Since June, his party has gained support in polls and despite some clear difficulties, there are also areas where the government appears to have made significant strides. One of those areas is public healthcare.
Importantly, not all reforms require the approval of Spain's bicameral legislature (Cortes Generales). In a first significant - although largely symbolic - step, on 27 July Sánchez's cabinet approved a Royal Decree-Law (RDL; a bill issued directly by the central government in situations of "extraordinary and urgent need") removing the requirement for individuals to be "insured" (i.e. have a regulated social security status, either via paid work, unemployment benefit or similar) to access non-urgent public health care services. Such requirement was introduced in 2012 by RDL 16/2012 along with a raft of other austerity measures - most notably, patient co-payments for medicines and the delisting of more than 400 drugs from state reimbursement. The government has trumpeted this change as "restoring the universal character of healthcare" in Spain; in reality, the change will mostly affect irregular foreign migrants who are ineligible for a work permit or state benefits, and several autonomous communities had already lifted these restrictions on their territories.
While the change may be small, the symbolism matters: the Socialist government has officially begun to reverse the "cruel" austerity policies implemented six years ago, and has done it remarkably quickly since getting into power in early June. So are there more changes to come, and if so - could they benefit the pharma industry?
Despite the clear anti-austerity line of Pedro Sánchez and his ministers, it looks like measures with a significant impact on expenditure will not be implemented hastily. The (recently renamed) Ministry of Health, Consumption and Social Welfare (MoHCSW) maintains that making non-urgent healthcare available - under certain conditions - to all will in fact save money by curbing unnecessary, costly hospitalizations among previously excluded groups. When announcing this first move, minister Carmen Montón avoided forward-looking declarations by saying the government was taking a "step-by-step" approach to reforming the healthcare system, focusing on universal access first and seeking "solutions to other issues" in parallel. One of those "issues" which we know Montón herself feels strongly about are patient co-payments for drugs, which can be up to 60% of the price of prescription drugs depending on the patient's socioeconomic status. Understandably, the co-payment has been hugely unpopular with patients, and criticized by many commentators and the left side of the political scene. A small number of autonomous communities have issued their own exemption decrees for some groups of citizens, leading to legal disputes with the central government; this includes Valencia, where Carmen Montón served as regional health minister before assuming the national role. Since June, Montón has said on more than one occasion that the government intends to scrap co-payments - however, only for pensioners, and not until it considers it to be financially viable.
This is not surprising: according to government estimates released last year, Spain saved EUR5.515 billion (USD6.514 billion) between 2013 and 2016 in drug expenditure through the package of cost-cutting measures implemented by RDL 16/2012, with the bulk of this amount derived from co-payments. One way of enabling this kind of expenditure is to make savings elsewhere, and it seems as though Montón might already have an idea or two on how to do that. Speaking at the Congress of Deputies about her department's near-term priorities, Montón reportedly revealed that her Ministry plans to introduce what appears to be a value-based funding model for medicines. Montón was quoted as saying that the proposals would "develop a model to determine the value delivered by new medicines … in comparison with alternatives". Among other solutions "under consideration" by the MoHCSW that the minister reportedly mentioned are outcomes measurement for high-impact drugs, centralized procurement, and policies to stimulate the uptake of biosimilars and generics. In addition, there are plans to modify the therapeutic positioning reports (TPRs) - guidance documents prepared by the Spanish Agency for Medicines and Health Products (AEMPS) for all newly approved medicines - with a view to make them more relevant and binding for all of the country's autonomous communities.
All these proposals appear to be geared towards a more centralized, cost-effective and evidence-based pharmaceutical policy. This could lead to both positive and negative consequences for the pharmaceutical industry - and without concrete proposals and timelines, it is too early to speculate. These are often complex, difficult proposals to implement, and whilst the end-goal is to ensure a more efficient and streamlined healthcare system, there is a significant upfront cost and educational process, with many different options to create evidence-based decision-making - certainly, the pharmaceutical industry needs to ensure that its voice is heard throughout the reform process. Notably, one issue which has not been mentioned so far is the therapeutic reference pricing system, which was subject of a planned reform announced by the previous government in late 2017. Just days before the change of government, Spanish health news portal Redacción Médica reported that the draft of an updated RDL on reference pricing, which was expected to include a more granular definition of 'active ingredient' for the purpose of creating reference clusters, was due to be published imminently for public consultation. This hasn't happened, and whether the MoHCSW has simply put it on the back burner awaiting review, or perhaps discarded entirely, is not currently known.
Following years of austerity, an unstable government and the recent escalation of the Catalan crisis with implications for businesses and the economy, the healthcare and pharma sectors in Spain are headed for yet more uncertainty. If there is one positive takeaway from the past two months, it is the way the current government and MoHCSW have been communicating their activities to the public. Frequent - by previous standards - press releases on the status of the "universal healthcare" bill and other issues may indicate an era of more transparency and, hopefully, advance notice when it comes to important reforms. But let us not forget that this remains a minority, potentially fragile government, and any major initiatives could easily be delayed or even reversed in the event of early elections and another change of power, keeping policy instability in Spain high.
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We thought it was time for an update... https://t.co/h1zq9RFM7p