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Portuguese MoH pleases troika but pharma remains anxious
As 2012 drew to a close, the Portuguese Ministry of Health took stock of the most notable developments that rocked the country's healthcare arena in 2012. Amongst them is a huge paradox in the healthcare accounts for 2012 since the MoH enjoyed the biggest budget ever during a year of contention. This is because of the supplementary budget of EUR 1,500 million (USD 1,987 million) that helped settle historical debt on top of the annual state budget transfer to the national healthcare system (SNS) of EUR 7,585 million.
In fact, the MoH's debt settlement programme has significantly reduced the stock of arrears, according to the 6th review of the Economic Adjustment Programme report from the European Commission (EC). These reviews assess compliance with stipulations in the Memorandum of Understanding (MoU) signed in May 2011 by the Portuguese government in exchange for a financial bailout from the so-called troika made up of the EC, International Monetary Fund and the European Central Bank. The report comes after the troika staff visited the capital of Portugal, Lisbon, from 12-19 November.
With a settlement of EUR 1, 500 million, the EC report says the remainder of about EUR 1, 000 million will in turn be settled via a second supplementary budget of EUR 432 million and specific savings in 2013. Although the EUR 432 million was approved in 2012, the troika has only allowed the MoH to touch it next year. This is reportedly because of accumulation of new debt, which the February 2012 law of commitments was designed to prevent. Under this law, hospitals should not be purchasing medicines and other supplies without funds to fulfil their obligations in the next three months.
Since then, the troika has been persuaded this law is being "implemented" despite the MoH recently admitting hospitals have difficulty fulfilling it in exceptional cases. This admission came shortly after Portuguese branded industry association Apifarma complained hospitals breach this legislation even with now unlawful extended payment deadlines. The association once more highlighted that sky-high debts in 2012 marked a particularly difficult year for the pharmaceutical industry in Portugal.
Another immediate concern for Apifarma is the lack of funding approval and availability of innovative medicines. Despite the MoH boasting 2012 "guaranteed access to innovative medicines", such as US firm Pfizer's rare neurodegenerative disease drug Vyndaqel (tafamidis), the situation has considerably deteriorated lately. Another worry continues to be legislative instability because 2012 was marked with significant reform linked to greater savings.
Both the EC and the MoH were singing from the same hymn sheet with expectations of more savings from a range of measures including the implementation of compulsory prescription by active pharmaceutical ingredient. A policy unlikely to have generated the expected savings is the altered basket of countries used in the international reference pricing system, which is reportedly about to change again in the sequence of the troika's 6th review.
The EC report says savings in the outpatient medicine sector are being generated but those in hospitals have been "slower to materialise". However, it believes recent progress in centralised purchasing may lead to important savings. Despite not admitting disappointment with the hospital sector, the MoH joined the EC in stressing these measures in combination with the protocol signed with Apifarma are likely to "ensure the target for 2012, i.e. lowering expenditure to 1.25% of GDP will be achieved".
In recent weeks, Apifarma sat down with the MoH to renegotiate this cost-containment protocol for 2013. This currently includes a payback clause of up to EUR 300 million for 2012 medicine expenditure (EUR 130 million for ambulatory and EUR 170 million for hospital), which if exceeded results in manufacturers who have signed up to the protocol returning the surplus spending to the SNS. Expenditure on ambulatory medicines attained the target whilst for hospital medicines the reduction was not as significant as expected. Until mid December, Apifarma said manufacturers have accordingly issued notes of credit of about EUR 40 million to SNS units.
The MoH has reportedly brought to the negotiation table a EUR 333 million reduction in medicine spending for 2013 in order to meet troika's target of public drug expenditure not surpassing 1% of GDP next year. (Diario Economico newspaper) However, Apifarma is unsurprisingly resisting the idea since the foreseen expenditure cut is likely to be unbearable and could lead to an exodus of multinationals from the market. These negotiations are expected to be once again strained and protracted as the pharmaceutical industry wants cost-cutting measures that involve other stakeholders whilst the MoH plots more legislative change to please the troika.
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