“The government did not achieve any real savings with the drug price cut. The 2009 price reduction order had to be enforced, of course, but it should have been done gradually, not all of sudden,” said Robert Popescu, chairman of the Association of Pharmaceutical Distributors and Retailers in Romania, at the ZF Pharma Summit ’15 on Tuesday.
ZF Pharma was organized by ZF in partnership with the Association of Pharmaceutical Distributors and Retailers in Romania, Antibiotice Iasi, Ionescu si Sava law firm, Bondoc si Asociatii law firm, EASI Logistic, Farmexpert, Honda Trading Romania, Janssen (part of Johnson & Johnson), McCann Erickson, Microsoft, PeliFilip, Porsche Finance Group and Terapia.
“Had it been an annual cut of 2% to 3%, it would not have had such a big impact on the business, it would have been a percentage that allowed companies to adjust.”
The impact of the price decline translated into a 17% drop in the revenue of distributors and pharmacies, and the local market might lose half of its retail pharmacies in the coming year, Robert Popescu added.
“Not all products will be able to stay [on the market] at the current prices. The total spending on drugs will not go down and I think we will see a 2.8% decline of the market by the end of this year,” said Petru Craciun, general manager of market research company Cegedim.
Besides the drug price cut and the clawback tax, which eats 25% of the revenue of the companies in the industry, companies also have to deal with a complete lack of transparency from the authorities.
“Out of the 500 million lei (EUR113 million) paid by generic drug producers as taxes, we estimate 200 million were actually miscalculations by the CNAS (National Health Insurance House i.e.) of the clawback tax. Taxes account for 50% of the cost of a drug at the moment,” said Dragos Damian, chief executive officer of Terapia (part of SUN PHARMA Company) and chairman of the Generic Drug Manufacturers Association in Romania.
Most of the privately held companies in the pharmaceutical industry say that the government will not be able to make any savings despite the decision to cut drug prices, so patients will end up actually paying more for medicines.
Cegedim’s Petru Craciun says a number of inexpensive drugs will cease to be available on the market because the price cut imposed rendered them unprofitable. Lacking cheaper treatment options, patients will have to turn to more expensive products.
“Companies will try to survive by changing product portfolios. I can understand the reason to cut drug prices, because every customer wants good quality at the best price, but the way this measure was devised is not really in the spirit of the noble intention behind it,” he added.
On the other hand, Marius Savu, the chairman of the National Agency for Medicine and Medical Devices (ANM), says that since there is an order issued in 2009, therefore a law, it was supposed to be enforced at some point, which companies in the industry have to accept. However, he does admit that a 15% to 20% drop in drug prices may also have had some not so positive effects such as some products becoming unprofitable.
“The order about the current drug prices has been valid since 2009 but had never been enforced. I think it is time the main actors sat down together and reconsidered how a price structure that is attractive to the public sector and fair to the industry should look like.”
Some irregularities in Romania’s healthcare system are caused by the lack of transparency, he added. Therefore, his agency will start to publish on its website details about the funding various service providers, doctors or pharmacists received from pharmaceutical companies as of the end of this month.
(English version by Loredana Fratila-Cristescu)