Pharma Fights Healthcare Cost-Containment Policies - Pharmaceutical Technology

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PharmTech Europe

Pharma Fights Healthcare Cost-Containment Policies
The ongoing economic crisis in Europe has accelerated healthcare cost-containment measures targeting the price of pharmaceuticals, but the pharma industry is not giving in without a fight.




Unpaid debts

Another major problem for pharmaceutical companies is that although they have continued to supply drugs for the European market, there is a growing level of unpaid bills by governments. According to some media reports, austerity measures leading to healthcare spending cuts for hospitals in Portugal, Italy, Greece and Spain have meant delays in payments for some drugs of up to three years (5). According to EFPIA, its member companies are owed between €12 billion to €15 billion.

Most of the attention has been focused on Greece, where the unpaid debt stands at €1.7 billion (6). In November 2012, EFPIA offered to cap the amount the Greek government pays for outpatient prescription drugs in exchange for payment of all outstanding debts to the industry and a commitment to avoid future debts accumulating (6). EFPIA has also signed similar pharmaceutical stability deals with Belgium, Ireland and Portugal.

One country where the pharmaceutical debt problem has been growing in severity is Spain. According to Farmaindustria, the Spanish industry trade association, companies were owed between €4 billion to €6 billion in 2012 (6). On average, hospitals were paying bills 430 days late and some pharmacists closed their premises over unpaid bills (7, 8). Roche reportedly stated that several hospitals had not paid their bills for two years, causing the company to insist upon strict credit terms with 12 hospitals in Spain’s 17 autonomous regions (7). In Valencia, pharmacists complained that the regional government had not paid for any drugs dispensed in the area for nearly five months (7).

In June 2012, the government was forced to act to address debts to a cross-industry list of service providers and announced that it would pay €17 billion to suppliers of its autonomous communities (8). Spain’s autonomous regions are responsible for half of public spending, but have vastly overshot their deficit targets since the start of the economic crisis. Data from the Bank of Spain show that they owe twice the amount that they owed in 2007 (7).

According to the Deputy Prime Minister, Soraya Saenz de Santamaria, approximately 40% of the money provided by the government was to be used for healthcare bills, but participation in the plan was optional and three regions did not request funds (8). In July 2012, it was reported that a Spanish government payment scheme had settled about 96% of the pharmaceutical debt in the country (7). The Spanish Association of Health Technology Businesses was reported as being satisfied with the scheme, which resulted in 90% of its members’ debts being settled, but it warned that new debts exceeding €2 billion were accumulating in various Spanish regions (7). These concerns were also shared by Farmaindustria, but regional government officials were said to be surprised by the industry’s worries, although they did not challenge the debt data provided to the Spanish media (7).

Summary

After several years of acceptance, the pharmaceutical industry is challenging European governments to address the problems that the economic crisis is causing companies. Many pharmaceutical trade associations have made representations at the highest political levels to limit the continuing drive to introduce price cuts and to ensure that they are paid for supplying medicines. The scale of the unpaid bills in European countries, particularly in Spain and Greece, is at a record level that may force companies to take drastic measures. In Greece, for example, Merck KGaA was reported as having halted supply of its cancer drug Erbitux (cetuximab) to public hospitals due to unpaid bills (7). This is a course of action that some of the leading companies have publicly stated that they do not favour, but behind the scenes the leaders of the pharmaceutical industry must be working on strategies to persuade governments to take the sector’s views more seriously.


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