View of Commercial League National Pharma Center on the Recent Cost-Cutting Effort

Note: For us, public communication in healthcare does not mean PR campaigns for individual pharmaceutical products, nor does it mean self-promoting statements about quasi-investments, nor use of patient organizations for corporate interest.

For us, public communication in healthcare is above all a way to find the solutions for critical problems and the introduction of the long-awaited healthcare reform, the right place for confidentiality of personal medical data and the patient-doctor relationship, as well as the prudent correlation between private and public insurance funds and addressing the problem of the widespread corruption in healthcare.

The new approach of pressuring pharmaceutical manufacturers and distributors into cutting costs and deferring debts payable by the NHIF is disgraceful and will hardly have the desired effect. It cuts off paths to improvement in patient accessibility to reimbursed medicines, to achieving stability in the drug-supply market and restricted budget implementation.

Healthcare officials and managers with polarized opinions and proposals have addressed the danger of rising public cost for medicines and all claim to have solved the problem with the quality and accessibility of care. So far, none of this has been achieved and the record low among Europe rates of reimbursement for important diseases remains unchanged.

In 2010 the NHIF had a serious deficit of financial resources for reimbursement of medicines for outpatient treatment and cut costs, including fees payable by patients for fill-in prescriptions that ought to be fully reimbursed. Additional discounts are drilled from pharmaceutical manufacturer’s prices of 5%, as well as reduction in distributors’ and pharmacies’ mark-up by 6% and 15% respectively.

The expected financial effect, if achieved at all, would amount to an annual BGN 40 million, which in no way solves the budget problem, as the deficit exceeds BGN 100 million.

What will be the price, however, paid by society for these administrative limitations introducing austerity measures from the wrong end of the value spectrum?

Accessibility to medicines has been severely disrupted because distributors and pharmacies need to provide medicines while accepting that their payment from the NHIF will be deferred by a few more months under compulsorily reduced mark-ups. The reasons for this failure are the lower revenue collection of the government budget and the economic inexpedience of proposed solutions in several aspects:

1. The NHIF imposes the smallest discount to the players who benefit the most within the supply chain (5%) – foreign manufacturers of medicines under patent protection.

2. Respectively, the financially weakest players, pharmacies and distributors, are burdened with the highest discounts, while carrying the whole financial burden of funding NHIF operations.

Therefore, by equally treating economically unequal entities with different profit participation, the NHIF discriminates against weaker but equally important players in the sector. This flawed system was instituted in June 2009 by the previous government under the leadership of the corrupted E. Raynov.

Despite the obvious gaps, the increasing expenses and the narrowing access to medication, the Ministry of Health and NHIF as yet have not taken the necessary decisions. Here are some points which Commercial League considers to be crucial:

1) Incentives to use generic medicines would swiftly lead to at least 30% drop of reimbursement costs and would improve access for patients after co-payments have been decreased. To that end, the positive drug list regulation and the drug pricing regulation must be amended. Referral prices to trademarks rule ought to be replaced by referring to international non-proprietary names (INNs).

2) In the NHIF reimbursement system, reimbursing level on prescribed medication ought to be superseded by reference values on expenses for complete treatment of each disease payable up to a fixed monthly money limit. The transition from medicine- to therapy-related reimbursement would increase the impact of patients on doctors in terms of scrutinizing included therapies within the monthly limit. This would lead to public control of prescriptions and improve access.

3) The system of distribution of costly medicines, which account for over 60% of the overall expenditure for reimbursed medicines, must be built throughout negotiations between NHIF and manufacturers and the encouragement of distributors to grant the retail pharmacies with consignment stock arrangements. NHIF’s payments ought to be made directly with the manufacturer or an authorized distributor.

This structure of distribution and delivery of reimbursed medicines removes financial risks and relieves low-liquidity players, such as pharmacies and distributors, of their burden and at the same time enables NHIF to contract deferred payment and discounts with pharmaceutical manufacturers, who would be guaranteeing financial security by directly contracting the public fund. The availability of such a construction and its implementation in Bulgaria (until June 2009) secured broad access to medicines in the whole country for more than seven years.

It seems as though the previous government has laid a financial time bomb for the current government – having enjoyed all benefits from the abolished pharmaceutical distribution structure in the country. Indeed, by the end of 2009 there were no strikes of pharmacists and medical doctors, only casual groups of patients who still show discontent.

Many other improvements could facilitate these necessary decisions but they cannot replace them as technical approaches and instruments. A mandatory health record would be of tremendous use, it would be created for everyone, even for the uninsured, with or without a separate electronic file. Another useful step would be the consolidation of all controlling and regulatory bodies in healthcare, including the ones in charge of pharmaceuticals, into an agency with the Council of Ministers.