Spanish Government Confirms Healthcare Reforms, Defunding of Drugs
After a slight delay, the Spanish government yesterday passed the previously announced Royal Decree-Law 16/2012, which sets out a series of reforms on the healthcare sector in Spain.
IHS Global Insight Perspective
The passing of the decree setting out healthcare reforms in Spain comes as no surprise, despite opposition from several regions that will be implementing new co-payment rules.
Among several other measures, the decree highlights the need for "defunding" of pharmaceutical products that are not deemed necessary to the public healthcare system, as well as a more widespread tendering and auctioning of drugs in Spain.
Although the government has highlighted expected savings of around EUR400–450 million through defunding, in reality the process could exceed this as the government appears intent on imposing stricter reimbursement criteria and a centralised procurement process. The industry has avoided outright price cuts, but these new procedures will provide longer term market access barriers to the Spanish market.
The Spanish government yesterday (24 April) approved the Royal Decree-Law 16/2012, which outlines a series of new measures to restrict demand and supply of healthcare services and products in Spain. The measure is a direct result of the government's attempts to grapple with national and international demands for the country to balance its budget, as well as a directive that education and healthcare would be the source of enhanced savings. Budget minister Cristóbal Montoro concomitantly presented the 2012 budget, which included EUR27 billion (USD36 billion) in austerity measures. The outline of the reform agenda was made last week (see Spain: 19 April 2012: CISNS Approves USD9-Bil. Savings Package in Spain as Health Minister Asks for "Forgiveness").
There are no major surprises in the actual decree, which was published in the Official Gazette slightly later than anticipated (it had been expected to go through on 20 April). From 2013, pensioners will also have to pay part of their prescription costs. Responsibility for the reforms will ultimately lie with the autonomous regions, which will have stricter criteria to reduce their budget deficits.
Significant uncertainty remains over the precise nature of some of the reforms, particularly around the new centralised purchasing mechanism and new health technology assessment systems. The new cost-effectiveness body had previously been announced last August, but there are no new details of its precise methodology and remit, beyond acting as a "NICE [National Institute for Health and Clinical Excellence]-like body". It will be composed of eight sub-groups and provide economic analysis on the therapeutic value of reimbursed medicines.
As a general goal, the law outlines that defunding of medicines will serve the purpose of removing drugs where funding "is not deemed necessary to meet the health needs of the Spanish population", or for drugs that may be effective but treat minor symptoms. The new auctioning and tendering of medicines will have an adapting pricing mechanism proposed by the Ministry of Health (MoH) to the Interministerial Commission on Drug Prices. The MoH will be able to propose an original ceiling price to drug companies, which will be followed by vendor responses and a selection process for the best price, which will be valid for two years. These prices will also be exempt from the previous 4%, 7.5%, and 15% price cuts that have been implemented in Spain during 2010 and 2011. The basis for the price mechanism will include reference prices based on therapeutic groups.
Outlook and Implications
Although the government has highlighted expected savings of around EUR400–450 million through defunding, in reality, the process could exceed this as the government appears intent on imposing stricter reimbursement criteria and a centralised procurement process. The industry has avoided outright price cuts, but these new procedures will provide longer-term market access barriers to the Spanish market. Clearly, the discourse since the announcement has centred on an emerging perception that the industry has been spared austerity in favour of more financially vulnerable pensioners. The precise nature of the defunding mechanisms and centralised procurement system may eventually evolve and turn into a major problem area for the industry. Industry association Farmindustria has issued a statement regretting that the majority of the weight of the new measures will indeed fall on the industry.
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