Farmindustria Calls for Changes to Cost-Containment Policies, Accepts Changes to Pharma Spending Ceilings with Conditions
Italy's association of innovative pharmaceutical producers, Farmindustria, has presented its proposals for changes to the cost-containment policies set to be introduced later this month, giving a conditional acceptance of the plan to change the drug-expenditure ceilings developed by the Ministry of Health and Italian Medicines Agency.
IHS Global Insight Perspective
The Italian association of innovative pharmaceutical companies, Farmindustria, has presented its proposals for changes to the pharmaceutical sector-related measures in the austerity package, set for implementation this year, giving conditional acceptance of plans to change the drug-spending ceilings later this month.
Public drug spending already fell dramatically in 2011, so Farmindustria is racing the tide somewhat in its intervention.
According to Farmindustria, it was promised negotiations with the government and Italian Medicines Agency (AIFA) on the subject of the changes to the drug-spending ceilings, but ultimately no negotiations took place. It is likely that a discussion between the association and the MoH and AIFA will follow, with promises made on either side, but how the MoH manages to tie together its aims to increase generics use and increase access to high-cost drugs remains to be seen.
Proposed Changes to Drug Expenditure Ceilings
The Italian Ministry of Health (MoH) and Italian Medicines Agency (AIFA) have proposed changes to the ceilings for expenditure on outpatient and inpatient drugs. According to this proposal, the ceiling for outpatient pharmaceutical expenditure—not including patient co-payments for drugs priced above the reference price—would be adjusted from 13.3% of total public healthcare expenditure to 12.1%. Regarding expenditure on hospital medicines—excluding those considered non-essential, classified under classes C and C-bis of the Italian drug reimbursement system—it is proposed that the ceiling be raised from the present 2.4% of total public healthcare spending to 3.6%. Under the proposal, the pharmaceutical industry is to cover 35% of any overspend in the hospital system.
The implementation of these proposals, made initially as part of the austerity package introduced by the Berlusconi government in July 2011, is set to be decided on by 30 June (see Italy: 15 July 2012: New Health Co-Payments to Be Introduced Immediately As Italian Senate Amends, Passes Austerity Package). Farmindustria, the association of innovative pharmaceutical companies in Italy, has come out in the past few days with stark warnings of the consequences of the government's current policies for Italy's pharmaceutical industry, as well as for access to innovative treatments for Italian patients, putting forward its own proposals for changes to the measures due to be implemented under 2011's austerity package.
Drug Spending Cuts of Around EUR1 Bil. Planned in 2013
As Italian newspaper Il Sole 24 Ore reports, the austerity package foresees cuts to the public healthcare budget for pharmaceuticals in 2013 of around EUR1 billion (USD1.25 billion). Italian news provider Roma Capitale reports Farmindustria president Massimo Scaccabarozzi as saying that the association had expected the government to engage the industry in negotiations concerning the plans for pharmaceutical spending cuts and changes to expenditure ceilings before 30 April, which is why Farmindustria has formulated its own proposals for changes to the austerity package's pharmaceutical-related measures. Farmindustria is calling for the implementation of the changes to come into effect in October along with other healthcare spending plans, rather than June, as presently scheduled.
The association points to the destructive effects the cuts would have on the domestic pharmaceutical industry, and emphasises the negative impact government policy has already had on the industry. Italian medical news provider Quotidiano Sanita reports Scaccabarozzi as saying that in the first four months of 2012, there has been a 6.2% reduction in pharmaceutical production in Italy, and that since 2005, there have been around 10,000 dismissals in the industry. He is also reported as saying the number of clinical trials in the country has fallen drastically, by 14% year-on-year (y/y) in 2008–09 and 12% y/y in 2009–10. The full Farmindustria proposal can be accessed on the Quotidiano Sanita website, here.
Farmindustria Accepts Ceiling Changes, with Conditions
In essence, Farmindustria states in its proposals that it is willing to accept the proposed changes to the expenditure ceilings, under the condition that rules are imposed for the management of expenditure, and that access to innovation in Italy is at an equivalent level to that of other major European countries. Other changes Farmindustria has called for include an abolition of the 1.83% payback required from the pharmaceutical industry on sales to the Italian National Health Service, in place since 2010, and the quickening of market access for new innovative medicines in Italy, emphasising not the economic aspects but rather the real therapeutic needs of patients. This is essential, the association argues, in order to maintain research and innovation in the sector, while it also argues for the establishment of permanent, ongoing negotiations between Farmindustria, AIFA, the regions, and the MoH in order to overcome the problems of market access and funding for drugs.
Outlook and Implications
Whereas at the time of the austerity package in July 2011 it appeared that the choice was between lowering the ceiling on outpatient drugs and increasing the ceiling for hospital drugs—together with the pharmaceutical industry paying 35% of the overspend—it now appears the AIFA and MoH are seeking to implement both of these proposals. Indeed, this plan was first iterated by Health Minister Renato Balduzzi early in the year (see Italy: 3 January 2012: Threshold May Be Lowered for Italian Outpatient Drug Expenditure and Raised for Hospital Drugs).
Looking at the data on the Italian pharmaceutical market for 2011, there was a substantial reduction in spending on hospital drugs compared with 2010, reaching 3.6% of total public healthcare expenditure (see Italy: 6 June 2012: Italian Outpatient Pharma Spending Falls 9.4% Y/Y in 2011, Hospital-Drug Boom Cools). Thus, in contrast with 2010, when hospital-drug spending was up to 5.1% of total spending (with the ceiling at only 2.4%), spending in 2011 was at the same level as the proposed ceiling set to be implemented in June 2012, and thus it is likely to carry on at this lower rate, meaning pharmaceutical companies are unlikely to have to cover much of the costs. Additionally, public spending on outpatient drugs was below the ceiling in 2011, at 13.18%, compared with a ceiling of 13.30%. Thus, with public expenditure on medicines falling, the danger of pharmaceutical companies having to pay more as a result of ceilings being exceeded is diminishing.
This is only a small part of the industry's problems, however; a major area of concern for the industry is market access, with a strong focus at present on Italy's apparent shortfall in terms of access to high-cost innovative therapies compared with other major European countries. This is perhaps the main reason behind Farmindustria's proposals—to sound a warning signal ahead of the Italian government's final announcements regarding the cost-containment plans—and considering the fact that, as Farmindustria contends, there was no proper dialogue with the government on the subject, it is taking an opportunity to make its voice heard.
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