A PHP Error was encountered

Severity: Warning

Message: implode(): Invalid arguments passed

Filename: models/single_model.php

Line Number: 620

Pharmaceutical Market – Reaping the fruits of past actions - Doing Business | DOINGBUSINESS.RO

  |  09.11.2012

Pharmaceutical Market – Reaping the fruits of past actions

After, 2009 and 2010, years with double-digit growth, the chronic underfunding and the application of the claw-back tax have tempered the market in 2011 and 2012

Page 1/2
 1 2   

Despite a seemingly tough year and difficult context, the pharmaceutical sector has managed to pull off some growth in 2012 and continue the upward trend. In 2012, according to BMI, the pharmaceutical market is expected to reach RON 13.6 billion, a 6.7% increase over 2011. According to the same source, in 2016 the market will reach a value of RON 18.89 billion and a compounded annual growth rate (CAGR), over the period 2013-1016, of 8.6%.


Despite the quite recent change in the reimbursement mechanism which favors generic drugs and despite the fact that the low GDP per capita means that patients are unlikely to be able to afford the most expensive drugs, generic penetration is not expected to increase significantly.


Despite the rosy surface image, the sector does not seem able to evolve away from recurrent themes which impact it mostly in a negative way: deep underfunding, long payment terms, claw-back tax, and reimbursement lists.


The claw-back tax


The claw-back was introduced in 2009 through an Emergency Ordinance, in an attempt to increase revenues for the public health insurance system so the government can pay bills within legal deadlines. However, this was decided under the assumption that drug suppliers are the main trigger for budget overruns,  without any regard to the lack of prescription control mechanisms in place. Since the claw-back mechanism, as it was initially designed, did not produce the desired results, various new versions of the mechanism have been proposed. Since September 2012, we have the claw-back version 4, with the following key amendments:


• Value-added tax is excluded from the calculation of the quarterly consumption reimbursed by the NHIH and the quarterly budget for reimbursed drugs;

• The budget ceiling for reimbursed drugs increases from RON1.425 billion to RON 1.515 billion;

• Market authorization holders or their appointed representatives have to declare and fully pay the claw-back tax within 30 days from the implementation of the Government's Emergency Ordinance to be able to benefit from the cancelation of any potential penalties.


Still, under the latest version of the claw-back tax and after a lot of opposition, pharmaceutical producers are forced to pay the tax, not only on their turnover, but also on the margins of the wholesalers and retailers. Another criticism of the mechanism relates to the negative impact the claw-back has on the cheap generic drugs with tight margins which might become loss making under the current mechanism.


As per IMF Staff Report, Fifth Review under the Stand-By Arrangement, the recently introduced claw-back tax will be fully used to pay down unregistered bills revealed during the stocktaking exercise and recorded at end-2011. This could be one explanation why the authorities require payment of claw-back tax four times per year, while the drugs continue to be reimbursed after almost one year.


Page 1/2
 1 2   


Load new captcha.