Spain: It shouldn't be all about drug expenditure containment

further to the current changes in the Spanish healthcare system, I am pleased to publish a guest post from my good colleague Fernando Aisa, Barcelona.

26 Aug. 2011

Last Thursday, my colleague Ulf posted a message in the blog, regarding the last health cost containment measures of the Spanish Government.

Summarizing, the Royal Decree approved contained the following measures:
• Mandatory prescription by active ingredient
• The physician will prescribe by active ingredient
• The pharmacist will dispense the cheapest drug available
• Changes in the reference price system
• A new reference price will be set immediately when the first generic gets reimbursement authorization by the NHS
• The decrease in the price to be in the reference system -and hence reimbursable- must be done immediately, and not
in two years, as it’s been so far
• 15% rebate for all the drugs manufactured for human use, in the case that: 10 years from the date of reimbursement
authorization by the NHS, 11 years in case of a new indication had been approved

The Government expects savings of around 2.4 billion € with these new measures.

In 2010, two additional Royal Decrees were approved, expecting to save 2.5 billion €:
• 7.5% reduction in manufacturer's price of patented medicines reimbursed by the national health service
• 4% reduction in the price of orphan drugs
• Price of generic medicines cut by 25%

The 2010 measures undertaken provided –for the first time ever- a decrease of -2.36% in the national drug expenditure.
Should the growth deficit of drug expenditure be a goal in itself? Like the spies in the good novels of John Le Carre –Bond used to have more “explicit” means- this is called deflection: Putting one’s attention on a secondary goal while the real one remains undetected.

Aiming to have negative growth in drug expenditure is like trying to freeze salaries. In a country with a more and more ageing population, which is also increasing overall; with high quality of life; with universal healthcare coverage; with innovative medicines coming up that aim to increase life expectancy; just with inflation… with endless etceteras… one cannot expect to keep the drug expenditure growth negative. Of course, it’s good to have a reasonable use of medicines and controlling prescription.

Should we foster the use of generics, as the Spanish government is doing?

Innovative medicines have a life cycle, and it’s protected by a patent, allowing the licensor to have some profits. After that, a reasonable policy of quality generics would allow to divert resources again back to new molecules and research. Hence, yes (for the sake of the post brevity, allow me to simplify here)

Why is this a deflection then?

Ulf very adequately said that these measures focus again on pure price parameters. And he is right. Better use of resources would allow to pay what a medicine is valued (and not over valued) We miss these kind of measures. Spain has 17 regions with a lot of autonomy. The Central Ministry of Health controls hardly 10% of the national healthcare budget. The rest relies on the regions. Due to the specific recent history of Spain, there was an urgency to transfer a lot of competencies to the regions from the central government, without planning or consistency. Hence, we now find 17 regional ministries of health, each of them developing their own health care policies. And very diverse policies: Some regions have overcrowded the hospital population, building and building, under the umbrella of the real-estate boom, creating overlapping of health care areas. Now, some primary care centres are being closed down due to the lack of patients. The population of doctors per 1000 inhabitants is one of the highest of the OCDE. In contrast, nursery services are below any average –OCDE or EU. Other region tried to create its own reimbursement list, trying to supplant one of the last competencies of the central government: Approval a single price and reimbursement of the same drugs across the territory, to ensure all citizens have access to the same level of health care. Again, the etcetera of non-sense policies becomes incredibly high. Guess what: The famous Spanish debt –not that high, anyhow- mainly comes from the regions and their policies. Regional healthcare debt is huge and pharma companies are sustaining a lot of effort. Some of the reasons are named above.

In the absence of a central HTA agency –last Royal Decree approved tries to create kind of embryo- we may find, currently, around 10 regional HTA agencies. Again, each of these agencies has its own assessment criteria. Surprisingly, none of them has criteria of value based evidence. They stay in mere cost-effectiveness or YTC vs. standards of care. Again, they just look for savings, instead of increasing the quality of the medicines available and the service to the patient. And then we’ve got the hospitals. In an attempt to control the prescription and dispensation of specialty drugs, the government transferred a significant number of these drugs to be dispensed from the hospital pharmacy. This resulted in a huge increase in the number of hospital pharmacy commissions, which obviously overlap and duplicate competencies with the regional HTA agencies and diverse bodies.

Drugs should be priced and paid what they are worth -It’s true that some of them may be over-priced, but that’s a topic for another article- and we must ensure we have the right mechanisms in place to make the fair assessments. But we cannot simply focus on trying to reduce the bill. After having put in place reasonable measures to ensure right use and prescription of drugs, we should stop shrinking innovation and put our efforts in increasing the efficiency of healthcare expenditure and resources, reducing the bureaucracy and layers, standardizing assessment criteria. The opposite would lead to an unequal healthcare coverage and lower quality of drugs available, emphasising the inequities of the country.

New Royal Decree further tightening drug funding in Spain

The Spanish cabinet just approved the new Real Decreto - ley 9/2011 – another set of measures in the fight to tighten the state’s budget. Among the updated rules in the new law is that doctors only can prescribe drugs (with a few exceptions) according to the active substance (principio activo (PPA)) rather than by brand. This, according to the Spanish government, should ensure that only the cheapest available medicine is being dispensed within the national health system. On the other hand the therapeutic price referencing system, article 93, will be once again altered - the second time in a year - whereby the system will now be converted into a low price mechanism that only looks at the financing of the cheapest drug in the class.

This new set of cost containment measures come not really as a big surprise but the implications are most likely to further negatively affect the pharmaceutical sector in Spain in terms of employments and investments in R and D says Farmindustria, the Spanish industry organization.

Here is the link to the full text of the decree.