Drug makers in the dark on plan for subsidies

Pharmaceutical companies are guessing which drugs will be affected and by how much as the state prepares to cut subsidies next month for a number of medicines. "We know that we know nothing," said Irena Rej, president of the Farmacja Polska Industry Chamber, an association of 168 local drug makers, drug importers, distributors and pharmacies. Following warnings by the new health minister, Mariusz Łapiński, Poland's cash-strapped government plans to reduce drug refunds by April 10. The state, which shelled out zł. 5.2 billion ($1.2 billion) last year to compensate drug makers for dropping their retail prices, wants to save some zł. 1 billion ($238 million) this year by eliminating about 370 drugs from its refund list and slashing subsidies for others, according to general information sent to the industry by the government. But drug industry representatives said last week that the government's reluctance to disclose details of the plan might ruin their businesses.

"Production is running; producers, distributors and pharmacies have their stores filled with drugs and suddenly they may find out with two weeks' notice that the price of the product will rise in some cases by 30% and more," Rej said. Renata Furman, spokeswoman for the Health Ministry, said the government was only legally required to publish the new refund limits by April 10, when the list of refunded drugs takes effect. "Drug makers, however, will be informed about the limits (before March 17)," she said. Rej said that three weeks would not be enough time for pharmaceutical companies to prepare for the changes. "It can't be done overnight because it will damage both the health of patients, who often can't switch to new drugs in just three weeks, and the business of the drug makers, which have business plans and cannot change production overnight," Rej said. "These things should be determined four to five months in advance." Polfarmed, an association of Polish drug makers, is also pressing the government to make public its new refunding plan as quickly as possible. "The government should provide the list of (refund) limits as soon as possible," said Wojciech Kuźmierkiewicz, Polfarmed's vice president. "Otherwise, it's hard to predict what will happen with the products already on the market."

Expecting the worst The impact on the market will be heavy if the government cuts subsidies by zł. 1 billion, or 10% of the zł. 10 billion ($2.4 billion) in total drug sales last year, according to estimates by the research firm AzyX. "There will be chaos in the market just after the publication of the new lists," said Robert Pachocki, board member at Farmacja Polska. Manufacturers won't cut their prices because they are already amiong the lowest levels in Europe, according to Jerzy Garlicki, vice president of the Association of (International) Pharmaceutical Companies' Representatives in Poland (SPFFwP). "In effect, the patient will have to cover the difference in price," Garlicki said. Industry sources said the refunding limits would hit drug importers more severely than local producers. "Both Polish and foreign makers will lose when a few hundred drugs are deleted from the refund list but the Polish companies will suffer less because their prices are lower," Polfarmed's Kuźmierkiewicz said. The share of imported drugs in total drug sales fell to 65.4% in 2001 from 66% in 2000, the first drop in 12 years, while the new refund limits may force importers to yield more market share in 2002, according to Garlicki. "The cuts will hit (primarily imports of) innovative drugs, as they are the most expensive," he said. Poland's drug market has grown an average of 20% annually in the past decade, generated largely by rapidly rising refunds from the state budget as the government covered patients' drug costs by up to 100% in some cases. The reduction in subsidies is also meant to curb the industry's growth, which has been partially due to government assistance, according to the Health Ministry's Furman. "The government will again have to spend roughly the same amount of money as last year anyway but if we kept the current refund list in force the expenditure on subsidies would rise again by another 20% to some zł. 6 billion ($1.4 billion)," Furman said.