The Spanish National Health System: Time for Restructuring
The theme of the ISPOR 14th Annual European Congress was “Rational Health Care Decision Making in Challenging Economic Time.” This article will discuss the health care reforms occurring across Europe and will cover the health care reforms recently introduced in Spain and discuss their impact.
To provide the whole picture, we need to take into account that health care reform is a key initiative for the majority of countries around the world, including those in Europe. Although there is a mixture of funding and delivery models across the European Region, each country faces similar cost pressures in its national health program. The mounting challenges in funding these programs, combined with recent global economic conditions, have served to accelerate the pace of reform as governments try to reduce their exposure to health care funding. In many countries, this has resulted in “cost-shifting” the burden to employers and individuals.
To use Germany as an example, at the beginning of 2011, the German pharmaceutical market changed with the introduction of a new law to restructure drug market (AMNOG). Under the new law, each New Chemical Entity (NCE) must be supported by a benefit dossier defining the additional benefit of the drug in relation to the appropriate comparator.
In terms of the Congress host country, Spain, the Spanish government has been struggling to keep pharmaceutical expenditures under control in recent years due to the economic crisis. Demographic factors such as the ageing of the population, the inclusion of new services and innovative treatments, and, in general terms, greater demand for health care, put increasing pressure on public resources and on the fiinancial sustainability of the health care system. Within this framework, a new Royal Decree (RD) has recently been approved based on cost-containment measures. Generally speaking, the primary objective of this new law focuses on prescription by active ingredient and the government expects savings of around f1500 million per year, which represents about 10% of the total pharmaceutical market.
Before going into the RD in detail, let us recall some of the basics of the Spanish health care system and review some of the most acute problems it is facing:
The Spanish health care system is one of the most decentralized health care systems in the world; health care is run independently by each of the Autonomous Regions. Spain is a large and diverse country, and there are significant variations in income levels, health care costs, and health care needs across the different autonomous communities. Health care is administered by the Autonomous Regions, but not directly financed by them. Tax revenues go to the central government, which redistributes them into the different Autonomous Regions in agreement with their needs and costs.
About 12% of the population has private health insurance. This two-tier health insurance system with a public basement and a private stage is unique in Europe. Private insurance payments account for 21% of total heath care expenditures. Further, a fair number of Spaniards pay out-of-pocket for care outside the national health system.
Spain has a declining birth rate, ageing population, and an increasing life expectancy. Retirees constitute an increasingly larger proportion of public health care system users. Providing prescription medications without charge to all retired persons regardless of income level is regressive, distributing the same benefits to those with higher incomes as to those whose pensions barely cover their living expenses. In the current economic crisis, the system as a whole is unsustainable. Expert opinion favors the introduction of co-payments to reduce costs and demand for services, while public opinion resists any attempt to limit access.
Addressing regional disparities in health care and safeguarding the sustainability of public health provision has been high on the national political agenda for a long time. To cope with the sustainability of the Spanish National Healthcare System, the new RD includes a package of measures on pharmaceutical policies, a great number of which are solely for the purpose of making additional savings where public invoicing of medicines is concerned. Some of them are:
- Prescription by International Non-Proprietary
Name (with exceptions) and the obligation to prescribe the cheapest medicine;
- Toughening up the Reference Price
System: the so-called “gradualness” used to progressively adapt the prices of a product to the reference price is no longer permitted, doing away with innovative Galenic protection once the first generic is on the market, etc.;
- Making the rebate which is already in place even higher, raising it up to 15%. These rebates are applicable to medicines that don’t have a generic in Spain, that have been on the market for more than 10 years, financed by the State and that are not protected by a patent in force; and
- Establishing a system of “selected prices” for certain categories of medicines.
The direct consequences of these measures will be the closing down of some companies (especially the small and medium-sized ones), laying off staff, the resizing of investment in R&D, and pharmaceutical companies relocating to other countries to invest. All these aspects are very negative, not only for the pharmaceutical industry, but also for the Spanish economy as a whole. With all of the above in mind, the most serious point to make here is that these cuts do not solve the core problem of our national health care system: chronic budgetary under-financing compared to the true cost, just as it has been reported by numerous experts, and even from Regional Authorities.
Even more important than its immediate economic impact, however, is the structural change that the new RD will have on the Spanish pharmaceutical market. It will change not only the dynamics of the market, but also incentives and relations between the different agents along the medicine chain.
With the economy at a standstill and the fact that an important sector like the pharmaceutical one is not gaining strength in gross domestic product, it is not good news for improving the Spanish economic competitiveness, nor the much needed change in the productive model boost in the medium and long term.