Economy
Drug producers to pay HUF 21 bn over subsidy budget overshoot
Considering the statements from the past days, we can expect fierce debate between the government and drug producers in the remaining of the year.
The minister mentioned a three-year agreement, but a great number of questions remain unsolved. Health minister Jenő Rácz's predecessor had in his time promised that these issues “would be addressed in the coming months". Lucky for the government the stock of “coming months" just cannot be depleted, apparently.
Producers said the latest round of talks with the government over this year's subsidy budget yielded no progress, adding that no agreement is likely until late September at the earliest.
“Realistically, we don't expect an agreement until late September or perhaps later," László Marosffy, the Chief Financial Officer of Egis said.
The debate could damage investors' assessment on the stocks of both Richter, the countries largest drug producer and its junior sector peer Egis.
Controversies in the drug subsidy system are a perfect portrait of the nation's health care system. Reforms are badly needed, but real restructuring has not been even outlined as yet. This is why financing holes of tens of billions of forints need to be filled by ad hoc measures even after the second three-year agreement had been reached.
Under an earlier agreement, if the HUF 284 billion subsidy budget is exceeded, the government and producers would split the costs of the first 5% of extra spending. If the overshoot exceeds HUF 30 billion, producers would have to cover all of the rest.
The open issues are as follows:
1. how much of the excess drug spending is caused by state intervention (this would need to be deducted from the increase)
2. how will producers split the extra costs
3. what is the basis for the 5% increase of the annual drug subsidy budget?
It was a “wise" move by the government that it did not allow to publish the wording of the three-year agreement, as it can later on refer to the imperfection of the deal. In the current situation, the bad-mouthing going on between the government and drug producers is entirely incomprehensible for the public.
Whereas the drug subsidy system needs drastic plastic surgery, it is given no more than limited anaesthesia.
The Health Insurance Fund earlier this month predicted the subsidy budget would exceed its target by up to HUF 36 billion while some analysts believe the overshoot could reach HUF 50 billion.
The minister mentioned a three-year agreement, but a great number of questions remain unsolved. Health minister Jenő Rácz's predecessor had in his time promised that these issues “would be addressed in the coming months". Lucky for the government the stock of “coming months" just cannot be depleted, apparently.
Producers said the latest round of talks with the government over this year's subsidy budget yielded no progress, adding that no agreement is likely until late September at the earliest.
“Realistically, we don't expect an agreement until late September or perhaps later," László Marosffy, the Chief Financial Officer of Egis said.
The debate could damage investors' assessment on the stocks of both Richter, the countries largest drug producer and its junior sector peer Egis.
Controversies in the drug subsidy system are a perfect portrait of the nation's health care system. Reforms are badly needed, but real restructuring has not been even outlined as yet. This is why financing holes of tens of billions of forints need to be filled by ad hoc measures even after the second three-year agreement had been reached.
Under an earlier agreement, if the HUF 284 billion subsidy budget is exceeded, the government and producers would split the costs of the first 5% of extra spending. If the overshoot exceeds HUF 30 billion, producers would have to cover all of the rest.
The open issues are as follows:
1. how much of the excess drug spending is caused by state intervention (this would need to be deducted from the increase)
2. how will producers split the extra costs
3. what is the basis for the 5% increase of the annual drug subsidy budget?
It was a “wise" move by the government that it did not allow to publish the wording of the three-year agreement, as it can later on refer to the imperfection of the deal. In the current situation, the bad-mouthing going on between the government and drug producers is entirely incomprehensible for the public.
Whereas the drug subsidy system needs drastic plastic surgery, it is given no more than limited anaesthesia.
The Health Insurance Fund earlier this month predicted the subsidy budget would exceed its target by up to HUF 36 billion while some analysts believe the overshoot could reach HUF 50 billion.
