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Reimbursement revolution

Published on February 7, 2012 by: in: Economy

Unfortunately, the leitmotiv of many changes against patient and competition enclosed in the Reimbursement Act is shifting the reimbursement costs onto patients or eliminating competitiveness in the drug circulation market. The most offending thing about those changes are politicians who claim to protect patient’s best interest while the new law has nothing to do with it.

In health care a wish of a new year to be as good as its beginning would be a curse. The new year has begun with dramatically late release on reimbursed drug list out of which 800 items has been removed and another similarly late publication – just before Christmas, on 16th December – on regulations concerning contracts between pharmacists and National Health Fund that were to be concluded by 1st January 2012. Without the later the pharmacists would not be allowed to sell reimbursed drugs, therefore, the contracts were being concluded hastily between Christmas and New Year’s Day. Moreover, the beginning of the year brought a day-to-day change in rules of drug payments and doctors’ protest against individual responsibility for writing prescriptions for reimbursed drugs. In this context politicians speak righteously about a revolution  – it is the revolution, with its unpredictability, feverish excitement, chaos and fundamental changes devoid of any plans, that comes to mind. However, the legislation process should not resemble revolution but rather a good management, where any changes are planned, assessed in terms of possible outcomes; where interested parties are informed in proper advance.



The basic fault of the reimbursement law is its late implementation in a way that surprised patients, hospitals, doctors, pharmacists and pharmaceutical companies. However, sins of negligence do not concern the reimbursement act solely, the process of its establishment is also flawed. The reimbursement act changing fundamental rules of drug funding – those sold in drug stores and those administered in hospitals, e.g. oncological treatment – was enacted with a disregard for the public, meaning that the interested individuals and experts as well as critical voices coming from Office of Competition and Consumer Protection and the Bureau of Research of Sejm were ignored. All of them were raising the alarm about the act being unlawful in terms of rigid prices and a ban imposed on drug store advertisements. The enacting process of the reimbursement act was aptly described in “Rzeczpospolita” from 5th January. The public party had only three days for public consultations and when the bill ended up in parliamentary commission the only amendments that were taken into consideration where the ones the governmental representatives approved of. The public party was totally overlooked.

The law enacting process which from the identification of the problem should lead to its resolving, that should expect participation of public parties and experts being heard out as well as an assessment of possible outcomes carried out, turned into a process of forcing through the governmental solutions at all costs and against everyone. Unfortunately, expressions coined by Minister Arłukowicz describing works carried out on the refund drugs list (works “behind closed door”, “cordoned off”) render perfectly the atmosphere accompanying proceedings on reimbursement act. Discourse of fight and siege prevailed over cooperation and agreement. It comes inconsistent with the noble rules of carrying out the legislation process proclaimed by the government and developed by Minister Michał Boni.

Nevertheless, the characteristic trait of the enacting process of the reimbursement law was, unfortunately, the lack of media’s interest in changes of crucial importance to the health care system. Passage of the law in May 2011 did not reverberate widely until doctors’ protest that put the reimbursement law on the spot. If not for the protests, the act would meet fate of other, numerous over the past years, breakthrough laws on public health care (including the Act on Medical Activity passed in April 2011). Because health care is usually treated as too complicated, difficult and not very exciting domain.

It is hard to deny that public health care is complicated – for the multiplicity of concerned interests and importance of goods being involved, for instance. The role of the Minister of Health is exceptionally tough, he is forced to manage limited resources in such a way to ensure execution of constitutional right to health protection. The Minister has some liberty, admittedly, but at the same time, in accordance with Constitutional Tribunal jurisdiction, he ought to ensure that the constitutional right to health protection is real, not fictional (K 14/03 ruling). Therefore, the basic difficulty of being a Minister of Health is selection – a choice of benefits which would fit into the guaranteed health benefit basket. In the meantime, selection of health care benefits is neither mentally nor politically easy. Whether reimburse common but cheap benefits which most patients can afford anyway, such as nose drops as a treatment for rhinitis, or on the contrary pay only for the most expensive, technologically advanced therapies, e.g. cancer treatment? Whether reimburse very expensive drugs which may slightly extend a life span at the expense of other benefits? How to put a price on days of patients’ lives?

The specific gravity of choices made in the Ministry of Health is unquestionable, yet it should be a reason for greater not lesser cooperation with interested parties and independent experts. In the meanwhile, the Ministry of Health is thought to be the most shut and unwilling to cooperate, treating the public party as dangerous lobbyist instead of potential source of valuable knowledge.

The Reimbursement Act is burdened mostly with faults resulting from such attitude of administrative bodies dealing with health protection. Admittedly, one cannot say that the Act on Reimbursement does not introduces positive changes, yet some of the solutions are directed at the patients and free competition.

A beam of sunshine on a rainy day?

What is positive about the act is that it gathers all regulations concerning drugs reimbursement and way of establishing of their official prices in one document. Previously they were scattered about various acts (mainly in the Act on Prices and the Act on Publicly Funded Healthcare Benefits), coinciding with each other and partially inconsistent. Extremely important and long awaited, although very late, was an implementation of Council Directive No. 89/105 from 21st December 1988 concerning transparency of prices regulations on medicinal products designed for people and incorporation of those regulations into public health insurance system (commonly known as the Directive on Transparency). 89/105 Directive establishes general determination rules of price-reimbursement drug status and requires to do so in a course of indictable and controllable administrative decision making process that is to be evaluated on grounds of objective and verifiable criteria. Yet, the price-reimbursement status of drugs in Poland, before the act came into effect, was established by decrees of the Minister of Health, thus, by legislative and not administrative acts which were difficult to be referred to court as well as made on the basis of unclear and unverifiable criteria. For many years Poland was threatened by possible legal action taken by the Court of Justice for violation of European law. The implementation of the 89/105 Directive was an anticipated essential change. Finally, another beneficial solutions that came off well are those aiming at budget retrenchment previously applied in other European states. One of the advantageous mechanisms is so called pay back. It is a duty imposed upon pharmaceutical company to repay some of the reimbursed amount of money in case of expenses covered by the National Health Fund surpass 17 per cent of all the expenses allotted to overall guaranteed benefits in a given year (guaranteed health care benefits, besides drugs, includes: hospital care, primary health care services or outpatient secondary care, therapeutic rehabilitation – all categories mentioned in art. 15 of the Act on Publicly Funded Healthcare Benefits). Another solution is made of so called risk division instruments – that are mechanisms obliging pharmaceutical companies to take over some of the costs related to a treatment with its medicinal product. Such instruments may take various forms, for example they may make company’s repayment for the therapy conditional on drug’s therapeutic efficiency or they may oblige the company to pay for certain cycles of therapy. The initial project also included a proposal to establish so called Garattini’s tax, a fee amounting to 3 per cent of company’s annual turnover, but the idea was rejected during legislative proceedings.

Anti-patient and anti-market solutions

Sadly, the reimbursement act includes many other changes that strike at patients and competition. Their leitmotiv is shifting reimbursement costs onto patients or eliminating competition in the drug circulation market. What is particularly appalling about those changes is that politicians claim those changes protect patients’ interest while they have nothing to do with it.

Prices becoming rigid

The most damaging solution proposed in the Reimbursement Act is surely the introduction, on 1st January 2012, of rigid prices set on reimbursed drugs. Hitherto prevailing prices of reimbursed drugs were maximum, therefore, only the upper limit was rigid while prices set in drug stores could be lower. And often they were.

It was particularly important for the patients because they were the ones, not the National Health Fund, to cover differences between the reimbursement limit and actual price set in a drug store. Unlike other countries, such as Germany or Great Britain where patients pay fixed price not dependant on actual price of a given drug, in Poland the fixed price is covered by National Health Fund (in a part of the limit) and patients cover the remaining part of the price. By eliminating the possibility of price reduction, the new solution strikes directly at patients.

It is worth elaborating on principles of co-paying for drugs as they are the essence of reimbursement system. Without these principles it would be hard to understand the actual results of introduction of rigid prices. Despite their significance, public awareness of the principles of co-paying is horribly low.

Reimbursed drugs are gathered in co called limit groups which constitute therapeutic equivalents. Drugs within these groups should be interchangeable for given therapy. Such grouping is a standardized procedure of reimbursement policy in many countries anyway. Of course, drug equivalence within a group depends on criteria of their incorporation into the group. The worst case scenario for patients and at the same time the best one for pubic payer is when the limit group is broadly fixed, broader than actual therapeutic equivalency. Since essentially it means that reimbursement limit – that is the basic amount of money for co-payments obliging the National Health Fund and simultaneously its upper limit, is established on the level of the cheapest or one of the cheapest drugs within the group; it is established on the level of a fairly inexpensive drug. Having a big group it is easy to assume that there are more inexpensive drugs. At the same time, such broad grouping means that less expensive equivalent may not be available for a given patient at all, only because it is a reimbursement equivalent and not the therapeutic one. Unfortunately, that is the case with the Act on Reimbursement. Doctors and pharmacists who scrutinized the first list of reimbursed drugs are warning about it.

The price of every reimbursed drug sold in a drug store is covered jointly by the National Health Fund and by the patient in following proportions: the patient covers the part of the price resulting from drugs’ payment categories – at present in Poland these are: 30% and 50% of drug’s price; there is also a lump sum amounting to PLN 3.20 and a category of drugs free of charge. But these categories relate to the price of a drug that sets a limit, the patient pays 30% of price of that drug and not the one actually being purchased. The remaining amount, only up to the limit, is paid by the National Health Fund. Until the implementation of the Act on Reimbursement the limit was set on the level of the least expensive drug within a group. Currently the limit is fixed on the basis of the highest price among the lowest wholesale prices of a drug that completes 15% of quantitative turnover. Therefore, if we take drugs A, B, C and D where A, B and C are the least expensive, A – the least expensive one, has a turnover amounting to 5%; B – next in line – with a turnover of 11%, then the price limit is set on the basis of wholesale price of drug B. The amount of money above the limit is paid by the patient. It means that drugs with lump sum prices or the ones free of charge are often very expensive in reality because “lump sum” or “freedom of charge” are set only up to the limit and the price above the limit is paid by the patient. Thus, the categories are extremely misleading but, from 1st January 2012 according to a new decree on prescriptions, they will be written in on those. A patient who reads a prescription saying “free of charge drug” or “drug with a lump sum price” will be absolutely astonished hearing the actual price he is supposed to pay for a purchased drug.

Thus, summing up, the patient pays two parts of an actual price of a drug – one resulting from the payment category within the limit and the other part reaching above the limit. Because the National Health Fund always pays one constant price resulting from the limit, making the prices rigid do not change anything from its point of view. Whereas it is of great importance to the patient who no longer has the possibility of buying a drug at a lower price than this indicated by the drug reimbursed list.

And even when the maximum prices were in effect, Poland was the country where patients’ co-payment was exceptionally high. The patients paid 34% of the price of reimbursed drugs on average, while the level of co-payment reaching 30% of a drug price is considered by WHO to be limiting availability of drugs. Poland – along with the United States, Canada and Turkey – was also placed in a group of four shameful exceptions among OECD state members where private payment for drugs (both reimbursed and not reimbursed) exceeded public ones. While in Canada and the US private payment came mostly from private health insurance, in Poland and Turkey it came straight from a patient’s pocket.

Since rigid prices are not profitable neither for patients nor the National Health Fund then, one may wonder, who might be possibly pleased by them? Introduction of rigid prices was supported by those pharmacists who wanted to eliminate price competition between pharmacies. Polish producers of generic drugs were interested in such solution as well, since lower prices of reimbursed drugs are not so problematic for them as for international producers who rely on changes brought about in foreign markets. The prices enclosed on Polish reimbursement lists are referential for other countries, therefore, they are taken into consideration during a process of establishing administrative prices in other states. Price reduction on drugs begins (unlike in pharmacies) a helix of price levels heading downwards in all markets. Such outcome does not threaten Polish producers who do not participate in international markets. Besides, reduction of drug prices initiated by international producers may cause an outflow of Polish drugs abroad (so called parallel export), a phenomenon which already happened over past years frequently in Poland, like when it occurred that antithrombotic drugs are several times more expensive over the Oder River as compared to Polish drugs. A few wholesale companies and pharmacies has been punished by the Main Pharmaceutical Inspector for taking part in an exportation procedure.

Introduction of rigid prices will unquestionably worsen the patients’ situation. It has been confirmed by expert analyses (such as IMS Health or PharmaExpert) presented both before implementation of the Act on Reimbursement and after publication of first drug list. Immediately after the publication of first reimbursement list depleted of 800 items when compared to previous list, IMS Health – an institution that carries out researches of pharmaceutical market – calculated that the co-payments that are to be made by patients has increased from 34% to 38%.

A peculiar fatalism hanging over the idea of rigid prices became anecdotal. The idea has a long history; it was coming back repeatedly with successive projects of reforms concerning reimbursement law. Successive Ministers of Health, including both Ewa Kopacz and Bartosz Arłukowicz, as long as they were common members of parliament were against the idea. As soon as they got into the Ministry, they changed their minds.

The responsibility of doctors and chemists for prescriptions

Solutions prepared for doctors and chemists have the similar – budget supporting – purpose. When there were old regulations, both occupational groups have already heavily suffered, because of strict interpretation of regulations by National Health Fund. Not only doctors, but also pharmacists were obliged to return the sum of reimbursement in case of patients unauthorized to a specific medicine. It applied also when there was something missing in medical documents (doctors) or the medicine was dispensed in spite of mistakes in prescriptions (chemists). The both problems presented situation typical for “Catch 22”: doctors were punished for writing prescriptions for uninsured people, but they could not check thoroughly the insurance, because they did not have access to the register of insured people, which was in hands of… supervisor, National Health Fund. On the other hand, the pharmacists were held responsible for the most detailed errors in prescriptions, such as the number on the wrong side, although they did not commit these mistakes and they could not refuse to dispense the medicine to patients, in such case.

The Reimbursement Act has increased this responsibility and strengthened the position of National Health Fund. Initially, it concerned not only chemists, but also doctors. Both groups were supposed to make individual agreements concerning filling in and writing prescription for reimbursed drugs. Earlier, pharmacists did not conclude such agreements at all, while doctors concluded them only, when they were not employed by subjects, which concluded the agreement for benefits financed from public resources of National Health Fund. However, the project was changed in the Senate and the old rules governing agreements with doctors were brought back. It means that only some doctors were supposed to make agreements for reimbursed drugs. Furthermore, there is individual responsibility of all doctors for prescription of medicine introduced – in amount of inappropriate reimbursement. Protest “against prescriptions” of doctors is not surprising, in sight of very strict control of National Health Fund. Doctors still do not have access to the register of insured people and the term “documented medical reasons” (which is the base for prescriptions) is very flexible and extensively interpreted by National Health Fund. No one has probably considered the role of patient in this system and whether the doctor should control the insurance of the patient.

Prohibition of pharmacy advertising and prohibition of encouragement
The Reimbursement Act introduces two very anti-market solutions: total prohibition of pharmacy advertising and prohibition of encouragement (used by anyone) of reimbursed drugs. Both prohibitions, even if they are justified to the certain extent, have potentially huge area of influence and they can threaten not only the freedom of economic activity, but also limit all the positive actions in benefit of the patient.

The total prohibition of pharmacy advertising completely replacing previous “fragmentary” prohibition addressed only to reimbursed drugs was introduced on the initiative of the Polish professional association for pharmacists. This prohibition is formulated in such a way that it is unknown whether the pharmacy can deliver any information except for information on localization and opening hours. It is strengthened by high cash indemnity and the bodies of Pharmaceutical Inspection announce that it would be implemented very strictly. This questions the possibility of giving patients any information and taking pharmaceutical care, which chemistries are obliged to do. It asks a question about online pharmacies, where online portal is both a shop window and a counter.

Furthermore, there is the prohibition of any encouragement of reimbursed drugs including donations and discounts. This regulation should be quoted in its entirety in order to show how defective the law can be. It is about Art. 49 Paragraph 3 of Reimbursement Act. It shall be forbidden to use any kind of encouragement in relation to medicines, foodstuffs for special nutritional purposes or medical products subjected to refund from public resources, especially directed to beneficiaries, entrepreneurs and their employees or entitled people including sale conditioned by various factors, discounts, packets, customer loyalty schemes, donations, awards, presents, gifts, trips, lotteries, draws, all forms of commodatum, tie-in transactions, facilitations, sponsored shopping or services, any kinds of coupons, tokens and any not specifically mentioned benefits.

This regulation may prevent anybody from giving patients anything related to reimbursed drugs. This directly influences diabetics, who earlier got insulin pens, needles and glucose meters free-of-charge. It may have strong negative influence on situation of hospitals, which would not be permitted to accept donations. The prohibition of encouragement between entrepreneurs questions usual business practices, which include such forms of encouragement as discounts.

Uncertainty on the hospital market

Furthermore, some solutions are thoughtless. They introduce chaos and uncertainty to the market. This group may include solutions on the hospital market. For a long time it was unknown, what is the supposed character of prices of drugs sold to hospitals or whether the hospitals are subject to prohibition of encouragement including prohibition of donations and discounts. The regulations are unclear in this case. The representatives of the Ministry of Health have finally decided that prices for hospitals are maximal and not fixed, because otherwise it would be unreasonable to organize tenders. When one of the regulations of the Reimbursement Act, saying that the price of drugs bought by hospitals cannot exceed the limit, is considered, then such interpretation would prevent hospital from buying other medicine than limit-setting drug. The representatives of the Ministry of Health have not yet clearly taken a stand in using discounts and donations towards hospitals, although the prohibition of encouragement is applicable towards transactions where fixed prices are used – in order to “seal them” (i.e. prevent them from “avoiding” of fixed prices system). What is more, it is unknown how the earlier therapeutic programs will be changed into drugs programs, which was supposed to happen till the 1st January 2012. Such programs were earlier specified by Minister of Health in form of decrees and they influenced vital health issues – such as breast or kidney cancer, viral hepatitis B and C, malignant lymphoma, Crohn’s disease. Since the 1st January 2012 these programs will be established in the form of decision for each medicine separately. It is unclear how these programs are supposed to look like. Unfortunately, although it is already half of the January, these programs have not been issued yet. There is however the trial period for “old” programs till the half of 2012, but only if the agreements between National Health Fund and beneficiaries such as hospitals had been concluded till January 2012. As far as I am aware, such agreements have not been concluded.

The fault of implementation

The greatest fault of the Reimbursement Act is late implementation. It is more harmful, when we consider that these solutions change the rules of medicine financing significantly. Three days before new regulations entered into force, it turned out that more than 800 drugs disappeared from the list – including basic drugs for diabetes, asthma. Furthermore, the payment of patients for some medicines have significantly increased, which may enforce some patients to change the therapy. This change is however impossible without consultation and in case of patients needing transplantation at least five visits in transplantation centre and careful medical supervision are necessary. Have anybody prepared patients for this?

According to jurisdiction of the Constitutional Tribunal these legal changes need trial period, which will enable all interested parties to adapt. Generally it is thought that 14 days is appropriate term, but the important public interest may justify limitation of this term. Even if there is possibility of learning new regulations and adaptation possibilities, the 7-day period is necessary. Meanwhile, patients, doctors and pharmacists must adapt to the new reimbursement reality resulting from list of the reimbursed drugs during last two days.

Further future of the Reimbursement Act

It is unknown what will happen to the Reimbursement Act in 2012. Minister of Health has announced the change of regulations in regard to the responsibility of doctors for prescriptions. The organizations of entrepreneurs, occupational authority of doctors and opposition parties have announced to appeal the case to the Constitutional Tribunal. In spite of this, the Reimbursement Act will be implemented. It will reveal how regulations are understood and applied – such as the prohibition of the advertising of chemistry’s or prohibition in regard to reimbursed drugs. In two months there will be another list of reimbursed drugs. In June the trial period for drugs used in therapeutic programs (hospitals) will be over and  Minster of Health will have to decide, how to introduce the medicine programs. If it is not prepared properly, then there will be another “entertaining December”.

Translation: Małgorzata Jędrocha, Grzegorz Skrzypczyk

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About Natalia Lojko

Lawyer, specializing in pharmaceutical law and property rights.

Fredrich Naumann Foundation For The Freedom
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