Austerity leads to healthcare cuts in Portugal
When PharmaBoardroom came to Portugal in 2007, price cuts, payment delays and changes to the health system with each successive government were but the first indications for the pharmaceutical sector that troubled times were ahead: four decades of political and financial mismanagement had resulted in Portugal’s economic stagnation. When the country requested a financial bailout by the IMF in spring 2011, the country quickly came round to face reality. Adaptation was paramount to the recovery of this economically ravaged nation, and government and industry quickly sought to find new solutions to the crisis. In 2014, renewed economic growth and a willingness by all stakeholders to work together will be the keystone to preparing Portugal’s revitalization.
Then-White House Chief of Staff Rahm Emanuel commented in 2009, “You never let a serious crisis go to waste…it’s an opportunity to do things you think you could not do before.” This mantra parallels the mindsets of many in Portugal’s pharmaceutical industry today. After serious downturns in the last few years, the country is poised for restoration. While many believe that returning to the environment in the years preceding the crisis is not likely, there is immense hope for a return to respectable market levels.
You never let a serious crisis go to waste…it’s an opportunity to do things you think you could not do before.”
Portugal’s austerity measures for healthcare are similar to those across Europe, but are more extreme because of the country’s bailout. Because health plays a major role in Portugal’s budget allocation, the pharmaceutical industry has been targeted as an area for cutting costs. “Imposing the lowest prices in Europe based on reference countries, creating restrictive access measures, and refusing to compensate new medicines are all easier than merging hospitals or changing policy at the level of the Ministry,” says Heitor Costa, executive director of Portugal’s pharmaceutical association APIFARMA. He believes that it is easier for the health system to make cuts in the area of pharmaceuticals, the majority of which are reimbursed by the country’s government, than in other areas.The troika of the Central European Bank, IMF, and European Commission have set a goal for government spending on healthcare to be limited to only one percent of GDP, one of the lowest in all of Europe. As such, the pharmaceutical industry created a memorandum of understanding (MoU) that stipulated the industry contribute EUR 600 million (USD 780 million) in savings back to Portugal’s healthcare system between 2011 and 2012. This was followed up with a similar MoU for 2012-2013.
This agreement was critical to ensuring stability in Portugal, especially for innovative companies. “We try to work closely with Portugal’s regulatory authority INFARMED and the Ministry of Health to find best ways to bring innovation to Portuguese patients,” remarks Gisella Dante, general manager of Janssen Portugal. “Participating in APIFARMA is also critical; we believe in the protocol, and Janssen believes this is an important tool in terms of placing everyone together to determine a solution for the government, industry and ultimately the patients. This protocol was also the first of its kind in Portugal; no other industry has given money back to the government. Many companies had to work hard internally to make this protocol work for two consecutive years; but it represents a real partnership.”
“APIFARMA maintains a stance of dialogue, which always prevails,” says Eduardo Pinto Leite, vice president of APIFARMA and director general of GSK Portugal. “The industry is here because it has been given a license to operate for society. Although conditions are rough, particularly with lack of debt payment and slowness of innovation entry, the Ministry of Health knows the industry is here to stay. With that in mind, we have always supported dialogue.”
“Partnership between the health system and the pharmaceutical industry must be more than noble intentions and enthusiastic words,” notes Secretary of State of Health Manuel Teixeira. “Despite specific missions and frequent divergent approaches, health system activities and pharmaceutical interests have symbiotic connections. Bearing this in mind we are open to discuss balanced and affordable partnerships that give to patients an equitable access to valuable treatments.”
The industry is here because it has been given a license to operate for society. Although conditions are rough, particularly with lack of debt payment and slowness of innovation entry, the Ministry of Health knows the industry is here to stay.”
The industry’s protocol to provide savings for the healthcare system over the last two years has seriously affected the introduction of new drugs into Portugal. For the last two and a half years, an extremely limited number of medications have been accepted for reimbursement. “Portugal has been part of Europe for a long time, but it feels like the country is leaving Europe because of this lack of access to new medicines to fulfill unmet medical needs,” continues APIFARMA’s Costa. “Sustainability is one of the main preoccupations of all companies here and elsewhere in Europe. The industry should share risks in that sustainability while still maintaining access to innovation; the state currently designs the market for each company, which creates uneven competitiveness and is generally incomprehensible.”
“The government has very demanding concrete targets to achieve, of which the industry is aware,” says Nelson Ambrogio, managing director of Bayer Portugal. “There is a collaborative spirit between government and the industry, and there are clear challenges for issues like innovation approval. The period between marketing authorization and access to medicine in Portugal is almost 500 days. This figure is more than one year for approval in many other European countries”
Part of this issue revolves around the complex regulatory system of Portugal, which pharmaceutical companies often struggle to comprehend. Eurico Castro Alves, president of Portuguese regulatory authority INFARMED, is making efforts to help streamline many of INFARMED’s processes, such as the implementation of an autonomous and integrated national system for the evaluation of health technologies. “This system will be the basis for the decision on public funding for medicines and medical devices according to their cost-effectiveness,” says Castro Alves. “The goal is to ensure equity in national access to medicines and medical devices, making available better suited treatments to the clinical situation of each patient, and correlating them to the resources of the national health system.” Additionally, INFARMED also played a key role in the creation of the Forum of Portuguese Speaking Medicines Agencies (FARMED). “Through this project and through mutual cooperation,” comments Castro Alves, “the objective is to move towards a more convergent regulatory framework, strengthening national capacities to promote and ensure access and rational use of quality, effective and safe medicines, contribute to the sustainable development of the sector and the respective health systems, and promote the elimination of barriers to such development.”
To read more articles and interviews from Portugal, and to download the latest free report on the country, click here.