Cezary Sledziewski, Executive Director of PZPPF, discusses the pros and cons of Poland’s catching up with EU’s rising standards. He argues: “No one currently knows exactly how much these costs would represent but estimates indicate costs of USD 66 million for Poland.”
In 2011, prior to the implementation of the Reimbursement Act, you mentioned: “any market trend has consequences on the generic industry.” Since the law was passed in January 2012, what have been the consequences for the Polish generics industry?
We were expecting these changes to take place for several years. Therefore, we were prepared and had anticipated the consequences; but nonetheless, its implementation has affected the entire value chain.
Some of the biggest changes have been seen in the business environment, which has grown more competitive and transparent since the act was introduced. The ban on unofficial discounts in the supply chain is the most fundamental one that was supported by our Union. In a way, the patient now interacts with the reimbursement system. Also, a new settlement ceiling on reimbursement expenditure amounting to 17 percent of the total public healthcare expenditure was introduced, as well as a new negotiating system to fix official retail prices with the Ministry of Health. Official fixed margins were also introduced at pharmacies. This represents a big difference, as before pharmacies were only interested in selling higher-priced products, and today the price of the product does not have an impact on the pharmacy’s sales performance. However, lowering wholesaler’s margin by more than three percent is questionable.
On the occasion of the law on “Jumbo groups,” (combining patented and non-patented active ingredients of a given substance class), introduced as a result of the reimbursement law, these have proven to be controversial as a common reimbursement level is disadvantageous for most branded drugs and benefits for the patient are ignored. Through this policy, over 300 of these groups were created.
Finally, the law introduced severe penalties for medical practitioners in cases of administrative errors on prescription drugs. This has led to reluctance to prescribe in some cases, even if the medicine is on the reimbursement list.
How have generics companies been adapting their strategy to move forward?
Most generics companies manufacture OTC products as well as supplements, so for them the transition post-reimbursement act was not so difficult. The issue however, with reimbursement drugs for generics is that prices went down four percent on average, but for some groups this was much lower.
And in that sense, how has PZPPF been guiding companies through this revolution?
PZPPF is leading working groups and providing ongoing assistance to its members to resolve any issues concerning the reimbursement system or other market issues. PZPPF is present at parliamentary committee sessions and our voice is always heard. For instance, in the original draft of the regulation by Government, a three percent tax on drug sales in Poland had been suggested, calculated on net profits, but our Union succeeded in having it counseled by Parliament.
Overall, since the law was passed, PZPPF has managed to introduce 50 changes in the law, and help its companies manage this unprecedented revolution. Of course, considering that we represent a wide array of companies of different nationalities, sizes and interests, finding common ground can be challenging, but it is our duty to sit down with our members and discuss solutions that correspond to their expectations as a group.
Historically, Poland has been a country that adopted its laws under consensus in middle ages. Perhaps, this is why we are experienced in the decision making process.
Many international companies such as SANOFI or GSK have decided to invest in manufacturing in Poland. Who among your members has decided to do the same and how is Poland represented as a manufacturing country?
Amongst our international members Gedeon Richter, Sandoz, Teva, Valeant and Actavis are manufacturers as well as all of our local members. This is mainly a Polish historical factor, as in our socialist era, we had 10 factories manufacturing mainly for export to the Soviet Union.
Poland has a very strong manufacturing tradition and highly qualified people. Hence, around 50 percent of pharmaceutical employees have a higher education degree. Poland also boasts a good legal environment for patent and data exclusivity that gives good opportunity for generic drugs manufacturing.
What is worrying is that because of ever-stricter regulations targeting the pharmaceutical industry, costs are rising drastically to adapt to these new measures, but prices of drugs on the other hand are diminishing.
With the uncontrollable influence of the Internet, European anti-counterfeiting measures are not sufficient, either to stop the flow of counterfeit drugs or to educate the public about the risks of using such drugs. Legislation on falsified medicines is introducing stricter rules to ensure safety in medicines and controlled trade. Some of the measures of this legislation include an authenticity feature on the packaging, an EU-wide logo to identify online pharmacies, tougher regulations on manufacturers with individual pack numbers and strengthened track-record system for wholesale distributors. Once again, the real problem is that these measures will be costly, as for instance placing individual numbers will slow production and demand investing in new IT systems. No one currently knows exactly how much these costs would represent but estimates indicate costs of USD 66 million for Poland.
Given the current reforms taking place at the European level, what should be Poland’s biggest priorities today?
The future of Poland lies in biotechnology, however costly, risky, long to develop and unpredictable its results may be.
However, Instead of investing in biotechnology, which would give Poland a chance to rise on the international scene, it seems that investments are going towards EU regulations.
Many reforms are taking place at a European level, and for instance the Agreement on European Patent Court system has not been ratified by either Poland or Spain. Poland is against this system for many reasons, but the main reason is that any court case would be extremely costly for a company. This system is unstable and Poland will not join to protect its industry including the pharmaceutical one.
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