Impact of regulatory fees on medicines consumption in the Czech Republic

2010-02-10



The year 2008 saw the introduction of regulatory fees in the Czech Republic for surgery and emergency room visits, hospital stays and prescriptions. It was also a year during which the Czech Republic continued its healthcare reform, which included changes in the prices and reimbursement calculation mechanisms. A recent analysis of the Czech healthcare system carried out by the country’s Office for Healthcare Information and Statistics (UZIS) shows that these factors, including the introduced regulatory fees, decreased the volumes of medicines distributed in the Czech Republic in 2008. However, the fees did not reverse the increasing trend as far as the value of distributed medicines is concerned, as they contributed to a shift in drug spending towards modern – and more expensive – treatment.

Medicines’ consumption up in value but down in volume

As in almost every country, expenditure on healthcare in the Czech Republic has been constantly growing, not only at current prices, but also at constant prices – in 2008 the growth amounted almost to 36% compared with 2000. The share of public expenditure on health in the gross domestic product has been hovering around 6% since 2000, and in 2008 it amounted to 5.75%. Approximately 8.5% of the public healthcare expenditure came from the public budget, whilst 91.5% was covered by the public health insurance system.
Expenditure on medicines has been also demonstrating a growing trend. For the sake of comparability between years, UZIS calculated the value of medicines consumption based on the highest permitted drug prices and sales margins of medicines distributed in the country. The real costs of the consumed medicines may therefore be slightly lower. The total expenditure on medicines in 2008 calculated in this way amounted to CZK 72.75bn (€2.79bn), or CZK 7,008 (€267) per one inhabitant. This constitutes an 8.3% increase, compared with 2007.



The increase in the total value of distributed medicines in 2008 was coupled with a rise in the average pack price. Compared with 2007, the average price of one medicine pack increased by over 17% to CZK 229 (€8.7). However, the volume of distributed medicines dropped by 7.4% compared with 2007, from 343.12 million to 317.66 million – the lowest level in at least six years.



Regulatory fees bring relief to soaring drugs expenditure of the obligatory health insurance system
The introduction of regulatory fees in the Czech Republic in 2008 most definitely had an impact on healthcare trends, including medicines consumption. One could say that prescription and surgery visit fees served their purpose well, decreasing the number of prescriptions being presented at pharmacies by over 23% compared with 2007. The number of prescriptions for reimbursable drugs that year dropped by 26.7% compared with 2007.

The smaller number of prescriptions presented at pharmacies obviously influenced the already mentioned decrease in the volume of distributed medicines in 2008 and decreased expenditure of obligatory health insurance funds on reimbursable medicines. The foundations for the current public health insurance system in the CR were laid in the early 90s. The system consists of nine health insurance funds; private health insurance is also available but functions as an addition to the public system.
The amount spent by the nine obligatory health insurance funds on reimbursable medicines decreased from CZK 33.57bn (€1.3bn) in 2007 to CZK 32.75bn (€1.2bn) in 2008, and the proportion of medicines costs in the total healthcare expenditure of obligatory health insurance providers decreased from 18.5% to 16.9%, respectively.



The fall in the financing of medicines expenditure by obligatory health insurance funds has been visible for quite some time now. In 2000, 63% of the total amount spent on medicines was financed by the obligatory heath insurance scheme, whilst in 2008 it was only 45%.

Individual expenditure on medicines in 2008 grows even more as the result of fees introduction

The decreasing contribution of the obligatory health insurance system to the financing of medicines expenditure obviously means that Czech citizens are the ones that feel the burden. The introduction of regulatory fees most definitely contributed to yet another increase in private healthcare spending, a trend visible not only in the Czech Republic. Thus, in 2008, the total value of patient co-payment for reimbursable medicines increased by 7% compared to 2007, from CZK 7.84bn (€299m) to CZK 8.38bn (€320m).



Compared with 2007, in the consecutive year the average annual expenditure on healthcare per one member of an average household increased by CZK 699 (€26.7) or 29.5% to CZK 3,068 (€117.2). In pensioner households this average in 2008 amounted to CZK 4,790 (€183), a 35% increase on 2007. Medicines-related expenses constitute the largest part in the healthcare expenditure of individuals, and in 2008 their share amounted to 54.7% (prescription medicines 30.6% and drugs without prescription 24.1%).



Despite decreasing reimbursement levels and increasing patient co-payments for reimbursable drugs in total values, the average reimbursement level calculated per one prescription in CZK in 2008 was 33.2% higher than in 2007, which – UZIS believes – may be related to the fact that doctors were prescribing more modern and expensive medicines and larger packs. It is worth noting that one of the aims of the Czech Ministry of Health behind the introduction of regulatory fees was to earmark more funds earned on the fees into the funding of the cost of more modern medicines. The patient average co-payment per one prescription also increased in 2008; however, when re-calculated excluding the prescription fee, it becomes apparent that for the first time in years it actually dropped by 1.2% to CZK 86 (€3.3).




Uncertain future for regulatory fees and impact of other regulations on medicines consumption

The introduction of regulatory fees most definitely has had an impact on the consumption of medicines in the Czech Republic, lowering the number of prescriptions presented in pharmacies – which helped to generate savings for health insurance funds – and decreasing the volumes of distributed drugs. The additional resources brought by the fees as well as the generated savings allowed the authorities to move resources within the public health insurance system to the area of expensive treatment, thereby improving patient access – a factor partially responsible for the increased value of 2008 drugs consumption, despite the decrease in volumes – whilst maintaining the availability of other healthcare services, which was the original aim of the Ministry of Health behind the introduction of the fees.
However, because 2008 was the first year when the fees were in operation, it is therefore difficult to estimate their full impact in this area, especially taking into consideration further regulations introduced by means of the so called “Janota’s package” adopted in 2009, which brought about a number of amendments to the Czech budget. At the beginning of 2010 Czech Republic increased the VAT rates on medicines from 9% to 10%, and also reduced the maximum manufacturer’s drug prices and reimbursement levels by 7% for a period of one year for those medicines whose prices were not reviewed by the Czech medicines agency (SUKL) in 2008, when the country introduced a new reimbursement system. The introduction of the new regulations has fuelled debate over the constantly increasing level of patient co-payment, prompting the Health Ministry to investigate if the drug prices set by distributors and pharmacies will make Czech citizens pay more for medicines in 2010 than in 2009.
At the moment it still remains to be seen what future awaits the regulatory fees, especially in view of the May 2010 national elections, which may bring to power those parties which have been fiercely opposing the fees since their introduction.

Beata Fojcik
PMR Reporter from the Czech and Slovak pharma markets