A hot summer laid on the pharma market, with new political, business or legal issues added to the chronical issues still unsettled and put significant pressure on all market players, either medicine and medical services suppliers or beneficiaries.

As usual, the heart of the matter is the poor funding in the medical sector in general and in the medicine market in particular. The limited funding is of real concern in any State, even the European Commission is looking for measures to allow patients in Member States the access to reimbursable treatments. However, besides its health budget per capita significantly lower than the EU average, distinctively Romania has no coherent and correlated health policies to tackle the health system dysfunctionalities, including the access to proper medication. Moreover, the unpredictable, restrictive legislation adopted in disregard of a transparent decision-making process has negative impact on the local pharma market, in which the much-needed stability and medium- and long-term strategies are no more than a utopia.

A succinct radiography of the pharma market in this summer revealed the absence of actual solutions to the traditional issues of the pharma market, and the adoption of measures for controlling the medicines' exodus. Nevertheless, such measures lead to tensions between medicine manufacturers and distributors.

In this context, the most unpredictable and non-transparent tax burden in Romania i.e., the clawback tax imposed on the marketing authorisation holders, remains an obstacle to the development of the pharma market and to patients' access to treatment. As a result, some essential medicines - including the cheapest ones - disappear, whilst innovative therapies are blocked from entering the market; introduced in 2011 as a temporary measure for a time of crisis, the clawback tax became permanent and proved an unsustainable burden, as the medicine manufacturers must pay for roughly 20% (and this percentage is steadily rising) of the reimbursable medicine budget (i.e., the full overrun of the approved budget) whilst the authorities refuse to increase the amount of such budget.

Unfortunately, what can be predicted about the clawback tax is that its rate will increase in the next quarters, and that, despite various promises and declarations, the governmental authorities did not prove firm intentions to amend its legal regime so as to regulate a sustainable and transparent tax burden. At most, minor changes like freezing the percentage of the tax at a specific level and exclusion of the cheapest products from scope of clawback might be implemented in the future, if the voice of the industry and patients' associations (timidly endorsed by the members of the Romanian Parliament's Health Commissions) will be listened by the Ministry of Finance and Government as well.

At its turn, the price policy has a number of severe consequences on the pharma industry, which are borne by the end beneficiary, the patient. At this point, Romania has some of the lowest prices for prescription-based medicines (and the lowest net prices i.e., the cost the State incurs for the reimbursed products), but the regulatory authorities imposed an additional 35% reduction of the prices for the innovative medicines whose generic correspondent of which have been priced by Ministry of Health; the level of prices thus generated is below the European minimum level and may not be supported by the international manufacturers of innovative medicines for various reasons, including the creation of a spiralling drop of the prices in the other European States which, directly or indirectly, reference their national price to medicines to the ones approved in Romania.

The Ministry of Health alleges that, further to the local regulation of two price catalogues, the European States would take as a reference the level of the prices in Romania's Public Catalogue (where the maximum price equals to the arithmetic average of the lowest three European prices), and not the prices in Canamed (at most equal to the lowest European price, possibly also aligned to the generic/biosimilar reference price– thus additionally decreased by 35% /20%). But of course, no one can guarantee that this contrivance will be effective, as it has no mandatory effects for any of said States.

In early summer, it was supplementary confirmed that regardless of its negative consequences, such decrease in medicine prices is rather non-negotiable, as an element assumed under the current governing coalition's programme.

As far as the patients are concerned, in theory the price drop should have been a beneficial or at least a neutral measure; and yet, due to the extremely low prices in Romania, the cheapest essential medicines (financially unsustainable in the context of the clawback tax) and the most innovative therapies - which are the subject of parallel export to EU countries that have considerably higher prices - disappear from the market.

As a rule, parallel trade is a legal phenomenon perfectly justified from an economic perspective, and it is one of the EU market's pillars; special attention should be paid to the parallel trade of medicines (which are not mere commodities, at least as they have regulated prices and limited production capacities), which may affect the patients' safety. The Romanian authorities have gradually become aware of the Romanian distributors' ample parallel exports, and have recently adopted measures for reporting and controlling the effects of the phenomenon; still, some of such measures are contradictory, and the authorities do not intervene at the level of the causes. In this context, the Ministry of Health imposed rules for creating minimum monthly stocks of medicines subject to reimbursement, which are applicable to distributors, as well as obligations for marketing authorization holders, to ensure the minimum monthly turnover of same medicines as well as to cover the justified orders addressed by the pharmacies.

However, there are some deficiencies as no sufficient details are provided in respect of some key terms (e.g., definition or qualification of the "need of the public health"), or some mechanisms for balancing obligations between manufacturers and distributors; consequently, these measures generated significant tensions between the two categories of market players, which will be further arbitrated by the authorities having a very broad power of interpretation, in lack of precise legal benchmarks. Hence, this summer we expect the authorities to adopt solutions that will be objected by the pharmaceutical companies involved.

Finally, right after the Ministry of Health adopted said measures for enforcement of the public service obligation, the Romanian Parliament amended Law No. 95/2006, deciding to allow pharmacies to conduct wholesale distribution activities, which is a bizarre measure exponentially multiplying the number of entities authorised to make parallel exports of medicines.

As regards the reimbursable medicines granted to Romanian patients - a traditionally deficient chapter in Romania's medicine policy – we noted that several molecules with favourable decisions within health technology assessment proceedings were included on the list of reimbursable medicines in the year 2017, such list being generally updated on a quarterly basis.

Nevertheless, in regulatory and administrative terms, real obstacles still exist (e.g., many restrictions within the HTA process or related to the execution of cost-volume agreements, significant delays in drafting of therapeutic protocols, etc.), and make difficult the Romanian patients' access to reimbursable innovative therapies that are reimbursed for many years in other European countries. The players in the pharma market had therefore a long hot summer, and had to work on reconfiguring their business plans according to the restrictive conditions aforementioned. Unless the authorities' vision changes for the better, most probably the pharma companies will adopt action scenarios including withdrawal/non-launching of products and an increasing number of legal proceedings, initiated in particular at the end of the year and in early 2018, in order to protect their legitimate rights and interests.

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