POLISH PHARMACEUTICALS: PROGRESS AT LAST

C O N F I D E N T I A L SECTION 01 OF 03 WARSAW 002212 SIPDIS SIPDIS STATE FOR EUR/NCE:BPUTNEY STATE PASS TO USTR FOR WMOORE COMMERCE FOR 4232/ITA/MAC/OECA/MROGERS, JBURGESS, JKIMBALL E.O. 12958: DECL: 11/08/2017 TAGS: ECON KIPR TBIO ETRD PL SUBJECT: POLISH PHARMACEUTICALS: PROGRESS AT LAST REF: A. WARSAW 139 ¶B. WARSAW 1757 ¶C. WARSAW 595 WARSAW 00002212 001.2 OF 003 Classified By: Economic Counselor Richard Rorvig for reasons 1.4(b,d) ¶1. (SBU) Summary: The Ministry of Health finally issued an update to its list of drugs eligible for reimbursement from the National Health Service. The list was great news for the industry. Twenty-one innovative active substances were added. Also, a new law that went into effect on September 29 should, if implemented correctly, significantly improve the processes for adding new drugs to the reimbursement list. These are still early days, but local pharmaceutical companies are hopeful that some of the long-standing market access problems besetting the innovative pharmaceuticals industry in Poland may be on the road to resolution. End summary. -------------- -- New Reimbursement List Breaks the Drugs Log Jam -------------- -- ¶2. (C) On November 2, former Minister of Health Religa signed the long-awaited update to the list of drugs eligible for reimbursement from Poland's National Health Service. The list was originally expected to be issued in June and, under Polish law, should have been issued no later than September. It proved worth the wait: 21 innovative active substances were added to the list, significantly exceeding the pharmaceuticals industry's gloomy expectations. Malzorgata Maurer, Director of INFARMA, an innovative pharmaceuticals industry association, told EconOff that the companies are delighted with the list. ¶3. (U) The new drugs treat conditions that include tumors, coronary heart disease, epilepsy, glaucoma, schizophrenia, post-transplant conditions, chronic obstructive pulmonary disease and pulmonary embolism. Several different dosage levels, or "presentations," may be approved for a single active substance. The list includes 57 drug presentations. As reported ref A, 12 innovative active substances had been added to the reimbursement list in March. Taking the March and November lists together, a total of 33 new innovative substances, comprising 106 presentations, were included on the reimbursement list in 2007 -- a marked increase from prior years. ¶4. (C) The new drugs are expected to increase annual costs by PLN 265 million (about USD 106 million). About PLN 65 million (about USD 26 million) is expected to be saved by lowering price limits of some drugs already on the list, leaving a net cost increase to the government of PLN 200 million (about USD 80 million). Maurer told EconOff she thinks the Ministry's cost projections are probably right for the first year, but after that costs may grow as awareness of the drugs develops in the Polish market. Under a new law that went into effect on September 29, the Ministry of Health now has authority to remove drugs from the reimbursement list. Maurer noted the Ministry may use that authority if costs began to run out of control. -------------- New Legislation Promises Greater Transparency -------------- ¶5. (SBU) Exciting as the new list is for pharmaceuticals companies, it is a one-time event regarding what has been a chronic problem. Over the longer term, the new law that went into effect on September 29 is likely to prove the more significant development. The most important aspects of the legislation are: -- a 180-day limit for making a decision on whether to add a drug to the reimbursement list (90 days to evaluate the drug and 90 days to negotiate a price level); -- a requirement that the Ministry provide a reasoned basis for decisions; and -- allowing decisions not to include a drug on the reimbursement list to be appealed to an administrative court. The law is not perfect. For example, it specifies criteria WARSAW 00002212 002.2 OF 003 for making pricing decisions, but is silent on how to determine the level at which the drug's cost will be reimbursed to the patient (either 50%,70% or 100% of the cost). Also, the Ministry of Health can now remove drugs from the reimbursement list, or reconsider reimbursement levels, and there are no criteria specified for those decisions. Perhaps most seriously, there is no penalty for exceeding the time limits in the law, except that, in case of a proposal to change a drug's price, failure by the Ministry to act will be deemed agreement to the new price. Similar time limits have existed in Polish law in the past, and they have been ignored frequently (see ref B). ¶6. (C) Nevertheless, if implemented properly, the law should lead to a significant improvement in the timeliness and transparency of the decisionmaking process for adding drugs to the reimbursement list. Initial indications are favorable; several industry contacts have told EconOff that a new wind is blowing in the Ministry since Artur Falek became director of the Health Ministry's Drugs Policy Office. EconOffs have noted a refreshing increase in openness at meetings with the Ministry. The same phenomenon has been commented on to us by diplomats from other EU states. Falek told EconOff that he believes his team has the resources to clear out the existing backlog of drug applications during the first part of 2008. Some of these applications have been languishing in the Ministry for years. -------------- Comment: What's Behind the Changes -------------- ¶7. (C) The pharmaceuticals industry's market access problems have stood out in a country where business conditions are excellent, and U.S. investment growth has been among the fastest in Europe. The wait for a new reimbursement list was filled with twists and turns; indeed, at one meeting in September Vice Minister of Health Piecha told us the new list would have only two innovative molecules on it. While a number of issues remain to be addressed, we are cautiously optimistic that the sector has turned a corner. Several factors will have combined to produce change, including: -- an EU infraction suit: innovative pharmaceuticals companies are pursuing an EU case in Brussels challenging Poland's lack of criteria for making reimbursement list decisions, failure to respect deadlines, failure to justify decisions and failure to provide appeal rights. The case had reached the stage of a "reasoned opinion." The new law undercuts some of the causes of action. (NOTE: This is one of three pending suits; the other two concern Poland's approval of "ghost list" products (see Ref C) and the 13 percent price cut introduced in 2006. The UK's EU and Commercial Counselor in Warsaw told EconOff that he was non-plussed when, at a recent meeting with diplomats from several EU countries, Ministry officials refused to discuss Poland's response to the "reasoned opinions," citing confidentiality. End note.) SIPDIS -- the political moment: Vice Minister Piecha announced the draft list to the media at the height of the recent election campaign, and Minister Religa signed the list on his next-to-last business day as minister, leaving the next government to figure out how to pay for the new drugs (and try to explain to the electorate the withdrawal of drugs from the market if the cost proves unsustainable). -- a change in personnel: the former director of the Drugs Policy Office, known for a marked policy preference for Polish-produced generics, departed the Ministry to take a position with a Polish generics company. His replacement appears truly committed to increasing transparency. -- last but not least, substantial USG efforts. These have included assisting U.S. companies to organize themselves to advocate for their cause, helping to set up and participating in Ministry-industry meetings, coordinating approaches with other embassies, taking advantage of visits of officials from USTR and other agencies to raise the issue, and ensuring full consideration was given to letters on the matter from the U.S. Secretary of Commerce. As the new PO-led government takes over, post will continue to promote dialogue between U.S. companies and the Ministry, WARSAW 00002212 003.2 OF 003 and to push for enhanced market access through implementation of a fair and transparent process for making reimbursement decisions. ASHE