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

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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.

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New Reimbursement List Breaks the Drugs Log Jam
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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.

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New Legislation Promises Greater Transparency
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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

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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.

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Comment: What's Behind the Changes
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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.)

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-- 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,

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and to push for enhanced market access through implementation
of a fair and transparent process for making reimbursement
decisions.
ASHE