This record is a partial extract of the original cable. The full text of the original cable is not available.

C O N F I D E N T I A L SECTION 01 OF 03 BUCHAREST 000835

SIPDIS

DECL: 04/05/2015
TAGS: PGOV TBIO ETRD KCRM EFIN PREL RO USTR
SUBJECT: ROMANIA: CORRUPTION IN HEALTH CARE SYSTEM REMAINS AN ISSUE FOR NEW ROMANIAN GOVERNMENT
REF: A. A) BUCHAREST 1611 B. B) BUCHAREST 0964 C. C) BUCHAREST 0611 D. D) BUCHAREST 0164

Classified By: ECONOMIC SECTION CHIEF JOHN RODGERS FOR REASONS 1.4 B AN DD

Summary

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¶1. (SBU) One of the key challenges facing Romania,s new Health Minister Mircea Cinteza is a state-run health system plagued by corruption. Two types of corruption manifest themselves in Romania: high-level manipulation of the system for personal gain and low-level &facilitation payments8 that state-employed medical personnel require from patients. High-level corruption is by far the most corrosive andchallenging for the health care system. The development of a private health insurance industry and HMOs in Romania offers a promising alternative and a challenge to the state-run system. Post continues to engage with Romanian authorities to assist in creating a more effective and "cleaner" healthcare system. End Summary.

Health Care System,s Inherited Deficiencies

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¶2. (U) Despite limited health reform efforts since 1989, the Romanian health care system remains plagued by a number of problems partly inherited from the communist era: poor quality of services, inequitable access, unofficial fees, and limited financing. While hefty wage-based social insurance contributions (7 percent of wages for employers and 6.5 percent of wages for employees) should have increased the amount of money available for medical care, in fact not all of the funds collected actually go for health care. Instead of going to the Ministry of Health or the National Health Insurance House, the funds go to the Ministry of Finance where they can be used for other purposes. The funds the health care system receives are based on the Government,s enactment of the health care budget, which generally has amounted to 3.6 - 3.8 percent of GDP, although the new Government has promised to raise this ceiling. Moreover, the government has not achieved broad compliance with the mandatory contributions. Estimates indicate that less than 25 percent of the population actually contributes, and several large companies in financial distress have not paid the amounts required, even if collected from employees.

A Legacy of Inaction

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¶3. (U) The former Social Democratic Party (PSD) government, though not the leadership of the Ministry of Health, acknowledged the existence of corruption within the healthcare system. They declined, however, to take action to address the problem. In 2003, the U.S. Embassy obtained a special grant in the amount of $400,000 from the State Department to investigate corruption in the health system. For over nine months, the Embassy attempted to engage officials in the Ministry of Health, including former Health Minister Ovidiu Brinzan, to develop a program for use of the funds, but received no cooperation. The grant was withdrawn because the Ministry was simply not interested in dealing with the serious issue of corruption in the health care system. Post,s efforts to raise the debate from the theoretical to the practical level have gained some attention, with the EU, European embassies, WHO and numerous private entities calling for more accountability. This external scrutiny, combined with several scandals - including a National Control Authority report charging that the national blood supply was tainted due to inadequate controls ) and the demands of ordinary Romanians have put pressure on the Health Ministry, but failed as yet to result in significant reform.

The Two Faces of Corruption

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¶4. (C) Corruption in the Romanian healthcare system has two variants: high-level corruption perpetrated by those controlling the system and low-level corruption comprising under-the-table payments required by doctors and nurses to receive services. Although both forms of corruption are disruptive, the high-level corruption is the most damaging, because it bleeds the system of scarce funds, skews decision-making on procurement or approved treatment regimes, and otherwise hinders efforts to improve care. Moreover, such entrenched corruption results in public apathy. Romanians believe tackling corruption &at the top8 is futile, even potentially dangerous. Top-level corruption is the focus of USG involvement because it directly hinders the ability of U.S. firms ) pharmaceutical suppliers, medical product suppliers, and private health insurance companies ) to enter and compete in the Romanian market. Under the last government (which left office in December), high-level corruption was rarely investigated, prosecuted, or publicized because of the entrenched interests involved, which reached the highest levels of the Romanian government. Instead, health officials tended to divert the public,s attention to the need to fight low-level corruption, an easier task, because most Romanians have firsthand knowledge of how this system of bribes and payments works.

Transparency Commission and High Level Corruption --------------- ---

¶5. (C) In order to come into compliance with an EU directive, the MOH established the Transparency Commission (now named the Committee for Pharmaceutical Strategy) in the second half of 2003 to oversee the introduction of medical products ) mostly pharmaceuticals ) in the state-funded reimbursement system. However, the history of the former President of the Transparency Commission, Dr. Victor Voicu, is a classic case of how the Romanian system has accommodated corrupt health officials. Voicu headed the Commission until he was eventually removed amid charges of conflict of interest. Our contacts within the pharmaceutical industry advised EconOff that these charges stem from his role in favoring generic drugs, specifically the Romanian generic pharmaceutical producer LaborMed. His wife owns approximately a quarter of LaborMed,s shares and his daughter ) former manager of external affairs at Pfizer Romania ) is a LaborMed executive. During his tenure as Transparency Commission president, Voicu repeatedly cast votes that enabled LaborMed to receive early approval or granted the company fast track approval for its generics, while the products of other companies waited in line. When charges against him began to surface, Voicu finally started to recuse himself from LaborMed related decisions. However, his efforts proved to be too little, too late and he was forced to step down, although he was never formally charged with any wrongdoing. (Note: Even now, the renamed Transparency Commission attracts criticism of U.S. and other foreign pharmaceutical firms. They complain about (what else) lack of transparency in decision-making. End note)

¶6. (C) Although removed from his position as Transparency Commission President, Voicu to this day retains his post as Chairman of the National Drug Authority,s (NDA,s) Scientific Council ) the body which makes the technical recommendations upon which the Transparency Commission makes its decisions. Another role of the NDA,s Scientific Council is to regulate the data exclusivity of pharmaceuticals on the Romanian market. Post, in cooperation with American pharmaceutical firms, actively engages the Romanian State Office for Inventions and Trademarks (OSIM) and the NDA for more rational data exclusivity standards, consistent with U.S. and EU norms. Post was instrumental in Romania,s passage of Supplementary Protection Certificate (SPC) legislation protecting pharmaceutical patents, guaranteeing intellectual property rights to pharmaceutical products equal to other EU countries. Voicu,s position as President of the Scientific Commission and his links to LaborMed represent a potential obstacle to our efforts. Voicu continues to push for fast track approval of generic applications on behalf of LaborMed before the enforcement of SPC goes into full effect.

Former Ministry of Health Officials Under Investigation --------------- ----

¶7. (U) Prosecutors of the National Anti-corruption Prosecutor,s Office (PNA) in March called in former Health Minister Ovidiu Branzan, cabinet member in the former Social Democratic Party Government, in connection with an illegal transfer of 5 billion lei ($186,000) from the Health Ministry,s budget to accounts of a company in relation to a contract for the purchase of air purification equipment. The deal also allegedly involved a relative of Branzan,s, Ion Bazac, who mid-last year was assigned as Secretary of State for European Integration in the Health Ministry. Bazac,s predecessor, Iulian Popescu, was the first top official in the Health Ministry investigated by the PNA. He was officially accused of bribe-taking and abuse of office to the detriment of public interests. Investigators reportedly have evidence that Popescu received $65,000 in three separate installments as a &reward8 for furnishing confidential information on procurement tenders to suppliers of pharmaceutical products and equipment.

Low Level Corruption: Show Me the Money

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¶8. (SBU) There is an understanding between patients and their doctors and nurses, that those who do not pay personal &gratituties8 to their doctor or nurse will not receive expeditious treatment, or even any treatment at all in some cases. Such unofficial payments are said to provide physicians with incomes many times the level of their official salaries and are a financial barrier for those who are unable to pay. The more urgent or complicated the required care, the more the doctor will expect. In cases where families cannot comply with the payments demanded, care providers often cut services. In addition to facilitation payments to doctors and nurses, patients are expected to pay small fees (about $6 per day) for health specialists to administer medications. Patients must also supply all of the non-medical items they need during hospitalization, including clothing, towels, toilet paper, plates and utensils.

Poor Public Health Care Drives Patients to Private Clinics --------------- -----

¶9. (U) With official funds earmarked for public hospitals being misdirected or misspent, and unofficial funds to doctors sometimes not resulting in improved services, patients with means increasingly seek care in private clinics. Several years ago, private health clinics were a luxury available only to the privileged few. While this still the norm, an estimated 25,000 people hold membership cards for private health clinics. Employees of multinational firms in particular express a preference for treatment at private clinics rather than public hospitals. The development of a private health insurance industry and health management organizations (HMOs) as well as the supply of private medical services in general is seen as a means, through offering the public an alternative, to pressure the public system to improve.

Comment

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¶10. (C) The previous government was unwilling to tackle the healthcare corruption issue in any serious way. Although it was alleged that even Prime Minister Nastase,s wife, profited directly from systemic corruption, it was clear that corruption existed at all levels of system. The new government has pledged to focus on corruption and there is hope that reform may begin. Post is already engaging with the new government to ensure that progress is realized in creating a less corrupt and more efficient healthcare system in Romania.

¶11. (U) AmEmbassy Bucharest,s reporting telegrams are available on the Bucharest SIPRNet website: www.state.sgov.gov/p/eur/bucharest

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