VZCZCXRO9479
PP RUEHAG RUEHAST RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA RUEHLN
RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHBM #0604/01 2121410
ZNR UUUUU ZZH
P 301410Z JUL 08
FM AMEMBASSY BUCHAREST
TO RUEHC/SECSTATE WASHDC PRIORITY 8540
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUEAUSA/DEPT OF HHS WASHINGTON DC PRIORITY

UNCLAS SECTION 01 OF 02 BUCHAREST 000604 
 
SIPDIS 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ECON ELAB EINV PGOV SOCI AMED RO
SUBJECT: ROMANIAN HEALTHCARE PART 2: PHARMACEUTICAL DEMAND RISING, 
BUT ACCESS AND QUALITY REMAIN CONCERNS 
 
REF: A) Bucharest 601 
 
Sensitive but Unclassified; not for Internet distribution. 
 
SUMMARY 
 
¶1.  (SBU) As incomes rise in Romania, pharmaceutical consumption is 
also increasing.  Better awareness of useful medications has put 
pressure on the Government of Romania (GOR) to expand the national 
drug list and to include more cutting-edge medications.  While any 
pharmaceutical which has been on the EU market for at least one year 
may be legally sold, even if it is not on the national list, these 
medications are not covered under the national insurance system. 
This keeps them out of reach for average Romanians.  Breakdowns in 
the system sometimes leave patients without access to the 
prescriptions they need at the right time. 
 
¶2.  (U) This is the second of a three-part series on healthcare in 
Romania.  Part 1 focused on the public healthcare system, while part 
3 will look at the emerging private healthcare market.  End 
Summary. 
 
THE MARKET FOR PHARMACEUTICALS 
 
¶2.  (SBU) Romanian pharmaceutical consumption is well below the EU 
per capita average, which indicates that the market has significant 
room to grow.  However, the cost of prescriptions already accounts 
for nearly 20% of government health expenditures, leaving little 
room for expansion absent radical restructuring of the healthcare 
delivery system.  Because healthcare is publicly financed, payment 
arrears to drug makers on the part of hospitals are not uncommon. 
Hospitals which do not receive timely reimbursements from the 
National Insurance House cannot pay distributors, causing 
distributors to halt shipments.  Likewise, when distributors cannot 
pay pharmaceutical companies, the companies sometimes halt shipments 
to distributors.  This cycle of missed payments creates intermittent 
drug shortages for key medications. 
 
¶3.  (SBU) In a July 23 meeting with EconOff, Romania Country Manager 
for Merck Sharp and Dohme (MSD), Agata Jakoncic, stated that while 
the issue of payment arrears has improved this year, this is only 
because the Government wants to appear responsive to patients in an 
election year.  She expects payment problems to be a continuing 
issue after the parliamentary elections this fall.  The difficulties 
inherent in working through the state-run system have led some 
pharmaceutical companies to focus their energies on direct sales to 
the small private sector and on marketing non-prescription drugs. 
Still, the pharmaceutical sector is growing despite these 
challenges.  Sales are expected to increase 5-10% in 2008, on top of 
an 11.2% increase in 2007.  Imported drugs make up 80% of the 
available number of medications but account for only 44% of sales, 
meaning that most consumers continue to rely on inexpensive, 
locally-produced generic medications. 
 
¶4.  (SBU) Maintained by the Ministry of Health, the national drug 
list currently contains 2,106 medications which are covered under 
the state health insurance program.  These drugs are reimbursed on a 
sliding scale of 100, 90, or 50 percent.  Drugs reimbursed at 100 
percent include select medicines used to treat serious illnesses 
such as hepatitis-B and cardiovascular disease.  Generics are 
reimbursed at 90 percent, and most brand name drugs are reimbursed 
at 50 percent.  This structure favors generics over brand names, 
making it difficult for the branded medications to compete.  This 
helps to explain the high usage of generics in the Romanian market, 
since they are not only cheaper but are also reimbursed at a 
significantly higher rate.  For drugs not on the list, 
pharmaceutical companies are forced to offer their own discount 
deals to consumers if they hope to sell the drugs at all. 
 
¶5.  (SBU) While in theory all of the drugs on the national list are 
provided at no or reduced cost to any insured consumer, in practice 
not all patients receive their medications at subsidized prices. 
Under the existing public health insurance scheme, fixed amounts of 
insured medications are delivered to each pharmacy, with the 
pharmacy permitted to seek other additional supplies directly from 
distributors.  Medication is only free or at reduced cost so long as 
the "insured amount" remains in stock at the pharmacy.  When the 
allotted amount of medication runs out, patients must choose either 
to pay the market price for the prescription or they may wait until 
the next official shipment. 
 
¶6.  (SBU) According to Jakoncic, the infrequency with which the 
national drug list is updated is a significant source of frustration 
for pharmaceutical companies.  Although Romanian law states that the 
list may be updated as often as once per year, in practice the GOR 
does so at very irregular intervals.  The most recent revision came 
in July 2008 after having remained static since 2005.  Companies are 
reluctant to sell non-listed drugs because the market for them is 
much smaller.  In addition, Romanian law does not allow a drug to 
enter the local market unless it has already been on the EU market 
 
BUCHAREST 00000604  002 OF 002 
 
 
for one year.  These barriers to entry mean that, depending on when 
the list was last updated, some new, life-saving drugs may not be 
available in Romania, despite being widely used elsewhere in the EU. 
 
 
¶7.  (SBU) Control over the quality and the appropriate dispensing of 
drugs remains an issue.  The sometimes cozy relationships that 
hospital directors have with drug suppliers and distributors allows 
for kickbacks and the occasional distribution of second-rate 
medications.  The limited regulation on pharmacies has allowed for 
an environment where clerical staff will often dispense medication 
without first consulting a pharmacist.  It is not uncommon for 
pharmacies to have insufficient reference materials to check drug 
interactions or dosages.  The overall lax enforcement of 
prescription requirements has meant that most prescription 
medications are relatively easy to acquire from a pharmacy for any 
paying customer. 
 
COMMENT 
 
¶8. (SBU) Comment:  The pharmaceutical distribution system 
illustrates some of the worst aspects of Romania's "universal care" 
medical system.  Transparency and predictability are lacking. The 
infrequently updated national drug list serves as a central 
gatekeeper, making it difficult for new drugs to enter the market in 
a timely fashion.  In theory, there are no barriers to obtaining any 
needed medication approved on the list.  In practice, the 
availability at the insured price is unreliable.  While the ability 
to pay cash improves the odds of access to medication, it does not 
guarantee it.  This access remains a very real concern for many 
Romanians, including those whose lives are seriously endangered if 
they must miss doses due to temporary supply disruptions.  Reforming 
the public healthcare system to ensure consistent access to 
medication will be a challenge for Romanian policymakers and 
provides an opening for private health insurance.  End Comment. 
 
TAUBMAN