Severe drugs shortage a matter of time and money

A REVOLVING cycle of debt in Slovakia's chronically cash-poor health system may prevent delivery of life-saving medication by this summer, say Slovak drug distributors.
Health insurance companies now owe nearly Sk10 billion ($220 million) for drugs and other health care products to Slovak pharmacies, leaving pharmacies unable to pay their debts to drug distributors, who in turn have trouble paying their suppliers.
"Distributors will soon not have the money to buy drugs from producers, who will naturally cease to provide their goods. The reduction of our supplies is neither planned, nor anticipated for a certain date. The situation will simply evolve with time," said Andrej Reiner, president of Slovakia's Association of Drug and Healthcare Equipment Suppliers (ADL).

A REVOLVING cycle of debt in Slovakia's chronically cash-poor health system may prevent delivery of life-saving medication by this summer, say Slovak drug distributors.

Health insurance companies now owe nearly Sk10 billion ($220 million) for drugs and other health care products to Slovak pharmacies, leaving pharmacies unable to pay their debts to drug distributors, who in turn have trouble paying their suppliers.

"Distributors will soon not have the money to buy drugs from producers, who will naturally cease to provide their goods. The reduction of our supplies is neither planned, nor anticipated for a certain date. The situation will simply evolve with time," said Andrej Reiner, president of Slovakia's Association of Drug and Healthcare Equipment Suppliers (ADL).

"Certain types of drugs will disappear one by one, according to the financial situation of each distributor. Even some life-saving drugs will be missing by summer," he added.

Drug distributors and pharmacies have protested non-payment by health insurers in the past, but have always been dissuaded from stopping drug supplies altogether. Slovak law makes supplying drugs a duty, while the companies involved have been reluctant to risk their business reputations, say many in the sector.

But this time, distributors say, it's a different ball game. The ADL claims that debts in the drug distribution system increased by Sk2 billion last year, meaning that distributors will soon be forced to stop supplies of some drugs simply because they run out of money.

With payment arrears from health insurance companies now reaching 250 days, says Reiner, and "producers no longer willing to wait so long before cutting off supplies," the end is in sight.

Peter Mihálik, president of Slovak Pharmacists' Chamber (SLeK), said that pharmacies' receivables grew by Sk150 million a month in 2001, adding that one reason for the debt increase was a growth in drug prices and over-prescription by Slovak doctors.

Peter Pažitný from the Mesa 10 think tank explained that "pharmaceutical companies use marketing campaigns to stimulate doctors to prescribe more drugs, thus inducing demand in the sector that can't be covered by the state budget."

The distributors expect the government to save the day with cash injections, largely from revenues from the privatisations of the western Slovak spa Piešťanské kúpele and Slovak gas giant Slovenský plynárenský priemysel (SPP).

However, they worry that calls from international financial institutions not to put privatisation money into unreformed sectors will lead politicians to break their promises.

The Slovak Pharmacists Association says that more is needed than just cash. "The solution is clear. First, the debts have to be removed from the sector," said Mihálik. "But reforms have to be carried out too. Without changing the inefficient health system structure, recurring cash injections will make no sense."

Pažitný agreed, arguing that "injecting more cash into the system is not a solution. It has been done in Slovakia before, but it has not solved the problem."

Pažitný suggested that requiring patients to pay a small charge for every prescription would also help, but that major reform was the only long-term answer.

"The only way to solve the critical situation is profound reform measures, like reducing the basic benefits package, which is now too broad, introducing new payment mechanisms, and merging hospitals," he said.

However, added Pažitný, it comes down to people in the end. "The most important part of the system are doctors' pens and prescription methods," he said.

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