Israel in Largest Ever Drug Spending Rise

April 5, 2005

The Israeli government has secured final legislative approval for this year's budget increase to the "basket" of drug and healthcare resources funded by the country's National Health Insurance (NHI) scheme. The extra government finance will bring total 2005 spending to some NIS350mn (US$80.78mn), a slight increase on the amount approved earlier by the Israeli cabinet. The base cost of the scheme is usually around NIS225mn (US$51.49mn).

The increase is the largest ever, and has been won after months of fierce debate, with several drugs such as Genentech's leading cancer therapy Avastin only included in the final stages of negotiations. Notably, the government appears to have made a conscious choice to include roughly 50 cheaper, less essential drugs (mainly under the so-called List B) in the basket, largely as a means to widen its coverage. Indeed, officials now appear to have entirely dispensed with imposing clinical priorities on the essential drugs list, known as "List A."

Meanwhile, the health ministry is also reportedly pushing for legislation on the provision of nonessential drugs by the country's four publicly financed sick funds, which account for more than 80% of drug sector spending. Greater legal clarity is certainly required over how the funds spend government resources, as well as the means by which priority drugs are selected. Recent reforms, which have also included the liberalisation of hospital procurement and the removal of the pharmacy sector's monopoly on OTC drug dispensing, have attracted growing public concern in Israel.