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Romanian Drug Suppliers Cut Off Public Sector

May 20, 2005

Romania's association of drug distributors and importers are to withdraw credit to state-funded hospitals and pharmacies offering state reimbursement, amid a payments backlog of EUR200mn (US$252.70mn). The country's healthcare system remains chronically underfunded, with roughly 90% of Romania's hospitals failing to make their payments on time.

Suppliers now want the government to commit to paying its oldest debts. Last year the government outlined plans to settle outstanding funds, amid reports that more than EUR50mn was owed to multinationals GlaxoSmithKline and Aventis from 2002. However, as action has not been forthcoming, some hospitals are now only treating emergency cases or asking patients to pay for services upfront.

Romania's prime minister, however, attributes the nascent crisis to poor fund management, rather than any budget shortfall. Notably, some reports claim that auditors have discovered a EUR600mn (US$758.01mn) black hole in health funds, a sum roughly equivalent in size to the country's entire pharmaceuticals market. The Health Ministry now pledges to continue deliveries using state-owned companies, but these claims may ring hollow. As with recent similar incidents in Eastern European neighbours such as Hungary, the threat of the outright collapse of the healthcare system may prove motivational to both sides.