June 27, 2005

Hungary's national drug reimbursement fund, the OEP, expects that a new reference pricing system will save the government over HUF4.3bn (US$21.17mn) per year. The new structure expands fixed reimbursement to 1,885 products, with only the price of the cheapest drug in each therapeutic class to be reimbursed. This is likely to apply to about a third of the national reimbursement list.

The move is similar to the existing "therapeutic reference pricing" regime in the Czech Republic, of which US research-based drugmakers' association PhRMA has been a leading critic. New categories to be added from July 1 in Hungary include antihypertensives, painkillers, depression treatments and cardiovascular drugs. Most of the 150 new drugs to be added to the list will be low-cost generics.

However, the changes to the country's reimbursement list are expected to drive up average prices, although only by as much as HUF500 (US$2.46). Even this has only been possible due to the failure of a government attempt to freeze soaring drug prices in the country, a measure recently overturned by the Constitutional Court.

Although the OEP now hopes the savings will pay for more advanced patented drugs, the new pricing plan will do little to alleviate short-term gloom in the foreign drug sector. This year's national budget for pharmaceuticals will be some 2% lower than last year's, at some HUF284bn (US$1.40bn), due to a new cost-sharing agreement between the industry and the government. Drugmakers have agreed to share the costs of any overspend of over HUF30bn (US$147.83mn) this year. Further, drug firms note that after the failure of drug price controls, prices are only being restored at April 2004 levels.