The current economic crisis, coupled with a generally high level of political instability in Greece, Hungary, Poland, Russia and Turkey, makes this a particularly volatile time to do medical device business in each of these countries. So claims the European medtech industry Eucomed in an Insight report it recently published.

According to Funding and Reimbursement Processes for Medical Devices in European “Emerging” Economies, each of the five countries mentioned is responding in different ways to the need to make cost savings. These methods often involve restructuring their reimbursement systems, which then creates new challenges for medtech manufacturers.

The medical devices industry could face problems in each of these countries “due to their own specific healthcare related issues”, says the report.Overall, the economic crisis is resulting in a decreased budget for healthcare and higher unemployment levels which, in turn, leads to a reduced level of funding for the financing of the systems.

Turning to individual countries, the report notes the following individual trends in each of the countries:

Greece

Patients have become increasingly willing in the recent past to pay towards their own care which has boosted private healthcare services, but the current economic crisis is likely to curtail this trend and put more stress on essential public services.

Moreover, with the current economic crisis resulting in the Greek government being increasingly short of funds, there is likely to be even more stress placed on health services, and payments to healthcare product providers will be further delayed, a situation already intolerable to most healthcare product suppliers.

With a new government in office since October 2009, there could be important changes ahead.

Hungary

The Hungarian system is under considerable pressure as the economic structure has begun to crack under the financial strain. There was a healthcare budget cut of HUF30bn (€112m) at the beginning of 2009. With unemployment now above 10% and income from tax revenues down, government funds have dropped and this is having a knock-on effect on hospital funds.

As a result, hospitals are delaying paying manufacturers and distributors, as well as postponing tenders, and so cutting back on purchases.

There is also talk of the financial crisis prompting a reduction in the number of hospitals and smaller healthcare facilities, leading to the creation of larger healthcare establishments.

It will be interesting to see what will happen in Hungary after the elections in April.

Poland

Against the background of the current economic crisis and the need to make the books balance, the Polish Ministry of Health is reviewing the so-called Social Security System Basket, introducing or excluding medical procedures from the public healthcare basket, or introducing co-payments, according to various medical criteria.

Prior to this revision, whenever a service (including the use of a medical device) was included in the basket it was reimbursed up to 100%. The concern is that the introduction of the co-payment might lead to an increase in patient’s out-of-pocket expendituresfor medical devices, even in the inpatient sector, which may discourage the purchase of some devices.

The recent Act of the Parliament on the Social Security Basket System includes indications on how medical devices should be used within the healthcare system, and explains the role of the Polish Health Technology Assessment Agency, the AOTM, in giving recommendations on the financing and reimbursement of medical technologies.

A draft law would make it compulsory for companies to pay some €37,000 to the agency for carrying out an HTA of their product, yet only positive HTA outcomes would result in the product being introduced in the reimbursement process, which could badly impact SMEs.

The financial crisis has also decreased the amount of tax revenues collected by

the Polish government to fund the healthcare system.

Legally, the NFZ – the National Healthcare Fund - is not allowed to spend less on the healthcare budget than the previous year. As a result, it seems that the NFZ will have been forced to use some of its 2008 savings towards 2009. But given that there are no savings from 2009 for 2010, the NFZ may need to take on a loan to cover some of the 2010 expenditure, which is not a tenable situation, Clinica notes.

Russia

There has been a decrease in purchasing power of more than 30% among Russians as a result of the devaluation of the currency. This decrease in purchasing power had led to rationing policies, including in the usage and purchase of elective healthcare service products and impacting the purchase and use of some capital equipment and implantable products.

It is not all bad news, however. At central level, the government has organised an anti-crisis programme, setting aside some funds to ensure adequate access to medical devices.

At regional level, however, many enterprises have been closing down because of the crisis, and drug pricing is under the spotlight.

While the focus is now mainly on the pharmaceutical market, some predict that this could spill over into medical devices, not least since there is currently no real law or regulatory structure for reimbursement apart from a technical directive on registration and a directive in development on safety.

It is quite possible that the government may now decide to focus on both reimbursement and pricing for medical devices.

Turkey

So far, the impact of the economic crisis seems to have impacted Turkey less than other EU countries. Nevertheless, unemployment levels have reached a historical high of 15% and hit, in particular, high-income citizens who often hold private health insurance.

For this reason, it is predicted that there will be a decrease in spending within the private healthcare sector; but this is not expected in the publicly financed sector.

There is also likely to be a knock-on effect of the Turkish government deciding to decrease GDP, along with the decision to maintain the share of GDP spent on healthcare at around 7-7.5%.

According to the report, however, the medical devices industry (worth some $1bn) might be impacted less in terms of cuts, than the pharmaceutical industry ($12bn), which is much more visible because of its size.