Hungarian Cost Pressures Affect Drug Sector

Hungary's government continues to struggle to turn its cost-cutting drug sector policy into a reality, with regular health budget overspending prompting many drugmakers to openly question the sustainability of the country's reimbursement framework, the National Health Insurance Fund (OEP).

Hungarian drug spending has been growing rapidly in recent years, with annual sales often rising by up to 20% year-on-year since the start of the decade. Sales growth slowed to 14% in 2004, and a new agreement between manufacturers and the government to restrain drug prices until December 2006 is expected to help contain prices this year. The arrangement affects approximately 4,000 products, with the maximum increase set at 7%, or roughly the level of inflation expected in 2005. However, even this rate was not the government's preferred level of 15%, which was overturned by a court challenge earlier in the year.

Beyond price cuts, recent government attempts to control the burgeoning drug market have included the extension of fixed subsidies and measures to control doctor prescriptions. However, with drugs already accounting for more than a fifth of public sector healthcare costs, the government is likely to remain challenged by the ever-rising spending that is forecast for the coming years.