Hungarian Government Expands Drug Subsidy System

OEP, the Hungarian National Health Insurance Fund which reimburses the majority of selling prices on the country's drugs list, is to expand and simplify its drug categories system. The practical consequences are likely to further benefit domestic generics makers at the expense of branded imports.

The subsidy system will now cover 63 therapeutic groupings of drugs, compared to 50 previously. According to government officials, 80% of the OEP's costs are attributed to just three categories: anti-hypertensives, cholesterol-lowering drugs and ulcer treatments. Imported medicines currently account for 40% of the scheme's annual spending.

The government has expanded fixed-amount subsidies in recent years, as part of efforts to reduce the disparity between pharmaceutical budget allocations and real demand. However, the system has substantial incentives for lower-cost generic products, as it obliges patients to pay the difference between a predetermined subsidy and the market price of any given drug.

The system is understood to have substantially benefited local drugmakers such as Gedeon Richter, as well as worsening the outlook for producers of off-patent branded drugs. Further, amid a price freeze which ended in early 2005 as well as slowing drug price rises, multinationals continue to find conditions tough in the local drug market, which is expected to be worth US$3bn by 2009.