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<p><b>INTRODUCING A REFERENCE PRICE SYSTEM FOR PHARMACEUTICAL PRODUCTS IN CROATIA |
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AND ITS INFLUENCE ON PLIVA'S BUSINESS PERFORMANCE </b></p> |
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<p>Zagreb, 20 January 1999</p> |
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<p> Prompted by the Ministry of Health, the Croatian Institute for Health Insurance |
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("HZZO") has announced its intention to introduce, as of 01 February 1999, a |
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system of so-called reference prices for all pharmaceutical products reimbursed |
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by state health insurance. Accordingly, PLIVA d.d. ("PLIVA"), the largest pharmaceutical |
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company in Croatia and leading pharmaceutical group in Central and Eastern Europe, |
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has commenced negotiations with the Ministry of Health and HZZO about determining |
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new prices of drugs.</p> |
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<p> The reference price system is used in many European countries, and HZZO has |
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embraced this model in order to reduce expenses in the Croatian health care |
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system. This model will help HZZO save an estimated HRK 350 million annually. |
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In terms of value, the introduction of these measures will mean approximately |
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HRK 40 million less revenue for PLIVA annually from pharmaceutical sales on |
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the Croatian market, where price reductions will mostly affect license products.</p> |
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<p> Commenting on the decision of the Croatian Ministry of Health and the Croatian |
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Institute for Health Insurance, Zeljko Covic, President of PLIVA's Management |
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Board, stressed: </p> |
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<p>"The problem of illiquidity in the Croatian health care system is one of the |
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main reasons why HZZO has forced drug manufacturers to reduce their prices. |
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This is an attempt to ration drug consumption in Croatia, that is, to reduce |
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the proportion of it that health insurance subsidies. During negotiations with |
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HZZO, PLIVA has showed understanding for the difficulties which exist in the |
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health care system with two goals in mind: for regular collection of debts in |
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the pharmaceutical industry to be achieved in Croatia, and to protect the vital |
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interests of the company." </p> |
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<p>For PLIVA, introducing the new system will cause an average 4-5% reduction |
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in drug prices paid by state health insurance. Taking into consideration the |
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fact that the total price reduction for products from HZZO's reference list |
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will amount to, according to the HZZO information, an average 15%, PLIVA's products |
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will have a smaller price reduction than those of other manufacturers. In order |
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to decrease the negative effect that these price reductions could have on the |
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company's financial results, PLIVA will exert its best efforts to reduce its |
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costs with additional measures, primarily by further reducing its production |
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costs and achieving more favourable contractual conditions with licence partners." |
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</p> |