SSN Contains Pharmaceutical Expenditure in Q1 as Italian Pharmacies Instrumental in Generic Dispensing

SSN Records 2.1% Drop in Pharmaceutical Expenditure in Q1

Italy's National Health System (SSN) recorded a 2.1% decrease in its pharmaceutical expenditure for the first quarter (Q1) of 2008 compared to the same period in 2007, to approximately 3 billion euro (US$4.6 billion). The number of medical prescriptions in the same period grew by 5.8% year-on-year (y/y), while the estimated pharmaceutical expenditure per citizen came to 50.5euro.

A comparison between the individual months of January, February, and March 2008 relative to the same periods in 2007 shows that whereas both in January and in February, pharmaceutical costs incurred by the SSN showed a slight y/y increase, by 0.9% and 2.5% respectively, the highest drop was evident in March, at 9.1% y/y. According to Federfarma, the Association of Italian Pharmacists, this could be explained by the decrease in the number of working days for 2008 compared to 2007 and a decrease in the number of medical prescriptions (-0.7%).

Selective drug-price cuts in effect from 15 July 2006 and a more generalised 5% cut in drug prices in effect from 1 October 2006, together with the continuing impact of reference pricing all had an effect. Another factor to affect the public pharmaceutical bill was the expansion of regional drug-reimbursement lists to include drugs reducing gastric acid production (proton pump inhibitors) in the following regions: Apulia, Abruzzo, Sardinia, Liguria, Calabria, Campania, and Lazio. The reintroduction of the patient co-payment "ticket" in Abruzzo and Campania from 1 January 2007 and the "ticket remodelling" in Sicily from 4 April 2007 also showed their effects

Pharmacies Instrumental in Generic Substitution

According to Federfarma, Italian pharmacies played an important role in containing pharmaceutical expenditure during the first quarter of 2008 with savings made by generic substitution of around 130 million euro, of which nearly 7 million euro was derived from the pay-back ("ticket") system. Indicative non-proprietary name (INN) prescribing and indicative generic substitution are in place in Italy (see Europe: 11 June 2008: EU Commission Highlights Varying Generic Pricing Policies Across Europe). However, Italy has major regional differences in the consumption of generic medicines.

In terms of number of prescriptions in the first three months of 2008, the region of Sicily recorded a decrease by 1.2% y/y as a result of the measures designed to curb healthcare expenditure on a regional level. These included prescription limits and an 8.6% y/y increase in co-payments ("tickets") made by patients in the first quarter.

Outlook and Implications

The latest data on the pharmaceutical expenditure in Italy show a continuing trend of cost containment attributed to the number of different measures that the Italian government has undertaken on national and in some cases regional levels, in order to address rising healthcare expenditure (see Italy: 14 April 2008: Italian Public Pharmaceutical Expenditure Falls 6.8% Y/Y in 2007). One of these measures has been to promote the prescription and use of generic medicines, which is already producing the desired effects. Traditionally, the Italian market has been dominated by branded medicines, and the generic market is still underdeveloped. Patients and doctors are used to branded products and concerns remain over the quality of non-branded drugs, which can explain to a certain extent the regional differences in the consumption of generic medicines. The share of generic medicines in total pharmaceutical expenditure in 2007 was 18.7%—a figure expected to reach 24-25% in 2008 (see Italy: 20 March 2008: AIFA Expects Rise in Generic Consumption in 2008).

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