Cablegate: Poland: Second Round of Price Reductions For

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Anne W McNeill 10/06/2006 04:25:28 PM From DB/Inbox: Anne W McNeill

Cable
Text:

UNCLAS WARSAW 02064

SIPDIS
CXWARSAW:
ACTION: ECON
INFO: ADM MGT ORA FCS DCM AMB PAS POL

DISSEMINATION: ECOX
CHARGE: PROG

APPROVED: ECON:LGRIESMER
DRAFTED: ECON:DZIMMERMAN
CLEARED: NONE

VZCZCWRI711
OO RUEHC RUCPDOC RUEHKW RUEHBS
DE RUEHWR #2064 2651538
ZNR UUUUU ZZH
O 221538Z SEP 06
FM AMEMBASSY WARSAW
TO RUEHC/SECSTATE WASHDC IMMEDIATE 2065
INFO RUCPDOC/DEPT OF COMMERCE WASHINGTON DC IMMEDIATE
RUEHKW/AMCONSUL KRAKOW 1313
RUEHBS/USEU BRUSSELS

UNCLAS WARSAW 002064

SIPDIS

SENSITIVE

STATE FOR EUR/NCE/BPUTNEY
STATE PASS TO USTR FOR DONNELLY/ERRION
COMMERCE FOR 4232/ITA/MAC/EUR/OECA/MROGERS, JBURGESS,
JKIMBALL

E.O. 12958: N/A
TAGS: ETRD KIPR ECON PL
SUBJECT: POLAND: SECOND ROUND OF PRICE REDUCTIONS FOR
INNOVATIVE DRUGS

1. (U) Sensitive but Unclassified/NOT for internet
distribution

2. (SBU) At a September 15 meeting, Piotr Blaszczyk, the
Acting Director of the Drug Policy and Pharmacy Department of
the Polish Ministry of Health, issued a second round of price
cuts to 27 pharmaceutical companies. The price reductions
vary by company and product, and appear to range from 4 to 23
percent. (Note: at a September 7 meeting with American
companies, Deputy Minister of Health Boleslaw Piecha stated
that the second round of price cuts would be from 5 to 8
percent. End Note.) The price cuts apply only to sales of
innovative drugs to hospitals, and affect approximately 100
active substances comprising about 30 products. The cuts
could become effective as soon as September 29.

3. (SBU) At the September 15 meeting, the Health Ministry
delivered individual papers to each company via sealed
envelope detailing the price cuts. The companies are
required to respond to the Health Ministry by September 25 on
whether they agree to the terms dictated by the Ministry
(which could be done in writing) or wish to negotiate (which
will be done in person on September 25 and 26). Companies
generally do not believe that negotiating will change the
situation or defer the price cuts, and could cause the Health
Ministry to discontinue using them as suppliers. Some
companies are considering not selling to the Health Ministry
at the new prices as they will not be able to make a profit.
The pharmaceutical companies all agreed that there was a
total lack of dialogue and transparency throughout the
process.

4. (SBU) The Health Ministry explained to the companies that
it arrived at the new prices by asking other European
countries for their pricing lists; by surveying 320 Polish
hospitals for their pricing data (which had been previously
negotiated with each pharmaceutical company on an individual
basis); and by examining global sales data in IMS. (Note:
IMS is the leading global provider of business intelligence
for the pharmaceutical and healthcare industries. End note.)
The Health Ministry also directly requested more information
from 27 companies on their products and pricing, to which 22
companies reportedly responded. Beyond this, the Health
Ministry did not explain its methodology or evaluation
criteria for selecting the products which were reduced in
price. According to the pharmaceutical companies, the
products selected for price reductions tended to be their
most expensive.

5. (SBU) Comment: This second round of price cuts follows
an initial round of price cuts which reduced the
reimbursement price by up to 13 percent for imported
pharmaceuticals and pharmaceuticals manufactured in Poland by
foreign firms using imported active ingredients. Prices were
not cut for domestic producers in either round. During the
first round of cuts the Ministry of Health speciously
explained that the cuts were necessary because of "exchange
rate fluctuations". Apparently learning from this
experience, the Ministry offered no explanation for the
second round of cuts. American and European innovative
pharmaceutical companies are increasingly frustrated by the
Ministry's non-transparent price cuts and lack of dialogue.
Post will continue to work with the companies to try to
foster a constructive, transparent dialogue with the Ministry
of Health.
ASHE

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