Treasury blasts 'unholy alliance' of drugmakers, Health Ministry

The treasury harshly criticized on Wednesday the "unholy relationship" between drug companies and decision makers at the Health Ministry.

In a document on changes to the ministry's budget for 2008, the treasury also unveiled plans to add NIS 200 million for new medicines and medical technologies - significantly less than what the ministry had hoped for.

The treasury also said it plans to slash NIS 350 million from the budget of health maintenance organizations.

To prevent drug companies from influencing officials who determine which drugs the Health Ministry will cover, the treasury is requiring pharmaceutical firms to produce a full list of organizations they help fund. The requirement will apply to any company seeking to get its products on the ministry's list of subsidized medicines.

The treasury is hoping that such a requirement would help reveal unethical relations between the drug companies - for which inclusion in the subsidy plan carries great benefits - and the organizations and people who determine which drugs to include. Transparency regarding the drug companies' beneficiaries would shed new light on recommendations by medical officials who receive funding from the firms.

In addition, the treasury is planning to increase the 2008 budget for the national list of medications ("the medications basket") by NIS 200 million. The increase will allow the Health Ministry to include new medications and medical procedures in the list of subsidized services. However, the ministry had hoped for a larger increase.

The treasury's document, which was sent Wednesday, holds another disappointment for the Health Ministry in the form of future slashes to the budgets of the health maintenance organizations. The treasury is planning a series of cuts that will amount to NIS 350 million.

The treasury explained that the HMOs must reimburse the state in compliance with the contract they had signed with the state allowing them to collect payments from clients. The contract stipulates that the HMOs will pay the state 6.62 percent of the total cost of the medications basket - which amounts to some NIS 24 billion.

The treasury intends to put another dent in the HMO budget for 2008 by reducing the "demographic update clause." The clause currently gives the HMOs an annual supplement of 1.13 percent to their budgets due to various demographic factors such as the country's growing and aging population, which requires additional spending on health care. The treasury intends to reduce that supplement to 0.9 percent.

The HMOs can find some comfort in the fact that the treasury allowed them to determine their own medications budgets. The HMOs will receive one-third of the current medications budget.

Officials at the ministry voiced concerns that the HMOs might prefer to subsidize popular drugs at the expense of important and less common products, for which they might slash funding.