INSANE PRICES
Cristian Niculescu

There are important disparities in the price of cancer medicines within the 28 EU member States. Cancer patients in Eastern European countries can often not afford life-saving new drugs, because they are extraordinarily costly or simply not available for shortage reasons. Big manufacturers of cancer drugs like Roche and Novartis charge often equal or even higher prices for innovative drugs in poorer Eastern countries than in affluent Western European states. The European Commission sponsored  recently several studies on this topic, but didn`t intervene in the pricing and reimbursing of life-saving drugs within the Union till now.

In Romania the Government control drugs prices but does not reimburse the cost for all the strictly necessary drugs.  So Romania has a ”sick drugs market. Some patients have to borrow money or sell their properties for paying their treatment. The companies complain that state budgets are too small and preferred parallel exports, which became the main cause of the medication crisis in Romania. The big pharma players re-export a great part of the commodities received from the producers, by ignoring national regulations. The intra-community trade cannot be proven because the distributors “forget” to report the movements of products to the Romanian authorities. The lack of reporting favors medication frauds, such as the double sale of the same products. The huge profits and the financial strength allow the big companies to corrupt doctors and eliminate independent competition. The doctors prescribe drugs preferentially or write recipes for fictitious patients. 

The visible and dramatic effect is that the vital medicines become unavailable to patients so a lot of them die until they receive medicine savior. The Romanian prosecutors and the justice attempt to accommodate all this sick system.


In Romania it is notorious the story of a 67 years old woman who saves her husband from cancer of the prostate. Cristina Achimoiu regularly travels 200 km by train to the Capital of Romania to sell her wool handmade garments. The money she raised are for his husband's treatment. The old lady has a minimum pension of 400 lei (around 85 euros) meaning 10 times less than the amount of medicines needed by the patient. A journalist posted on Facebook the story of Cristina that later received help from a lot of Romanians, impressed by her sacrifice. But this a happy case.

Cristina Achimoiu regularly travels 200 km to sell her wool handmade garments for his husband's treatment (Photo: Carla Buleanu)

 Mioara Dumitrescu was 47 years old when she was diagnosed with brain cancer, in 2011. She published a letter accusing the health authorities that refuses her Avastin treatment and she asks to be euthanized. The drug is not included and not refunded by the oncological protocol in Romania. Drugs like Avastin, Herceptin, Interferon, Zoladex or Tarceva are issued only after special and complicate approval protocols. In 2012 Mioara Dumitrescu sued the state and won the trial with the National Health Insurance House (CNAS). After lengthy procedures CNAS finally approved the 4,000 euros per month needed for her treatment. Too late, Mioara died in 2013.

Last chance: the justice

Because they face with imminent death, due to corruption and bureaucracy, patients turn to the last resort: the justice.  In June 2014 the Romanian Federation of Associations for People with Cancer (FABCR) opened the first trial against the Romanian Government. The patients have demanded the reimbursement of drugs that cost thousands of euros and are not on the list of compensated or free medicines
           Unfortunately, the Romanian Ministry of Health continues the trials with the patients who have won in first court. Dan Cimpoieru is the lawyer of another group of people with cancer that won in court the right to treatment, in the summer of 2014.

”These patients do not have time. They want to live. The court's decision can be appealed by the Ministry of Health, but is  executory. Patients can take the drugs that are not on compensated lists”, explains Cimpoieru, who represents the Alliance of Chronic Patients.The lawyer points out that the Government, Ministry of Health and the National Health Insurance House must ensure these patients treatments, but they need medicines that are not refunded. But until they reach the court the patients are killed by the insane prices.

Drugs crisis is a never ending story

The average cost of treatment for a cancer patient reaches 2700 euros/year, according to statistics of CNAS. European  Cancer  Patient  Coalition report that in  Romania from  2008  to  2013, over  25  cancer  medicines  were  either  not  available  or  in  short  supply. These  shortages led  to  thousands  of  Romanian  patients  either  being  denied  treatment,  pursuing  an  incomplete  treatment  or being  forced  to  arrange  (and  pay  for)  the  purchase  of  the  necessary  medicines  themselves  from  Western European  countries. Unfortunately, there is no official list of non-available cancer drugs. The Doctors Alliance published only an informal list of cheap missing drugs. National Medicines Agency (ANMDM) receives the complaints of citizens regarding the lack of any drug.

Two years after cytostatics crisis in 2013, the situation has not really improved. In February 2015 hundreds of sick persons from Brasov and Oltenia regions were again deprived of drugs. Farmexpert retailer officially announce that he cannot sell at the tender price, meaning the price admitted for settlement by the National Health Insurance House. So doctors could not treat patients receiving Herceptin, for example. „It was a crisis related to the distribution, importing firms say that they have imported enough, but probably were also led out in parallel trade, otherwise I cannot explain”, says CNAS president, Vasile Ciurchea.

 

Herceptin is a cancer treatment that often ”evaporate” during the Romanian drugs shortages

Of course, suppliers have their point of view. Money is not enough, as communicated in October 2015 by the National Association of Manufacturers and Importers of Medicines (ARPIM).  „It takes at least another EUR 280 million for that all Romanian patients can benefit from treatment (...) and we are forced to support this treatments through the clawback tax”, ARPIM president, Călin Galaseanu explained. In 2011 the Romanian government imposed to the producers to finance the health system through a 5-11% tax on drugs sales. In the second quarter of 2015 the clawback tax  reached 24% of sales.

 Beside the clawback the suppliers are also bothered by the new price catalog for medicines available in July 2015.  The catalog prices for thousands of products decreased by 20% or more in some cases. The Romanian Health Ministry decided to force the companies to implement cost reductions.

High profit for big pharma

Drug crisis is a story of profit optimization practiced by the big companies. Big pharma have noticed and speculated huge problems of Romanian medical system, according to KeysFin, a business information and risk management agency. KeysFin data show that Romanians spent on drugs, between 2009-2014, over 85.4 billion lei (19 billion euros) so the profit for the companies being 4.4 billion lei (almost one billion euros).

 In 2014 the drug market in Romania was about 2.7 billion euros, according to the National Medicines Agency. 22% of this amount represents the parallel exports, a form of intra-community trade allowed by the free market of the European Union.  Drugs in Romania have low prices, imposed by national authorities. Therefore producers and importers/retailers prefer to re-export these goods to the markets with high prices. Due to the parallel exports the worst situation for patients is seen in oncology. In Romania there were about 110,000 patients treated for cancer in 2014. Alliance of Chronic Patients calculation in the same year shows that in Romania there are over 500,000 cancer patients and that 78,000 new cases occur annually. It is very difficult to estimate the actual number of illnesses because the National Cancer Registry is not implemented.

 The cancer treatments are high-profit for the big pharma. In 2014 the market value of oncology drugs amounted to about half a billion euros, meaning a market share of 16.6%, according to different matching sources from the industry. The sales growth in oncology drugs is an european trend, not only a Romanian one. Sales of cancer medicines in Europe increased mainly due to the introduction of innovative medicines, according to Management in Health Journal.

According to Dr.Alexandru Eniu “inequalities exist in availability and patient costs, especially for newer, more expensive drugs, but drug shortages also affect several essential, old and inexpensive drugs, and this should be unacceptable!” The Romanian doctor is Chair of the European Society for Medical Oncology (ESMO) for Emerging Countries Committee and also the Head of the Day Hospital Unit at the Cancer Institute Ion Chiricuta from Cluj-Napoca (Romania). 

 Dr. Eniu mentioned that drug shortages affect several essential, old and inexpensive drugs like tamoxifen, doxorubicin, cisplatin, 5-FU, bleomycin. Dr. Eniu used tamoxifen in adjuvant breast cancer as an example. “Tamoxifen was widely available across Europe, but when we questioned how patients found the drug in the pharmacy, we found that it was not available in certain countries”.

The prices and the incoherent reimbursement strategy are the main causes of drug shortages in Romania, said Dr.Alexandru Eniu, Chair of the European Society for Medical Oncology (ESMO) for Emerging Countries Committee (Photo: Facebook)

He said there are two main causes for the shortages. First is the “dramatically increased pricing” by pharmaceutical companies. Dr. Eniu mentioned that the prices proposed by pharmaceutical companies are often unrelated to their magnitude of benefit, and that there is little if any transparency in how these prices are set. The second cause is the “incoherent reimbursement strategy” of the national authorities. ”In the last 4-5 years, virtually none of the new therapies were included on the list for reimbursement”, says Dr. Eniu.

Parallel trade, legal but immoral

In these circumstances suppliers are moving towards re-selling drugs. The College of Pharmaceutists president from Timis county, Florina Gherman believes that there is a too permissive Romanian legislation. “Why we cannot keep these drugs in the country? Because, they told us, based on intra-Community trade, such a situation is legal. What can we do? We stay just to complain and raise concerns, along with patients. Sure that we are terribly affected, the druggists”, says Florina Gherman.

 In 2014 National Medicines Agency (ANMDM) received 399 requests for parallel export. Applications have focused on medicines subject to prescription. According to ANMDM, the destination countries are: Denmark, Poland, Germany, Great Britain, Latvia, Lithuania, Belgium, Italy.  According to Iulian Trandafir, chief drug distributor of Farmexpert retailer, currently there are about 380 companies (from about 400) in Romania which performs parallel exports. He said the state could reduce or control this activity, but the sanction of 10,000 lei (2200 euros) is too small.

A "trunk of drugs" bring a profit of 500,000 euros, said the CEO of International Medicine Manufacturers Association from Romania, Dan Zaharescu

The EU encourages parallel exports, which is advantageous, explains the Vice President of the National Agency for Medicines (ANMDM), Dr.Marius Tanasa. ”It is beneficial for us as a state, because we are talking about jobs and income for our economic agents. But in certain situations where certain drugs tend not to cover the state needs we take measures to prohibit parallel trade, for certain substances, for limited periods„  says Dr.Tanasa. In 2013 the Health Ministry temporarily suspended the export of 41 drugs (oncology included). In December 2014 this provision was extended.

 But the efficiency of such measures is doubtful. The top 5 pharmaceutical distributors in Romania are the largest re-exporters of pharma products and the source of the crisis, said some extremely well informed sources from pharma industry. The parallel export represents a huge source of profit, of arranging figures and of aggressive development of pharmacy chains, which they own. Parallel export is usually made through companies affiliated to the top management of these companies.

”Trade margins on foreign markets are between 10% and 180%. Payments are made immediately, unlike a Romanian hospital, where you can wait for months for your money”, told our sources and give an example. Mabthera is an injectable oncology product that treats lymphatic cancer. One ampoule costs about 6000 lei (1330 euros). The manufacturer, Roche sells 500 ampoules to the “titans” of the Romanian market: Mediplus, AD Pharma, Polisano, Farmexim or Farmexpert. From them, 495 boxes go immediately to Germany, with a minimum 15-20% profit to the input price. Only 10 boxes remain available to hospitals and patients.

Mabthera is one of the most costly cancer treatment in Romania: more than 1300 euros for one ampoule.

By regulations, the 500 authorized warehouses have to sell 90% within the country, and the rest can be used for intra-community trade. Nobody complies with this regulation, although it represents grounds for withdrawing the authorization. In 2013, the National Agency for Medicines required to all distributors to make monthly reports of their movements of medications, in terms of boxes, lot, expiration date, supplier, buyer, initial stock, stock movements. However, larger warehouses don’t report anything to the ANMDM. Without tracking the inputs-outputs of commodities nobody cannot prove that the medications delivered by the producers are re-exported. The lack of reporting favors fraud schemes.

Medicines are sold twice

The above mentioned sources revealed us one of the fraud schemes: in national pharma chains medications are sold twice. ”So, I have several oncologists which I bribe. They issue prescriptions, which they send to the pharmacies chain of the distributor who corrupted them. Based on the prescriptions, the suppliers invoices the fictionally prescribed medication to their own chain of pharmacies. The pharmacies enter the prescriptions into the system as if they delivered the medication to the patients. Then the product, which the patient never saw, is settled with the National Health Insurance House (CNAS)”. Subsequently the distributor-chain of pharmacies couple reintroduces the products into the circuit, through another company in the group, and exports it. So, they take their money once from the CNAS and once more from intra-community trade. It is a scheme practiced only in the big companies, the ones which don’t report their sales.

The most interesting disclosure is how the fictional prescriptions get into the CNAS Single Integrated Information System (SIUI). The system is based on software produced by SIVECO, an IT company accused of European funds fraud and tax evasion. Initially, the SIUI displayed all reports for all pharmacies, all the time. Now, the system fails once a week, in different counties in Romania, for 2-3 hours. When the failure is rectified, the system suddenly displays a national pharmacy with reaches almost a billion lei (222 millions euro) the same day. ”I’ve seen in Harghita county a pharmacy with record sales of four billion lei (890 millions euro) in only one day. Physically, it is impossible to accommodate so many recipes. There is only one explanation: while the system is offline for anyone else, the respective pharmacy continues to have access to it, so it uploads and reports all those fake recipes”, explain our sources.

Prescriptions registration system have frequent and strange failures in Romania

According to them there isn’t much negotiation for drugs prices. The big pharma players use zero discounts if the prices are regulated by the state. The huge prices of medications put pressure on the Health Insurance funds, which settle the few products delivered by the distributors. ”For example, Roche grants a 14.5% discount for its oncological product Mabthera, with payment after 150 days, according to the contract between producer and distributor. However, the distributor sells it with payment no later than 30 days”.

Our sources said that the EU can issue regulations to break the monopole of the big suppliers. It is a question of allowing no more than four pharmacies for one company, and the owner has to be a professional pharmacist. The producers should be required to deliver to at least 15 retailers (not to three, like now) under equal competition conditions (the same discount) and with a maximum rate of acquisition for each warehouse. ”For parallel exports, the trail of the medication should be mandatorily monitored by installing a CIP for every lot, a sole code to allow the tracking of the stocks. These are just some very simple solutions”, add the above mentioned sources.

Roche and Novartis price strategy

One of the biggest pharma companies, Roche ”take the pricing of our medicines very seriously and consider a variety of factors in doing so, including the benefit for patients, how the medicine compares to other treatments and how to ensure price doesn't prevent our medicines reaching people who need them”, according to the company Spokesperson in Switzerland, Dr. Ulrike Engels-Lange. Medicine prices are negotiated individually, in Europe mostly on a national level with national health authorities. One of Roche approaches is PRM or Personalised Reimbursement Models which facilitate more flexible pricing solutions by allowing medicine prices to be differentiated by indication, combination or response.          

 Another Swiss group, Novartis stresses that the discovery and development of new medicines is challenging and risky. ”On average it takes 10 years and 2.6 billion US dollars to research and develop a new medicine, and only 12 percent of medicines that enter clinical testing are ever approved for use by patients.  For cancer drugs, that approval rate drops to 6.7%”, said Novartis Deputy Head Communications, Satoshi Sugimoto. He add that the company also offers an extensive patient assistance program that provides Novartis medicines for free or at a reduced cost to those who cannot afford them. In 2014, Novartis Patient Assistance programs provided medicines valued at 2.2 billion US dollars to 71.7 million patients. The medicines prices differ from country to country for many reasons, including currency exchange rate fluctuations, differences in income, government regulations, the socio-political economy and differences in health care systems.

Anti-corruption prosecutors ”treatment”

In the summer of 2015 the drugs crisis became hot in Romania. National Anticorruption Department (DNA) raided the offices of dozens health institutions and authorities, doctors, producers and drug retailers. Doctors with management positions are being investigated for having bought, recommended or prescribed more expensive drugs, instructed by certain pharma companies. As a reward doctors received sponsorship, trips abroad, paid travels at medical congresses and other benefits concealed from interested companies. The prosecutors found large stocks of very expensive drugs that doctors ordered for fictitious patients. The drugs were refunded by CNAS.

One of the surveyed doctors is the former head of the Oncology Department of Clinical Emergency Hospital Sibiu, Dr.Valeria Valeanu. She concluded agreements of intellectual property rights with Pfizer and Roche Romania. The two companies have agreed drugs supply contracts with Sibiu County Hospital. Dr. Valeanu recognized that pharmaceutical companies have paid her holidays abroad, but she claimed herself to be innocent."I believe I didn’t do anything more than that is practiced throughout the country and not only in Romania”, said Dr. Valeria Valeanu. Following DNA investigation, she resigned from the leadership of the National Cancer Program of Sibiu County Hospital.

 The names of companies appearing in DNA files are: Roche, Novartis, Actavis, Pfizer, Teva Pharmaceuticals, Pharma Services, Alvogen, Sandoz, GlaxoSmithKline, Egis, Romastru and Glenmark. Among the drugs cited as beeing privileged are those produced by Swiss companies: Avastin, Herceptin and Tarceva. The investigations shows that "the work conducted by Roche and Actavis was coordinated (…) in order to advantage the prescription of products belonging to these companies, to maximize the sales/profit.

The net sales of Roche in Romania have exceeded  EUR 180 million in 2014, and that was only from drugs issued on prescription

Roche and Novartis have officially recognized the DNA investigation and promised full cooperation with Romanian prosecutors. GlaxoSmithKline was forced to communicate more information. The management of the company received an anonymous email containing allegations related to improper payments in Romania. The informant claims that GSK paid some Romanian doctors hundreds or even thousands of euros between 2009-2012 for prescription of oncology drugs.

"The cohabitation" between doctors and companies is not at the first episode in Romania. In 2013, the Directorate for Investigating Organized Crime and Terrorism caught two doctors from County Hospital Deva who filled hundreds of cancer prescriptions for ghost patients. In 2014, pharmacies from Polisano group have become suspect for fictitious purchasing of oncology drugs refunded by CNAS. After the prosecutors initiated the investigation,  Polisano owner, Ilie Vonica committed suicide.

This is the Romanian part of an european cross-border investigation project and the other team members are: Eric Breitinger (Switzerland), Aleksandra Jolkina (Latvia), Harry Karanikas, Dimitra Triantafilou (Greece), David Leloup (Belgium) and Stanimir Vaglenov (Bulgaria)

 

This documentary was developed with support by Journalismfund.eu