A healthy system is a wealthy system

A healthy system is a wealthy system

A blunt outline of some critical aspects to be addressed in the healthcare system, stated by Pascal Prigent – GM GlaxoSmithKline (GSK) Romania



Entire Europe and the whole world are faced with an ageing problem and financial difficulties but if we look at what other countries do, we can see that the trend in Europe is to increase investment in healthcare, given exactly the ageing of the population. The World Bank estimates that public expenditure on healthcare in the EU could almost double as a percentage of GDP from 8% now to 14% in 2030. Romania now invests only 3.8% of GDP in healthcare, so it is critically important to invest more. The under-investment has serious consequences: life expectancy in Romania is the lowest in Europe, infant mortality the highest and chronic diseases indicators tend to be below the European average. The issue is not only social, but also economic. Several studies have shown that investing in healthcare is actually beneficial for the economy. It’s not that you need to be wealthy in order to be healthy but rather that you have to be healthy if you want to create wealth.



One of the more obvious consequences of the lack of investment in healthcare is the Romanian patient access to the newest products. Currently, Romania is the only country in the European Union to impose a one year waiting period until a new drug can be evaluated in order to be included in the reimbursement system. This comes on top of the fact that the reimbursement list has not been fully updated since August 2008. For Romanian patient medical innovation stopped 4 years ago and we don’t have access to the same drugs as all our European neighbors. Obviously, there is a need to urgently increase the healthcare budget. In order to make this possible the system must be reformed and the financing has to be diversified.



The reform of the system has to focus on eliminating waste and improving operating efficiency. As far as financing is concerned, the idea of combining public and private funding is an interesting one, but the market needs to be made attractive for private investors. The claw-back tax can be part of the solution, but the form is not sustainable as the state cannot expect that the pharmaceutical industry alone will finance the system deficit. The entire pharmaceutical industry is now discussing with the authorities and it is critical to find a compromise and an acceptable version of the tax to avoid a system collapse.






There should be a balance between the private and state owned medical services. If only the private sector develops and state owned services stay behind, we might face the problem that only people who can afford private medical care services will benefit of proper care. This is why private hospitals have already started to sign agreements with CAS. We believe that a mixed system with collaboration between private and public financing makes sense but it will be important for the government to structure the market in a way that will be attractive to the private sector. The timeline implementation of the new healthcare law, facilitating access to the market for private insurance companies, is still unclear and highly dependent on the political agreements.



We all agree that there is a need to change the current Romanian healthcare system, but there is no need for reinventing the wheel. There are best practices across Europe that could be applied in Romania as well. We think that the new law should aim to be sustainable in the first place and also to provide health and security for the citizens who need them most. Currently, with 3.7 million illegal workers and half of the private sector workers paid only the minimum salary, this is not sustainable. Therefore, increase tax collection, encourage legal employment by simplifying labor laws could be ways to bring more money into the system. As mentioned before, the waste in the system should also be reduced and operating efficiency improved.






The needs are high and it is urgent to do something. Of course the amount of money is not unlimited. This is why we support short term option of the authorities, to limit the basic package of benefits of patients by excluding from the reimbursement system drugs that are most affordable, but ensuring that patients have access to the most expensive ones without long waiting periods. In the long term, the basic package of benefits would have to be redefined in order to be financially sustainable yet allow an appropriate level of care.



We also appreciated that the authorities opened a public debate on the law, but we think that it’s better if you include the key stakeholders at the beginning of the process, when the law is being developed, not at the end because at the end, when everything is already written, it’s very difficult to make changes as we are talking about a complex process.







The unpredictability of the legislation system discourages investments in Romania. It is very difficult for any company, in healthcare or other sectors, to develop an investment plan in an unpredictable and volatile environment. Foreign direct investments in Romania dropped from EUR 376 million in January 2011 to EUR 23 million in January 2012, according to a report released by the Romanian National Bank.



Any company in Romania and anywhere in the world is looking for and hoping for a stable environment, predictable and transparent. This is what enables a long term view and therefore a long term investment. As for Romania, I think that the unpredictability of the legislation system might discourage investments here because it is very difficult for any company to develop an investment plan in an unpredictable and volatile environment. Therefore, maintaining the fiscal and legislative stability should be the main objective of the Romanian authorities in order to keep and attract foreign investors. As in every economy facing the current budgetary pressures, we understand there are ups and downs but the desire of investment should be encouraged and peoples’ needs should be treated as first priority.



So maintaining the fiscal and legislative stability should be the main objective of the Romanian authorities in order to keep and attract foreign investors here. As in every economy facing the current budgetary pressures, we understand there are ups and downs but the need of investment should be encouraged. The industry has to partner with the government and play its role but, if we want a true partnership, it will be critical to ensure a predictable and transparent environment, as well as the possibility to grow. The short term priority is to reform the claw-back tax and open the reimbursement list.






Nevertheless, I can say that as a country it’s crucial to have a healthy population as this influence the economic prosperity. Romania now loses around EUR 18.6 bn (15% of 2010 GDP; LAWG survey) of economic output over the medium to long term, as a result of the poor health condition of the population. Most developed countries spend more on health and education as a foundation for a long term sustainable development. This spending increased over the last 10 years as percentage from GDP. Unfortunately, Romania occupies the last place in Europe when it comes to health spending from GDP.



At the same time, a survey done by that Local American Working Group - LAWG in partnership with the Romanian Academy, shows that if population health status in Romania would be at the EU average level, there would be a surplus in economic output of EUR 6.7 bn (6% of 2010 GDP), resulting from increased labor force participation and productivity. By constantly increasing HC expenditures of GDP over the next 10 years, the health status of the Romanian population could reach EU average.