The Spanish drug industry is pleading with the government to stop trying to balance its accounts at the cost of its members, but the chances of that happening look dicey, given the momentum hospitals are piling up unpaid bills.
The government has pledged to soon pay off the €6.3 billion ($8 billion) that industry group Farmaindustria says drug companies were owed at the end of last year. But the lobbying group says that hospitals have already piled up another €1.5 billion since Jan. 1, a pace that is faster than in 2011, Reuters reports.
"There are many regions that have practically not paid anything since Jan. 1, 2012," Jordi Ramentol, president of Farmaindustria, said at a Madrid press conference.
Spain's economy, like some others in Europe, has been in steady decline since the bursting of the real estate bubble in 2008. As countries have been pressured to get on top of widening deficits, they have been cutting healthcare spending. Spain's 17 autonomous regions set their own public service budgets and account for about 50% of government spending, Reuters says. The health ministry says that close to three-fourths of the €17 billion slated to pay for all regional debt will be needed to pay healthcare bills. New reductions announced in April are estimated to cost the industry €3 billion in revenue.
Most of the Big Pharma companies have been trying to work with the government rather than send in the debt collectors. Roche ($RHHBY) earlier this year said it was going to be cash on delivery for those hospitals in Spain, and Portugal, that are about two years late on payments. In all of this, it is the regional drugmakers, whose main source of income is their home turf, most hurt by the double squeeze.
The industry thinks it can help the economic situation, but only if it has the cash flow to invest, Ramentol said this week. "We want to help exports and increase the number of jobs. This is what the country needs, because we are in a downward spiral," he said.
- here's the Reuters story