The drug reign in Spain is leading to lots of pain

Even as drugmakers have been trying to outmaneuver revenue declines as the patents peel off some of their best-selling drugs, they have also faced a bleak reimbursement picture, particularly in the European Union. New stats out of Spain paint a vivid picture of just how much pain government cuts might cause.

The Ministry of Health laid out €702 million ($886 million) for pharmaceuticals in July compared with the €923 million it spent in July a year ago, a 24% cut, while 14.1% fewer prescriptions were dispersed, PharmaTimes reports. Interestingly, those reductions were offset by the fact that prices for drugs are reportedly up 36%.

Spain's economy, like most 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. Greece just hasn't been paying many of its bills and Germany is not approving as many new drugs. France and the U.K. have both tightened drug spending parameters.

Because Spain's 17 autonomous regions set their own public service budgets and account for about 50% of government spending, the central government has imposed tough new measures to keep drug spending from escalating unchecked. One move that PharmaTimes says is working particularly well is the new co-payment system that began in July. The price-sharing ranges from 10% for retirees up to 60% for those who are working. The government expects that and other measures to save an estimated €7 billion a year. It has also stopped reimbursements for more than 425 drugs.

In addition to what it means for consumers' buying power, it is whittling away at revenues for drugmakers, local and global. PharmaTimes says the cuts are expected to reduce drugmakers' revenues from Spain 5% a year and has taken an 8% bite out of the annual value of the market there. That amounts to €2 billion. While Spain is a small market for the biggest global players, it's significant for domestic drug manufacturers, which have pleaded to the government for some kind of relief. 

- read the PharmaTimes story