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The ready player

Poland's pharma industry is keen for action but will the government play ball?

Poland, with a population of 38 million, entered into the European Union in May 2004. Many things were supposed to change because of the accession and, to be fair, many did. However, we are still waiting for some changes to transpire to enable the country to function on a more European level.

The pharmaceutical industry, in particular the relationship pharma companies have with ruling authorities, has noticeably suffered from this apparent lack of change.

At the beginning of the 1990s, Poland entered an era of transformation that comprised advancing market changes, many of which affected the pharma industry. These changes included, among others, the reorganisation of the Polish healthcare system, the privatisation of the healthcare sector, and the introduction not only of international manufacturers, but also new national companies.

However, despite this rather radical, yet welcome transformation, the country enjoyed neither significant healthcare reform nor any serious, modern reform of the governance system as such.

Poland is a relatively young democracy and it is still learning. We are establishing our own rules and customs, as well as making changes to the way we do business, administrate public money, and talk to society etc.

In some areas we are getting better, for example in regional development, where social partners are invited to strategic discussions. Sadly, the same cannot be said in areas such as healthcare.

Governance rules
So, what is good governance? Essentially, it focuses on participation; it should be consensus-oriented, accountable, and transparent and responsive.

To be successful, governance has to be an efficient, equitable and inclusive way of ruling that also follows the rule of law. It should assure that corruption is minimised, the views of minorities are taken into account and the voices of the most vulnerable in society are heard in the decision-making process. It must also be responsive to the present and future needs of the population.

The government is one of the principle players in this scenario. Other stakeholders involved vary depending on the level of government under discussion.

In rural areas, for example, participants may include influential land owners, peasant farmers' associations, cooperatives, non-governmental organisations (NGOs), research institutes, religious leaders, financial institutions, political parties, even the military. On a national level, in addition to all of the above stakeholders, the media, lobbyists, international donors and multinational corporations may all play a part in making decisions or influencing the decision-making process.

Despite the participation of all these groups, the pharmaceutical industry remains absent from discussions about, or decisions on, healthcare in Poland.

While it may seem obvious that the industry should be involved in such matters, the truth is that in Poland, this simply isn't the case and pharma remains absent from the negotiating table, despite its contribution to the health of the nation and the economy.

According to IMS Health data, the total value of the pharmaceutical market in Poland reached PLN14.23bn (Ä3.59bn) in 2005, a 7.4 per cent increase on the 2004 figure of PLN13.25bn (Ä3.35bn).

Since the beginning of the 1990s, the pharmaceutical industry has been one of the most dynamically developing sectors in the country. Notwithstanding the weakening of the boom in 2002, this trend is still continuing.

Medicine prices in Poland are still more than four times lower than in the rest European Union and the average is 30 per cent lower than the average price level in countries of the Visegrad Group (Poland, Czech Republic, Slovakia and Hungary).

Generics represent over 60 per cent of the Polish market in value and over 85 per cent in quantity and the government is steadfast in its determination to support the continued development of the generics industry in Poland.

While governmental support here is apparent, there is more to be done than simply supporting the national industry.

It is evident that the authorities in Poland fear the development of a free market (and not just in pharmaceuticals) and are reluctant to listen to ideas of an open, transparent economy, not to mention funding research and development (R&D).

Poland lags behind other EU countries in terms of R&D investment. There are a number of reasons for this: history, the tradition of separating science from the market and flow of private money, a lack of strong support from national authorities, and a lack of proper tools for development.

World stage
The most important suppliers of pharma products to the Polish market are its neighbouring European countries. Drugs are mainly imported from France (18 per cent) and Germany (15 per cent), followed by intake from Switzerland, Holland, the UK and Italy.

A good proportion of pharmaceutical components needed for the production of medicine is imported from the European Union as well.

The share of imported medicines on the Polish market amounts to 68 per cent in value. In 2005, the total value of imported pharmaceutical products was PLN9.3bn (Ä2.34bn), while the value of exports reached PLN1.2bn (Ä302.4m), and costs are likely to continue to rise.

Statistics show that Poles are using more and more drugs and national healthcare system expenses are growing every year.

In 2005, 19 per cent of the healthcare budget was spent on the reimbursement of pharmaceutical costs in the outpatient healthcare service. This is a significant chunk of public money and, with costs and demand increasing, is just one issue that calls for open dialogue between the authorities and the pharma industry.

So why does the government continue to ignore the value an innovative pharmaceutical industry can bring to Poland?

The issue is not, as some believe, about sudden price cuts announced this summer or the complete lack of implementation of the EU transparency directive. The problem lies much deeper than that.

The problem is the view the government has of the industry. Far from being able to see pharma as a `necessary evil', the government in Poland believes the industry to be an `unnecessary evil' - something that is not worth consulting or treating fairly and equally. It simply does not consider pharma as a partner that it can discuss healthcare concerns with, or encourage in R&D.

Political change
From an industry perspective, there are several simple steps the political elite and public administration could make to help foster a relationship between the two parties. These include:

  • Introducing legislature, judiciary and electoral bodies

  • Having a democratic relationship between the public and private sector

  • Taking social partner organisations into consideration

  • Decentralising and supporting local governance

  • Managing change, leadership and policy development

  • Implementing civil service reform

  • Economic and financial management.

The rules of how to do it right are well known, much has been written about it, campaigns launched and debates undertaken. Yet, implementing these structures in Poland is hard to achieve. Will we have to wait for the next generation before we can accomplish good basic governance principles?

Effective leadership involves developing the competencies of everyone who can help to increase political commitment and sustainable human development. It also includes the ability to bring together both public and private stakeholders to define ongoing development goals and strategies that are centred around people, and their ability to manage systematic change in unpredictable situations.

Moving forward
Countries also need professionals who can translate political vision into sustained programmes for good governance. This leads us to the reform of state institutions, helping them to become more efficient, accountable and transparent. Effective reform requires political commitment, which should include the support of the private sector and civil society.

Good governance includes both procedural and substantive elements; so too does the management of economic and financial matters. There is a need to form relationships between the state, the private sector and society to develop frameworks that provide incentives for broad-based and sustainable growth.

Sound policies and practices in economic and financial management will contribute significantly to an environment that enables sustainable human development.

On this basis, treating the private sector (or any other non-governmental sector for that matter) like a partner, inviting it for discussions or consultations, taking its rights into consideration and treating it seriously does not seem too difficult.

It seems, however, that all of these activities can be undertaken only when there is the political will and strength to do so. This, of course, is dependent upon the people and their political culture and tradition. Systems can be changed quite easily, but much more effort is required to change people's minds, their way of thinking and their way of ruling.

We have a relatively new system of governance, but in a field as deep and socially delicate as healthcare, effective governance is conspicuous by its absence. We have managed to overcome bad habits in other areas, I only wish we could do the same in healthcare.

The author
Anna Koziel is external affairs manager at Poland's Association of Innovative Pharma Companies Representatives

2nd September 2008

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