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Hungary, eyeing euro, weighs drug cuts, private insurance plans

Health Minister Lajos Molnár wants to slow drug consumption as part of a larger effort to cut Hungary's budget deficit, forecast to reach 10.1% of GDP this year, the highest in the European Union. The EU has said it won't allow Hungary to join the euro until the country controls its finances. Hungarian ministers' 2007 budget meeting started yesterday. „The whole budget situation is in a horrible mess, and everything needs to be cut back,” said Péter Mihályi, a professor at Budapest's Central European University who advises Molnár. „The drug issue is a fairly chunky one.” Hungary's National Health Insurance Fund, the state's monopoly health insurer, has been in deficit for the past decade. It spent Ft 432.4 billion ($2 billion) on drugs last year, 20% more than in 2004.The government reckons it can save by introducing co-payments on prescriptions, lowering drug subsidies and letting private health insurers to cover Hungarians instead of the state, according to a draft of the government's plan. „Hungarians are the most avid pill-poppers in the region,” said Robert Bonte-Friedheim, who analyzes eastern European pharmaceutical companies at Citigroup, in an Aug. 25 note to investors. „Hungarian policy makers realize they spend too much on drugs relative to total health care spending.”

Hungarian drugmaker Richter Gedeon Nyrt will be waiting to find out how the proposed spending cuts will affect profit, said Zsuzsa Beke, a company spokeswoman. Richter CEO Erik Bogsch sat on the committee that advised the government on the plans. „We think that there will be some decisions regarding health care and the budget, but we don't know what,” Beke said. Subsidy cuts and other measures imposed in July are expected to dent Richter's pretax profit by Ft 1.8 billion this year, the company said in a June 14 statement. Egis Nyrt, the second-biggest Hungarian medicine maker, said profit could be hurt by as much as Ft 1.7 billion in the fiscal year that ends in September 2007. Proposals such as introducing fees for doctors' visits may not slow consumption, Bonte-Friedheim said. Hungarian doctors already demand „tips” from patients that are typically about 5,000 forint, he said. „A Ft 500 additional fee is unlikely to be a powerful deterrent,” he said.

The government has been soliciting comments on its health-care package, known as the Green Paper, through a toll-free number and Internet forums. The establishment of an insurance-based health-care system is an issue of „primary concern,” State Secretary for Health Ágnes Horváth said at an Aug. 23 press conference. The public is split on the government's proposal to introduce a fee for doctor's visits, she said. Hungarian insurance industry group MaBISz estimates the domestic health-insurance market may be worth as much as Ft 150 billion in annual premium income. At present, the state's National Health Insurance Fund insures virtually all Hungarians, whether they pay into it or not. The Hungarian Socialist Party, the senior coalition member, opposes private health insurance in the short term, preferring to revamp the state-monopoly system. The budget deficit may force the Socialists to abandon their position. „Competition between insurers could help balance the state insurance fund's books, and could halt the necessity of fund transfers from the state,” the government's draft document said. (Bloomberg)