Boston, MA -- (ReleaseWire) -- 02/07/2014 -- BMI View: The Czech healthcare system is facing severe challenges as it struggles to contain budget deficits. At the same time, demand for the latest pharmaceuticals and access to healthcare services is expected to continue its steady growth trajectory, putting pressure on the state and insurers to raise premiums or redistribute funding. We forecast pharmaceutical and healthcare expenditure to recover once funding for the healthcare system stabilises and the Czech Republic's macroeconomic outlook improves in line with the eurozone.
Headline Expenditure Projections
- Pharmaceuticals: CZK79.60bn (US$4.07bn) in 2012 to CZK81.17bn (US$3.96bn) in 2013; 2.0% in local currency terms and -2.6% in US dollar terms. Unchanged from previous quarter.
- Healthcare: CZK275.29bn (US$14.08bn) in 2012 to CZK286.49bn (US$13.99bn) in 2013; +4.1% in local currency terms and -0.6% in US dollar terms. Historical revision to 2012 figure.
Risk/Reward Rating: Despite leading our regional RRR table with a score of 63.2 out of 100, drugmakers will face challenges in the Czech pharmaceutical market as a result of pricing pressure, poor access to the market and increasing generic substitution. Additionally, adopted and proposed amendments to healthcare and insurance laws have attracted criticism from the pharmaceutical sector.
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Key Trends And Developments
- Plans to introduce hospital fees and fees for accessing healthcare services have been ruled unconstitutional and struck down by the Czech Supreme Court.
- VAT, prescription and doctors fees are to be scrapped according to plans by the new Czech governing coalition.
- The healthcare deficit appears to be widening even further than estimates from the Ministry of Finance suggest. As a result, plans to raise premiums have been discussed as well as charging patients fees to use hospitals.
- The General Health Insurance Company has asked the Ministry of Finance for a loan of CZK2.6bn (US $134mn) to pay off rolling debts and restore liquidity in the healthcare system.
- In June 2013, it was reported that the Czech Ministry of Health is working on a new system of collecting insurance premiums that will primarily benefit the state-run insurer General Health Insurance (VzP), which has the most expensive patients on its books. Presumably, privately run health insurers have not been underwriting policies for the highest-risk patients or have demanded high premiums for coverage. As a result, patients unable to afford the coverage have turned to the state insurer.
BMI Economic View: The Czech Republic is forecast to remain a positive convergence story through the coming 10 years, despite the severe adverse impact of the 2008-2009 global recession, with the eurozone accession policy anchor contributing to steady progress in a long-term government reform agenda, despite a target for accession yet to be decided.
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