Spain Coughs up Billions to Keep Regions in Medicine

09.06.2012 -

Spain finalised plans to pay off the healthcare debts of its regions on Friday as some pharmacists closed their doors in protest over unpaid bills in the country, where drugmaker Roche has tightened credit to several hospitals.

Deputy Prime Minister Soraya Saenz de Santamaria said the government would pay €17 billion ($21.19 billion) to suppliers of its autonomous communities. Spain's Health Ministry said 73% of that money would be for unpaid healthcare bills.

"The pharmaceutical industry sees the plan as very positive, because it solves a problem that was threatening the survival of companies and the functioning of the national health service in normal conditions," said a spokeswoman for Farmaindustria, which represents drug companies in Spain.

The plan, first outlined in February, earmarked a total of €35 billion not only for autonomous regions but also local councils.

Around 40% of the total figure will pay healthcare bills and Saenz de Santamaria said the government had already paid over €9 billion of unpaid bills for Spain's local councils.

Paying off the regions' debts should guarantee the supply of medicine in the recession-hit country, where Switzerland's Roche recently tightened credit conditions at 12 hospitals, meaning they must pay off some of their outstanding debts to receive more supplies.

Spain's 17 autonomous regions account for around 50% of public spending and missed their deficit targets by a wide margin last year.

Spain's Health Ministry said the regions' healthcare debts are more than the €12 billions the government will pay off, but participating in the plan is optional. Saenz de Santamaria said three of the regions had not asked for funds.

In troubled euro zone peer Greece, parts of the healthcare system have already experienced drug shortages and international drugmakers are working with European authorities on plans to keep drugs coming into the country in the event of it leaving the euro zone.

Pharmacists in the autonomous community of Valencia, on Spain's eastern coast, closed for the second consecutive day on Friday, protesting that the government had not paid for any drugs given out in the region since February.

Pharmacies are not included in the central government's payment plan.

But the initiative has cheered drugmakers facing debts that have not been paid off for years in some cases.

Roche spokeswoman Silvia Dobry said: "There are several hospitals that have not paid their bills for more than two years. In Spain we started to insist on our credit terms in 2011 and this now applies to 12 hospitals in 4 of Spain's 17 regions."

Dobry said that over 95% of Spanish hospitals were not affected by the policy and that Roche welcomed the Spanish government's plans.

Other drug companies contacted by Reuters said they had not changed payment methods in Spain. Denmark's Novo Nordisk, which demands payment on delivery in Greece, said it had not implemented such a policy in Spain.

A spokesman for Sanofi said the company had "problems with unpaid bills, like many other suppliers" but it trusted the government's payment plan would prove a solution to the problem.

Pfizer said it had no plans to change its distribution model in Spain.