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However, monitoring and analysis of effective utilization of acquired equip ment are left outside the National Project framework. Supervision over equipment utilization is within the authority of Russian Healthcare Control and the RF Subjects, but neither methodology, nor funds for monitoring of equipment effective utilization are foreseen.

The project makes a stress on strengthening centralized administrative con trol over its performance, but for the majority of objectives any changes in control technology functions are not foreseen. Project performance management is ac Section Social Sphere complished through the standard administrative methods of control over imple mentation of planned actions on the part of management bodies; only the list of in dicators, on which the information is requested from regions, has been extended.

There is a risk that, on the one hand, the standard forms of control will not help to get the information, required for adequate evaluation of effectiveness of Project activities, and on the other hand, they will not become a reliable barrier against in efficient usage of the funds, allocated for the Project.

National Project financing included the funds for implementation of govern ment order for free medical service with the help of high tech (expensive) equip ment for the amount of RUR 9.9 bn (versus RUR 6.3 bn in 2005). 128 thousand of patients have enjoyed the treatment. The basic investment component of the Pro ject is the construction of 15 high tech medical centers within two years. In the investments were planned in the amount of RUR 12.6 bln, but in fact only RUR 3.6 bln were spent. Construction of seven centers has been started in Astrakhan, Penza, Krasnodar, Cheboksary, Krasnoyarsk, Tyumen, Khabarovsk. Nevertheless, there is a risk in spite of a larger number and extended capacity of medical assis tance, that informal ways of payment for medical services will take place both, in the new and old clinics. Naturally, the effect of large volume of government financed high tech medical assistance will be considerably reduced, if the practice of informal inducements to medical personnel, paid by the patients, is sustained.

Reviewing the National Project in terms of government guarantees of free medical services, one should mention that no changes are expected in regard to free services to all social types of population. Nevertheless, it is foreseen to allo cate more resources to certain guarantees (to primary, emergency and high tech medical assistance) to make them less dependent on the situation and ensure wider access for the citizens of the country.

At the same time, the Project makes provisions for measures of free additional services to a number of target groups of population: examination of newly born babies for galactosemia, mucoviscidosis and androgenital syndrome (expansion of neonatal screening); extra examinations of employees, extra medical examinations of employees, engaged in harmful and(or) dangerous industries. In fact, it means expansion of government guarantees of certain types of medical services to the above categories of population.

Strategy of targeted financing of selected problem areas in terms of govern ment guarantees to the population is focused on the growth of medical service ca pacities, on dismissal of resource restrictions in regard to some healthcare com ponents. However, this strategy maintains the gap between guarantees and financial provisions of other sectors of healthcare system and has little relation to the institutions, ensuring the guarantees.

Apparently, realization of the Project in 20062007 is supposed to demon strate enhancement of the situation in the most problematic segments of health care system, i.e., in primary and high tech medical assistance. It should be pointed out, that priorities of investments, planned within the framework of the Project are well justified. The results of the project might be immeasurable as compared with RUSSIAN ECONOMY IN trends and outlooks the budget expenditures for its implementation. There is a risk that the project, based on extensive input of funds in problematic areas without institutional changes, might not bring the expected results.

Pharmacological Support to Socially Supported Categories of Population Whereas the results of the National Project in 2006 were primarily virtual, functioning of the system of supplementary pharmacological support to the groups of population, receiving subsidies from federal budget, implemented in 2006, was marked by significant events.

It should be reminded, that Federal Law No. 122 FZ as of August 22, 2004 (On amendments to the legal acts of the Russian Federation and recognition of certain legal provisions of the Russian Federation as null and void in view of newly adopted federal laws On amendments and revisions to the Federal Law, On general prin ciples of legislative (representation) and executive bodies of government power of the Subjects of the Russian Federation and On general principles of local govern ance in the Russian Federation has granted the right for free medicines to the fol lowing categories of population44:

- Disabled war veterans and eligible categories;

- WW participants and eligible categories;

- Veterans of military operations;

- Disabled (adults and children);

- Persons, suffered radiation exposure.

The amount of subsidies for medicines, allocated to socially supported categories from the federal budget in 2005, made RUR 50.8 bn, whereas the cost of medicines, provided to socially supported persons, made RUR 44.0 mln.

Those ones, who had a right for subsidies had a choice either to get a package of social services, including free medicines, or their equivalent in the form of mone tary compensation. As a result, the number of voluntary recipients of a social package has reduced by 51.4 per cent of the total number of citizens, who were included in the Federal Register of persons, entitled for government social sup port (See Table 15).

RUR 29.1 bn were allocated for the program of supplementary pharmacologi cal support to socially supported categories in the federal budget of 2006. The re duction of the program financing as compared with 2005 was corresponding to the reduced number of persons, who chose to stay within the program. Though the number of those people has been reduced two fold, the list of medicines, included in the program, was still growing. In the first half year of 2006 the number of pre scriptions (66.0 mln) has exceeded by 8 per cent the number of recipes, pre scribed in 2005 (61.3 mln), and the monetary equivalent of invoices, issued by dis tributors, hs reached RUR 27.4 bn.

Specified in Article 6.1 and 6.7 of the Law No. 178 FZ as of 17.07.1999 and Enclosure No. 1 to the Order of granting a package of social services for certain categories of citizens, approved by the Order of Ministry of Healthcare and Social Development No. 328 as of 29.12.2004.

Section Social Sphere Table Indicators of program implementation aimed at additional medicine provision for the citizens eligible to receive state social assistance from the federal budget 2005 2006 Number of citizens included in the Federal register eligi b) 14,456 16,301 16, a) ble to receive state social assistance Overall number of recipients of set social services, Thou 12,584 8,373 8, a) sand The share of recipients of set social services in the num 87.1 51.4 49.ber of citizens included in the Federal register, % c) Cost of set social services per person a month, Rbl., 450 477 Including on medicine, Rbl. 350 424 Federal budget expenditure on the program of additional d) e) 48.3 39.1 40.medicine provision, bn Rbl.

The sum billed to be paid for supplied medicine accord 44.0 62.ing to the program of additional medicine provision a) as of 01.2001 corresponding year.

b) as of 01.10.2006.

c) Approved from 01.04.2007.

d) Originally approved 29.1 bn Rbl., in December 2006 additionally appropriated 10 bn Rbl.

e) Including: 6.0 bn Rbl. paying for medicine delivered in 2006, 34.9 bn Rbl. payment for the de liveries in 2007.

Source: Minzdravsotsrazvitia RF; http://www.mzsrrf.ru/inform_fz/.

Financial management of supplementary funding of pharmacological provi sion, in pursuance of Federal Law No. 122 FZ was implemented by the federal and regional funds of mandatory medical insurance. In November 2006 a large group of officials of the Federal Fund of Mandatory Medical Insurance was taken under ar rest on charge of corruption, which was an unprecedented case within the last fifty years in the Russian history.

Even before the introduction of the new system of medicines' supply in Janu ary 2005 it was obvious to the exerts, that the new system was associated with high corruption risk. Such factors as formation of the list of medicines, subject for free distribution among socially supported categories, which could be amended within a year, usage of qualification method, rather than tender procedure, to select suppli ers of medicines, who were granted the priority right to distribute pharmaceutical products to the regions; poorly developed and intransparent system of control over justification of suppliers prices, subject for government registration and upper lim its of distributors fees for medicines; insufficient verification, if the number of pre paid recipes matches the number of actually received ones created the loopholes for corruption schemes within the new system of medicines distribution. The above mentioned actions of law enforcement structures confirm that in all likeli hood, those loopholes were not neglected.

Apparently, corruption practice and boosted prices for medicines enlarged the expenditures for extra medicines, designated for the system of surplus phar macological provision as compared with the estimated budget. There is a number RUSSIAN ECONOMY IN trends and outlooks of evidences, when prices, paid for the medicines, designated for socially sup ported categories, exceeded those ones in open trade. The vast scale of such practice is recognized by the RF Ministry of Healthcare and Social Development, but there is no published information on the dynamics of prices in the system of pharmacological support45.

However, the budget deficit could be more rationally explained by other rea sons. The basic failure of the new system is the lack of clearly predefined norms of medicines consumption. The doctors could voluntarily define the amount of pre scribed medicines. The Ministry authorities explained it by at intention to cover a postponed demand of socially supported categories for medicines and to define actual demand, basing on practice. Moreover, there was a confidence, that expen ditures, allocated from the budget in 2005, which exceeded the total amount of ex penditures of 2004 (RUR 7.9 mln), would be quite sufficient for medical treatment.

And actually that was true for the year of 2005.

However, it should be noted, that nearly 1/3 of regions received medicines through regulated distribution. The final amount of medicines, to be allocated for socially supported categories, was determined upon applications of clinics and their further negotiations with higher healthcare authorities46. In 10 per cent of cases they made applications for the upper limits of admissible amounts of medi cines.

The declared right of socially supported groups to get necessary medicines for free, restricted only by an established list and a doctors readiness to prescribe them, has resulted in an upswing of demand for free medicines. In 2006 another failure of the newly created system was revealed. The approach, which provided a choice to socially supported groups between pharmacological support and its monetary compensation, brought up a problem of unfavorable selection, which is a typical bottleneck of social security system. Monetary compensations were chosen by those, who applied for free medicines only occasionally. As opposed to them, regular consumers of medicines, who suffer of serious chronic diseases and can expect their aggravation, have preferred the benefit of free medicines. However, the average cost of healthcare portion of a standard social package (i.e., pharma cological support and health resort vouchers), the equivalent of which is paid to those who chose monetary compensations (RUR 424 in 2006), was estimated as an average figure for the majority of socially supported population. Now, when about a half of that group with the highest demand for medicines has stayed in the program, the expenditures for their support will be higher, than the cost of initially estimated average package, multiplied by the number of program participants.

As a result of all the above factors, expenditure liabilities of the program of supplementary pharmaceutical support too the socially supported groups of popu lation in 2006 have exceeded the expenditures of the preceding year.

Please, refer to the information on monitoring results of implementation Federal Law No. 122 FZ as of 22.08.2004 for 9 months of 2006 to: http://www.mzsrrf.ru/inform_fz/548.html.

Data base on Organization of Financing and Management of Healthcare in Russian regions.

http://www.socpol.ru/research_projects/pdf/proj14_2005report.pdf.

Section Social Sphere The total amount of invoices, issued by the suppliers of medicines, has reached RUR 63 bln by the end of the year. To cover the deficit, RUR 10 bln was al located from the federal budget in 2006. With account to RUR 5 bn, saved in and spent in 2006, the total expenditures for medicines, provided to the socially supported groups in 2006, should amount to RUR 50.1 bn. The difference between that amount and the invoices of suppliers makes RUR 12 bln. As per the information of the Federal Fund of Mandatory Medical Insurance, the invoices for at least RUR 3 bn, which inconsistent with relevant requirements, will not be paid. The issue of payment under the other invoices for RUR 9 bn is still open.

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