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78.9 139.5 120.7 145.2 146.Of which:

Formation of healthy way of life 0.7 0.Development of basic medical and sanitary assistance and improvement 65.2 90.5 65.8 55.7 60.of disease prevention Training and re-training of general practitioners (family doctors), 0.15 0.3 0.3 0.3 therapeutists (district doctors) and general pediatricians (district doctors) Salaries and wages to general practitioners (family doctors), therapeut- 14.6 21.9 19.5 21.6 21.ists (district doctor) and general pediatricians (district doctor) and nurses working with them Salaries and wages to medical staff of feldsher-midwife stations, doc- 4.1 11.2 8.0 9.4 9.tors, feldshers and nurses of ambulances Supply of diagnostic equipment to municipal dispensaries and out- 14.3 15.4 0.05 patient clinics Provision of ambulances to departments and emergency and immediate 3.6 3.9 0.2 care institutions Vaccination 4.5 6.1 5.0 6.5 5.Prevention of AIDS, of hepatitis B and C, and identification and treat- 2.8 7.8 8.0 9.3 13.ment of AIDS-infected individuals Tuberculoses screening, treatment of tuberculoses patients, prevention 2.7 4.measures Prophylactic medical examination of the working population 5.5 7.0 5.7 3.9 4.Additional payment for medical and sanitary aid provided to the non- 4.3 working pensioners Additional medical examinations of employed in industries with occu- 1.9 2.0 2.0 2.0 2.pational hazards Provision of the population with hi-tech medical assistance 13.0 46.3 51.3 61.1 60.Construction of hi-tech medical technological centers 3.2 28.8 9.5 11.6 6.Provision of hi-tech medical assistance 9.8 17.5 24.0 28.2 36.Development of new hi-tech medical technologies 7.7 5.1 Undertakings aimed at the improvement of medical assistance to 3.6 3.0 3.cardio-vascular patients Section Social Sphere Directions of the national project, types of expenditure 2006 2007 2008 and sources of funds (plan) Undertakings aimed at improvement of medical assistance to those 3.2 2.3 3.injured in road accidents Undertakings aimed at the improvement of oncological assistance to the 6.7 5.population Undertakings aimed at the development of blood banking service 3.3 4.2 4.Improvement of medical assistance to mothers and children 9.4 14.9 17.0 25.3 24.Payments on birth certificates in the framework of medical assistance 9.0 14.5 16.6 16.8 17.provided to women during pregnancy and birth, dispensary observation of a child in his first year Development of perinatal centers 7.1 6.Examination of newborn babies for galactosemia, adrenogenital syn- 0.4 0.4 0.4 0.6 0.drome, mucoviscidosis Prophylactic medical examination of orphans and children who are in 0.8 0,difficult situations and who stay in permanent establishments of the healthcare system, education and social protection Implementation of the pilot healthcare modernization project 2.0 3.4 Provision of information support and project management 0.6 0.7 0.2 0.3 0.Source: the RF Ministry of Public Health and Social Development data.

During the projects implementation in 2009 tangible accomplishments in provision of various types of medical assistance to the population were achieved. However, it should be remembered that expenditure on the project in 2009 amounted only to 13.7% of the overall government expenditures on health care system and the implementation of such project does not exclude the need for the health care system reform on the whole. Due to its design, the national project was unable to ensure significant progress in the solution of key problems of the Russian public health system. Declarativity and inconcrete character of guarantees of free medical assistance, low efficiency of the chosen model for compulsory medical insurance, insufficient protection of the population from payment risks for medical treatment, inequality in accessibility to medical assistance among different social and territorial groups, low structural efficiency of the system for medical services provision, weak medical staff motivation solution of all these issues is impossible without major reforms in the organization, administration and financing of the public health system. The national project has cleared the road for these reforms. However, they have not stated. In the framework of the national project, the government financed implementation of the pilot project designed to introduce new public health financial vehicles in 19 Subjects of the Russian Federation in 2007-2008. However, there were no major institutional breakthroughs affecting entire public health system. It is not envisaged in the national project in the future.

Provision of Medicines to the Population; Strengthening Government Price Control over Medications The state of drugs provision has become one of the hot buttons in the wake of the economic crisis.

According to the data of Russian official statistics, in 2009 growth of retail prices on medicinal drugs amounted to 13.9% exceeding overall consumer price index growth, which for the same time interval constituted only 8.8%. Most rapidly prices grew in the first quarter 2009 then the growth constituted 14.2% in relation to December 2008. At the same time, there was significant price dispersion on one and the same medication, and this range increased. For example, in St. Petersburg maximum price exceeded minimum one on similar medication 5fold an average, and by March 2009 this ratio went up to tenfold.The World Bank. Russian Economic Report 19. June, 2009, http://siteresources.worldbank.org/ INTRUSSIANFEDERATION/Resources/305499-1245838520910/rer19-eng.pdf RUSSIAN ECONOMY IN trends and outlooks Prices on pharmaceutical products are subject to government regulation in Russia. It is worth noting that the price regulation on pharmaceutical products represents a widespread practice in the countries with developed market economies. However, abroad only prices on those pharmaceutical products which are reimbursed (in total or in part) by the government are subject to state regulation. In Russia a different approach to this issue has been chosen: those pharmaceutical products which are in the list of essential and vitally important pharmaceutical products are subject to price regulation. This list is regularly updated. Its latest version was approved on 30 December 2009 and it includes 500 international nonproprietary names for pharmaceutical substances. Sales volume of these pharmaceutical substances amounts to about 40% of the pharmaceutical market. The government purchases about half of these pharmaceutical substances for distribution among medical institutions and in the framework of programs of drugs distribution for several categories of population: social security beneficiaries and certain types of patients (program provision of necessary drugs and program high-cost nosology).

Effective prior to 2010 the system of price regulation envisaged registration according to declarative principle of wholesale factory price of producers and importers on essential and vitally important drugs and authorized Subjects of the Russian Federation to set independently wholesale and retail markups on prices of essential and vitally important drugs. At the same time, there was no control over set prices. Actually, in the regions marginal markups were not applied on a cumulative basis to the wholesale factory price of the producer but to the price of each subsequent distributor. A chain of middlemen emerged in the pharmaceutical market.

Each middleman applies corresponding marginal wholesale markup and as a result prices on the same drugs turn out to be dependant on the number of middlemen and may substantially differ in the same region.

Such regulation system of drugs provision to the population turned out to be unable to withstand pressure, as a result of the ruble exchange rate depreciation, on the prices of imported drugs (in 2008 these drugs constituted 77% of the sale volume on the pharmaceutical market1) and imported substances used by the domestic pharmaceutical producers. Price growth on drugs turned out to be impressive for the population.

The state with drugs provision and distribution became a subject for discussion at the RF government session. At the session of the Government commission on the increase of the Russian economy sustainability, which took place on 10 March 2009 instructions were issued which were reflected in the Order of the RF Ministry of Public Health and Social Development as of 27 May 2009 277H, aimed at regulating price and drugs assortment monitoring, and in the Government Ordinance as of 8 August 2009 654 On Improvement of Government Price Regulation on Essential and Vitally Important Drugs. This document introduced significant amendments in the regulation procedure of essential drugs price fixing. The new procedure was put into effect from January 2010. It envisages:

ceiling wholesale factory prices on the essential and vitally important drugs are fixed in accordance with procedure approved by the RF Ministry of Public Health and Social Development together with the Federal Tariff Agency.2 This procedure envisages determination of Source: TSMI Pharmexpert (www.pharmtech-expo.ru/.../zip/production_for_HARMTEH_241109.ppt) Order of the RF Ministry of Public Health and Social Development 983 and the Federal Tariff Service 447- of 14 December 2010. On Approval of Methodologies for Setting Marginal Release Producers Prices on Essential and Vitally Important Drugs. Section Social Sphere ceiling wholesale factory price of domestic producers on the basis of average weighted real wholesale factory prices for the set preceding time interval (in 2010 for the period from July to 31 December 2009) and forecasted inflation rate.

Formation of ceiling wholesale factory prices of foreign producers is based on comparison of submitted for registration ceiling price levels with the volume of minimal prices on these drugs in the producer country and other countries where these drugs were registered as well as with the volume of their average weighted real import prices for the same preceding time interval;

in the event of state registration of the ceiling wholesale factory price, prices on similar (according to the international nonproprietary name, form of production and dosage) homeproduced drugs shall be taken into account. The Federal Control Service of public health and social development was commissioned with monitoring the assortment and prices on essential and vitally important drugs in compliance with the terms and conditions approved by the RF Ministry of Public Health and Social Development, as well as create and introduce monitoring electronic database for assortment and prices on essential and vitally important drugs. Earlier the Federal Control Service in the field of healthcare and social development conducted price monitoring solely of part of drugs from the effective list of essential and vitally important drugs and/or minimum assortment list of drugs. Drugs of 81 international nonproprietary names represented in 118 pharmaceutical forms were subjected to monitoring. Meanwhile, the minimum assortment list of drugs which are necessary for provision of medical assistance 148 international nonproprietary names of pharmaceutical substances are presented. Effective in 2010 list of essential and vitally important drugs comprised 500 international nonproprietary names of pharmaceutical substances. Thus, the scale of monitoring of prices on drugs must significantly increase;

ceiling wholesale factory prices are coordinated by the Federal Control Service in the field of healthcare and social development with the Federal Tariff Service. Earlier the following rule was effective: a coordination of ceiling wholesale factory price stated by the producer could not be rejected where it was a minimal wholesale factory price of the same producer according to the statistical data for six months prior to the date of the data submission for the state registration. From 1 January 2010 this rule was rescinded. Until 1 April 2010 which is the set date for termination of price re-registration, producers had to coordinate prices with two different agencies and in the event of disagreement turn to a special commission on dispute resolution which emerge in the event of state registration of ceiling wholesale factory prices on essential and vitally important drugs, which was set up in compliance with the Order of the RF Ministry of Public Health and Social Development of 9 October 2009 820.

As long as presently effective list of essential and vitally important drugs contains drugs produced by only one supplier, introduction of new procedure for the price registration creates risks of termination from 1 April 2010 of provision and distribution of those drugs prices for which will not be registered. Refusal in registration will mean that these drugs will be unavailable in pharmacies and inaccessible for patients;

ceiling wholesale and retail markups on drugs will be determined by bodies of executive power of the Subjects of the Russian Federation with regard to organizations of wholesale commerce of drugs and pharmacies. These markups will be in percentage points and will be differentiated depending on the price of drugs and taking into account geographic remoteness, transport accessibility and other characteristic properties. The Federal Tariff Service by the Order of 11 December 2009 442-a approved Procedure for determining by executive au RUSSIAN ECONOMY IN trends and outlooks thorities of the Subjects of the Russian Federation of ceiling wholesale and retail markups on actual wholesale factory prices on essential and vitally important drugs. This Procedure envisages markups determined on the basis of information on costs incurred and profit margin of wholesale organizations and pharmaceutical institutions and there differentiation across three price groups (up to 50 Rb inclusive; over 50 Rb and up to 500 Rb inclusive). With account of actual level of markups in comparable conditions formed during the reporting regulation period in order to avoid disappearance of cheap drugs correcting coefficients are introduced and applied to the wholesale and retail markups;

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