Modernising health systems in the Balkans

Supportedby
A report from The Economist Intelligence Unit
Uneven progress
MODERNISING
HEALTH SYSTEMS
IN THE BALKANS
MODERNISING
HEALTH SYSTEMS
IN THE BALKANS
Uneven progress

1
MODERNISING HEALTH SYSTEMS IN THE BALKANS
U N E V E N P R O G R E S S
© The Economist Intelligence Unit Limited 2016
2 About this report
4 Executive summary
6 Key findings
7 Chapter 1: Healthcare systems in transition
17 Chapter 2: Towards a consistent approach to health technology
assessment
23 Chapter 3: Deficient decision-making processes for pricing and
reimbursement
28 Conclusion
CONTENTS

2
ABOUT THIS REPORT
Modernising health systems in the Balkans: Uneven progress is a report by The Economist
Intelligence Unit (EIU) report, supported by Novartis. The report examines and assesses
the reimbursement landscape, the structure for health technology assessment,
funding models and the policy outlook for ten Balkan countries: Albania, Bosnia and
Hercegovina, Bulgaria, Croatia, Kosovo, Macedonia, Montenegro, Romania, Serbia
and Slovenia. The findings of this report are based on desk research and interviews with
a range of healthcare experts, policymakers and economists.
In March and April 2016 The EIU conducted 17 interviews with experts on Balkan health
systems. The insights from these in-depth interviews appear throughout the report. The
EIU would like to thank the following individuals (listed alphabetically) for sharing their
insight and experience:
• Patriciu Achimas-Cadariu, former minister of health, Romania
• Tit Albreht, co-ordinator, Joint Action Cancer Control, National Institute of Public Health
of Slovenia (NIJZ); assistant professor in public health, University of Ljubljana, Slovenia
• Enis Baris, sector manager for health, nutrition and population, Europe and Central
Asia, World Bank
• William Bartlett, senior research fellow, European Institute, London School of Economics
• Tomislav Benjak, head, department of prevention of disability, Croatian National
Institute of Public Health (HZJZ), Croatia
• Jelena Cugurovic, steering committee member, CML Association of Serbia, and
member, Initiative for Innovative Approach to Improving Access to New Medicines in
Serbia
• Antoniya Dimova, associate professor of management, University of Varna, Bulgaria
• Jurij Fürst, head, medicinal products department, Health Insurance Institute of Slovenia
• Stanimir Hasardzhiev, chair, National Patients’ Organisation (NPO) of Bulgaria, and
secretary-general, Patient Access Partnership, European Patients’ Forum
• Mirjana Huic, assistant director and head of the department for development,
research and HTA (AAZ), Agency for Quality and Accreditation in Healthcare and Social
Welfare, Croatia
• Elke Jakubowski, senior adviser for policy and strategy, division of health systems and
public health, World Health Organisation (WHO) Regional Office for Europe
• Tanja Novakovic, product manager, Galenika, and president, pharmacoeconomics
section, Pharmaceutical Society of Serbia
• Peter Pazitny, partner, Healthcare Consulting & Research Center, Bratislava, Slovakia

3
• Stanislav Primozic, head, sector for pharmacoeconomics, pharmacovigilance and
HTA, Public Agency for Medicinal Products and Medical Devices (JAZMP), Slovenia
• Ivan Svajger, former director, Agency for Quality and Accreditation in Healthcare and
Social Welfare, Croatia
• Bojan Trkulja, managing director, Association of the Manufacturers of Innovative Drugs
(INOVIA), Serbia
• Sinisa Varga, member of parliament, former health minister, Croatia
The EIU bears sole responsibility for the content of this report. The findings and views
expressed in the report do not necessarily reflect the views of the sponsor. Andrea
Chipman was the author of the report, and Martin Koehring was the editor.
June 2016

4
EXECUTIVE SUMMARY
The Balkan region is among the poorest areas in Europe and has been battling to make
up lost ground since the wars of the early 1990s that led to the break-up of the former
Yugoslavia. As a result, the degree of success in developing health systems in the region
that offer similar levels of service to those of their western counterparts has been uneven
at best.
The ten Balkan countries examined in this report—Albania, Bosnia and Hercegovina,
Bulgaria, Croatia, Kosovo, Macedonia, Montenegro, Romania, Serbia and Slovenia—
continue to make slow progress in modernising their health systems.
Most of the region’s countries are in limbo, with structural remnants of the cradle-to-
grave health systems that are no longer viable. These systems, which were built under
the socialist system, are no longer able to adequately meet the needs of its populations.
This comes amid rising demand for higher-quality services, ageing populations and
skyrocketing prices for drugs and new medical technology.
Moreover, intra-regional distinctions are clear: while EU members Bulgaria, Croatia,
Romania and Slovenia have access to EU structural funds, the experts interviewed for
this study generally agree that Croatia and Slovenia have made more progress overall,
with the states that emerged from the former Yugoslavia generally benefitting from
better primary care systems dating back to the socialist period. Serbia and Bosnia and
Hercegovina, meanwhile, have made more moderate progress, while the region’s
smallest and least developed countries, including Kosovo and Montenegro, have
generally lagged behind.
“Health indicators have improved in all countries of the south-eastern European region
on average in the past decade, but still lag behind the EU,” says Elke Jakubowski, senior
adviser for policy and strategy in the division of health systems and public health at the
World Health Organisation (WHO) Regional Office for Europe in Copenhagen.
Bosnia and Hercegovina has invested in the strengthening of community-based mental
health services, while Albania has demonstrated best practice when it comes to low-fat
and high-fruit intake and extending vaccination coverage to children, according to Dr
Jakubowski. However, she notes that poverty remains an underlying threat to population
health. “Overall, inequalities in health outcomes have persisted, and in some cases they
have increased.”
While a select group of countries, including Croatia and Slovenia, have notched up
more significant achievements in modernising their public health systems and hospital
networks and others have begun to restructure reimbursement and pricing systems for
new technologies, only a few have tried to introduce a standardised system for health
technology assessment (HTA). However, Even the most advanced of these systems are
not yet functioning across the board.

5
The absence of such a system makes it more difficult for the region’s health systems to
accurately measure the cost-effectiveness of the investments they are making in new
healthcare solutions. This in turn creates complex and challenging problems for health
systems, which can result in poor outcomes, even in the most advanced countries in the
region. Indeed, the OECD has found that although most of Slovenia’s health indicators
are in line with the EU average, healthy life expectancy at birth remains among the
shortest.1
In addition, with many of Europe’s most developed healthcare systems
focusing increasingly on broader population-health indicators, reliable interim indicators
measuring quality, efficiency and access are crucial. The Balkan region lags far behind
many of its EU neighbours in this regard.
This paper evaluates the progress made by individual Balkan countries compared with
both their regional neighbours and west European countries.
1
OECD, Reforming health and long-
term care to ensure fiscal sustainability
and improve service delivery, Slovenia
Policy Brief, May 2015. Available at:
https://www.oecd.org/policy-briefs/
slovenia-reforming-health-and-long-
term-care.pdf

6
KEY FINDINGS
Many local health systems remain excessively decentralised, complicating the process
of modernisation. Bosnia and Hercegovina is split into three separate regions, one of
which has ten separate cantons, and each has its own health fund. Elsewhere in the
region, individual localities and hospitals have significant autonomy and resources,
making the standardisation of services more difficult. An emphasis on secondary care
over primary care and a lack of measures to encourage more efficient health delivery
have often meant poor use of health budgets.
Universal health insurance remains inconsistent and out-of-pocket costs are rising. While
many of the Balkan countries nominally guarantee universal healthcare, access to
services can be uneven and out-of-pocket costs remain high, accounting for as much
as 40% of healthcare expenditures in Bulgaria and other parts of the region.
Comprehensive and consistent systems for health technology assessment (HTA) are
non-existent or underdeveloped in most of the region. Most of the countries in the region
have no HTA infrastructure to speak of, although those that are already EU members are
increasingly looking to co-operate more closely with EU-wide initiatives, given their small
size. Even in countries such as Croatia and Slovenia, where HTA systems are beginning to
emerge, their use has yet to become standard practice.
Austerity measures have led to reduced spending in many parts of the health budget,
especially in the area of pharmaceuticals. Most Balkan countries continue to struggle
economically in the wake of the global financial crisis, with incomes well below the
European average. While many of the most cutting-edge medicines and devices are
reimbursed in principle for all citizens, the reality is that governments have cut health
budgets in recent years, many face shortages or a complete lack of accessibility to
the latest treatments, and some of the poorer countries often find it difficult to maintain
access to even basic technology.
Balkan health systems need to improve their procedures for negotiating prices for
medicines and devices. Most governments in the region have poor systems for
negotiating competitive prices for essential drugs and devices, reflecting the lack of a
comprehensive system for assessing healthcare investments and, in some cases, local
procurement practices.

7
CHAPTER 1: HEALTHCARE SYSTEMS
IN TRANSITION
The transition process for countries in the Balkans has been taking place for more than
two decades, since the conclusion of the war that led to the division of the former
Yugoslavia.
Many of the region’s health systems still bear a strong imprint of their socialist past, yet
exposure to western Europe has increased demands for higher-quality healthcare. While
public-sector budgets are increasingly unable to meet these demands, evolving private
insurance schemes have only filled a portion of the gap.
Since independence, many healthcare systems in the former Yugoslav states have
become increasingly decentralised, complicating the policymaking process and
making it more challenging to ensure equal access to healthcare across populations.
In addition, most remain overly dependent on expensive inpatient care, with less
investment in primary care, which is sparsely staffed in many places.
“It would be fair to say that in all these countries there have been significant
improvements in health outcomes,” says Enis Baris, sector manager for health, nutrition
and population in Europe and Central Asia at the World Bank. He mentions progress in
increasing healthy life expectancy and reducing infant and maternal mortality rates,
but adds that “with regard to reforming the health systems, I wouldn’t necessarily be too
positive and favourable”.
Meanwhile, access to care—which is comprehensive in principle—remains patchy both
between countries and within them. In particular, high levels of out-of-pocket (OOP)
payments make many treatments and services unaffordable to all but the wealthiest
few.
This situation has been exacerbated by strict budget constraints in recent years that
have hit service provision and investment, especially in the most innovative therapy
areas. The populations of most countries in the region are primarily covered by social
health insurance (SHI), which is linked to their place of work. Unemployment has
increased in the wake of the global financial crisis in 2007-08 and, in turn, SHI funding
has been hit. Economic pressures have exacerbated levels of corruption, which were
already high in many of the region’s health systems.
Fragmented health networks
In Bosnia and Hercegovina, at perhaps the more extreme end, there is no national
healthcare system to speak of. Instead, its three regions—the Federation of Bosnia and
Hercegovina (BiH), the Republika Srpska (RS) and the self-governing district of Brcko—
are divided into 13 separate health systems between them (including ten separate

8
cantonal ministries for the Federation of Bosnia and Hercegovina), each with their own
health ministers and individual methods and scope of insurance coverage.2
This structure has an impact on equitable access to health services for the country’s
almost 4m people, undermining planning co-ordination and transparency in decision-
making as well as throwing up obstacles to regulatory and supervisory control.
In Croatia, which has seen some of the most advanced reforms in the region, decision-
making is frequently decentralised on several levels, including county hospitals and
primary-care centres.
“The more centralised a healthcare system is, the better off it is,” says Sinisa Varga, a
trained dentist, member of parliament and minister of health in Croatia’s centre-left
Social Democratic government from 2014 to January 2016. “Since we have only 4.3m
people, if you disaggregate into ever smaller groups, you lose economies of scale.”
The fragmentation of Balkan systems further complicates the process of making health
systems more efficient and increases inequalities between regions and populations.
A focus on secondary care
In addition to the fragmentation of many Balkan health systems, most governments
in the region share an excessive focus on secondary care at the expense of primary
healthcare. The lack of investment in primary-care services contributes to the inefficient
use of resources and persistent poor health outcomes for populations, those interviewed
for this study say. “Primary healthcare services are better in the former Yugoslav states,
especially Croatia and Slovenia, but all of these countries still have a lot of hospitals and
a lot of beds, and they haven’t necessarily been very successful at reforming inpatient
care both in terms of rationalisation and efficiencies,” Dr Baris says. In addition, structural
problems in the hospital sector have helped to drive up costs.
Tomislav Benjak, head of the department of prevention of disability at the Croatian
National Institute of Public Health (HZJZ), notes that the key element of primary health
reform in his country included privatising the role of general practitioners; they had
previously been government employees, and the change merely led to a reallocation
of spending rather than improved health outcomes. “My opinion is that reform has not
had a great impact on reducing the quality of healthcare for patients. For example,
since the reform in Croatia we have had increasing use of emergency healthcare in
hospitals.”
Ivan Svajger, former director of Croatia’s Agency for Quality and Accreditation in
Healthcare and Social Welfare, notes that in Croatia a huge amount of hospital
budgets goes to salaries—more than 90% in some hospitals. The lack of human resource
management contributes to this problem, according to Dr Svajger, resulting in shortages
of doctors and nurses in some parts of the country.
2
Catic, T, HTA in Bosnia and
Herzegovina: Herzegovina Situation
Overview, presentation to ISPOR 14th
Annual European Congress, Madrid,
Spain, November 8th 2011. Available
at: http://www.ispor.org/congresses/
spain1111/presentations/HTA-CEE_
CaticTarik.pdf

9
“What I see as a major problem is the cost of the service,” he adds. “Hospitals try to do
more and more volume to be able to collect some money from national funds, but they
also collect costs at the same time, because there are costs relating to services.” As a
result, he says, some private-sector providers have begun to reject contracting with the
national insurance funds and turned exclusively to out-of-pocket payment for services.
Croatia has nevertheless travelled further down the reform road than many of its
neighbours. The country’s National Reform Programme outlines efforts to expand
capacity within hospitals, while at the same time reducing the average stay by 10-30%
in order to increase patient flows.3
“We’ve had a fairly progressive government, adapting the system to the modern needs
of chronic care and ageing populations, gearing it towards patients and their needs,”
says Dr Varga. He notes that his government has moved from a capped budget to a
partial payment-for-performance system.
Dr Varga and his Social Democratic government also agreed to pay significant debts
incurred by 64 hospitals, including ten national teaching hospitals, on condition that
local governments relinquish control of the running of the hospitals to the central
government. But although the government paid two instalments of debt relief between
2013 and 2014, the new government has said it will not extend the initiative. According
to Dr Varga, the limited success of many regional governments in making systems less
focused on tertiary care has raised issues of fiscal sustainability.
In Slovenia, where one-third of overall healthcare spending is on inpatient care, the
OECD argues that excessive reliance on secondary and specialist care rather than
primary care curtails opportunities for cost containment and care co-ordination.4
At the same time, the country has benefitted from the fact that once it had achieved
independence, it was able to curtail defence expenditure earlier than other former
Yugoslav states. This gave the country a head start in health institution-building.
“The two western republics (Slovenia and Croatia) were mostly industrialised, and GDP
per capita was higher than in the others,” says Stanislav Primozic, deputy director and
head of pharmacoeconomics, pharmacovigilance and HTA at the Public Agency of
the Republic of Slovenia for Medicinal Products and Medical Devices (JAZMP). He adds
that the government has ring-fenced Slovenia’s health budget from general spending,
making it “independent and stable”.
The lack of investment in public-sector healthcare, especially primary care, is a problem
in the region, notes William Bartlett, senior research fellow at the European Institute of
the London School of Economics (LSE). He adds that he visited one hospital in Serbia, in
which a new wing and CT scanner financed by the World Bank contrasted sharply with
a dilapidated primary-care centre nearby.
3
Republic of Croatia, National Reform
Programme, April 2014, p. 23. Available
at: http://ec.europa.eu/europe2020/
pdf/csr2014/nrp2014_croatia_en.pdf
4
term care.

10
Neighbours such as Romania and Bulgaria, meanwhile, have made even less progress
in reducing the focus on secondary care. In Bosnia and Hercegovina shortages of
pharmacists remain a major obstacle, exacerbating the problem of accessing drug
supplies in hospitals.
Yet the basic organisation of hospital services is also a major drain on the system, with
many individual facilities, especially in less-developed countries, characterised by too
many beds and poor levels of care, those interviewed say.
Lack of efficiency and consistency also hampers systems
Consistency of treatment also receives short shrift in many parts of the region, according
to interviewees. In some countries, including Macedonia and Romania, there has been
little effort to standardise clinical practice guidelines for the treatment of common
diseases or for the monitoring, prescribing and use of medicines. Lack of equipment also
continues to affect some parts of the region.
Dr Baris says that in some countries, such as Serbia, there is quite a lot of pressure on
the government, with cancer treatment being rationed because there are not enough
linear accelerators for radiotherapy. He adds that the World Bank has been helping the
Serbian government to procure the technology.
Elsewhere, the absence of a supportive legislative framework has hamstrung the reform
process. “In Bulgaria, after the introduction of the health insurance system in 1998, there
were no significant changes to improve efficiency, effectiveness or public health,” says
Antoniya Dimova, associate professor of management at the University of Varna. She
says that, although the government approved some changes to the laws on health
insurance and healthcare establishments that regulate the system in 2015, the Ministry
of Health has yet to issue the necessary accompanying orders.
Other efforts to introduce greater efficiency in expenditure have had mixed results. In
Croatia, the use of performance-related payments—a mix of capitation, payment for
quality in services and achieving key performance indicators—started in primary care in
2013, with strong results, and was expanded to hospitals in 2015, according to Dr Varga.
He adds, however, that the new right-of-centre Croatian Democratic Union (HDZ)
government, elected in November 2015, has said that it will not continue the reforms.
Universal care becomes more limited in scope
Unlike in western Europe, there is no tradition of universal healthcare in the Balkan region.
Although SHI is the largest source of coverage, it excludes those who are self-employed,
such as workers in the agricultural sector as well as the growing ranks of the unemployed,
according to Dr Bartlett. “There is no formal universal coverage, and even less so in
practice. The only entitlement to healthcare is on the basis of social contributions, not

11
citizenship.” Gaps persist in the region’s insurance systems and, as a result, OOP costs
continue to rise.
Although in many countries state funding covers vulnerable populations, including
pensioners, children and those with low incomes, other disadvantaged groups, such
as the Roma minority, find it more difficult to access healthcare, and high levels of
health inequity persist across the region. Moreover, the range of services covered varies
significantly, according to those interviewed for this report.
Dr Baris notes: “Universal health coverage is there in theory, but not necessarily in
practice in many countries. I wouldn’t say there is universal coverage for most of the
services you would expect to be covered in western Europe, given the implicit rationing
and high out-of-pocket expenses even for essential care.”
Kosovo, which only gained independence in 2008, is a notable example. The country
has no social health insurance yet in place, despite the government’s 2010-14 Strategic
Plan envisaging such a system being implemented by 2013.
In Romania, where most of the population is covered by a combination of SHI
contributions, taxation and co-payments, the Ministries of Transport, Defence, Interior
and Administrative Reform, Justice and the Romanian Intelligence Agency operate
their own parallel health systems with separate facilities. Only 10% of the female
population is able to get coverage for cervical cancer screening. According to Dr Baris,
cervical cancer-related mortality is ten times higher than in western Europe. Meanwhile,
in Bulgaria, 23% of the population were not covered by any insurance scheme in 2011,
and although in need of social assistance, they were not entitled to it.5
The number of people covered by voluntary health insurance (VHI) varies considerably
across the region, and the lack of a well-developed private health sector has
contributed to the challenges facing the region. “The major problem in Croatian
healthcare is that more than 80% is public and only 20% is private,” says Dr Svajger.
Yet in Slovenia, 85% of the population have had some form of VHI as of 2007.6
The OECD
argues that the widespread use of VHI in Slovenia has a “regressive impact on the
funding of healthcare and lowers incentives for practitioners to prescribe appropriate
and cost-effective care”.7
The challenge of protecting against financing risk
The range of benefits on offer has become more limited in many of the Balkan countries
due to economic constraints, and as a result private spending on healthcare has
increased. Consequently, levels of OOP payments make up a large share of expenditure
in many countries in the region. According to health-spending data from the WHO, out-
of-pocket spending accounts for around half of total health expenditure in Albania and
more than 40% in Bulgaria and Montenegro. In Croatia and Slovenia the share is much
5
ICARE4EU, Regional non-profit
organisation (NPO) “Diabetic care”,
Burgas, Bulgaria, p. 16. Available
at: http://www.icare4eu.org/pdf/
Diabetic_Care_Burgas_programme_
Case%20Report.pdf
6
Albreht, T, Turk E et al, “Slovenia: Health
system review”, Health Systems in
Transition, Vol. 11, No. 3, 2009. Available
at: http://www.euro.who.int/__data/
assets/pdf_file/0004/96367/E92607.pdf
7
term care.

12
lower at 11% and 12% respectively (see chart 1), similar to the shares seen in France (6%),
the UK (10%) and Germany (13%), for example.
In Serbia, the country in the region with the highest level of health spending as a
percentage of GDP, at 10.4% in 2014 (see chart 2), OOP spending makes up more than
Out-of-pocket expenditure as a percentage of total health
expenditure, 2014
(%)
Albania
Bulgaria
Montenegro
Macedonia
Serbia
Bosnia and Hercegovina
Romania
Slovenia
Croatia
Source: WHO Global Health Expenditure Database.
Chart 1
49.9
44.2
42.8
36.7
36.6
27.9
18.9
12.1
11.2
Total expenditure on health as a percentage of GDP, 2014
(% of GDP)
Serbia
Bosnia and Hercegovina
Slovenia
Bulgaria
Croatia
Macedonia
Montenegro
Albania
Romania
Source: WHO Global Health Expenditure Database.
Chart 2
10.4
9.6
9.2
8.4
7.8
6.5
6.4
5.9
5.6

13
one-third of total health expenditure. Hence, while overall levels of healthcare spending
(as a share of GDP) are comparable with many west European countries, these funding
anomalies mean that patients are shouldering a substantial share of overall healthcare
spending in the Balkans.
“A particular concern of the WHO is the relatively large share of out-of-pocket payments
in the SEE [south-eastern European] countries,” says Dr Jakubowski. “The share of OOP
as a proportion of total health expenditure is more than twice as high as in the EU
countries.” While she acknowledges that vulnerable groups are technically exempt from
additional fees in most Balkan countries, she adds that exemption policies are “partly
undermined by the existence of informal payments of patients to providers. Where OOP
expenditure exceeds 30% of the total, the incidence of ‘catastrophic’ levels of health
expenditure by households increases sharply.”
A substantial share of OOP expenditure goes to pharmaceutical products. OOP
spending on medications is a leading source of impoverishment in low-income countries
such as Kosovo. While most of the larger Balkans economies claim to cover 100% of
medical treatment for chronic diseases and serious conditions such as cancer under
their SHI programmes, increasingly strict rules on reimbursement have weakened access
to healthcare solutions such as screening and drugs in recent years.
In Kosovo, with a population of less than 2m, the entire structure of coverage and
reimbursement of pharmaceuticals is basic, with a Health Care Commissioning Agency
(HCCA) developed as a forerunner to an insurance fund to define a list of basic services
and costs. Drugs account for 85% of OOP spending in Kosovo, according to a World
Bank outline for a project that is designed to create an outpatient drug benefit scheme
in the country. The project aims to ensure that at least 65% of primary health facilities in
the country have at least one pharmacy contracted to provide an outpatient benefits
package by 2018.8
Disparity in the share of OOP payments across the region is due to varying reimbursement
rates in different parts of the region, with wealthier countries such as Croatia and
Slovenia claiming to reimburse 100% of inpatient drugs for the most serious and chronic
conditions, while some poorer countries reimburse on a sliding scale between 50% and
90%. This largely depends on whether the medicine is essential, with vulnerable groups,
such as children and pregnant women, ostensibly exempt from co-payments.
In Albania, pharmaceuticals on the positive list are grouped into six categories with
different reimbursement rates, ranging from 50% for antibiotics and treatments for skin
conditions to 75-85% for chronic diseases such as coronary heart disease, hypertension
and asthma, to full reimbursement for cancer and multiple sclerosis.
In several countries in the region, including Slovenia, high-cost medicines are not part of
hospital budgets but are covered through funding agreements between hospitals, the
health ministries and insurance funds.
8
World Bank, Design Outpatient
Drug Benefit Scheme, Kosovo Health
Project. Available at: http://www.
worldbank.org/projects/procurement/
noticeoverview?id=OP00033169

14
Cuts in funding leave systems exposed
The ability of regional policymakers to invest in upgrading their health systems has been
undermined by the fact that, although economic growth has generally been more
rapid in the Balkan countries than in western Europe, the rate of growth of healthcare
spending in the region has also outpaced that in the western part of the continent (see
chart 3).
The increase in public spending on health between 2007 and 2011 in Albania, Bulgaria
and Bosnia and Hercegovina was particularly notable, Dr Jakubowski points out.
Meanwhile, the delayed effects of the global financial crisis in countries such as Slovenia
and Serbia have resulted in a decline in economic growth in the earlier part of this
decade. In turn, rising rates of unemployment have reduced the resources available to
public health funds.
“Because of high unemployment and low salaries, funds available to the health fund
are much lower than in socialist times, but the rights of patients in Serbia have stayed
the same on paper,” says Bojan Trkulja, managing director of the Association of the
Manufacturers of Innovative Drugs (INOVIA) in Serbia.
Even in Croatia, arguably the best-performing country in the region, budget cuts have
reduced money for healthcare expenditure. Dr Varga notes that the 15.5% contribution
of employers to the Croatian Health Insurance Fund budget does not cover the full
costs of healthcare services, especially since an anomaly in the way Croatia’s budget
Source: The Economist Intelligence Unit.
Chart 3
Healthcare spending growth and GDP growth, 2006-15
(%)
-10
0
10
20
30
40
50
60
GDP growth, real, 2006 to 2015HC spending growth, 2006 to 2015
USUKSpainItalyGermanyFranceSloveniaSerbiaRomaniaCroatiaBulgaria

15
is divided means that maternity leave and sick leave pay are covered out of the
healthcare budget instead of out of welfare budgets, as is the case in most European
countries, thus creating an additional source of expenditure. Many international
organisations believe Croatia spends too much on healthcare, Dr Varga says.
Moreover, between 2002 and 2015 Croatia’s Ministry of Finance combined the entire
healthcare budget with the pool of central Treasury funds, with health spending
ultimately at the whim of the finance ministry, according to Dr Varga. “We often had a
discrepancy between what was guaranteed to patients compared with what money
was available. That’s when we had a very big rise in waiting lists, especially for elective
surgery.”
As is the case in many countries in western Europe, meanwhile, rising pharmaceutical
prices, especially for the most cutting-edge drugs, are putting particular pressure on
already stretched health budgets. A position paper by the Forum of International
Research & Development Pharmaceutical Companies, EIG, a non-governmental
professional organisation based in Ljubljana, argues that these constraints have led
Slovenia’s sick fund and hospitals to press doctors to limit prescriptions of drugs, resulting
in problems with drug availability.9
Those interviewed for this paper note that the inability of many Balkan states to efficiently
negotiate discounts from manufacturers is exacerbating the problem, as is the fact that
austerity programmes commit many Balkan governments to reduce the amount they
are spending on drugs.
Consequently, spending on medications varies significantly across the region, with six
countries spending 16% or less of their healthcare budgets on pharmaceutical products,
while three countries—Romania, Bulgaria and Kosovo—spend 30% or more of their
healthcare budgets on drugs.10
In Kosovo, despite the existence of an essential drugs list, the supply for outpatient and
inpatient care is insufficient, and essential drugs are often only available in private
pharmacies.
In Albania, although the government’s 2014 pharmaceutical policy reforms replaced
some drugs on the reimbursable list with generics, doctors reported shortages of even
basic drugs a year later, according to BIRN, an independent non-governmental
organisation in Albania specialising in investigative journalism.11
The report noted that
the reforms introduced a pricing formula using reference prices from Macedonia,
Greece and Italy, which led to a fall in drug prices but also reportedly caused many
multinational companies to exit the Albanian market, compounding shortages.
The BIRN report also noted that doctors were sceptical about the efficacy of some of
the drugs supplied through the scheme. While public spending on healthcare in Albania
accounted for only 2.9% of GDP in 2014, the lowest rate in the Balkan region, private
spending was among the highest in the region, also at 2.9% of GDP, according to World
Bank data.12
9
Forum of International Research
& Development Pharmaceutical
Companies, EIG, Recent Developments
in Slovenian Health Care Environment
– Drug Availability Perspective, p. 6.
Available at: http://www.firdpc.com/
img/File/Recent_developments_in_
Slovenian_health_care_environment-
drug_availability_perspective.pdf
10
Business Monitor International; IMS
Health; Cegedim Romania; quoted
in: “SEE pharmaceutical market
healthy in 2010”. Available at: http://
top100.seenews.com/2011/07/
s e e p h a r m a c e u t i c a l - m a r k e t -
healthyin-2010/; and Imasheva, A and
A Seiter, The Pharmaceutical Sector of
the Western Balkan Countries, February
2008, Health, Nutrition and Population
(HNP) Discussion Paper. Available at:
http://apps.who.int/medicinedocs/
documents/s17510en/s17510en.pdf
11
BIRN, “Patients Pay Price for Albania’s
Drug Reform”, September 24th 2015.
Available at: http://www.balkaninsight.
com/en/article/patients-pay-price-for-
albania-s-drug-reform-09-23-2015
12
World Bank, World Development
Indicators. Available at: http://
databank.worldbank.org/data/home.
aspx

16
Romania is also among the countries that have faced shortages of essential drugs in the
past few years, especially for the treatment of cancer and diabetes, according to its
former minister of health, Patriciu Achimas-Cadariu. He adds that the government has
introduced various measures to ensure that drugs are not siphoned off into the informal
sector, including limits on the export of pharmaceuticals where commercialisation is
believed to lead to shortages and the exclusion of unauthorised medicines in Romania.
The government has also approved legislation to allow quick access to medicines for
compassionate use.
Shortages of medicines also make it more difficult for doctors in the region to develop
their skills and familiarise themselves with the most innovative treatments, according
to Jelena Cugurovic, a member of the steering committee at the CML Association of
Serbia, a non-profit organisation which acts on behalf of patients with chronic myeloid
leukaemia, and member of the Initiative for Innovative Approach to Improving Access
to New Medicines in Serbia.
Overall, discrepancies in spending between the public and the private sector contribute
to inequities, according to Dr Bartlett. “It’s not that [the Balkans have] a backward
health service. The skills of the doctors are good, on a western European level, they
are up-to-date with medical knowledge, but the system is not equal for everyone—
especially now, with pressure to reach budget-deficit targets.”
The South-eastern Europe Health Network (SEEHN), a WHO-supported multi-country
partnership, was set up in 2001 as a political and institutional forum with the aim of
helping countries in the region with their modernisation efforts. Over the past ten years
SEEHN has been promoting the development of public health services and health
systems as well as the treatment of communicable diseases and mental health, among
others, with a focus on the challenge of introducing universal healthcare.13
13
“Universal health coverage top of
agenda for South-eastern Europe
Health Network”, WHO, December
15th 2015. Available at: http://www.
euro.who.int/en/countries/serbia/
news/news/2015/12/universal-health-
coverage-top-of-agenda-for-south-
eastern-europe-health-network

17
CHAPTER 2: TOWARDS A
CONSISTENT APPROACH TO HEALTH
TECHNOLOGY ASSESSMENT
Against a backdrop of economic constraints and reduced spending, Balkan
governments need to be able to make difficult decisions about how to make the
best use of their scarce budget funds. Currently, the institutions for helping to guide
healthcare policymakers to make these decisions are underdeveloped at best, and
non-existent in many cases.
The lack of sufficient tools for assessing and comparing the efficiency and level
of innovation of new treatments and technologies also has a knock-on effect on
procurement and pricing.
Evaluating and comparing the efficiency and cost-effectiveness of new treatments is still
a foreign concept in the region, even if many of its health systems are beginning to look
more closely at health outcomes.
Slovenia’s National Institute of Public Health (NIJZ) is a participant in EVIPNet, a global
WHO initiative that promotes the systematic use of health-research evidence in
policymaking. According to Tit Albreht, co-ordinator of Joint Action Cancer Control
at the NIJZ and assistant professor in public health at the University of Ljubljana, the
institute hopes to expand its involvement in the years to come. Although Slovenia has
not systematically introduced performance indicators into healthcare delivery, some
performance-based incentives have been introduced in primary care to meet the
national preventative programme’s targets, Professor Albreht says. This also includes
ongoing work on quality indicators in Slovenian hospitals for benchmarking purposes
and the sharpening of clinical guidelines.
Moreover, the decentralised nature of healthcare provision makes it more difficult to
develop transparent and streamlined guidelines and systems for evaluating healthcare
technology. At the same time, more of the region’s governments are at least recognising
the value of doing so. Given their small size and limited resources, many of the region’s
countries rely heavily on HTA reports compiled by EU institutions or other international
bodies.
As in other aspects of healthcare, Slovenia and Croatia lead their Balkan neighbours in
developing systems for evaluating healthcare technology and care pathways, although
even here much work remains to be done, according to Dr Baris of the World Bank.
“In those two countries, there are some formal mechanisms. Croatia has an agency in
charge of HTA, and there is a lot of talk about it elsewhere, but ultimately it boils down to
setting up a committee with experts that will look at the evidence. It’s not always clear
what the criteria are on which they decide which drugs will be reimbursed.”

18
In Bulgaria, while efforts to set up an HTA system are at a more rudimentary stage, the
country’s politicians have acknowledged the importance of access to medicines and
quality healthcare for its citizens, something that was not always the case, according
to Stanimir Hasardzhiev, chair of the National Patients’ Organisation (NPO) of Bulgaria
and secretary-general of the Patient Access Partnership, European Patient’s Forum. “We
strongly encourage this process, but there is still a lack of understanding of the role of
HTA in these countries. Many politicians have introduced HTA as a mechanism that will
allow them to delay or stop growth of costs. Actually, the rationale for HTA is completely
different: allowing them to decide which medicines need to be reimbursed.”
Historical legacies and the role of the European Medicines
Agency
The relatively recent evolution of democratic societies in the region is part of the legacy
that has made it more difficult for policymakers in the region to develop the necessary
systems for increasing the efficiency of healthcare systems.
Ongoing corruption and politically influenced decision-making, including high levels of
informal payments, are a major challenge. Another obstacle is the legacy of trade-
union power throughout the formerly socialist societies. This makes it more difficult to
gain the support of healthcare professionals, whose backing is needed to introduce
necessary reforms.
The output of the European Medicines Agency (EMA), a London-based EU agency
for the evaluation of medicinal products, has been a key part of the authorisation
process for new medicines in the Balkan region, allowing its smaller and poorer member
countries to avoid costly duplication of efforts. By contrast, the process of drug pricing
and reimbursement remains a national responsibility. In many countries in the region
drugs can be authorised either by the national agency or centrally through the EMA. In
Serbia, manufacturers can only apply for local marketing authorisation if their product
already has marketing authorisation in its country of origin, the EU or the US. In theory,
authorisation should take 210 days for medicines not registered through the EU, but in
practice it is closer to 300 days, Mr Trkulja says.
“We have quality, efficacy and safety very much in place at the EU level,” says Mr
Primozic of the JAZMP. “Pricing and reimbursement is very national in competence
and likely to stay for some time a national competence.” He adds that, as a small
country, Slovenia is unable to staff HTA agencies with hundreds of employees, as is the
case in larger EU countries. Instead, the JAZMP—which was established in 2007 as a
regulatory agency and started its HTA unit two years ago with three people—is sharing
the resources of the National Institute of Public Health and the Ministry of Health.
A number of countries use HTA reports from other European countries as part of an
interim process for determining reimbursement and procurement decisions. Given the

19
lack of capacity for conducting full HTA processes in many countries in the region, there
are nascent efforts to introduce a joint HTA process using methodologies based on
those of well-established HTA bodies in Europe, such as the UK’s National Institute for
Health and Care Excellence (NICE), according to Mr Hasardzhiev of Bulgaria’s National
Patients’ Association.
Existing HTA regimes are patchy
Croatia and Slovenia have the most developed HTA regimes in the region, although
even these are patchy in areas and not yet working in a consistent manner.
Croatia, like many of its Balkan neighbours, has automatically applied all marketing
authorisation approvals that follow the centralised procedure of the EMA. The country’s
Agency for Medicinal Products and Devices, which was established as an independent
agency in 2003, is responsible for marketing authorisation, medicines quality and
pharmacovigilance. The Croatian Health Insurance Fund (CHIF), set up in 1993, defines
services covered by SHI, reimbursement based on budgetary impact and demonstrated
efficacy over comparator treatments and price setting; it also provides VHI that covers
additional charges.
Although Croatia’s Agency for Quality and Accreditation in Healthcare and Social
Welfare, established in 2007, has a Department for Development, Research and Health
Technology Assessment (AAZ), its activities have been restricted owing to a low budget
and limited capacity. The first Croatian Guideline for HTA Process and Reporting was
published in 2011, and the agency is an associate partner of the European Network for
Health Technology Assessment (EUnetHTA) and co-operates with an HTA group at the
CHIF to help it prepare HTA reports for the fund.
“Establishing a transparent, scientific, independent evidence-based HTA process in
Croatia was not an easy and quick process,” says Mirjana Huic, head of the AAZ, which
currently has just three permanent members of staff. “To further the sustainable HTA
process in Croatia, with mandatory links to reimbursement/investment or disinvestment
decisions, several [items] are needed: support and commitment of government
institutions with a full legal framework in place; capacity-building with educated,
permanent staff; appropriate stakeholder involvement; further sustainable national and
international co-operation and collaboration; and appropriate funding.”
In Slovenia, the country’s Health Council decides which technologies and programmes
will be financed from public resources. The Health Insurance Institute (HIIS) classifies
pharmaceuticals for the purpose of reimbursement, with advice coming from experts in
various health fields and decisions based on both cost-benefit analyses and available
financial resources. However, in the absence of a national HTA agency most assessments
are driven by industry and performed by private providers. In the meantime, the country
continues to collaborate and co-ordinate within the framework of the EUnetHTA.

20
Other countries in the region, such as Bulgaria and Serbia, have been working towards
developing an HTA framework for a number of years but remain in the earlier stages.
While government institutions may fulfil some aspects of the evaluation process, the lack
of a consistent system makes it difficult to ensure that health systems are getting the
best value for their money, and the lack of transparency makes it hard for stakeholders
to know how decisions to approve or deny reimbursement for certain technologies are
being made.
In the case of Bulgaria, a number of elements of an HTA system are in place, although
there is still no national HTA agency. The health ministry’s National Council on Prices and
Reimbursement of Medicinal Products takes the efficacy, cost-effectiveness, budget
impact and affordability of new drugs into account for coverage and reimbursement
decisions, according to the International Society for Pharmacoeconomics and
Outcomes Research (ISPOR).14
At the same time, the authorities tend to defer to the
primary European HTA bodies in the UK, France and Germany.
The country’s National Centre for Public Health and Analyses is an associate partner of
EUnetHTA. In September 2015 the health ministry established the procedures for setting
up an HTA committee, including representatives from the ministry and a number of other
agencies, and as of December 2015 the National Centre for Public Health performs
assessments for drugs belonging to a group without comparators on the existing
reimbursement list. This analysis includes the evaluation of the existence or absence
of alternative treatments, expected numbers of patients, the comparative analysis of
therapeutic efficacy and safety and financial indicators, including budget impact and
cost-effectiveness. It is difficult to determine how many, if any, decisions have been
made using these criteria.
Although the understanding of HTA in neighbouring Romania encompasses the
evaluation of medicines, medical devices, diagnostic procedures and health
management, the country’s system is currently limited to a range of drugs. However, the
government expects to expand its remit in the near future, according to Dr Achimas-
Cadariu, a former health minister. Core responsibility for HTA belongs to the Department
for Health Technology Assessment, a unit that was established in 2012 and which
previously operated within the health ministry. It was transferred to the National Agency
for Medicines and Medical Devices in 2014.
Under an HTA methodology which was developed in 2014, the department uses interim
HTA from three European agencies for reimbursement decisions: France’s National
Health Authority (Haute Autorité de Santé, or HAS), the UK’s NICE and Germany’s Institute
for Quality and Efficiency in Healthcare (Institut für Qualität und Wirtschaftlichkeit im
Gesundheitswesen, or IQWiG). This involves making a final decision based on a scoring
system that uses six criteria, including reimbursement in France and the UK, the number
of EU countries where the drug is reimbursed, relative efficacy and effectiveness, relative
safety, and relative patient-reported outcomes.
14
ISPOR Central & Eastern European
Network Newsletter, 2013, December; 1
(2), p. 6. Available at: http://www.ispor.
org/CeeNetwork/documents/News_
Across_CEE_Newsletter_Vol1_No2.pdf

21
The Romanian HTA department requires budget-impact data as part of the dossiers
submitted by applicants, although critics argue that because this analysis is self-assessed,
there is no mechanism to address undervaluation by manufacturers. In December
2013 the acceptance rate for HTA reports completed by that date was 80% of new
medicines. Romania’s National School of Public Health, Management and Professional
Development has also worked on some joint European projects with EUnetHTA.
In Serbia, where drugs accounted for 18% of expenditure by the National Health
Insurance Fund (NHIF) in 2014, there is no national HTA agency. The NHIF is involved in
pharmacoeconomic assessment to support reimbursement decisions, while the health
ministry includes an HTA Committee with wide responsibilities but little technical support.
Serbia is not a member of EUnetHTA. The EIU has published a country case study on
Serbia that examines the systemic weaknesses in Serbia’s healthcare system, including
corruption and the lack of a comprehensive system for assessing both new and existing
healthcare solutions, which are undermining access to both basic and cutting-edge
health technology and are contributing to poor health outcomes.15
A third tier, including the poorest countries such as Macedonia, Kosovo and Albania, has
no system to speak of in place. In Montenegro and Kosovo, international organisations
have been involved in providing some funding for structural reforms. A 2013 World Bank
project to improve the financial basis of the healthcare system in Montenegro included
support for the regulation of drug prices, competition and the introduction of pay-for-
performance and diagnosis-related group (DRG) payments for hospital treatment.
The Macedonian health ministry’s Committee on Drugs, Medicinal Products and Medical
Devices oversees the authorisation and licensing of drugs. From 2011 to 2014 expert
committees appointed by the ministry were responsible for preparing the positive list of
drugs, a process made all the more challenging by frequent changes in membership.16
Macedonia’s Health Insurance Fund, which sets up reference pricing and engages in
procurement with manufacturers to purchase drugs, has been independent since 2000
but is hampered by a significant budget deficit. The health ministry provides guidelines
for using evidence-based medicines in many specialties, but it has no apparent role in
formal HTA, and the country currently has no formal HTA system in place.17
In Kosovo, there has been no movement towards using HTA evidence or developing the
necessary infrastructure for producing it. There is a similar lack of clinical guidelines or
standards for care pathways.
In Bosnia and Hercegovina, which lacks both national and regional HTA agencies, the
essential list of 220 drugs, introduced during the war, has been the basis for the positive
lists in each canton. Cantonal insurance funds reimburse only a small number of these,
creating high levels of OOP payments.18
The variations and inconsistencies in the process for assessing and determining the
reimbursement for new treatments in the Balkans frequently leads to delays before drugs
are available. This adds to the pressure for a more coherent system.
15
The Economist Intelligence Unit,
Modernising the Serbian health system:
The need for a reliable decision-
making compass, June 2016. Available
at: https://www.eiuperspectives.
e c o n o m i s t . c o m / h e a l t h c a r e /
modernising-health-systems-balkans
16
Angelovska, B, V Ivanovska and E
Drakalska, The climate for innovative
medicines in the Republic of
Macedonia, 2013. Available at: http://
eprints.ugd.edu.mk/8241/
17
WHO, Access to new medicines in
Europe: technical review of policy
initiatives and opportunities for
collaboration and research, 2015.
Available at: http://apps.who.int/
medicinedocs/documents/s21793en/
s21793en.pdf
18
Cain, J et al, in Cain, J and E
Jakubowski, eds., Heath care systems
in transition: Bosnia and Herzegovina.
Copenhagen, European Observatory
on Health Care Systems, 4(7) (2002).

22
“It doesn’t mean each country has to have its own agency,” Dr Baris notes. “Some
[assessments] could be delegated to the West, and some could be sub-regional.
But I think there has to be a way of doing this in a rational way. I think there is a bit of
leadership needed.”
Given the immaturity of HTA infrastructure in most of the Balkan countries, the
development of co-operative mechanisms for evaluating treatments and technologies
is likely to be even more important in the years to come. In addition, participation in EU-
wide initiatives will become a greater priority.

23
CHAPTER 3: DEFICIENT DECISION-
MAKING PROCESSES FOR PRICING
AND REIMBURSEMENT
The lack of an effective and consistent system for HTA and for reimbursement and
pricing in the Balkan region is making it more difficult for policymakers in the health sector
to make informed choices about where to spend money. In addition, poor procurement
processes are contributing to a lack of bargaining power in price negotiations for
innovative treatments and, ultimately, to shortages of cutting-edge drugs and medical
devices.
Although data are incomplete, available figures suggest that the impact of drug
expenditure on health budgets in the Balkans varies significantly between countries,
ranging from just 10-12% of health costs in Croatia, Macedonia and Bosnia and
Hercegovina to 40% or more of total health expenditure in Romania and Bulgaria.19
In addition, a lack of negotiating capacity means that some countries in the region are
paying over the odds for essential medicines, and in some cases even generics.
Experts interviewed for this report explain that the different external reference pricing
systems used to establish the prices of drugs make suitable comparisons difficult and
affect negotiating power. While most Balkan states use a few countries as benchmarks
for reference pricing—primarily leading EU economies in the case of Croatia and
Slovenia or neighbouring countries in the case of Bosnia and Hercegovina—others,
such as Bulgaria, Romania and Macedonia, use as many as 12. These larger lists usually
include both central and east European economies and other EU countries. Bulgaria,
where manufacturing prices in the 12 reference countries are unavailable, includes an
additional five countries.20
In Macedonia, the introduction in 2011 of reference pricing by the health ministry (in
order to determine maximum pricing) and the country’s Health Insurance Fund (for
reimbursement price comparisons) helped to reduce overall drug prices.21
Ultimately, these variations and the lack of a sound basis for making comparisons are
contributing to a lack of access to healthcare solutions in many countries and are
placing additional pressures on governments.
There are also some countries in the region that have benefitted from the growing
domestic production of pharmaceutical products. In Bulgaria, local manufacturers
have continued to invest in modernising production facilities since the country’s
accession to the EU in 2007. This has attracted some multinational companies into the
market through the acquisition of Bulgarian pharmaceutical companies or via local
distribution companies.22
19
Business Monitor International; IMS
Health; Cegedim Romania; quoted
in: “SEE pharmaceutical market
healthy in 2010”, Available at: http://
top100.seenews.com/2011/07/see-
pharmaceutical-market-healthy-
in-2010/; and Imasheva, A and A Seiter,
The Pharmaceutical Sector of the
Western Balkan Countries, February
2008, Health, Nutrition and Population
(HNP) Discussion Paper. Available at:
http://apps.who.int/medicinedocs/
documents/s17510en/s17510en.pdf
20
Savova, A and G Petrova, “Current
Practice for Medicines Reimbursement
Agreements in Bulgaria”, ISPOR
Bulgaria. Available at: http://www.
ispor.org/congresses/Dublin1113/
p r e s e n t a t i o n s / S p e a k e r % 2 0 2 _
Alexandra-Savova-1.pdf
21
Hristova, K and C Habi, “Development
of pharmaceutical prices in the
Republic of Macedonia in comparison
to selected countries outside the
national reference baskets”, Journal of
Pharmaceutical Policy and Practice,
Vol. 8, Supplement 1 (2015). Available
at: http://www.joppp.org/content/8/
S1/P12
22
Ministry of Foreign Affairs of Denmark,
Pharmaceutical and Healthcare
Sector: Bulgaria, report prepared by
the Danish Embassy in Sofia, September
2014, p. 2. Available at: http://bulgarien.
u m . d k / e n / ~ / m e d i a / B u l g a r i e n /
Documents/Pharmaceutics%20and%20
Healthcare_2014.pdf

24
Large variations in pharmaceutical spending
But the outlook is hardly identical throughout the region. In Bulgaria, cuts to
reimbursement spending have made the country’s short-term outlook comparatively
unattractive. However, the pharmaceutical market in Bulgaria continues to grow
at a faster rate than in more developed central and east European markets, and
this situation is expected to continue in the near future as Bulgarian companies such
as Sopharma benefit from growing exports to the markets of the Commonwealth of
Independent States (CIS).23
Bulgaria’s Council of Prices and Reimbursement of Medicines, which is part of the health
ministry, aims to provide a 100% cover for most innovative drugs, according to Professor
Dimova of the University of Verna. Nonetheless, the health system has experienced
problems with access and delays owing to the drawn-out public tendering process
that is used to purchase medicines. In addition, she says, the government introduced
compulsory centralised discount negotiations for drugs on the positive list in 2015, which,
it is hoped, will lead to cost savings.
In Slovenia, meanwhile, reimbursement decisions are not one-size-fits-all, according to
Jurij Fürst, head of the medicinal products department at the Health Insurance Institute
of Slovenia. Drugs coming into the country are defined by external reference pricing
and an internal system based on two interchangeable drugs, with finance provided
for the cheapest or generic drug. In other cases the price depends on the grading of
certain therapeutic cycles, with statins priced according to the percentage by which
cholesterol is reduced, while protease inhibitors are priced by dosage.
As in a number of other countries in the region, Slovenia groups pharmaceuticals into
several categories, with reimbursement of the intermediate and positive categories
ranging from 25% to 75% of the price. New medicines entering the market are
automatically placed on the intermediate list until the country’s Institute for Economic
Research (IER) has carried out a pharmacoeconomic analysis.
In Macedonia, co-payments are charged for nearly all healthcare services and drugs,
with a maximum limit of 20% of the cost, lower co-payments for very expensive services,
and exemptions for certain population groups. No co-payments are charged for certain
severe chronic diseases, such as cancer and dialysis.
Generics playing a key role
Generics account for a substantial share of overall pharmaceutical sales. According to
the latest (2013) data from the European Federation of Pharmaceutical Industries and
Associations (EFPIA), in value terms (at ex-factory prices) generics accounted for 24.1%
of total pharma sales in Slovenia, 25.9% in Romania, 38% in Bulgaria and 45% in Croatia.
23
Ibid.

25
In Romania, generics benefit from higher reimbursement rates than all but the most
essential drugs. In Croatia, generics are fully reimbursed, giving patients a financial
incentive to purchase them.
In Macedonia, generics accounted for around three-quarters of the medicines
registered in the country as of 2013. Meanwhile, of six requests to include innovative
medicines on the country’s reimbursement list between 2007 and 2012, only one was
included on the positive list, along with three more medicines with the same generic
name at a later stage. Although other medicines have been registered in the country,
they have been rejected for inclusion on the positive list owing to financial constraints
and the existence of therapeutic alternatives. Three professors from Macedonia’s Goce
Delcev University of Shtip have argued that “generic prescribing and reference pricing
have a negative impact on brand medicines and limit the choice of prescribers and
patients, but save budget resources that can be used to include innovative medicines
on the market and the reimbursement list”.24
Efforts to improve negotiating powers
As has already been suggested, the lack of a consistent system for undertaking HTA
and inefficient procurement processes mean that the Balkan countries often invest in
less cost-effective medicines and sometimes pay more for medicines and devices than
their west European counterparts, despite their much more limited spending capacity.
Some countries, such as Bulgaria, have instituted claw-back mechanisms for new
drugs in an effort to get money from innovative drugs back into the healthcare system.
However, Mr Hasardzhiev argues that such situations are unsustainable in the long term.
The war years have also contributed to the lack of well-established institutions for the
assessment and procurement of new medical technology. In Bosnia and Hercegovina,
supplies of pharmaceutical products were channelled through humanitarian
organisations during the war and post-war years of 1992-2000. The resulting fragmented
system for drug procurement has often led to higher drug prices paid in the country,
sometimes at rates more than double the international price.25
This is in large part attributable to the absence of efficient and transparent procurement
processes, which make it more difficult to achieve competitive pricing and can
exacerbate corruption as part of the process. In Serbia, for instance, procurement takes
place only once a year, which adds to delays in making medicines available.
Moreover, the majority of pharmaceutical companies in most of the former Yugoslav
states are only registered for marketing purposes and cannot participate in the bidding,
Mr Trkulja of the Serbian Association of the Manufacturers of Innovative Drugs notes.
Instead, this job goes to wholesalers and distributors who have a significant degree of
autonomy in the prices they offer. “The representative for a drug manufacturer may be
willing to decrease the price of medicines, but they can’t guarantee that the distributor
that is bidding on their behalf will follow suit,” he says.
24
Angelovska et al, The climate for
innovative medicines in the Republic of
Macedonia.
25
Cain et al, Health care systems in
transition: Bosnia and Herzegovina.

26
In Romania, where pharmaceutical budget deficits are covered each year by the
general budget, several high-priced drugs for rare conditions were in the top-ten list
of reimbursed drugs in the country in 2009.26
In 2013 international consultants from the
UK’s NICE rated 30 of the top 50 most expensive drugs as too expensive considering
the country’s economic situation. “It’s not a fully transparent process, there is quite a
bit of discussion, and the World Bank is pushing for it,” says Dr Baris. “In Serbia, we have
been instrumental in doing analysis showing that they are paying quite a high price for
pharmaceuticals.”
Improving reference pricing is a key part of this process, according to Dr Baris. The World
Bank has been trying to create a forum in the western Balkans to harmonise reference
pricing for pharmaceuticals. “Given the limited cost base, which is equal to more than
10% of government revenues, and that the countries are aspiring to have a system close
to western standards, there is a big agenda there.”
A small handful of countries have begun to follow in the footsteps of their west
European neighbours in experimenting with managed entry agreements (MEAs)
for pharmaceuticals. These are risk-sharing agreements between payers and drug
manufacturers that are traditionally used to identify issues that are material to a
reimbursement decision. The agreements are designed to address uncertainty about
the performance of new technologies, manage their adoption to maximise effective
use, or limit their budget impact through the sharing of risk between producers and
purchasers.
In Romania, a price-volume agreement introduced in 2009 gives the government back
5-11% of pharmaceutical sales; the government introduced a similar mechanism for a
new hepatitis C treatment in 2015, according to Dr Achimas-Cadariu.
However, with no consistent system for determining coverage in place and no
mechanism for involving all stakeholders—including clinicians and patients—in the
consultation process, it remains unclear how easy it will be for governments to make
effective use of MEAs. Without such involvement and transparency, Mr Hasardzhiev
argues that it can be difficult for negotiators to be sure they are getting a good deal.
In Bulgaria, he notes, the government reached an MEA for one costly and high-profile
medicine, believing it had negotiated a strong price, but it soon discovered that it
was paying twice the price achieved in two substantially wealthier countries, Italy and
Portugal.
In Slovenia, the health system has negotiated some volume-based agreements as well
as some related to results and has generally preferred the former, Mr Fürst says. “We
don’t like [pay-by-results] because they take a lot of energy and they are complicated
for clinicians to follow.”
In Croatia, financial risk-sharing agreements are becoming more widely used, especially
for expensive drugs. A typical example of such an arrangement is a pay-back
26
Imasheva and Seiter, The
Pharmaceutical Sector of the Western
Balkan Countries.

27
agreement between the marketing authorisation holder and the CHIF, in which the
fund finances the treatment of a defined number of people based on budget-impact
analysis and the manufacturer supplies the treatment to additional patients at its own
cost. Such agreements were first introduced in 2009 to allow access to new medicines
while at the same time controlling expenditure. Meanwhile, the costliest medicines are
financed from dedicated CHIF funds separate from hospital budgets. Financial limits
were set in 2010 for each of these funds for each therapeutic indication.
Croatia’s pharmaceutical pricing and reimbursement reforms, which were implemented
between 2009 and 2010, resulted in an increase in the number of new medicines during
that period; 47 innovative pharmaceuticals were added to different reimbursement
lists, and 13 innovative pharmaceuticals were added to the list of expensive hospital
medicines during the period in question, compared with just 25 new products added
between 2002 and 2009. The reforms also contributed to improved decision-making and
transparency.
The country has become more aggressive in its negotiation with producers, Dr Varga
notes. Visits to procurement agencies in other European countries have helped Croatian
policymakers to learn how their governments achieve lower prices for essential drugs.
“No one specifically breached confidentiality, but we are talking about principle and
processes about how prices were reached.”
Other broader, macro efforts to reform the system could also help to keep government
spending under control while at the same time expanding access, according to Dr
Bartlett. He notes that a few steps could go some way towards making systems more
sustainable, namely financing public healthcare from taxation rather than SHI (and
abolishing the deduction of contributions to the national health insurance system from
wages) as well as developing a private insurance sector.
Mr Hasardzhiev believes that the solution will ultimately require an EU-wide restructuring
of the pricing process. One possibility is differential pricing, which would involve lower
prices across the board for poorer member countries, although there would need to be
a “fundamental change” in EU legislation guaranteeing the free movement of goods to
ensure that lower-priced drugs are not simply sold at higher prices in wealthier member
states.
A more transparent approach, he says, would be value-based pricing, which takes into
account the differential value of medicines in different member countries. “I think we
are coming to a point where we should reconsider the existing price system in Europe,
because it isn’t fair for some of the member states and prevents timely access for some
of the patients to innovative medicines,” he adds.

28
CONCLUSION
The Balkan region continues with the gradual modernisation of its healthcare systems,
but progress remains uneven. EU member states, especially those from the former
Yugoslavia, have seen the most tangible success so far.
Nevertheless, all the countries in the region continue to face a number of similar
obstacles, including excessively decentralised health systems; a lack of universal health
insurance; over-investment in the hospital sector at the expense of primary care; high
levels of out-of-pocket payments, partly a result of corruption; austerity measures
affecting healthcare budgets; fragmented systems for drug procurement; and
difficulties in assessing the cost-effectiveness of innovative healthcare technologies.
Pockets of progress have become visible, for example in Croatia and Slovenia, where
performance-related payments have been introduced in primary care. These two
countries have also started to develop systems for evaluating healthcare technology
and care pathways, and several countries in the region are experimenting with
managed entry agreements for pharmaceuticals and financial risk-sharing agreements
to facilitate access to healthcare solutions.
Several countries in the region are working with international organisations and initiatives
to support the process of modernisation. Notable examples include the WHO-supported
South-eastern Europe Health Network; World Bank projects (for example in Montenegro
and Kosovo); working with the European Medicines Agency; co-operation with
European HTA agencies to boost the development of drug appraisal systems; using HTA
reports from other European countries as part of an interim process for making decisions;
and joining the European Network for Health Technology Assessment.
Better collaboration across the region and the use of best practices developed
elsewhere will help to make regional healthcare systems fit for purpose. Experts
interviewed for this paper propose additional steps towards modernisation, such as
improving reference pricing; financing public healthcare from taxation rather than SHI;
and developing a private insurance sector.

While every effort has been taken to
verify the accuracy of this information,
The Economist Intelligence Unit Ltd.
cannot accept any responsibility or
liability for reliance by any person on this
report or any of the information, opinions
or conclusions set out in this report.

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