The Pact for Health, signed between the State and Regions, is the key document for health planning and management in Italy. The current two-year Pact for Health 2014-2016 establishes several priorities, including: updated basic health benefits (BHB); revision of the NHS Range of Fees; reorganisation and rationalisation of the hospital network; rationalisation of purchases; creation of a Health Technology Assessment model for drugs and medical devices

1. THE ITALIAN HEALTHCARE
SYSTEM.
TIME FOR A CHECK-UP.
April 2016

2. The Pact for Health, signed between the State and Regions, is the key
document for health planning and management in Italy.
The current two-year Pact for Health 2014-2016 establishes several
priorities, including:
updated basic level of assistance (BHB), i.e., the treatments the
National Health Service has to provide to all citizens, either free of
charge or co-payment;
revisionoftheNHSRangeofFees(forservicesandmedicaldevices)
and the National Drug Code;
reorganisation and rationalisation of the hospital network by
establishing harmonised standards throughout Italy;
rationalisation of purchases;
creation of a Health Technology Assessment model for drugs and
medical devices.
Citizens’ health: let’s make a Pact…

3. The Pact was signed in July 2014 as part of a financial framework in
which the State was to guarantee increased per annum financing of
the National Health Service (NHS).
2014 ⇢ 110 billion
2015 ⇢ 112 billion
2016 ⇢ 115.4 billion
Since public finances had to be rebalanced (does the phrase “because
Europe requires it” ring a bell?), the Government has repeatedly
recalculated the amount assigned to the National Health Fund.
so long as the funds are available

4. It goes without saying that recalculated means “reduced”!
Compared to the initial Pact, State financing is now as follows:
2015 ⇢ 110 billion
2016 ⇢ 111 billion
The cuts by the Government have so far stopped the basic levels
of assistance (BLA) and NHS Range of Fees from being updated.
To try and remedy the situation the Stability Law 2016 includes a
guaranteed appropriation of 800 million from the Fund to update the
BLA.
AND no reductions

5. Health and Reforms: an overview
Although the financial situation in Italy
is rather complex, in the past twenty-
four months the State and Regions
have worked on a series of interven-
tions involving the drafting and imple-
mentation of norms (e.g., the hospital
care standards agreement), and the
management of certain emergencies
(e.g., renegotiation of supply contracts
or the creation of the fund for innova-
tive drugs for the years 2015-2016).
Which major measures have
been adopted?
Let’s divide the measures
into three big thematic groups
and analyse them:
expenditure management
for drugs and medical de-
vices;
centralisationofpurchases;
appropriateness of the ser-
vices.

6. The Stability Law 2015 introduced, for the years 2015 and 2016, a
fund for joint reimbursement (State + Regions) of the expenditure
for the purchase of the extremely expensive innovative drugs (in
particular drugs to treat Hepatitis C): 500 million per annum.
What will happen in 2017? We can only wait and hope for the best!
The 2015 “Local Authorities” Decree rationalised last year’s health
spending. The Italian Medicines Agency (AIFA) has been tasked with
renegotiating, with the companies involved, the reimbursement
of the drugs paid for by the NHS:
by regrouping therapeutically similar drugs with the same
reimbursement and supply regime;
by launching a new negotiation procedure regarding the price
of biotechnological drugs after expiry of the patent of the active
substance.
Reforms: expenditure management for drugs

7. Reforms: expenditure
management for medical devices
Apart from reducing short-term expenditure, an attempt was made
to create a single management system governing the utilisation of
medical devices; this was achieved by establishing a body tasked with
ensuring national oversight. Let’s see how!
Rules were introduced regarding an increase in the spending cap
to be paid by manufacturers (40% in 2015, 45% in 2016, 50% in 2017)
basedonthelong-standingmodelusedforpharmaceuticalexpenditure.
Themeasureprovidesonesureadvantage:itestablishesanautomatic,
reliable mechanism. Nevertheless, the logic of silo-budgeting
remains in place, an approach increasingly unsuited to enhancing
technological innovation in the health sector.
The Steering Committee for Health Technology Assessment
established at the Ministry of Health – envisaged by the Pact for Health
2014-2016 – is a step forward towards the establishment of a single
management system governing the utilisation of medical devices and
capable of taking into account the importance of innovation.

8. For the first time a recent
Prime Minister’s Decree
establishes commodity cat-
egories and thresholds;
when exceeded, the NHS
agencies can only use Con-
sip S.p.A. or the regional
purchasing bodies included
in the list of aggregators
(normally one per Region).
Reforms: centralisation of purchases
One of the main targets of the spend-
ing review coordinated by the Prime
Minister’s Office is the rationalisa-
tion of the public procedures used
to purchase goods and services.
The health sector is perhaps the most
affected since it involves drugs, vac-
cines, medical devices and servic-
es unrelated to health.

9. Reforms: commodity categories
The list of commodity catego-
ries includes, amongst others,
drugs (€40,000 threshold),
vaccines (€40,000 thresh-
old), stents (EU threshold),
hip prosthesis (EU thresh-
old), defibrillators (EU thresh-
old), pacemakers (EU thresh-
old), needles and syringes
(€40,000 threshold).
Establishing the commodity catego-
ries and relative thresholds speeds
up centralised purchasing in the
health sector, at least regionally.
Another step towards the goal –
so often discussed in the past – of
standards costs.

10. Implementation of the prin-
ciples in the Pact focus pri-
marily on:
rationalisation of the ho-
spital network;
appropriatenessofspecia-
list outpatient treatments;
measures to curb defensi-
ve medicine.
The Pact for Health acknowledges that
boosting appropriateness is one of
the best tools to improve the quality
of healthcare and generate structural
savings.
Targeted expenditure means better
expenditure,butalsolessexpenditure!
Reforms: boosting appropriateness

11. The Ministry of Health has established the qualitative, structural,
technological and quantitative standards regarding hospital care,
thereby prompting the reorganisation of the network based on the
same uniform standards throughout Italy. This principle was inspired
by the criteria of integration between the hospital and territorial
services. In the Decree, the Minister has established in particular:
obligatory hospital planning criteria for the Regions in terms of
the hospital bed complement paid for by the NHS (3.7 each 1.000
inhabitants);
criteria regarding the classification of hospitals based on th-
ree increasingly complex levels (basic, Level I, Level II);
parameters to assess the ratio between annual number of tre-
atments, outcome of the cure and number of facilities.
The Decree also establishes several planning suggestions for the
Regions regarding the reorganisation of the hospital network and the
creation of therapeutic healthcare procedures.
Rationalisation of the hospital network

12. Appropriateness of
specialist outpatient treatments
A Decree issued by the Ministry of Health regarding more than 200
specialist outpatient treatments establishes not only the conditions
under which the treatments can be provided:
the conditions under which the NHS pays for the treatment;
indications regarding prescriptive appropriateness, i.e.,
the elements establishing the extreme inappropriateness of a
treatment.

13. Measures to curb defensive medicine
Measures adopted to prevent litigations with patients are a classic
source of inappropriateness: i.e. prescribing exams or treatments
that are often not required, just to be on the safe side. The draft law
on the professional responsibility of healthcare staff is currently
being debated by the Parliament. It was drafted to tackle defensive
medicine by regulating the civil and criminal responsibility of any
individuals working in the healthcare sector:
by limiting criminal responsibility to cases of serious negligence or
deliberatetransgressionofduty;thesecasesareunfoundedifhealthcare
staff have followed the guidelines issued by the Minister of Health;
as regards civil responsibility, by distinguishing between contractual
responsibility and extra-contractual responsibility, which refers to the
exerciseofthehealthcareprofession(burdenofprooflieswiththepatient);
by establishing that healthcare facilities can initiate proceedings
against the employee only in the case of serious negligence or
deliberate transgression of duty.

14. A premise is inevitable before assessing what has been done and
what still remains to be achieved: the ongoing, unpredictable
financial period has influenced, and still influences, everything the
government does. That said, let’s try and analyse the main issues and
the problems that still need to be solved.
Extremely expensive innovative treatments. To maintain a
sustainable system, entry into the market of extremely expensive
innovative treatments cannot be accompanied by a proportional
increase in the resources invested in the healthcare system: it’s
important to reconcile access to innovation and the universalistic
basis of Italy’s healthcare system.
The silo-budgeting management model (regarding drugs, for
example). The model may encourage Regions to delay rather than
promote access to innovative treatments. The model also hinders
enhancement of the link between early access to an innovative
treatment and the costs thereby avoided by the healthcare system.
Problems to be solved during
an unpredictable financial period…

15. The unitary control over the utilisation of
resources and structural interventions
The unitary control over the utilisation of resources. The
challenge in the near future is to organise unitary control over the
utilisation of resources in the healthcare sector, a control no longer
based on separate watertight compartments, but on integration
between inputs (drugs, medical devices, etc.), levels of care and
professional skills and expertise.
Structural interventions So far there have been no structural
interventions regarding innovation and savings in the sector of
pharmaceutical expenditure. In fact, up to now the ceiling of
pharmaceutical expenditure for hospitals is repeatedly exceeded
and the payback by industry has now become an integral part of
the programme rather than an extraordinary measure. This points
to an obvious distortion of the system.

16. Innovative drugs, old drugs
with an expired patent
Innovative drugs. The Working groups of inter-institutional
comparison contain interesting data about innovative drugs. The
Working groups were established in 2015 to review the overall
expenditure governance reform and discuss what direction the
reformshouldtake.Reformingthewayinwhichpricesofinnovative
drugs are established will have to be based on the criteria of
avoided costs in order to overcome the silo-budgeting logic
once and for all.
Olddrugswithanexpiredpatent.Largesavingscanbepotentially
obtained: the price of generic drugs subsidised by the NHS is
higher in Italy compared to major EU countries; furthermore, Italy
has not taken advantage of the opportunity provided by expired
patents of active biological principles or entry into the market of
biosimilar drugs. As a result, it is important to intervene on:
› the rationalisation of the distribution of pharmaceuticals;
› thepurchaseprocedureofbiologicaldrugswithanexpiredpatent.

17. Finally, let’s look to the future. The Renzi-Boschi constitutional
reform, recently approved by Parliament, envisages a radical
institutionalreform.In the constitutional revision Healthcare is affected
primarily by Art. 117 of the Constitution regarding assignment of
legislative competence between the State and Regions. Since the
Reform has been approved, the following changes will ensue:
goodbye to competitive legislative competence. State and
Regions will only have exclusive competences. The State will be
competent to not only determine the basic levels of treatments, but
also the general and common provisions regarding public health
protection, social policies and food safety;
Regions will be competent exclusively as regards the planning and
organisation of healthcare services and social services;
a“supremacyclause”hasbeenenvisagedallowingtheStatetotake
over responsibility for issues for which the Regions are competent
when it is necessary to protect the Republic or national interests.
The Healthcare system
in the new constitution

18. Changes on the horizon?
Let’s quickly go over the future Healthcare System, according to the
Reform.
The new Art. 117 effectively reiterates the concept of a legislative
competence at two levels of Government, despite the idea that
competitive competences is a thing of the past.
How this pans out will depend on how the Government and Regions,
each within their own field of responsibility, interpret the concept
of “general and shared provisions for the protection of health” and
“planning and organisation of health and social services”.

19. In short, there’s a very real possibility
of continuous appeals to the Con-
stitutional Court (obligatory after the
reform of Title V dated 2001)!
The Renzi-Boschi Law does not envis-
age the possibility for Regions to legis-
late while waiting for a State law, and
this could lead to a legal vacuum.
Adelante con juicio
No provision – however nec-
essary - is envisaged to re-
vise the so-called Confer-
ence System (between the
State, Regions and Local
Authorities) which has so far
played an important role as a
link between the State and
Regions as regards health
issues.

20. Telos Analisi & Strategie
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