Italy Healthcare Industry Regulatory and Reimbursement Landscape

Date: 23-May-2013
The Italian Pharmaceutical Market has Declined in Value Terms Due to the Introduction of Price Cuts and Increasing Focus on the Usage of Generic Drugs in Order to Rein in Ballooning Healthcare Expenditure


The pharmaceutical market (at the consumer price level, including Value Added Tax (VAT) and excluding hospital sales) in Italy was estimated at approximately $29 billion in 2007 and is projected to decline to approximately $23.5 billion in 2020, at a negative Compound Annual Growth Rate (CAGR) of 1.6%. The market is declining due to the fact that the government has adopted a policy of drug price cuts and promotes the use of generics. In addition, the strict pricing of drugs through negotiations and through external reference pricing and internal reference pricing is a major challenge for the launch of innovative molecules. Italy’s healthcare system is one of the most promising healthcare markets among the European Union member states due to its robust healthcare system, universal coverage by the National Health Service (Servizio Sanitario Nazionale, SSN) and the increasing prevalence of chronic diseases such as diabetes and cardiovascular diseases due to its increasing elderly population. Additionally, the Italian government provides tax credits to companies that invest in pharmaceutical Research and Development (R&D).


The size of the medical device market was approximately $9.8 billion in 2007. The market is projected to reach approximately $16.9 billion by 2020, at a CAGR of 4.3%. In 2012, the in vitro diagnostics and cardiovascular devices segments were the largest contributors to the market, with a share of 14.5% each. Other segments with significant shares in the medical devices market in 2012 were orthopedic devices (8.6%), nephrology and urology devices (7.8%) and hospital supplies (7.7%). A growing elderly population, an increase in healthcare facilities, reforms in the healthcare financing system, an increasing emphasis on the quality and accessibility of medical care and advances in medical technology are the major factors driving the growth of the medical devices industry in Italy.


The Regulatory Authority of Italy Provides a Transparent, Strong and Efficient Regulatory System to Facilitate the Approval of Pharmaceutical Products and Medical Devices; Strong Regulatory Systems Attract the Foreign Pharmaceutical and Medical Device Companies and Positively Influence the Growth Prospects of the Italian Healthcare Market


In Italy, the Italian Medicine Agency (Agenzia Italiana Del Farmaco, AIFA) is the main regulatory authority for pharmaceutical products, working under the guidance of the Ministry of Health (MoH). The AIFA authorizes medicines under the national procedure or under the community procedure through the European Medicines Agency (EMA). The marketing authorization of new drugs and medical devices requires the execution of Good Laboratory Practices (GLP) and satisfactory compliance reviews by the AIFA and MoH.


Licenses for the manufacturing and selling of drugs, cosmetics or medical devices are obtained from AIFA and involve the submission of an application and inspections of the relevant documents and buildings for the fulfillment of the required conditions for the license to be granted. The manufacturing authorization is subject to the opinion of the relevant professional board of experts, such as the Scientific Technical Committee (Commissione Tecnico Scientifica, CTS) and National Institute of Health (Instituto Superiore di Sanità, ISS).


An import and export business license is obtained by business operators for the import/export of pharmaceuticals from the MoH after the submission of an import/export declaration certificate which complies with the established standards of manufacturing and quality control.
Approval for conducting clinical trials is obtained from the Department of Evaluation of Medicine and Pharmacovigilance of the MoH, and involves the submission of non-clinical data by the sponsors, details of the clinical trials facility and the submission of the study protocol. The MoH authorizes the clinical trials on the opinion of the clinical trial expert committee and grants final approval to the applicant.


Universal Healthcare Coverage and Easy Access to Healthcare Facilities and Reimbursement are the Most Distinguishing Features of the Italian Healthcare System


Italy’s MoH offers universal access to the reimbursement process, covering the entire population of Italy. The public health care insurance system is region-based and regulated by the SSN. The MoH regulates the SSN at the national level. The SSN is responsible for providing universal coverage to the Italian population, free of charge at the time of treatment.


Private health insurance is a small player in the Italian healthcare market, as registering with the SSN is mandatory and private insurance can only be taken over and above the SSN coverage. Persons who take private health insurance over the SSN do so to cover for conditions that the SSN does not cover for such as dental care, outpatient consultation, alternative medicines, and treatment received outside of Italy, and injury due to illegal acts. Private insurers mainly cover foreign tourists and Italian residents who frequently tour out of Italy. Private insurance provides coverage for out-of-pocket expenditure and diseases not covered by public insurance


Moh Initiatives Contribute to the Success of the Italian Healthcare System


Italy’s MoH has focused on reducing the country’s disease burden, especially that of the elderly population, in order to improve the global competitiveness of the country. The MoH revises the National Prevention Plan (Piano Nazionale della Prevenzione, PNP) once every two years. The plan is aimed at the prevention and early detection of various disease conditions such as cardiovascular diseases, cancer, complications of diabetes and obesity and accidents, among others. Efforts are ongoing to do more so that significant gains in quality of life, workforce productivity and cost-efficiency can be achieved. Through the implementation of new national policies and healthcare programs, which are focused on the prevention and early detection of diseases, the MoH is trying to facilitate the early detection and treatment of diseases. This is expected to lead to improvements in health outcomes and the quality of life of patients.


In 2011, the Italian Health Minister, Ferruccio Fazio, announced the National Oncology Plan and Rehabilitation Policy Plan 2011–2013 to improve healthcare facilities for oncology patients.


Political Instability Continues to Act as a Major Roadblock for the Economic Growth of Italy


The Italian government was dissolved twice in a span of one year, starting from November 2011 to December 2012. In 2013, the elections held on February 24 and 25, did not gave a clear majority to either of the main parties or coalitions. Following the presidential elections held during in April 2013, a grand coalition was formed by the center-left Democratic Party, center-right People of Freedom Party and Civic Choice party and on April 28, 2013 Enrico Letta of the Center-left Democratic Party was sworn as the Prime Minister of Italy. The stability of this coalition is doubtful as the support of the coalition parties may be withdrawn at any moment. This political instability is affecting the growth of the country, as the key plans for economic consolidation are altered according to the philosophies of the new government.
Italy was the 10th largest economy in the world in terms of Purchasing Power Parity (PPP) GDP in 2010. However, the Italian economy is currently facing problems including inflation, high public debts, weak domestic demand, increasing imports and a weakening of the Euro. Moody's Investors Service lowered the Italian bond rating from A3 to Baa2 in 2012, due to the fact that the country’s public debt and unemployment rate is increasing, the non-domestic investor base is eroding and the market confidence is weak. The rating agency, Standard & Poor's, also lowered its unsolicited long-term sovereign credit ratings of Italy from A to BBB+ with a negative outlook and lowered the unsolicited short-term sovereign credit rating to A-2 from A-1.


Political instability remains a perennial problem in the country. Over the past few years, the Italian government has been constituted mainly by coalitions of small, medium and large political parties, which has lead to governmental instability.
The Italian government, burdened by the high debt-to-GDP ratio, is considering a number of measures to stimulate the economy. Prime Minister Mario Monti tried to reduce the public debt by introducing pension reforms, a property tax, increasing value added tax and a cut in public spending.


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