Israel's Drug Firms' Worries About NHIL

Industry's perception is that upcoming implementation of Israel's National Health Insurance Law, due to be implemented January 1 (see also Marketletter November 7), will increase competitiveness in the pharmaceutical market for a number of reasons.

According to the regulations being formulated with relation to the basket of drugs of the various sick funds, the latter will be required to include at least two drugs per therapeutic class. Although the regulations are not intended to restrict the number of drugs in each group, there is the suspicion that sick funds will exploit the wording of the regulations, in order to reduce the number of drugs in their formularies. If this were to be the case, companies could find that some of their drugs will be taken out of the sick fund formularies with significant implications for their sales.

Furthermore, the increasingly difficult financial environment anticipated by the smaller sick funds, with the implementation of the NHIL, will result in greater efforts to reduce the price of drugs being supplied to them. These pressures are in addition to the public criticism regarding the difference in prices between the private pharmacy market, through which the small sick funds mainly operate, and the institutional (General Sick Fund and Ministry of Health) market.