Israeli Drug Spending Warning

Dan Michaeli, chairman of the management committee of Israel's General Sick Fund, has forecast that pharmaceutical expenditure by the sick funds alone will grow by around NIS350-NIS400 million ($11.4-$128.4 million) over the next five years.

The Marketletter's correspondent in Jerusalem points out that this would mean growth of only around 5% per annum, in real terms, over the next five years, which is about half the annual average real growth in spending on drugs in the last 20 years. Nevertheless, Prof Michaeli says that "drugs represent a large component of total expenditure, and are becoming more expensive at a fast rate."

In order to remedy the situation, he recommends that drug prices need to be examined, that the terms of purchasing should be changed, that the registration procedures for generic drugs need to be simplified in order to reduce the use of patented drugs, and that inventories should be reduced.