Tax Amnesty for Pharmacies. No Amounts to be Recovered for Discounted Drugs Schemes

On 16.11.2022, the President of Romania signed the Decree for the promulgation of the Law on the approval of Government Ordinance no. 14/2022 for the modification and completion of Law no. 95/2006 on health care reform.

The law contains a single article according to which Government Ordinance no. 14 of 13 July 2022 for the modification and completion of Law no. 95/2006 on health care reform, adopted pursuant to Art. 1, para. IV. 2 of Law No. 186/2022 on the Government’s power to issue ordinances, and published in the Official Gazette of Romania, Part I, No. 711 of 15 July 2022, as amended, with a number of amendments and additions.

Our attention is now drawn to the amendments found in point 5 of the regulatory act exempting pharmacies from the payment of the sums of money to be determined by the Health Insurance Bodies in the control procedures carried out from the beginning of July 2022 until the end of October 2022.

Government Ordinance No 14/2022 for amending and supplementing Law No 95/2006 on health care reform, introduces in point 5, two new articles with the following content:

Art. III:

– para. (1): The exemption from payment of the amounts, which would have resulted if the maximum prices of medicines updated by the Ministry of Health as of 1 July 2015, had been applicable also in the first semester of 2015, established as a result of the recalculation by the National Health Insurance House of the consumption values of medicines reported, validated and registered in the Health Insurance Information Platform for each month from 1 January to 30 June 2015, is approved, on the basis of the reference prices of medicines with and without personal contribution for insured persons in outpatient treatment on the basis of a medical prescription, respectively of the settlement prices of medicines granted to patients under the national health programs, valid in July 2015, as well as the related accessories, as a consequence of the finding by the Court of Auditors of Romania of savings thus estimated to the budget of the  National Health Insurance Fund and classified as a loss.

– para. (2): The exemption from payment of the amounts paid from the budget of the National Health Insurance Fund for medicines dispensed since January 2015, representing the difference between the reference price valid at the date of dispensation of the medicines and the recalculated retail price, which would have resulted from the application by pharmacies of the commercial mark-up rates provided for by the Order of the Minister of Health no. 75/2009 for the approval of the Rules on the calculation of prices of medicinal products for human use, as subsequently amended and supplemented, to the purchase price or to a purchase price that is reduced by trade discounts, in accordance with the provisions of the Order of the Minister of Public Finance No 1802/2014 for the approval of the Accounting Regulations on the individual annual financial statements and consolidated annual financial statements, as subsequently amended and supplemented, as well as the related accessories, as a consequence of the finding by the Court of Accounts of Romania of such estimated savings to the budget of the National Health Insurance Fund and classified as harm.

– para. (3): the provisions of para. (1) and (2) shall apply to providers with whom the Health Insurance Bodies have concluded contracts for the supply of medicines with and without personal contribution in outpatient treatment, as well as contracts for the supply of medicines and specific health materials granted for outpatient treatment of patients included in some national curative health programs, within the health insurance system, in the period 2015 – 2016″.

Art. IV:

– para. (1): It is approved the exemption from payment of the amounts paid from the budget of the  National Health Insurance Fund for medicines issued from January 2015, representing the difference between the reference price valid at the date of issue of the medicines and the recalculated retail price, which would have resulted from the application by pharmacies of the commercial mark-up rates provided for by the Order of the Minister of Health no. 368/2017 for the approval of the Rules on the calculation and approval procedure of the maximum prices of medicinal products for human use, as amended and supplemented, to the purchase price or to a purchase price that is reduced by the trade discounts, according to the provisions of the Order of the Minister of Public Finance no. 1802/2014 for the approval of the Accounting Regulations on the individual annual financial statements and consolidated annual financial statements, as amended and supplemented, as well as the related accessories, as a consequence of the finding by the county and municipal health insurance funds of losses, as determined by the Court of Accounts of Romania, according to the provisions of Article III para. (1) and (2).

– para. (2): The provisions of para. (1) shall apply to suppliers with whom the county and Bucharest municipal Health Insurance Bodies have concluded contracts for the supply of medicines, with and without personal contribution, in outpatient treatment, as well as contracts for the supply of medicines and specific sanitary materials granted for outpatient treatment of patients included in some national curative health programs, within the health insurance system, in the period 2017 – 2022.

We remind that in July 2022 the Health Insurance Bodies in all counties started operational controls at all pharmacies in the country. The topic of these controls was to verify the compliance of the supplier with the provisions regulating the way of setting the sales prices of medicines that were reported and settled by the Health Insurance Bodies in the period 1.01.2015-15.07.2022.

In this context, the Health Insurance Bodies requested the pharmacies to provide the authorities with the contracts for the supply of medicines with and without personal contribution in outpatient treatment concluded with the Health Insurance Bodies, the invoices of medicines receipts and the receipt notes for medicines with and without personal contribution in outpatient treatment and medicines dispensed under the national curative health programs/sub-programs and the file in electronic format – XLS file type, as well as other supporting elements that the supplier would consider relevant for the fulfilment of the control objectives.

The control activities were initiated following the final settlement of the dispute concerning the annulment of the decision of the Court of Accounts of Romania no. 8/2016, which required through the County Health Insurance Funds that the providers establish the amount of the damage, representing expenses for goods and services unlawfully settled by the county Health Insurance Funds, as a result of the validation of prices for medicines higher than those resulting from the application of the trade discounts and the surcharge provided for by the Order of the Minister of Health no. 75/2009. At the same time, the decision required the health insurance companies to recover these harms.

In other words, by decision no. 8/2016, the Court of Accounts of Romania has established the responsibility of the Health Insurance Funds to take all necessary steps to establish and recover the harms incurred as a result of the unlawful settlement of medicines issued free of charge and compensated.

The National Health Insurance Body challenged the decision of the Court of Accounts of Romania, filing an application for annulment of that decision with the Bucharest Court of Appeal. By civil judgment no. 2174/8.07.2017, the Bucharest Court of Appeal, Administrative and Fiscal Contentious Section VIII dismissed the action brought by The National House of Health & Insurance. The judgment was appealed, and in May 2022, the High Court of Cassation and Justice issued civil decision no. 2858/19.05. 2022 in which it ordered the dismissal of the appeals filed by the appellant-claimant The National Health Insurance Body and by the appellant-intervenors Association of Pharmaceutical Distributors and Retailers of Romania and Federation of Pharmaceutical Employers of Romania against Civil Judgment no. 2174/8.07.2017, delivered by the Bucharest Court of Appeal, Administrative and Fiscal Litigation Section VIII, as unfounded.

Following the judgment of the High Court of Cassation and Justice, all county Health Insurance Bodies were obliged to implement the decision of the Court of Accounts of Romania, in order to establish and recover damages from pharmacies that benefited from commercial discounts from distributors, but which were not reflected in the prices settled for medicines dispensed.

Government Ordinance No 14/2022 for the modification and completion of Law No 95/2006 on health care reform seems to be the saving ordinance that will solve the dispute created by the insufficient regulation in the health care sector regarding the way of setting the sales prices of medicines that have been reported and settled by the Health Insurance Bodies at national level.

Of course, if this law had not been issued, there would have been serious discussions on the competence of the health insurance companies to carry out controls on the subject matter established by the control action initiated (including, in particular, Order No. 554/2022 of the National Health Insurance Body amending and supplementing the Methodological Norms on the activity of control structures within the social health insurance system, approved by Order of the President of the National Health Insurance Body No. 1.012/2013, which came into effect on 26.08.2022 and which amends the National Health Insurance Body’s Order regulating the control activity exercised by the Health Insurance Bodies) and on the prescription of the right of the county Health Insurance Bodies to check a good part of the period covered by the control (1.01.2015 – 14.07.2019).