Election Landslide: What Now for Spanish Healthcare?

The fact that the eurozone is in a tailspin is hardly ‘news’, but when heads start rolling as fast as they have done recently in Greece, Italy, and now Spain, it leaves the unsettling feeling that the heat on an already intense situation has been turned up one more notch.

Greek Prime Minister George Papandreou fell on his sword on November 9 after startling the EU by announcing he was pushing for a referendum on whether to accept its latest €100-bn installment of bailout cash. Three days later, Italy’s ‘colorful’ Prime Minister Silvio Berlusconi was effectively removed from office, despite suggesting that he would stay until reforms to calm the Italian economic turmoil were adopted. (Italian government debt stands at nearly 120% of its GDP).

Now, as widely predicted, Spain’s socialist government has fallen, making way for the conservative Popular Party, whose election win is the biggest for the Spanish Right since the end of Franco’ s dictatorship in 1975. The Party’s leader, Mariano Rajoy, will be taking on the Herculean task of, among other things, addressing the rate of unemployment in Spain, which currently stands at a staggering 21.5 per cent.

As for the Spanish healthcare market, the country is saddled with €5.4 billion ($7.1 billion) of unpaid drug bills, equivalent to about 0.5 percent of its entire GDP. Currently, Spain’s regional governments are paying bills an average of 430 days late.

There have been hints that Big Pharma companies such as Roche might do in Spain what they have done in Greece and cut off supplies to hospitals that have failed to pay their drugs bills. The industry has certainly started to show signs of increasing discomfort as far as the most beleaguered European countries are concerned. Sanofi Aventis’s Head of Global Operations, Hanspeter Speck, recently said “I don’t expect anything good in Europe,” while Richard Bergstrom, Director General of the European Federation of Pharmaceutical Industries and Associations, revealed that what worries him most are the debts of “close to €10 billion ($13.8 billion)” just from Portugal, Spain, Italy and Greece.

So will the new government bring hope for the Spanish health system (and, by extension, its global suppliers)? The Popular Party has stated that private sector involvement in the management of the health system, via public-private partnerships (PPPs), will rise sharply under their watch. The British Medical Journal (11 November 2011) reported that a conservative victory will see spending on healthcare PPPs in the community of Madrid increase by a third, from €371m ($505m) this year to €496m in 2012. More hospitals to be run as public finance initiatives are also expected to open in the same time frame.

Needless to say, moves towards partial privatization have long been controversial in a country with strong socialist ties — PPPs were only passed into law in Spain in 1997. The Federation of Associations for the Defence of Public Health (FADSP) is one body that is vehemently opposed to PPPs — it has argued that the building of hospitals under private finance can increase costs by up to seven times.

Whether this unprecedented injection of private money will boost or further derail the Spanish public health system remains to be seen. Either way, pharma will be watching closely as it waits for its bills to be settled.