Hungary looks to Parliamentary support in drug row

Government spokesman Zoltan J. Gal said the session would be held on June 7.

"Preventing a spiralling of drug prices remains the government's goal," he told a news conference after the weekly cabinet meeting, adding that negotiations with drug producers about prices would continue.

Last week the Constitutional Court threw out a state-imposed 15 percent price cut on subsidised drugs, ordering its withdrawal from June 30, and also limited the cabinet's future powers in controlling the price of medicines.

The measure was launched early this year to prevent a 40 billion forint ($195 million) overshoot in this year's drug subsidy budget. Drug firms already had to swallow an estimated loss of 7-10 billion forints in the second quarter.

Analysts estimate failure to win cuts in the subsidy could add 0.2 percentage points to Hungary's 2004 deficit, which the government forecasts at 4.6 percent.

Gal said the government wanted a solution which would satisfy the Court's demand but would still give the government the right to intervene. He did not disclose further details.

Health Minister Mihaly Kokeny has told Reuters the cabinet aimed to sign a letter of intent with the drug companies.

Drug industrial sources confirmed earlier on Wednesday that talks were under way with the government.

They said it was unclear what solution the state wanted but viewed it as likely it would want to try to reimpose some price controls.

"Some negotiations (with the government) are under way, but for the time being we don't feel that it would end up in a compromise," one drug industry source said. "We are completely uncertain as to what the outcome will be."

The government's room for manoeuvre is limited after the court ruling as it wants to avoid a rise in the cost of drugs to the Hungarian people while at the same time keeping the drug subsidy budget and the overall public sector deficit under control.

The sources said the state could either hike subsidies to prevent a rise in retail prices or try to keep drug factory prices low.

"The compromise could be that producers take some part of it," one source said.



Source: Reuters