It increases the risk of shortages of medicines.

-FEFE has been insisting on the need to address defaults with State and claims the guarantees from the Government so that there is a failure in providing pharmaceutical.

-spending decreases a 3.13 per cent while the number of recipes grows at 2.18%

Madrid, December 2011.- more than 70 percent of pharmacies will be affected by the problem of defaults at year end and if the State does not endorse debt shortages widespread with the consequent risk of bankruptcy of the national health system may occur. As noted in the Observatory of the medicine of the Federation Business Spanish pharmaceutical (FEFE) referred to the month of October.

The Observatory dedicated its first section to analyze spending. This increases slightly in Madrid (2.86%), Murcia (1.87%) and Navarra (2.10%), while the biggest declines occur in Andalusia (- 6.13%); Catalonia (- 5.26%); Canary (- 10,03%) and La Rioja (- 6.08%).

The Canary presents the largest decline for the second consecutive month. To generalize in the coming months the prescription by active ingredient must remain attentive to assess the effect of this measure, although it is believed that it will have little impact because the lower prices at the level which will not be possible large savings for the system. However, the new wording of article 85 conditions increases in stocks with negative economic consequences for the economy of pharmacies.

Defaults

The Observatory has become to keep track of defaults in the month of October. The method is to update forecasts of FEFE data known through non-official information of the autonomous communities and projections until the end of the year. In the third column are positioned savings commitments for the maintenance of the deficit drugs agreed with the Ministry of economy. The last column are the defaults provided in order year.

Twelve autonomous regions have published summaries of its austerity programs to meet the objectives of deficit in 2011 set by the plenary of the Council of financial and Fiscal policy. These programs include 855 million savings in medicines.

Considerations

In situations of normality payment of medicines given to pharmacies occurred within 45 days, them that pharmacies paid to suppliers. On many occasions, particularly when consumption grew with the double-digit rates, occurred some delays in the payment of the Bill for the months of November or December liquidated with the new budgets. Even this eventuality has picked up in some concerts such as the Madrid, ahead of two days the payment in the months in which there were no problems to generate interest sufficient to delay a monthly installment.

Of the total amount charged by pharmacies for the dispensing of prescriptions of the national health system 78% corresponds to suppliers – stores of distribution and laboratories-, and the remaining 22% pharmacy should front their

overhead, payroll, payment of taxes and social insurance. The pre-tax margin is situated between the 6 – 8% in the dispensations to the national system of health given the current level of deductions.

The borrowing capacity of pharmacies, at the present time is very limited, particularly in it refers to the acquisition of debt in the short term – policies and lending – exacerbated by the global economic crisis situation. It can be calculated with little margin for error two monthly payment puts 60% of the pharmacies in risk; three months of non-payment is intractable for almost all pharmacies.

The delay in payment to suppliers, in the event that the pharmacist is not already in the maximum can reach 120 days with a high financial cost. However, this delay would not be manageable by the distribution for the whole of an autonomous community pharmacies, nor the industry could withstand a delay similar to the warehouses of distribution.

So, before delays announced payment in various autonomous communities is expected a major shortage, or even some pharmacies will need to enter into arrangement with creditors, especially those acquired in the past five years with credits. In any case, since neither the schools nor the patron saints recommend it, is considering leaving voluntarily dispense prescriptions of the national health system or try to charge the amount to the beneficiaries. Pharmacies will however pay priority payroll, social insurance, taxation and those amounts which are essential for their survival, but the payment to suppliers can be affected. However, the main problem is health and social, which is why the new Government has to make important decisions before year’s end so that it doesn’t produce the failure of the system. The endorsement of the State applied to the Government by FEFE and claimed also by Farmaindustria is emerging as the best, and perhaps the only solution, in this crisis.

Hospital debt and forecasts

Also reflected in this Observatory hospitals defaults by buy who perform directly to laboratories and health technology companies, represented by Farmaindustria and Fenin. These defaults by the purchase of medicines to hospitals amounted to 30 September last to 5,826 billion euros with a term of payment means of 432 days. In the case of medical devices and related technology the debt at the same date was 4.740 billion euros and the term average 431 days payment.

Finally, in the short term forecasts indicate that in November the decline is much more important, because they will already be in force measures the RDL 9, 2011, although this will have to add undesirable lack of uniformity in its application.