The major drug companies Agis, Teva, and Merck-Israel have been forced by the General Health Fund (GHF) to refund it NIS 10 million each, in respect of drugs they sold the Fund in 1997. The refund was defined as a "global discounts refund", and was made pursuant to the negotiations over pharmaceutics purchasing in 1998.
Agis, Teva, and Merck-Israel are the major suppliers of drugs to GHF. In the past too, the companies would allow a certain discount on the drugs sold to it, off the general market price, in light of the gigantic volume of GHF purchases. GHF accounts for 60% of the Israeli market.
Some months ago, the fund management decided to institute a change in drug purchasing, including the downsizing of inventories, cutbacks in purchasing and the drafting of new contracts, in which the GHF would demand far larger discounts.
The backdrop to these moves is the GHF’s deficit, and pressure being exerted upon it by the Ministry of Finance and the Ministry of Health to streamline.
Despite repeated overtures, Agis would not comment on the report. Teva stated that it was not prepared to give details of its relations with customers. Merck-Israel declined to comment.
GHF management stated that "The GHF is not in the habit of publishing the details of negotiations it conducts with commercial companies". The Fund did state, however, that its new management had decided to take resolute action to arrive at a significant reduction in the costs of drug purchasing.
Published by Israel's Business Arena February 11, 1998