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the impact of the adjustment in the midst of the fight between the Government and the prepaid

the impact of the adjustment in the midst of the fight between the Government and the prepaid

During the first quarter of the year, the cut in the flow of funds to organizations and hospitals, which had a significant impact on firms in the health sector. As soon as it came to power, the Government opened the discussion on the cost and coverage of health and positioned prepaid medicine as a symbol of price liberalism.

Just days after his inauguration, President Javier Milei announced that The prepaid fees would move without official intervention, but just four months later, it was forced to regulate them and is on the verge of taking the issue to court.

In the midst of this, La Libertad Avanza’s zero deficit plan acquired a dizzying pace, and Public health was not one of the sectors that emerged unscathed from these movements. According to the budget execution of the first quarter, the Health item represented only 3.8% of total spending, which marked a decrease of 35% compared to the same period of the previous year, totaling $572,999 million.

Along the same lines, funds allocated to the Ministry of Health amounted to $291,178 million, registering a year-on-year decrease of 12.5% ​​during the period from January to March. These data arise from a report prepared by the consulting firm Center for Political Economy (CEPA), which analyzes movements in all areas of the State.

What the report says

At the beginning of the Milei era and the rise of economic deregulation, “it brought as a consequence a phenomenal acceleration of prices, with a highly negative impact on the medicines sector,” the document states. At the same time, the Government decided to freeze the bonus of $55,000 for those who earn salaries less than $160,712.61 in January and February and increase it to $70,000 in March.

After the victory of Javier Milei, “the behavior of prices of medicines most used by older people began a raid of significant increases: at the end of November there was an increase of 25.7%, in December the increase reached 40.9% %, in January they added 13.6%, in February they adjusted to 15.0% and in March to 8.4%,” warns CEPA. That is, in just 5 months, the medicines that older people regularly use increased their prices by 150.8%, far exceeding the already high inflation of that same period (114.5%).

Within the general increase of 8.4% in March that the basket of medicines suffered, the increase of 13.56% on average in the 10 medicines that increased the most stands out. Above the average, monthly increases of up to 17.72% are perceived.

But the year-on-year increases in some widely consumed medications are even more surprising: the average of the 10 medications that increased the most in the last year reaches an average year-on-year increase of 492%. Among those 10 products are Daflon 500, a venotonic used to increase vein tone and also as a vasculoprotector used to increase the resistance of small blood vessels, which increased 560%, and Aspirin Prevent, an antiplatelet agent used to reduce the risk of morbidity and mortality in patients with a history of myocardial infarction, angina pectoris, coronary angioplasty, non-hemorrhagic stroke, which increased 538%.

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In this context, Prices with PAMI coverage turn out to be a fundamental element for taking care of the income of older people. However, their prices also suffered a noticeable adjustment in recent months, although less than the general RRP. In November, prices with PAMI coverage adjusted 9.2%, in December, they increased 14.0%, in January they increased by 33.8%, in February they maintained their price and in March they adjusted again by 19.4%. That is, they accumulated a 99% increase.

Exchange rate and medications

It is usually indicated by the sector that, given the supposed participation of imported inputs in the production process, medicines should pace the evolution of the exchange rate. Beyond the veracity of the claim, what he perceives is a dissociation with respect to the evolution of the exchange rate as of April 2021.

Drug prices and prices measured in the CPI were dissociated from the evolution of the exchange rate, reaching a significant gap. It is important to highlight that when there are no sudden movements in the exchange rate and there is a process of exchange rate appreciation, medicines suffer increases above the exchange rate. Additionally, in instances of strong devaluations, medicines reflect these increases instantly as can be observed in August and December 2023, as in 2019.

Source: Ambito

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