Rising pharmaceutical expenditures are one of the key challenges of modern, solidarity-based healthcare systems. Slovenia is no exception. The stability of the national health insurance system is further strained by demographic trends, medical advancements, and broader access to innovative – yet typically costly – medicines. Data from the Health Insurance Institute of Slovenia (ZZZS) shows steady pharmaceutical expenditure growth over the past decade, with 2024 spending reaching EUR 779 million, or 14.8% of total ZZZS spending.
Existing Instruments for Controlling Medicine Prices
Slovenian legislation includes several mechanisms to manage the prices of publicly funded medicines. A central instrument is the maximum allowed price (MAP), based on a reference model comparing prices in Germany, Austria, and France. In addition, marketing authorization holders or wholesalers may negotiate lower prices than the MAP with ZZZS and agree on discounts, rebates, or volume-based risk-sharing agreements. Another important tool is the highest recognized value (HRV), a pricing standard determined by ZZZS for a medicine within a group of interchangeable medicines or within a therapeutic group.
Policymakers argue that these measures are no longer adequate to curb the growth of pharmaceutical expenditures. For this reason, the Slovenian Government proposed introducing a systemic payback mechanism in the draft Act on Urgent Measures in the Field of Healthcare – a measure put forward some time ago that continues to prompt expert debate.
Key Features of the Systemic Payback Mechanism
The systemic payback mechanism aims to limit the annual increase in ZZZS expenditures on medicines. A payback obligation would arise whenever spending on a specific group of medicines (determined in the draft act) in a given year exceeds the expenditure of the previous year; this difference constitutes the excess amount. Marketing authorization holders or their representatives would be required to pay 40% of this excess, with individual contributions proportional to each marketing authorization holder’s market share. Collected funds would be strictly earmarked for financing services under compulsory health insurance.
As with any market-intervention tool, the mechanism could have both positive and negative effects. Properly implemented, it could enhance cost predictability, act as a buffer against sudden pharmaceutical expenditure growth, and strengthen the financial stability of the health insurance budget. Strict earmarking further supports the measure’s legitimacy by ensuring funds are used solely for healthcare services.
Legal Issues Raised by the Systemic Payback Proposal
Despite these potential benefits, the proposed mechanism raises several significant legal concerns. The systemic payback is designed as a mandatory public levy intended to finance services under compulsory health insurance and exhibits characteristics typical of a tax. The key legal question is therefore its compliance with Article 147 of the Slovenian Constitution, which requires that taxes and other compulsory charges be established by law and that the law be clear, specific, and predictable. A preliminary review suggests that certain elements – particularly the methodology for calculating the excess amount and determining market share – are not defined with sufficient clarity, increasing the risk of legal uncertainty and administrative arbitrariness.
A further set of issues concerns the principle of equality before the law. The proposed mechanism excludes certain categories of medicines from the calculation base and market-share determination, thereby potentially placing obliged persons in unequal positions. Without a transparent justification, such differentiation risks violating the constitutional requirement of equality in tax burden. Given that small markets like Slovenia are already less attractive to global pharmaceutical companies, additional uneven financial obligations combined with legal unpredictability could further reduce incentives to introduce new medicines or even prompt withdrawals from the market.
The proposal also touches on constitutionally protected property rights under Article 33 of the Slovenian Constitution. Revenue generated from the sale of medicines forms part of the property sphere of marketing authorization holders. A systemic payback therefore constitutes an interference with their economic interests, permissible only if it pursues a constitutionally legitimate aim, is substantively justified, and passes the proportionality test. Available materials do not demonstrate any analysis that the mechanism is necessary or that it would effectively achieve the stated goals, nor do they assess whether existing, less intrusive instruments could reach the same objectives.
Conclusion
The proposed systemic payback mechanism represented an ambitious attempt to contain rising pharmaceutical costs and safeguard the financial sustainability of the health insurance system. However, due to substantial concerns, it was ultimately removed from the legislative package. Nevertheless, the debate it launched remains important, underscoring the need for solutions that are balanced, constitutionally sound, and economically effective in addressing the challenge of increasing pharmaceutical expenditures.
By Barbara Hocevar, Partner, Selih & Partners
This article was originally published in Issue 12.11 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
