US embassy cable - 05BUCHAREST835

C O N F I D E N T I A L SECTION 01 OF 03 BUCHAREST 000835 
 
SIPDIS 
 
STATE FPR EUR/NCE-WILLIAM SILKWORTH, EB/IFD 
STATE PASS TO USTR 
STATE PASS TO USAID 
USTR FOR LERRION 
TREASURY FOR STUART 
USDOC FOR 4232/ITA/MAC/EUR/OEERIS/CEEB/BURGESS/KIMBALL 
USAID FOR E+E 
 
E.O. 12958: DECL: 04/05/2015 
TAGS: PGOV, TBIO, ETRD, KCRM, EFIN, PREL, RO, USTR, corruption 
SUBJECT: ROMANIA: CORRUPTION IN HEALTH CARE SYSTEM REMAINS 
AN ISSUE FOR NEW ROMANIAN GOVERNMENT 
 
REF: A. A) BUCHAREST 1611 
 
     B. B) BUCHAREST 0964 
     C. C) BUCHAREST 0611 
     D. D) BUCHAREST 0164 
 
Classified By: ECONOMIC SECTION CHIEF JOHN RODGERS FOR REASONS 1.4 B AN 
D D 
 
Summary 
------- 
1. (SBU) One of the key challenges facing Romania,s new 
Health Minister Mircea Cinteza is a state-run health system 
plagued by corruption.  Two types of corruption manifest 
themselves in Romania: high-level manipulation of the system 
for personal gain and low-level &facilitation payments8 
that state-employed medical personnel require from patients. 
High-level corruption is by far the most corrosive and 
challenging for the health care system.  The development of a 
private health insurance industry and HMOs in Romania offers 
a promising alternative and a challenge to the state-run 
system.  Post continues to engage with Romanian authorities 
to assist in creating a more effective and "cleaner" 
healthcare system.  End Summary. 
 
Health Care System,s Inherited Deficiencies 
------------------------------------------- 
2. (U) Despite limited health reform efforts since 1989, the 
Romanian health care system remains plagued by a number of 
problems partly inherited from the communist era: poor 
quality of services, inequitable access, unofficial fees, and 
limited financing.  While hefty wage-based social insurance 
contributions (7 percent of wages for employers and 6.5 
percent of wages for employees) should have increased the 
amount of money available for medical care, in fact not all 
of the funds collected actually go for health care.  Instead 
of going to the Ministry of Health or the National Health 
Insurance House, the funds go to the Ministry of Finance 
where they can be used for other purposes.  The funds the 
health care system receives are based on the Government,s 
enactment of the health care budget, which generally has 
amounted to 3.6 - 3.8 percent of GDP, although the new 
Government has promised to raise this ceiling.  Moreover, the 
government has not achieved broad compliance with the 
mandatory contributions.  Estimates indicate that less than 
25 percent of the population actually contributes, and 
several large companies in financial distress have not paid 
the amounts required, even if collected from employees. 
 
A Legacy of Inaction 
-------------------- 
3. (U) The former Social Democratic Party (PSD) government, 
though not the leadership of the Ministry of Health, 
acknowledged the existence of corruption within the 
healthcare system.  They declined, however, to take action to 
address the problem.  In 2003, the U.S. Embassy obtained a 
special grant in the amount of $400,000 from the State 
Department to investigate corruption in the health system. 
For over nine months, the Embassy attempted to engage 
officials in the Ministry of Health, including former Health 
Minister Ovidiu Brinzan, to develop a program for use of the 
funds, but received no cooperation.  The grant was withdrawn 
because the Ministry was simply not interested in dealing 
with the serious issue of corruption in the health care 
system.  Post,s efforts to raise the debate from the 
theoretical to the practical level have gained some 
attention, with the EU, European embassies, WHO and numerous 
private entities calling for more accountability.  This 
external scrutiny, combined with several scandals - including 
a National Control Authority report charging that the 
national blood supply was tainted due to inadequate controls 
) and the demands of ordinary Romanians have put pressure on 
the Health Ministry, but failed as yet to result in 
significant reform. 
 
The Two Faces of Corruption 
--------------------------- 
4. (C) Corruption in the Romanian healthcare system has two 
variants: high-level corruption perpetrated by those 
controlling the system and low-level corruption comprising 
under-the-table payments required by doctors and nurses to 
receive services.  Although both forms of corruption are 
disruptive, the high-level corruption is the most damaging, 
because it bleeds the system of scarce funds, skews 
decision-making on procurement or approved treatment regimes, 
and otherwise hinders efforts to improve care.  Moreover, 
such entrenched corruption results in public apathy. 
Romanians believe tackling corruption &at the top8 is 
futile, even potentially dangerous.  Top-level corruption is 
the focus of USG involvement because it directly hinders the 
ability of U.S. firms ) pharmaceutical suppliers, medical 
product suppliers, and private health insurance companies ) 
to enter and compete in the Romanian market.  Under the last 
government (which left office in December), high-level 
corruption was rarely investigated, prosecuted, or publicized 
because of the entrenched interests involved, which reached 
the highest levels of the Romanian government.  Instead, 
health officials tended to divert the public,s attention to 
the need to fight low-level corruption, an easier task, 
because most Romanians have firsthand knowledge of how this 
system of bribes and payments works. 
 
Transparency Commission and High Level Corruption 
--------------------------------------------- -------- 
5. (C) In order to come into compliance with an EU directive, 
the MOH established the Transparency Commission (now named 
the Committee for Pharmaceutical Strategy) in the second half 
of 2003 to oversee the introduction of medical products ) 
mostly pharmaceuticals ) in the state-funded reimbursement 
system.  However, the history of the former President of the 
Transparency Commission, Dr. Victor Voicu, is a classic case 
of how the Romanian system has accommodated corrupt health 
officials.    Voicu headed the Commission until he was 
eventually removed amid charges of conflict of interest.  Our 
contacts within the pharmaceutical industry advised EconOff 
that these charges stem from his role in favoring generic 
drugs, specifically the Romanian generic pharmaceutical 
producer LaborMed.  His wife owns approximately a quarter of 
LaborMed,s shares and his daughter ) former manager of 
external affairs at Pfizer Romania ) is a LaborMed 
executive.  During his tenure as Transparency Commission 
president, Voicu repeatedly cast votes that enabled LaborMed 
to receive early approval or granted the company fast track 
approval for its generics, while the products of other 
companies waited in line.  When charges against him began to 
surface, Voicu finally started to recuse himself from 
LaborMed related decisions.  However, his efforts proved to 
be too little, too late and he was forced to step down, 
although he was never formally charged with any wrongdoing. 
(Note: Even now, the renamed Transparency Commission attracts 
criticism of U.S. and other foreign pharmaceutical firms. 
They complain about (what else) lack of transparency in 
decision-making.  End note) 
 
6. (C) Although removed from his position as Transparency 
Commission President, Voicu to this day retains his post as 
Chairman of the National Drug Authority,s (NDA,s) 
Scientific Council ) the body which makes the technical 
recommendations upon which the Transparency Commission makes 
its decisions.  Another role of the NDA,s Scientific Council 
is to regulate the data exclusivity of pharmaceuticals on the 
Romanian market.  Post, in cooperation with American 
pharmaceutical firms, actively engages the Romanian State 
Office for Inventions and Trademarks (OSIM) and the NDA for 
more rational data exclusivity standards, consistent with 
U.S. and EU norms.  Post was instrumental in Romania,s 
passage of Supplementary Protection Certificate (SPC) 
legislation protecting pharmaceutical patents, guaranteeing 
intellectual property rights to pharmaceutical products equal 
to other EU countries.  Voicu,s position as President of the 
Scientific Commission and his links to LaborMed represent a 
potential obstacle to our efforts.  Voicu continues to push 
for fast track approval of generic applications on behalf of 
LaborMed before the enforcement of SPC goes into full effect. 
 
Former Ministry of Health Officials Under Investigation 
--------------------------------------------- ---------- 
7. (U) Prosecutors of the National Anti-corruption 
Prosecutor,s Office (PNA) in March called in former Health 
Minister Ovidiu Branzan, cabinet member in the former Social 
Democratic Party Government, in connection with an illegal 
transfer of 5 billion lei ($186,000) from the Health 
Ministry,s budget to accounts of a company in relation to a 
contract for the purchase of air purification equipment.  The 
deal also allegedly involved a relative of Branzan,s, Ion 
Bazac, who mid-last year was assigned as Secretary of State 
for European Integration in the Health Ministry.  Bazac,s 
predecessor, Iulian Popescu, was the first top official in 
the Health Ministry investigated by the PNA.  He was 
officially accused of bribe-taking and abuse of office to the 
detriment of public interests.  Investigators reportedly have 
evidence that Popescu received $65,000 in three separate 
installments as a &reward8 for furnishing confidential 
information on procurement tenders to suppliers of 
pharmaceutical products and equipment. 
 
Low Level Corruption: Show Me the Money 
--------------------------------------- 
8. (SBU) There is an understanding between patients and their 
doctors and nurses, that those who do not pay personal 
&gratituties8 to their doctor or nurse will not receive 
expeditious treatment, or even any treatment at all in some 
cases.  Such unofficial payments are said to provide 
physicians with incomes many times the level of their 
official salaries and are a financial barrier for those who 
are unable to pay.  The more urgent or complicated the 
required care, the more the doctor will expect.  In cases 
where families cannot comply with the payments demanded, care 
providers often cut services.  In addition to facilitation 
payments to doctors and nurses, patients are expected to pay 
small fees (about $6 per day) for health specialists to 
administer medications.  Patients must also supply all of the 
non-medical items they need during hospitalization, including 
clothing, towels, toilet paper, plates and utensils. 
 
Poor Public Health Care Drives Patients to Private Clinics 
--------------------------------------------- ------------- 
9. (U) With official funds earmarked for public hospitals 
being misdirected or misspent, and unofficial funds to 
doctors sometimes not resulting in improved services, 
patients with means increasingly seek care in private 
clinics.  Several years ago, private health clinics were a 
luxury available only to the privileged few.  While this 
still the norm, an estimated 25,000 people hold membership 
cards for private health clinics.  Employees of multinational 
firms in particular express a preference for treatment at 
private clinics rather than public hospitals.  The 
development of a private health insurance industry and health 
management organizations (HMOs) as well as the supply of 
private medical services in general is seen as a means, 
through offering the public an alternative, to pressure the 
public system to improve. 
 
Comment 
------- 
10. (C) The previous government was unwilling to tackle the 
healthcare corruption issue in any serious way.  Although it 
was alleged that even Prime Minister Nastase,s wife, 
profited directly from systemic corruption, it was clear that 
corruption existed at all levels of system.  The new 
government has pledged to focus on corruption and there is 
hope that reform may begin.  Post is already engaging with 
the new government to ensure that progress is realized in 
creating a less corrupt and more efficient healthcare system 
in Romania. 
 
11.  (U) AmEmbassy Bucharest,s reporting telegrams are 
available on the Bucharest SIPRNet website: 
www.state.sgov.gov/p/eur/bucharest 
DELARE