With rulings no. 139/2024 and no. 140/2024, the Italian Constitutional Court (no. 139 and no. 140 of 2024) affirmed the legitimacy of the payback mechanism for medical devices, while also establishing that all companies are entitled to reduce their payment to 48% of the original amount due.

Background

The payback mechanism is a legislative instrument through which the amount in excess of the spending cap for the purchase of medical devices by Italian Regions shall be partially borne by the companies supplying them, for an overall percentage of 40% in 2015, 45% in 2016 and 50% in 2017 and following years.

This measure, already existing in Italy for pharmaceuticals, was introduced by Law Decree no. 78/2015 also for medical devices but had never been actually applied until the Decree of the Ministry of Health of 6 July 2022 which, after years of silence, certified that the National Health Service (NHS) spending cap for medical devices had been exceeded for the years 2015, 2016, 2017 and 2018. Thus, medical device suppliers were required with very strict timelines to refund to the Regions an amount equal to Euro 416,274,918 for the year 2015, Euro 473,793,126 for the year 2016, Euro 552,550,000 for the year 2017 and Euro 643,322,535 for the year 2018 (the topic was also covered in this article).

The measure, predictably, triggered firstly a strong political debate and then a judicial one. The Italian lawmakers granted several postponements of payment deadlines in an attempt to meet the needs of companies, while the latter brought numerous administrative appeals to Lazio's Regional Administrative Tribunal. Subsequently, with Law Decree no. 34/2023, companies that waived their right to appeal against the payback measures or, if they had already appealed, waived their right to appeal, were given the opportunity to pay an amount equal to 48% of the original amount due (a 52% "discount").

Despite the above, pressures continued and the Campania Region (in July 2023) and Lazio's Regional Administrative Tribunal (in November 2023) referred the question on the constitutionality of the payback mechanism, as applied for years 2015 to 2018, to the Italian Constitutional Court.

The decision of the Italian Constitutional Court

The long-awaited decision of the Constitutional Court, divided into the above mentioned two rulings, was released on 22 July 2024. The two rulings affirmed the legitimacy of the payback mechanism for medical devices, while also establishing that all companies are entitled to reduce their payment to 48% of the original amount due.

In the first ruling (no. 139/2024), upon an appeal filed by the Campania Region, the Court examined the provisions of Law Decree No. 34/2023, which allowed companies to pay only 48% of the originally due amount, on the condition that they waived their right to challenge the payment obligation in court. This condition was declared unconstitutional for violating the principle of equality (Section 3 of the Constitution) and the principle requiring a balanced setup of financial relations between the State and the Regions (Section 119 of the Constitution). Consequently, the reduction of payments to 48% for all companies was recognized, regardless of the waiver of the judicial appeal and without the need to file any specific request.

In the second ruling (no. 140/2024), on a referral from the Lazio Regional Administrative Court, the Court assessed the payback mechanism as governed by Section 9-ter of Law Decree No. 78/2015 and as applied for the 2015/2018 period. While noting some critical issues, the Court found the payback not to be in conflict with the Italian Constitution. Specifically, it ruled that the payback:

• Is not unreasonable with respect to Section 41 of the Constitution (freedom of economic initiative), since economic initiative can be limited by social utility, and payback imposes a solidarity contribution on companies to ensure the availability of medical devices necessary for health protection in a financially and economically challenging situation.

• Is not disproportionate, given the significant reduction to 48% of the original amount charged to companies, a reduction now unconditionally recognized for all companies thanks to Constitutional Court ruling no. 139/2024.

• Is not retroactive in nature, as the 2022 measures simply operationalized the payback obligations, which had already been introduced by the 2015 legislation.

Reactions from the industry

The reactions from the industry and the companies involved have been harsh.

Industry associations called upon the government to open an emergency confrontation, mentioning a potential irreversible crisis. According to them, payback could cause very serious repercussions on a sector composed of many small and medium-sized Italian companies, which now risk bankruptcy (and the consequent dismissal of many workers). There is also growing concern among health care organizations and HCPs, who see supplies and patients' access to the most innovative technologies at risk.

Next steps

It is not yet possible to make predictions about the applications of the payback mechanism for the years following 2018 (rulings in fact concern payback mechanism only as applied for the years 2015 to 2018), but the rulings will certainly impact the percentage of health care spending overruns charged to companies, to ensure it is not considered disproportionate.

There is the possibility such amount will be lowered. Applying the criterion adopted by the Constitutional Court, for example, it should not exceed approximately 25% of healthcare spending overruns (about half of what is provided for by Law Decree No. 78 of 2015, which provides for 40% in 2015, 45% in 2016 and 50% in 2017 and following years).

Lastly, other potentially more favourable measures for companies cannot be ruled out, considering the strong pressure on the Italian Government exercised by many industry and social actors.