The Competition Council has previously indicated that the most significant differences in the price structure of medicines in the Baltic States are due to surcharges applied by wholesalers and pharmacies, as well as VAT, which is 12% in Latvia, 9% in Estonia, and 5% in Lithuania. In Latvia, surcharges are created by applying a growing percentage surcharge to the producer price and the wholesaler price.
The Health Ministry has proposed to make it a rule that the price of medicinal products both in and outside the compensation system is equal and exceed neither the sales price of the manufacturer of medicinal products nor the wholesale price in Estonia and Lithuania, as well as the surcharges of medicinal products in Latvia cannot be higher than surcharges in neighboring countries.
The ministry also proposes to set a patient co-payment ceiling of €250, while the state would cover the remaining costs of compensated medicines. Another proposal, supported by the pharmaceutical industry, is a reduction in the VAT rate on medicines.
“It is specifically about reducing VAT on prescription medicines – from 12% to 5%,” explained VM Pharmaceutical Department Director Inese Kaupere.
“Latvia is currently excelling in negative terms with the largest direct payments of patients when looking at households' costs for purchasing medicines,” said Kaupere.
Retailers point out that Latvia has a budget of 30-40% lower for reimbursable medicines than Lithuania and Estonia, as well as inflation in the pharmaceutical sector is low – 6%.
“In our view, the main challenge is to increase healthcare spending to the same level as it is in neighboring countries, and then we will also be able to compare with our neighbors,” said the board member of the Latvian National Medicines Supply Association, Jānis Lībķens.
A similar opinion was also expressed by pharmacy representatives, stating that the country should expand the list of reimbursable medicines and reduce the VAT rate on medicinal products.
The Ombudsman's Office positively welcomes the proposals made by the Health Ministry, emphasizing that the main solution is the reduction in the VAT rate on medicinal products. However, the Office doubts that this will not be a sufficient solution to reduce drug prices and that other proposals from the ministry should also be considered.
