Will Latvia succeed in cutting medicine prices?

Another attempt to cut medicine prices, announced by the Ministry of Health (VM), has, as usual faced opposition from the industry, especially its big players. So far, efforts by the ministry to change things have ended with plan postponement for several years. Latvian Television's De Facto attempted to figure out whether this time would be different in its show aired December 17.

There are hardly any health ministers who have not planned medicine price cuts as one of their priorities. The beginnings of the newest report submitted by the Ministry of Health can be found in the drug price reduction plans announced by former Health Minister Ilze Viņķele. “Very, very difficult discussions as you can imagine. No merchant wants to give up their profits or higher revenue, but the discussion is ongoing,“ she said on January 19, 2020.

But universal drug price reforms remained on paper. The exception is reimbursable medicines, where it has been possible to make these medicines cheaper.

Now Health Minister Hosams Abu Meri (New Unity) believes it is necessary to move on.

"The reform needs to come with results to make medicines more affordable and prices more adequate. Because we are the most expensive in the Baltics. It is cheaper in Estonia and Lithuania. We want the same as in Estonia and Lithuania, we are not asking for anything special," Abu Meri said.

The solutions offered by VM several years ago and now are similar – to construct premium principles in the same way as reimbursable medicines, prescription medicines in all pharmacies should cost the same, and 5% of the price should be  compensated for all prescription medicines. Discussions with the Ministry of Finance (FM) on the reduction of value-added tax (VAT) are also foreseen.

The biggest support for change can be heard from individual pharmacies and pharmacists, but there are also reservations.

Dace Kikute, President of the Latvian Pharmacist Society, said: "The experienced experts of the Ministry also know a lot and the minister is on a very correct path in his conclusions. But now we have to try to negotiate what we do first, what we do afterward, to have less impact on sensitive sectors like that after possible - these are the sick people who find it very difficult to take any kind of change, and the next one is pharmacists as a workforce."

However, some organizations have raised bigger objections. They are the Latvian National Medicines Supply Association representing large wholesalers and the Latvian Pharmaceutical Care Association representing the large pharmacy chains.

Their members are connected. For example, both the wholesaler Recipe Plus and the Mēness Aptieka pharmacy network belong to a single holding; Tamro is affiliated with Benu pharmacies and Magnum Medical with Apotheka.

Janis Lībķens Rutulis, head of the Latvian National Medicines Supply Association, said: “Distribution of reimbursable medicinal products to the industry is not profitable. And if all prescription drugs become reimbursable drugs, the question is how the industry will stand. If the economic impact on the sector has not been calculated, we cannot accept such amendments.”

Kristine Jučkovica, head of the Latvian Pharmaceutical Care Association, also said: "We have estimated that between 100 and 150 pharmacies could be at risk. They could be at risk of bankruptcy. We have estimated that servicing reimbursable medications to pharmacies is unprofitable, but so far that balance has somehow been held."

Both organizations advocate a reduction in VAT and point out that funding for reimbursable medicines should also be increased, which is also recognized as too low by the VM. But these points mean more investment by the state. Wholesalers with a total annual turnover of more than a billion euros, while profits are measured in millions, are dismissive of the possibility of giving up some of their revenue.

For small pharmacies, in the absence of additional support, the new offer could indeed be financially tough. Agnese Ritene, chairwoman of the Pharmacy Association's board, said: "I think we've very much gone that direction of a shop. The pharmacy has become a store with all marketing activities, campaigns. [..] However, the pharmacy must focus on available pharmacists and affordable medicines, but for the primary priority to be precisely the quality of pharmaceutical care [..]."

In Estonia, customers have to pay 2 euros and 50 cents for the withdrawal of reimbursable medicines in a pharmacy in the form of a prescription service and consultation fee. Latvian pharmacists would also like a similar solution. However, VM does not promise this, as the main objective is to reduce the direct expenditures of the population on medicinal products.

Minister Abu Meri believes the changes will not be left shoved in the drawer this time because political support is there this time around.

“That's what I'm doing and what I'm going to do. There will be no stepping back,” he said, predicting that a report on changes in drug pricing submitted by the Ministry will be viewed by the government in January. 

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