Hospital head says hospitals should bypass medicine wholesalers

It is time to allow hospitals to buy medicines bypassing wholesalers, Normunds Stanevičs, Chairman of the Board of Riga East Clinical University Hospital (RAKUS), said on the Latvian Radio program "Good Morning" on October 28.

He said that currently the legal regulation requires hospitals to buy medicines from wholesalers, but does not allow them to do so from manufacturers. This leads to additional costs. 

"It happens that the wholesaler says: we will deliver, but it will cost €100 - you can take it or leave it. We can't not buy it. This means we cannot control prices," said Stanevičs.

He pointed out that one of the biggest increases in the cost of treatment is the rising price of medicines. 

Allowing hospitals to buy medicines directly from the manufacturer could both cut costs and ensure larger stockpiles of medicines, RAKUS chief believes. He added that RAKUS could form an institution with another university hospital to buy medicines for itself and regional hospitals.

RAKUS bought €19.7 million worth of medicines in the previous two years, but for the next two years, the procurement amounts to €26 million, an increase of almost 32%.

In Latvia, the model of drug pricing has not changed in the last 20 years. The current system of drug price formation is criticized by the State Audit Office. The Competition Council also found in the study that in Latvia in 40% of cases medicines are cheaper and in 60% of cases more expensive than in other Baltic countries, and the pricing system needs to be changed.

Currently, there are several reasons for price differences with other Baltic countries - starting from the mark-up or profit share of wholesalers and pharmacies, which is currently a percentage and changes along with the price of medicines and ends with the value-added tax, which is higher in Latvia than in the other two Baltic countries.

This summer, the government supported a new drug price reform of the Ministry of Health. It will be implemented from next year.

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