Банкеръ Weekly

Briefs

A VICIOUS CIRCLE MAKES MEDICINES EXPENSIVE

Public comments have been circulating lately that the prices of drugs in Bulgaria are much higher than they are in the rest of the European countries. The Minister of Healthcare Radoslav Gaydarski even complained that medicines are imported in the country without being registered in the positive drugs list. Moreover, a great part of the drugs are forbidden for use in some countries in Europe because of their high price.
In Bulgaria, the list of drugs assortment offered as well as their prices are regulated by distributors and producers, even though the state is one of their biggest buyers. A vicious circle is thus created because of the resale carried out at several levels which, well informed sources claim, adds some 20% to the products' prices. The mechanism is as follows: the Ministry of Healthcare periodically announces tenders for the sale of expensive life-saving drugs in which wholesale traders do not take part but which involve representatives of the foreign producers. They register extremely high prices. Those who win the public procurement order authorize wholesale traders in the country and sell drugs. In turn, they trade with the pharmacies. There are people who claim that there is no such practice anywhere in the world. Wholesale traders say that sales representatives of the producers are in the basis of the price chaos. They are the ones to declare in the ministry the price at which they intend to sell their medicines in the country. According to unofficial sources, their prices are often unrealistically high. If deliveries reach the final distributor, the pharmacies, the medicines may become cheaper if it turns out that they do not realize satisfactory sales. Asked by a BANKER weekly reporter, producers denied that prices go up because they are enlisted as free by the National Healthcare Insurance Fund (NHIF).
In order to dispel the doubts and avoid speculations with the transparency when making the drugs' prices, discussions about fixing them started a few years ago. The idea was proposed by the wholesale traders chamber with the intent to terminate the price chaos. The chamber chairman Vladimir Naidenov said that such regulation would prevent the manipulation of which the customers are victims. Some producers do not share this opinion because they say the interests of consumers are protected by the fixing of marginal drugs prices. They see no logic in introducing fixed values in the terms of a market economy even when it comes to medicines.
Radoslav Gaydarski's idea to reduce the number of drugs included in the positive list does not seem attractive to the wholesale traders chamber, either. According to the minister, since there are tested drugs that can be found at much lower prices, including new and much more expensive ones seems really ridiculous. However, the chamber opposed that the wide list of medicines will enable doctors to choose among different methods of treatment. The problem, Vladimir Naidenov said, is not in the scope of the drugs sold but in the practice to prescribe the most expensive drugs for which the healthcare fund pays. And this is one of the reasons why the fund's resources are never sufficient.
There are also other facts in the vicious circle because of which drugs are not sufficient for the people in need. One of them is the absence of an information system for which there is never enough money in the budget of the fund. The electronic reporting would help for making accurate statistics of the number of sick people and for determining the sufficient amount of drugs needed for their treatment. Misuses of drugs prescribed will become more rare, too. The new technology will replace the subjective factor in the drugs prescription and will reduce the cases of using other people's health books for examinations and receiving of drugs. The insufficiency of life-saving drugs is also explained with the lack of communication between the hospitals about the drugs available. There are cases in which drugs must be delivered urgently and that will be achieved if there is a well functioning communication system between the hospitals in the country.
There are no generic products (substitutes) on the market which are much cheaper than the original ones and that is considered another reason for the expensive drugs. According to wholesale traders, 70% of the import in Bulgaria currently relies on such medicines. Using them is absolutely admissible, since many of the generic drugs keep the biological activity of the original product and are identical while others only resemble the originals. In cases of specific diseases from which few people suffer, it is not worth producing generic products by competitive companies. Then the state is obliged to buy the original medicines, no matter how expensive they are. Instead of registering these drugs in the positive drugs list, the healthcare fund puts them in a list for import of products not allowed for use.
Deals resulting from drugs tenders organized by the state are among the most attractive to the companies. According to well informed sources, there are no more than 40 large distributors of drugs on the market now, including Sopharma AD, Libra AD, Higia AD, Actavis AD, etc. The monopolisation affects the competitive power of the companies and creates market discomfort. A few companies reach an agreement about the prices of drugs, while there are misuses on many different levels. According to Vladimir Naidenov, most frequently they happen at public tenders - through false bank guarantees for implementation of the orders and political umbrellas. Still, no evidence can be found, so all these remain just hypotheses.

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