Pharmaceutical manufacturers: Wholesaler price-fixing system needs changing

Pharmacy (picture is illustrative).
Pharmacy (picture is illustrative). Source: Siim Lõvi/ERR

Pharmaceutical manufacturers in Estonia are calling for a shake-up in the way medicine prices are marked-up in Estonia, saying the system has remained unchanged for two decades and is one which favors two major suppliers, according to a report on ETV news show "Aktuaalne kaamera" (AK) Monday night.

Kadi Lambot, owner of medical group Confido, told AK the purpose of the system is to keep drug prices under control, but is now outdated.

"It was once created for this purpose; now it is a question of how adequate the system, is or whether it is outdated," she said.

The report stated that the pharmaceuticals market in Estonia is the preserve of two major wholesalers which can set manufacturers conditions which they must fulfill, if they want their product to go on sale with their pharmacies.

Riho Tapfer, head of the Association of Pharmaceutical Manufacturers (Ravimitootjate liit), agreed that there was some truth to this claim and that this had developed over time.

"I will say it again, if it could be changed in any way by law or by a single decision, I think it would have been done [already]. The system that has been in place for twenty years will not change right away," Tapfer said.

The system in theory determines what mark-up wholesalers can obtain from medicine sales. However, the Competition Authority (Konkurentsiamet) says that the system allows wholesalers the opportunity to manipulate purchase prices in their favor.

The pharmacy sector was reformed at the beginning of April, ostensibly handing over majority control of pharmacies to the professional, dispensing pharmacists who work in the branches and away from the big wholesalers – primarily Magnum Medical, operator of the Apotheka chain of pharmacies, and Tamro, which operates the Benu pharmacy chain. A third wholesaler, Euroapteek, is Lithuanian-owned.

In practice, the Competition Authority says, this has led to the emergence or continuation of franchise agreements between large wholesalers and pharmacies, meaning wholesalers still have the opportunity to offer conditions to manufacturers when marketing their medicines.

Kadi Lambot said since the state has not modernized the system, the parties involved have started to regulate the pharmaceutical market themselves, though scope for this was not broad.

"If these mark-ups have been regulated by various agreements themselves, then nothing can be blamed on the entrepreneurs. This is life," Lambot said

For example, the Competition Authority has highlighted that part of the retail price of drugs must be reimbursed by pharmaceutical manufacturers, to wholesalers, as things stand.

Riho Tapfer of the Association of Pharmaceutical Manufacturers said the Competition Authority had been quite accurate and that manufacturers of drugs have tried to flag the issue, but that these have so far manifested as complaints which arise from time to time.


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Editor: Andrew Whyte

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