Price ceilings on drugs with no alternatives must be raised, Czech industry says

By Ondřej Plevák | EURACTIV.cz

21-02-2023

The industry believes that although price regulation is not fundamentally wrong, it was designed for a period of economic growth and a strong market and works better for more expensive drugs. [Shutterstock/Cineberg]

Languages: Czech

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This article is part of our special report How inflation has disrupted generic drugs market.

According to the Czech pharmaceutical industry, amid the medicine shortage crisis, current price caps without considering any alternatives could further jeopardise availability.

In the Czech Republic, drug shortages are not as significant as elsewhere and often do not directly affect patients. About 150 different medicines are missing from the market every month, and with some 6,500 prescription drugs available in the country, shortages represent about 2% of the market. But there is still a risk of problems.

Data from the Czech State Institute for Drug Control showed that only 11% of drug groups were affected by such shortages.

"These groups were not easily replaceable, and therefore it was necessary to look for a substitute in the form of preparing drugs from raw materials directly in the pharmacy, special import of the drug from abroad, or changing the prescription for a drug with a different drug substance," said Filip Vrubel, executive director of the Czech Association of Pharmaceutical Companies (ČAFF).

These drugs had to be substituted because of the lack of competition, meaning that there are only a few suitable alternatives on the market, often no more than three.

"Competitiveness has long been threatened by the state's heavy pressure on price, without caring whether the required savings will affect the number of traded variants of medicines on the Czech market," Vrubel argued.

"Especially for cheap, low-margin medicines, it is unlikely that other competitors will enter the market. The small Czech market, over-regulated and with price capping, attracts no one," he added.

The decline in margins is causing pharmaceutical corporations to have second thoughts about the continued presence of some drugs on the market. This is compounded by the unprecedented rise in the cost of manufacturing and importing drugs over the past year, which often cannot be reflected in selling prices due to price caps.

According to ČAFF, dozens of types of drugs in groups where competition is insufficient and sales prices are already at the regulatory ceiling could be at risk. These are mainly some very cheap but life-saving medicines – for high blood pressure, pain, high cholesterol or antibiotics.

The generics industry is urging the EU and national governments to show "leadership" and take immediate action against rising inflation, which has resulted in drugs’ shortages and has put patients in need to the test.

The industry believes that although price regulation is not fundamentally wrong, it was designed for a period of economic growth and a strong market which works better for more expensive drugs.

"There is a lack of mechanisms to respond flexibly to crisis years and inflation, as we are seeing now. Above all, we lack instruments that would stimulate supply, i.e. increase the regulated price and reimbursement in groups of cheap drugs, where the number of available alternatives has fundamentally decreased," Filip Vrubel said, summarising the pharmaceutical companies’ opinion.

The association reportedly warned the Health Ministry about the risks more than six months ago, yet the ministry has not issued any measures.

Moreover, according to the industry, the way to go would not be a lengthy change in the law but faster government regulation. "Unfortunately, we still haven't seen a fundamental shift," Vrubel said, adding that the ministry "does not take the industry's arguments seriously".

EURACTIV.cz asked the Health Ministry why it refuses to adjust the price ceiling for medicines that, according to the ČAFF, are in danger of becoming unprofitable for manufacturers to import into the Czech market and cannot be replaced by an alternative or a foreign-language batch.

The ministry stressed that the prices of medicines in the Czech Republic do not differ significantly from those in other European countries.

The setting of maximum prices and reimbursement is based on a reference system, i.e. according to prices in other European countries, which are not protected by trade secrets.

As for raising the price ceiling, the ministry says it cannot distinguish between different categories of medicines in this respect and would have to do so for all medicines with a maximum price and reimbursement. In other words, even those drugs have high margins and do not require regulation.

"That is why we have decided to approach this on an individual basis," the ministry's spokesman Ondřej Jakob told EURACTIV.cz.

More specifically, if a manufacturer is considering leaving the market because it is not worth staying due to the maximum price and reimbursement set, the ministry, in cooperation with health insurance companies, could increase the price in the public interest.

The drug would then remain available to Czech patients.

"We will definitely not do this across the board, but individually for drugs where their availability would be at risk," Jakob added.

(Ondřej Plevák | EURACTIV.cz, edited by Alice Taylor)

Languages: Czech

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