Representatives of the pharmaceutical industry are calling on the Ministry of Health to establish a reduced VAT rate for all medicines, as they told at a press-conference held on Friday, the 3rd of January.
The aforementioned requirement has been prepared as part of the proposals of industry representatives at the VM to improve the reform of the mark-up of new medicines, which entered into force on the 1st of January and provides for the abandonment of the percentage mark-up mechanism for wholesalers and pharmacies. The reform provides for one fixed mark-up for all reimbursable medicines and prescription medicines for packaging, a fixed mark-up in three price groups for pharmacies, as well as a number of other changes.
Industry representatives also propose expanding the basket of medicines to be reimbursed by expanding the diagnostic groups and the number of medicines. The industry also calls on the Ministry of Health to move the amendments to regulations, so that pharmacies do not have to incur additional costs by applying the reduced VAT rate to pharmaceutical services.
The proposals also mention the need to differentiate the supply costs for different medicines, taking into account the specific requirements for their storage and transportation.
One of the suggestions is also to carry out an assessment of the producer price policy, to make producer prices public and to introduce control mechanisms to introduce a ceiling on producer margins and prevent unjustified price increases. A proposal has also been prepared to revise the established maximum cost ceilings for pharmacies and supply companies so that they cover the real costs by providing for regular indexation.
The industry also calls for the abolition of the requirement to align producer prices with the levels in Lithuania and Estonia, as in a number of cases it is not possible to meet this requirement due to the fees imposed by the country itself. It also mentions the need to abolish the existing regulation on offering producer prices in public procurement, as this requirement cannot be met if the manufacturer does not participate in public procurement.
In parallel, the prepared proposals mention that it is necessary to consider the possibility of imposing an obligation on the manufacturer to distribute the medicine at a lower price in the compensation system if it is found that the price of the manufacturer’s medicine in public procurement is lower than the price of the list of reimbursable medicines.
Agnese Ritene, Chairwoman of the Board of the Pharmacy Society, mentioned that in the last working days of December, new contracts were received from the National Health Service (NVD) with information on the penalties that will be imposed if, from the 1st of January, pharmacies do not comply with the new medicines mark-up reform.
“The ministry does not count on the fact that the new system cannot immediately be ideal and pharmacies will need time to adapt,” noted Ritene, adding that in smaller pharmacies that do not have large electronic systems, the re-pricing of all drugs must be done manually.
Ritene also noted that the ministry has not clearly answered, which covers the cost of supplying medicines from the wholesaler to the pharmacy. Ritene also noted that the ministry has not clearly answered who is to cover the cost of supplying medicines from the wholesaler to the pharmacy.
At the same time, Alvis Erglis, Chairman of the Board of “Latvijas aptieka” LLC, said that manufacturing prices continue to rise and the medicines of the economic segment have already become more expensive.
In turn, Jānis Lībķens, Member of the Board of the Latvian National Drug Supply Association, pointed out that the significantly reduced ceiling for the margins of supply companies for a large part of medicines does not cover the actual cost of delivery. “The situation is also aggravated by the measures included in the 2025 budget, which, due to the increase in excise duty on fuel and fuel, will significantly increase the cost of transportation and logistics services,” he said.
Industry representatives explained that the proposals were prepared to prevent further escalation of the situation and to ensure the availability of medicines and pharmaceutical care services to patients in the long term. On the 16th of July 2024, Latvian government approved a new medicines mark-up model to promote the reduction of prices on medicines.
The reform of drug surcharges entered into force on the 1st of January this year, although it was originally planned that residents could see the changes from the 1st of November, 2024. After several months of opposition expressed by the pharmaceutical industry, a compromise step was taken, with the entry into force of the changes on the 1st of January.
Ministry of Health previously mentioned to LETA that the ram mark-up model envisages abandoning the non-transparent percentage approach in the mark-up mechanism for wholesalers and pharmacies, which may motivate pharmacies to sell more expensive medicines to patients, rather than medicines of equivalent effectiveness, which are cheaper. Instead, there is one fixed mark-up for all reimbursable drugs and prescription drugs per pack, regardless of the price for wholesalers, and a fixed mark-up in three price groups for pharmacies.