Amendments to the draft law №11493. Restriction for distributors to 20% may leave pharmacies without medicines - President of the UABio

Amendments to the draft law No. 11493 on quotas for the supply of medicines and the abolition of discounts for pharmacies have caused a wave of outrage among representatives of the Ukrainian pharmaceutical community. Specialized associations warn that the proposed amendments will have significant negative consequences for the pharmaceutical industry and society as a whole: worsening the availability of medicines and their significant rise in price.

Petro Bahriy, President of the Association of Pharmaceutical Manufacturers of Ukraine, told UNN what risks the proposed innovations pose and how to avoid catastrophic consequences.

-        The pharmaceutical community actively opposed the amendments to the draft law. Do you think that the proposed changes pose a threat to the stability of the Ukrainian pharmaceutical market? How do you think the proposal to create a unified state electronic catalog for managing trade margins and mandatory inclusion of all medicines in it may affect the availability of medicines for the population, especially in remote regions?

I see a huge threat in the amendment regarding the electronic catalog. In fact, it changes the legal status of the State Register of Medicines from a regulatory document to an information and communication system. This is a progressive and excellent tool, but, unfortunately, it is imperfect and will not be able to work and satisfy the entire market. If today's 20,000 pharmacies access this catalog on a daily basis and make their purchases through it, and this is tens of thousands of medicines every day, such an information and communication system will not be able to cope with this. The capacity of this   system is not enough to ensure the stable operation of the market. This is a huge problem.

-        So, this may affect the availability of medicines for the population?

Yes, of course, pharmacies will be left without medicines tomorrow, because they will not be able to get them if they purchase exclusively through such a catalog. Since  the system itself will not be able to cope with the number of requests that will come to this catalog. First, you need to create a catalog, test it, ensure its normal operation, and only then can you talk about procurement and ensuring the operation of pharmacies through it.

I am also categorically against the introduction of amendment on parallel imports. Because we, as domestic producers, are also entering other markets and competing there. No one is creating simplified models for us to register, ensure quality and terms of trade. It seems strange that against the backdrop of the development of domestic pharmaceuticals , simplified models are being created  for the whole world, and we are being put in the queue everywhere. I understand, for example, that Poland is opening a simplified model for us to enter the Polish market , and we are opening a simplified model for their medicines on the Ukrainian market. So it's win-win. If we want to build our own economy, pay taxes, create and preserve jobs, and develop the pharmaceutical industry, we must take care of the improvement of our own country, not that we have given up our market completely and our manufacturers have to close production. We are categorically against this. Today, we spend time, money, and resources on registration of our medicines in Ukraine, while foreigners enter our market free of charge and without registration. Do you realize that this is not a level playing field? This is nonsense. There is no such practice anywhere in the world. If we are moving to Europe, we would like to implement and introduce European approaches in Ukraine. Then it will be fair and competitive and will create a normal climate for business, including investment, and this is a guarantee that our patients will have high-quality, effective, affordable medicines.

As for the amendment on regulation of marketing agreements, we are in favor of European regulation.

- How do you assess the proposal to set a 20% limit for distributors to purchase from one manufacturer? Can you explain in more detail how this will affect manufacturers, pharmacies and end users?

Today, it so happened in our market that two distributors have a dominant position, they control 80% of the market. It just happened. Of course, we are in favor of having more distributors, because the more distributors there are, the more competition there is and the less their unreasonable or non-competitive influence on the market.

If we limit one day, for example, from January 1, to 20% to one manufacturer, one distributor, what will we do with the rest of our products that we produce? Where to put the remaining 60%? Unfortunately, the existing smaller distributors will simply not be able to cope with that flow of products and, accordingly, pharmacies will suffer, as they will not receive it, and pharmacies will not receive it, and patients will not receive it. Therefore, this is a huge risk.

If such a mechanism is introduced, it should be done in a civilized manner, with a certain transition period, using only market mechanisms. We should start limiting , perhaps not immediately to 20%, but first to 30% or 35%. And gradually reduce it to "grow" distributors. After all, a new distributor will not appear tomorrow, because, in fact, a distributor must invest billions in order to have the necessary warehouses, software, trained personnel, equipment, cars, vehicles. And not just any vehicles, but certified ones that can ensure the cold chain and deliver medicines without losing their properties. This is very important, because we are talking about medicines, and  not about the transportation of sand or bricks.

- Some experts say that changes to the draft law No. 11493 may lead to monopolization of the market in favor of certain players? Do you agree with this?

On the contrary, all these measures that we are discussing are aimed at demonopolizing the market and achieving high competition. A highly competitive market is indeed efficient. However, the way it is proposed, unfortunately , will lead to problems with the provision of medicines to patients. Imagine that you are a distributor. Today you have a 40% market share, and you have been limited to 20%. What will you do? You will take away from these orders, from this list of your customers, the most "fat bits" that will cost you "little blood", let's say, the cheapest  and with minimal costs. You will deliver this 20%, and the rest, to remote pharmacies in villages where logistics are difficult, where there is a war, you simply will not deliver. This is natural. And this will be done by one distributor and the other distributor. And the new one who enters the market will face what will be left... The tidbits will be taken away, and everything that is inconvenient, far away, threatening, risky, non-payment, he will have to work with it. He was already unable to work, and he will definitely not be able to cope with these challenges. And the hostages of all this will be ordinary clients, our patients, who will not receive their medicines in remote and problematic regions.

- Do you see any political overtones or lobbying of certain companies' interests in the proposed changes? If so, what interests might be behind these initiatives?

I don't see any such thing. Today, there are companies, small distributors, who believe that there is some discrimination against them... Perhaps, it is really necessary to equalize the conditions for the sale of medicines, for example. Given that these are medicines and socially sensitive products, they should be on equal terms, regardless of the number of sales, sales volumes. They should probably be the same for all market participants. Because a pharmacy in a village owned by one person will never get the same competitive conditions and the same prices for medicines as a chain of pharmacies. People in the village are not to blame for needing this pharmacy, but it may have higher prices. Here, in my opinion, the state should set its own requirements, its own policy, so that the population is not held hostage to this situation.