Inflation exposes Slovakia’s already ‘complex’ generics pricing system
Rising inflation has exposed an already “complex” and “unsustainable” pricing system for generic drugs, driving manufacturers to the edge, often forcing them to pull their products out of the market, stakeholders told EURACTIV Slovakia.
The Slovak Ministry of Health has updated legislation to reflect the increased production costs, but the pharma industry insists it is insufficient.
The annual inflation rate in Slovakia has reached 15.4% driving medicine prices up threefold in some cases, says Ondrej Sukeľ, president of the Slovak Chamber of Pharmacy.
Mainly affected are the so-called over-the-counter medicines, which can be sold directly to people without a prescription and are not covered by public health insurance.
However, the situation for drugs sold at prices set by law is comparable.
Although the cost of production has risen as well, it cannot be reflected in the final price of the medicine. According to European manufacturers, such production is, therefore, unsustainable.
Adjust prices to save drugs, generics industry tells EU
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.
In particular, the generics sector, which is also subject to regulation in Slovakia, reports problems.
As the country is not self-sufficient in drug production, the challenges for manufacturers are ultimately felt even more. Small domestic pharma producers manufacture only pharmaceutical substances, the price of which is unregulated.
A complex pricing system
Representatives of the Association for Generic and Biosimilar Medicines of Slovakia (GENAS), which brings together 14 non-Slovak pharmaceutical companies, stressed that as a result of the crisis in the last six months, the costs of shipping have increased sevenfold and air transport fourfold.
Rising production and distribution costs are, therefore one of the reasons for stock shortages in Slovak pharmacies. Yet according to the law, the manufacturer is responsible for their availability.
“The Slovak Chamber of Pharmacists has long warned of the unsustainability of the current pricing of medicines and the unprofitability of dispensing prescription medicines,” Sukeľ told EURACTIV Slovakia.
“What today constitutes the income of all pharmacies for the dispensing of prescription drugs is not even sufficient to pay the salaries of pharmacists,” added the president of the Chamber of Pharmacists.
According to the GENAS Association, the reason is mostly the complicated pricing system.
“In Slovakia, we have one of the most regulated, and at the same time, strictest pricing policies for reimbursement of generic and biosimilar medicines,” the Association’s President, Terézia Szádocka explains.
For example, GENAS consider the manufacturers’ obligation to adjust the prices of drugs every six months to be problematic.
In practice, manufacturers must adjust their prices twice a year to the average of the three cheapest bills on the European market.
If this average drops the drug must become cheaper in Slovakia. However, if the average European price increases, nothing changes for the Slovak market, as the law does not allow for price increases.
According to GENAS, these conditions ultimately force manufacturers to cancel the registration of a drug on the Slovak market, meaning a drug is withdrawn. As a result, the patient is left with fewer choices, more expensive substitutes and originals, or simply no alternative.
“It would be most helpful to align the frequency of referencing with the international recommendation of EURIPID (European Medicines Price Database, ed.) in the sense to adjust it once every two years, and not twice a year, as it has been enacted in Slovakia for a long time,” say the representatives of the Association.
In this case, prices would be less threatened by fluctuations on the European market and the industry would be able to plan its pricing more predictably.
Contacted by EURACTIV Slovakia, the Health Ministry says it has not received any requests from the pharmaceutical industry.
The ministry of health reacted by the introduction of an amendment to the law on reimbursement for medicines.
Yet the industry is not satisfied. It claims that the amendment does not sufficiently address the impact of inflation and the energy crisis on the generic pharmaceutical sector.
In August 2022, the Slovak Health Ministry issued an amendment to the Act on the Scope and Conditions of Reimbursement of Drugs.
However, it did not directly address the impact of inflation on their prices.
It only provided for the possibility to apply for special price regulation for a drug if there is a reason for this measure. The issue was therefore further addressed by the new decree, in force since February this year.
“Historically, this is the first opportunity for generic and biosimilar medicines to apply for a price increase of more than two to three percent, as the current legislation mandated until recently,” GENAS says.
According to the amendment, manufacturers will be able to exceed the European reference price, a kind of price ceiling for a drug, if the request is approved. The price will have a maximum limit determined by the average of the ten lowest prices instead of the standard three.
However, the Slovak Ministry of Health must conclude that the increase is justified. Moreover, the law does not specify what is considered relevant reasons for such regulation.
“A comprehensive solution to the medicines policy, also taking into account the persistent inflation and energy crisis by the state, could significantly contribute to ensuring the availability of medicines for Slovak patients,” Szádocka concluded.