The Competition Council fought for the rights of foreign producers for profit in Latvia


Member of the Board of the Latvian Association of Pharmaceutical Traders Jānis Lībkens.

Member of the Board of the Latvian Association of Pharmaceutical Traders Jānis Lībkens.

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Janis Lībkins, Member of the Board of the Latvian Association of Pharmaceutical Traders

For more than a month, the Competition Council has been trying to expand the misleading opinion on the market for returnable medicines. As it turns out from the report and publications in the press, the struggle for the rights of foreign producers to make a profit began.

The Latvian Association of Pharmaceutical Wholesale Traders (LZLA) was surprised by the high score by the Competition Council of Latvian pharmacies and wholesalers, as evidenced by the Competition Council's report on the distribution of reimbursable medicines that has been established for several years.

With the introduction of the KP study in the market for reimbursable medicines, LZLA unambiguously concludes that Latvian wholesalers have thoroughly seduced the world's largest pharmaceutical companies, which each year divert more money than the Latvian state budget.

In Latvia, they were forced to sell medicines without a markup, in unfavorable conditions for producers, thus obtaining Latvian pharmacies or wholesalers.

The Competition Council did not want to include Latvian pharmacies or pharmaceutical wholesalers in the market research of compensated medicines, but as a politician, he gained consumer opinion in internet research or listened to the radio.

Referring to a number of offers from LZLA and the Association of Pharmaceutical Owners, in order to discuss the problems, a meeting was held in two years.

At that time, the Competition Council rejected the supply of industry in order to reduce the prices for the most popular medicines in Latvia jointly and claimed that it would be a cartel. What actually sets the price of medicines in Latvia and how to regulate the market for compensated medicinal products in the interests of consumers?

The producer determines the price of the medicine and the profit

First, as in the case of petroleum products, the manufacturer determines the initial price of the medicinal product, while the final price for the consumer is directly dependent on it. Although there are also local drug manufacturers in Latvia, the price of medicines provided by foreign manufacturers has prevailed over it by now.

The manufacturer also freely accepts the decision to market the product or not on the market in Latvia. No foreign producer will choose the market for losses in the market, so producers will benefit from their participation in the Latvian pharmaceutical market.

Approaching drug dealers and pharmacies is precisely defined and strictly regulated by the state so that it can earn as much as national drug.

CP quotes show that there was no attention to the regulatory framework where the surplus of counterfeit medicines for wholesalers and pharmacies has declined several times despite inflation.

It is important that the statistical average profit of pharmaceutical companies is 85% of the turnover, while the profits of the wholesale medicinal products received by them are on average 5% of the turnover. These KP indicators do not show clarity in their publications, but they emphasize that foreign producers in Latvia are losing profits.

Secondly, there are over 80 pharmaceutical wholesalers in Latvia and more than 800 pharmacies, among which strong competition. The number of pharmaceutical wholesalers has increased over the past five years. The claim that the manufacturer is not motivated to enter the Latvian market if the goods have to give a discount is demagogic.

If the producer can not agree with a single drug dealer, he agrees with the other. On the other hand, the turnover of wholesalers is not increasing because of the sale of several medicines, but this is not possible in a country where the population is decreasing, but as manufacturers increase the initial price of medicines on the Latvian market.

The health of Latvian patients depends on unethical quotas

In the KP report, the biggest problem for returning medicines – the availability of these medicines for the population or quotas of producers – is neglected.

LZLA regularly encounters situations when one of the foreign drug manufacturers (which is usually necessary) is registered in the state registry of paid medicines, systematically rejects the fulfillment of all orders from Latvian wholesalers of medicines performed by Latvian pharmacies in the interests of their patients.

Although producers are proud of production capacity, it is actually unethical and requires that the product be included in the list of reimbursable medicines, but after that they are supplied with insufficient quantities and instead marketed medicines in markets where they can earn more.

This is how the situation arises when the activities of Latvian pharmaceutical wholesalers, the successive health of Latvian pharmacies and, most importantly, Latvian patients, depend on the quotas for the supply of medicines by some foreign drug manufacturers.

Latvian regulatory rules have a strictly defined principle – wholesalers of drugs and pharmacies must deliver within 24 hours medicinal products included in the list of recoverable medicines, any pharmacy in the territory of Latvia. The manufacturer is not obliged to deliver the medicinal product within the required time limit.

As a result, the demand for certain medicines is higher in patients than in the case of a producer, as there has recently been no demand for wholesale traders in Latvia. According to LZLA, this situation is no longer possible.

After the decision to operate on our national market, pharmaceutical manufacturers must satisfy the demand of the complete pharmaceutical companies in Latvia for special medicines.

Without a clear reason for refusing to execute these orders, the LZLA considers that such conduct must be regarded as an abuse of a dominant position. Although its abolition is under the direct competence of the CP, and LZLA expected that its CP report will finally begin to address this problem, the problem in the communication will not be taken into account.

Irresponsible in the country for a long time

Similarly, the issue of the liability and obligations of foreign drug producers against the country from which they receive their profits are not addressed. For years, foreign pharmaceutical companies have refused to register their business activities in Latvia.

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Indeed, foreign producers without a registration in Latvia are actually not accessible to the Latvian drug market supervisors, and their turnover and 85% profit from the sale of drugs in Latvia go to the home country of pharmaceutical companies and not to the Latvian government treasury.

By making foreign medicines producers wishing to earn money by marketing their medicines in accordance with Latvian legislation, it would be possible to achieve both the availability of medicines for all patients and the increase in revenues from the state budget.


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