LITHUANIAN COMPETITION AUTHORITY PROPOSES TO LIBERALISE PHARMACEUTICAL MARKET

The Lithuanian competition authority conducted a market study on the parallel import of pharmaceuticals. The aim of the study was to assess the situation in the Lithuanian pharmaceutical market and identify the main circumstances determining a low share of the trade of parallel imported pharmaceuticals in Lithuania, as well as to provide proposals on how effective competition could be ensured in the market.

In the opinion of Konkurencijos taryba, Point 19 of the Description approved by the Resolution No. 994 of the Government of the Republic of Lithuania as of 13 September 2005 unreasonably hinders competition between pharmaceutical companies (suppliers), since it stipulates that the declared prices for the parallel import of reimbursable pharmaceuticals must be at least 4-10 % lower than the prices of pharmaceuticals of marketing authorisation holders. Parallel import suppliers cannot provide to the market those reimbursable pharmaceuticals which, although cheaper, do not reach the required 4–10 percent threshold. As a result, these pharmaceuticals are not imported, and consumers do not have a possibility to buy medicines at a lower price. Having assessed the results of the study, Konkurencijos taryba proposed to the Government of the Republic of Lithuania to annul Point 19 of the Description.

When conducting the market study, the experts of Konkurencijos taryba evaluated explanations received from the Lithuanian Ministry of Health, the National Health Insurance Fund and the State Medicines Control Agency, information provided by undertakings in response to the questionnaires, the conclusions of other market studies, articles and other publicly available information. In addition, the experts of Konkurencijos taryba conducted an economic assessment of a negative and positive impact of price liberalisation on the market.

According to the data available to the authority, in Lithuania the share of the parallel import of pharmaceuticals at the wholesale level constitutes only 0.61 % of the market, while the share in Denmark is about 20%, in Germany – about 10 %, in the United Kingdom – about 14 %, in Latvia – about 4 %.

The experts of Konkurencijos taryba hope that if the restriction is removed, the Lithuanian residents will be able to buy most reimbursable pharmaceuticals cheaper. In fact, a positive impact of market liberalisation may not be felt immediately, since it would take some time to register new pharmaceuticals, conclude contracts and organise the supply.

Notes: Currently, most reimbursable pharmaceuticals in Lithuania are sold through marketing authorisation holders.

(1) The activities of undertakings engaged in the parallel import of pharmaceuticals are based on the free movement of goods and services as established in the Treaty on the Functioning of the European Union. The prices of pharmaceuticals vary across the EU member states, so the main principle of activity of companies engaged in the parallel import of pharmaceuticals is to import medicines from member states where their price is lower to member states where the price is higher.

(2) Consumers can benefit from parallel import not only directly (when a parallel imported medicinal product is offered at a lower price than the analogue distributed by marketing authorisation holders), but also indirectly, due to increased competition. Parallel import activities promote competition between companies engaged in the distribution and trade of pharmaceuticals, therefore, this can result in lower prices of medicines distributed by marketing authorisation holders.

(3) Parallel import can positively affect not only consumer access to pharmaceuticals, but also bring benefits to the state: centralised purchasing of pharmaceuticals, as well as compensation of the costs incurred by residents when buying medicines at a lower price, reduces the amount of expenses paid from the compulsory health insurance fund.