Myths and realities of the pharmaceutical market: what's really happening?

The pharmaceutical market in Ukraine is a crucial component of the healthcare system, ensuring the population has access to essential medications. However, recently, this sector has become a target for political manipulation, populist statements, and attempts at opaque changes.

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To understand what is happening, it is essential to debunk the most common myths that are actively circulated around the pharmaceutical market.

Myth 1. Drug prices in Ukraine are significantly higher than in Europe

Reality:

In 80% of cases, drug prices in Ukraine are lower than in European countries, especially when comparing costs by active ingredients rather than brand names. For example:

• Xarelto (15 mg №28): in Poland, it costs about 1471 UAH, while in Ukraine – from 860 to 1000 UAH.

• Azithromycin: the branded drug Sumamed costs 350–450 UAH, while the Ukrainian equivalent costs only 70–150 UAH.

Ukraine also has an effective reimbursement system - the "Affordable Medicine" program, which allows patients to obtain medications at minimal costs or even for free. For instance, under this program, the price of azithromycin can be as low as 18 UAH.

Conclusion: The issue of drug accessibility is addressed through proper informational policies and the expansion of the reimbursement program, rather than through attempts at administrative price regulation.

Myth 2. High drug prices are the fault of pharmacies and distributors.

Reality:

The structure of drug pricing is as follows:

• 75–80% of the price is determined by manufacturers or importers.

• 10–15% is the markup from distributors.

• Only 10–15% is the markup from pharmacies.

The profitability of pharmacy chains averages 4–6%, while that of distributors is around 4%. In comparison, manufacturers like Darnitsa have a profitability of over 25%. For instance, this company reported a net profit of 1.4 billion UAH on revenues of 7 billion UAH in 2023.

Conclusion: The main influence on pricing comes from manufacturers, not pharmacies or distributors.

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Myth 3. Marketing agreements are evil, driving up drug prices

Reality:

Marketing agreements are a standard European practice that encourages competition among manufacturers. They allow pharmacies to redistribute income, lowering markups on essential medications at the expense of less significant drugs.

Thanks to these agreements, the average pharmacy markup has decreased from 24% to 13% over the past ten years. Banning marketing contracts would not only deprive pharmacies of a source of income but would also force them to raise prices or close down, especially in smaller towns.

Marketing agreements help reduce prices for essential medications, and their limitation would worsen drug accessibility for the population.

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Myth 4. Quotas and electronic catalogs will save the market

Reality:

Proposals for quota supply and mandatory use of electronic catalogs carry more risks than benefits.

• Quotas (20% for one buyer): This will create an artificial drug shortage, especially in remote regions.

• Electronic catalog: Instead of transparency, this will lead to bureaucratization of processes, increased costs, and ultimately higher prices for consumers.

Conclusion: These initiatives lack economic justification and could undermine the drug supply system.

What needs to be done?

1. Expand the reimbursement program: Increase the number of medications and diseases covered by this program.

2. Declare prices by manufacturers: Implement a transparent pricing mechanism.

3. Allow parallel import of drugs: This will create competition for importers and reduce prices.

4. Maintain marketing agreements: This will stimulate competition among manufacturers and ensure drug accessibility.

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Conclusion

The pharmaceutical market in Ukraine requires sensible and transparent reforms, rather than populist initiatives that only harm the industry. Instead of manipulation and attempts at monopolization, it is crucial to focus on the real needs of consumers, creating conditions for stability and development. Only then can we ensure that Ukrainians have access to quality and affordable medications.