"Oleg Klimov discusses the pharmaceutical market reform, stating that excessive regulation has never yielded positive outcomes." (VIDEO)

In Ukraine, changes are being prepared in the regulation of the pharmaceutical market. The Ministry of Health has proposed limiting marketing agreements, banning retro bonuses, and introducing electronic trading among manufacturers.

However, these initiatives have raised many questions - lawmakers and representatives of the pharmaceutical business have noted that any changes must consider the interests of all market participants and comply with European standards.

To find a compromise solution, the Verkhovna Rada has decided to develop a separate draft law. For this purpose, on January 30, an inaugural meeting was held in the subcommittee of the Verkhovna Rada Committee on National Health, where lawmakers, manufacturers, pharmacy chains, and pharmaceutical organizations discussed the next steps.

The chairman of the board of the "Ukrainian Pharmaceutical Chamber," a member of the International Pharmaceutical Federation, and a member of the American Pharmacists Association, Oleg Klimov, shared with UNN how regulation of the pharmaceutical market works in the EU, why it is important to avoid excessive government intervention in pricing processes, and which mechanisms should be borrowed from European practices.

- Currently, a working group has been established under the Verkhovna Rada Committee on National Health, which is tasked with developing a comprehensive draft law on the regulation of the pharmaceutical market. In your opinion, how justified is this initiative?

This draft law on the regulation of the pharmaceutical market has long been overdue. If we consider the experience of European countries and countries with effective economies, such laws were enacted many years ago as the foundation upon which the healthcare system was built, based on investment attractiveness. Therefore, it is impossible to view the development of this draft law as a fragment of the healthcare system we have in Ukraine. It must, in our deep conviction, be part of a comprehensive healthcare system and primarily serve the interests of patients.

Regarding the initiatives, the fact is that we, together with lawmakers and the Ministry of Health, have been discussing for several years that there is an urgent need for systemic reforms in the healthcare system in Ukraine, not just fragmentary ones. The problem is that one of the biggest issues in Ukraine is that all reforms that have taken place in the healthcare system throughout the period of Ukraine's independence have been exclusively fragmentary. A unified system has not been built because each minister has had only one term. We know that a minister is a political figure, and the reforms that began were forgotten with the arrival of the next minister; no one reported on them, and everything started from scratch again. Then we ask: why does it work in that country but not in Ukraine? Because certain fragments are pulled from one system or another, while every system has essential fragments that allow it to function.

Therefore, as we, all participants in the pharmaceutical market, currently feel, all these changes that are now being initiated by various political forces and lawmakers are solely aimed at ensuring that the cost of medicines in pharmacies is affordable for patients, so that patients are not shocked when they see these prices.

- How important is it for regulation to include all links of the pharmaceutical market, from manufacturers to pharmacies? Is there a risk that overly strict regulation of one part of the market could simply shift the financial burden to another?

It is no secret, and Ukraine is no exception, that the cost of medicines, like any goods, is formed at the manufacturing plant, regardless of what is produced. As an example, we take the European model because Ukraine has committed to adapting all current legislation to European standards by 2025, in line with the directives of the European Union. In the EU, these approaches have a dual nature.

Currently, the changes and proposals we see are far from the truth. Therefore, if we talk about price regulation, the patient is only concerned with what they have to pay.

Let me give you a simple example from the German model, according to which our lawmakers propose developing a series of regulations and laws that would regulate the pharmaceutical market. For instance, in Germany, a drug costs 100 euros at the factory, plus various markups (distributors, pharmacies, pharmaceutical services, medical technology assessments), and on the pharmacy shelf, this drug costs 137.37 euros, but the patient pays no more than 10%. This is because in Germany and in the European Union, there is a concept of mandatory insurance. In our case, the entire financial burden falls on the patient, which is why our patients feel unwell when they see these prices. This is the first issue.

The second issue - we started with it - is price formation. The price is not formed at the level of just one market participant; it requires a systematic approach from the manufacturer, importer, distributor, and down to the pharmacy. In the European Union, the government approves prices for the manufacturer. In one country, this happens twice a year, and in another, once a year. However, the manufacturer, who has the price approved by the government, reveals its structure: what the production cost is, what the investment component is, and how much marketing expenses are included in the price. Thus, the entire price structure is approved by the government, and then the pharmacy legally receives all marketing agreements, which the manufacturer legally pays for. And all participants in the pharmaceutical market operate on equal terms, because a transparent system exists for everyone. We lack all of this.

Our proposal is to analyze the analytical materials of European Union legislation, where we illustrate how it works in each country. But we need to determine which country's model we are adopting. It is impossible to extract one fragment from different systems; if we do that, it will definitely not work, because a system works as a whole.

- How do you assess the changes proposed by the Ministry of Health at the meeting of the Verkhovna Rada Committee on Health regarding marketing agreements and retro bonuses? Should they be banned, or is a more balanced approach needed?

These two proposals have a right to exist. However, in the format in which they were presented to society, they function quite differently in the European Union. In the EU, the system of retro bonuses is widespread, and all rules are regulated. There is no notion of "no, it can't be done, we don't like it"; all elements work as part of a defined system.

- You have repeatedly emphasized that Ukraine should build a pharmaceutical market regulation system based on European standards. What European practices do you think should be taken as a basis?

Any house is built from the foundation. The foundation of what we are discussing is the existence of laws on self-governance for pharmaceutical and medical professions. Next, there should be a law on pharmaceutical activities. We have such a law, but it has certain distortions in terms of including missions that are not characteristic of this type of law. This law cannot regulate economic activities; that is set out in the relevant laws on pharmaceutical activities.

Furthermore, if we talk about opening pharmacies: we see pharmacies located half a meter apart in some areas, while others lack them altogether. Therefore, the role of local self-government is significant, and local self-government makes local requests to businesses: whether a manufacturing pharmacy or a retail pharmacy is needed in that region. To date, we still lack the approach that works in Europe - the classification of pharmacies by types of activity. We also lack a type of pharmaceutical activity known as pharmaceutical brokerage.

In contrast to Germany, for example, we do not have pharmacy cooperatives. In the EU, hospital pharmacies have a special status. Therefore, there are many questions, and most importantly, there are many opportunities if we introduce European standards. We are currently working on proposals for the Verkhovna Rada and ministries - if these are taken into account, in 4-5 years, our pharmacies will be unrecognizable. They will have a different face and a different range of services available. This is what we dream of and work towards.

- Is there a risk that excessive intervention in drug price regulation will lead to shortages of certain medications?

Excessive unilateral regulation and the absence of a financial model from the regulator covering what it regulates have never led to positive results. We remember past regulatory systems - they resulted in a 100% shortage because you can only regulate what you financially influence. If you do not financially influence that type of business, then there must be clearly defined norms for its operation, and regulation is not relevant there.

- Will you participate in the further work of the working group within the relevant committee of the Verkhovna Rada to ensure the adoption of truly effective legislation?

We, as a public organization, have been invited to participate in such a group within the Verkhovna Rada Committee on National Health. We have not been involved with the Ministry of Health. However, we work with everyone to familiarize them with the regulatory experiences of European countries.

- How do you assess the prospects of adopting a new draft law? Is there a risk that the law will be adopted hastily, without considering all nuances? Is there a possibility of finding a compromise solution that will satisfy all market participants and not worsen the accessibility of medicines for Ukrainians?

I will start with the end, because the first question cannot be answered by anyone. We hope that this draft law should be adopted with consideration of all proposals that genuinely reflect the European regulatory framework