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The price regulation of pharmaceuticals is illusory

The Competition Authority conducted an analysis of the competition situation in order to assess the functioning of the regulation that sets the limits for the prices of medicines. The Competition Authority considers that the current system for the mark-up of medicines is deficient and its supervision is fragmented. As a result, there is a significant risk of non-compliance with the set rules. “The lack of an economic regulator with clear powers in the pharmaceutical sector along with ineffective price regulation are detrimental to competition and to the consumers and leads to excessive use of health insurance funds,” said Märt Ots, director general of the Competition Authority.

Retail and wholesale distribution of medicinal products is subject to mark-up limits, above which prices on medicines should not be increased by wholesalers or pharmacies. However, the analysis of the Competition Authority confirms that purchase prices at which a wholesaler purchases medicines are prone to manipulations. In practice, pharmaceutical companies often reimburse part of the purchase price to wholesalers in the form of bonuses or fees for additional services (so-called kickbacks). The mark-ups are still calculated on the basis of the higher price indicated on the original purchase invoice. Therefore, the price of the medicine becomes higher than it should be according to the price regulation.

In order to bring clarity to the formation of purchase prices, the Competition Authority considers it necessary to establish a seamless set of rules on pricing and to set out clear supervisory powers and rights. The aim is to ensure the economic availability of pharmaceuticals to patients and fair prices based on the actual purchase prices of medicines.

Maarja Uulits
Head of External and Public Relations
maarja.uulits@konkurentsiamet.ee
667 2420

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