Slovak Government Set to Slash Prices of Imported Drugs by 7.4% from July 2008

The latest cost-containment measure taken by the Slovak Health Ministry is to reduce the price of imported medicines by 7.4% from July 2008, reports Slovak Agency TASR. The move is intended to make savings of approximately 900 million koruna (US$28.3 million). According to Peter Stanko, spokesperson for the Slovak Pharmacists Chamber (SLK), certain products may disappear from the market, notes the source. They include a vaccine against tick-induced meningitis and the Klacid antibiotic to treat skin or respiratory infections.

But the Slovak Ministry of Health remained defiant, saying that pharmaceutical companies did not register any objections to the proposal and that drug distributors have already agreed to the amendments, notes the source.

In 2007, drug sales by wholesalers to public and hospital pharmacies in Slovakia amounted to 28.6 billion koruna—an increase of 14.4% from 2006. The number of drug packages sold through pharmacies was up 4.8% year-on-year (y/y), at 162.3 million koruna. This was achieved despite the introduction of 5-7% price decreases by the Ministry of Health in April 2007.

The association of Innovative Pharmaceutical companies operating in Slovakia (SAFS) has not commented on the latest P&R policy, but is known for advocating a change in Slovakia's drug P&R regulations. SAFS is primarily interested in the amount of reimbursement by health-insurance companies when it comes to prescription drugs. SAFS argues that the producer price of drugs that are not reimbursed by the health-insurance system should be set according to market conditions. SAFS is also keen to see the introduction of patient fees per prescription, which it says will motivate the patient not to draw drugs they do not actually need or see a doctor without a serious reason. In this way, the association argues, the health system will save funds, which could be used for assurance of "better therapies."

Outlook and Implications

The latest move by the Slovak government will certainly be a blow to international drug manufacturers operating in Slovakia. Companies will need to re-evaluate the "financial viability" of importing some drugs, and shortages of certain drugs may be expected. Slovakia's pharmaceutical market has been traditionally dominated by imported drugs, which continue to form a significant percentage in terms of value (up to 70%), but if the new plan comes into effect, the balance may shift in favour of the domestic drug industry, which currently dominates in sales by volume. Germany, the Czech Republic, Switzerland, and France supply most of Slovakia's pharmaceutical imports and drug-makers from these countries will be hardest hit.

Cost-containment and populist policies have dominated the political arena in Slovakia of late, with Health Minister Ivan Valentovic already proposing that high-priced medicines be sold with lower profit margins for pharmacists, and cheaper medicines with higher profit margins. The so-called "digressive" margin on expensive drugs, Valentovic hopes, will bring savings of approximately 300 to 400 million Slovak koruna (US$12.4-19.5 million) for the system in the first year, which would rise to 700-800 million koruna the following year. At present however, it remains unclear what course of action the Health Minister will choose.

Find out more about Same-day Analysis