Economic expert: new regulation of the pharmaceutical market threatens to depart from the principles of market economy

The introduction of state regulation of the pharmaceutical market indicates increased government interference in market mechanisms, which may have negative consequences for the economy. This opinion was expressed by the Chairman of the Committee of Economists of Ukraine Andriy Novak in an exclusive commentary to UNN. 

The very fact that the state, the government, is interfering more and more in market mechanisms in various markets is a bad trend. Because the basic principle of a market economy is free competition and minimal government intervention only at the level of ensuring equal rights and conditions for enterprises and companies of any form of ownership, whether private, state-owned or mixed. This is on the one hand, and on the other hand, state intervention can only be in the form of control over safety issues, in this case, the effectiveness of medicines

According to him, if the state begins to interfere in economic mechanisms, this is a departure from the principles of a market economy. “This is a bad trend, in principle, which shows that in Ukraine we are allegedly already beginning to move away from the basic principles of a market economy,” Novak said.

He also added that tighter regulation of the pharmaceutical market could scare away foreign investors, which could lead them to reconsider their presence in Ukraine.

“Now, even in times of war, it is very important that there is a practice and a trend that Ukraine is supported not only at the political level, (it should be – ed.) so that Ukraine is also worked with at the economic level, on competitive market conditions,” he added.

According to the expert, if foreign companies leave Ukraine, this situation could lead to a comparison of Ukraine with countries that restrict free competition, such as Russia, which is extremely undesirable for both the economy and the country’s international image. 

“There is an aggressor country, Russia, and a country that suffers from aggression, Ukraine. And if the economic trends are the same, it is not a good sign for the international community and for Ukrainian business,” Novak emphasized.

Recall

The Verkhovna Rada passed in the second reading the draft law No. 11493 on the regulation of the pharmaceutical market. In particular, one of the provisions is to set a margin of 8% for distributors and representative offices of foreign pharmaceutical companies. According to economic expert Serhiy Lyamets, state regulation of drug prices and the 8% markup limit could result in annual budget losses of at least UAH 8 billion.

The European Business Association has previously called on the President of Ukraine to veto the draft law passed by the Parliament due to concerns that the innovations could negatively affect the health of patients.

Add

Health Minister Viktor Lyashko has not ruled out a possible reduction in the range of medicines in pharmacies after the law comes into force, which could affect the availability of medicines for Ukrainians.