Drug prices have not decreased. What is really happening with the pharmaceutical market

Five months ago, the Government banned pharmacies from entering into marketing agreements with manufacturers, which effectively prohibited retail from charging for product promotion. This was then presented as a tool to combat high drug prices. UNN analyzed how the pharmaceutical market in Ukraine has changed since the ban came into effect.

BackgroundAs market analysis shows, starting from autumn 2024, prices for domestically produced medicines began to rise sharply. The price peak occurred in January 2025. Against the backdrop of a full-scale war and economic downturn, this problem became threatening and required an urgent solution. Ukrainian President Volodymyr Zelenskyy intervened in the situation and instructed the responsible bodies to take measures that would reduce drug prices by 30%.

It is worth noting that the sharp increase in the cost of drugs was artificial, and everything indicates a conspiracy of several large drug manufacturing plants. The reason for their taking such a step became clear a little later.

One thing at a time. In pursuance of the relevant decision of the National Security and Defense Council, the Government adopted a number of decisions, among which was a complete ban on pharmacies entering into marketing agreements with manufacturers. It came into force on March 1, 2025.

This necessity was explained in government offices by the fact that manufacturers complain that they are forced to include up to 60% of marketing in the ex-factory price of each medicinal product. According to them, this is how much pharmacies allegedly demanded for product promotion.

At the same time, to demonstrate their social responsibility and care for the patient, manufacturing plants agreed to provide the Ministry of Health with several proposals to reduce the price of the drug by 30%. Thus, each manufacturer agreed to reduce the cost of several of their drugs, which allowed the Ministry of Health to form the so-called “TOP-100” of medicines. According to experts, including professional doctors interviewed by UNN, this list of popular medicines included drugs whose effectiveness has not been proven and they do not represent great value, especially for patients with chronic diseases who spend the most on medicines. A striking example is that the list included 9 types of ascorbic acid with different flavors.

Pharmacies, meanwhile, tried to explain that the percentage of marketing they received from manufacturers for product promotion was less than 18%, and the funds received allowed them to invest in a number of social programs for patients, open new points in remote areas, rebuild destroyed pharmacies in frontline territories, train staff, etc. At that time, no one listened to them, and the decision was made without looking back.

Retail still managed to reach out to the authorities and explain that pharmacies are also a business that pays billions in taxes, including from marketing. After the authorities realized that a hasty decision would lead to the budget losing up to 8 billion hryvnias annually, it was decided to rectify the situation.

They talked and talked…To find a compromise solution to the situation, a working group was created, which included representatives of all market participants (large pharmacy chains, small pharmacies, distributors, pharmaceutical factories, small drug manufacturers), the Ministry of Health, the Office of the President, as well as members of the Verkhovna Rada of Ukraine Committee on National Health, Medical Care and Medical Insurance. These meetings are still ongoing, and fierce battles are raging there. Large factories do not agree to resume marketing agreements and are seeking support from government representatives.

At the same time, over five months, it became clear that the ban did not work and drug prices, except for the mentioned “TOP-100”, did not decrease. Moreover, some drugs began to gradually increase in price. Of course, this is not such a rapid increase, because why attract attention, agree.

Market representatives say that the marketing ban allows manufacturers to save up to 500 million hryvnias every month. It would seem that what else is needed for prices to decrease? After all, according to analysts, it is the manufacturer who forms 72% of the drug’s price, the rest is the distributor’s and pharmacy’s markup.

In practice, however, giant factories put these funds in their pockets or spend them on promoting drugs through advertising, and the patient pays as before. At the same time, manufacturers also complain about falling drug sales. They tried to shift responsibility to retail, but in reality, it’s simple – the new regulation obliges pharmacies to have the cheapest drug in their assortment. Pharmacies no longer buy many different analogues of the same drug, because it is not profitable for them.

The stalemate was even noticed by the Ministry of Health. They officially recognized that the marketing ban did not affect the reduction of drug prices. However, the situation is not moving beyond regular talks about finding compromises.

At the same time, it is becoming increasingly difficult to ignore the problems that have arisen in the pharmaceutical market.

For example, it is becoming increasingly difficult to maintain the usual social programs for patients, and discounts, with which pharmacies competed for customers, no longer seem so attractive. In addition, retail is now seriously considering before going to rural areas with a small population or rebuilding destroyed points in frontline territories, because they understand that this is a knowingly unprofitable story and there are practically no funds to maintain them now.

Small drug manufacturers also suffer from the ban. Due to the lack of marketing, they cannot compete with giant factories. Even if a small enterprise produces a super-class drug that surpasses well-known analogues, patients will not know about it and it will not gain popularity, which in turn makes further scaling impossible.

Why is marketing needed by small manufacturers? First of all, it is an opportunity to somehow compete with large pharmaceutical factories like “Darnytsia” or “Arterium”, which do not need, so to speak, aggressive marketing to promote their products, because they have their own niche and recognition among consumers.

Small manufacturers emphasize that there are currently effective mechanisms that could really reduce drug prices in Ukraine, and the authorities should use them. “It (the marketing ban – ed.) will not lead to a decrease in prices in pharmacies. Because we have clear mechanisms, referencing and declaring prices. And, first of all, we need to look for answers in this field,” stressed Serhiy Koshchavets, Deputy Director for Commercial Affairs of Farmis company.

Pharmaceutical market participants call not to ban marketing, but to introduce transparent European rules for its operation, because in the European Union countries, marketing payments are a normal, established practice.

So, while the government is looking for a way out, the market is unbalanced. The ban on marketing agreements turned out to be not a reform, but a shock that took away planning opportunities. Therefore, until an alternative to the current regulation appears, Ukrainians, it seems, should not expect a real reduction in drug prices.