“This is a time bomb for the market and the population”: Oleh Klimov criticizes scandalous amendments to the draft law that will lead to higher prices for medicines (VIDEO)

The Ukrainian pharmaceutical industry is facing new challenges. Proposed amendments to the draft law No. 11493, which provide for a quota for the supply of medicines and the abolition of discounts for pharmacies, have sparked a lively debate in professional circles. Industry representatives are sounding the alarm, arguing that such changes could set dangerous precedents for the drug market, the quality of medicines and access to them for Ukrainians. 

In an interview with UNN, Oleh Klimov, Chairman of the Board of the All-Ukrainian Chamber of Pharmacy, member of the Board of the International Federation of Pharmacists, member of the American Pharmacists Association, criticized the initiatives that, according to him, lack sufficient justification, endanger public health and negate the achievements of domestic pharmaceuticals.

– Off air, you showed us some interesting papers. Could you tell us what they are? What’s the point?

We are now discussing very interesting changes to the legislation on the procurement of medicines supplied to our Ukrainian pharmacies and all the difficulties that ordinary people, not just the owners of the same pharmacy chains, will face in the near future.

The fact is that we received the documents we are going to discuss on Saturday at a meeting at the Ministry of Health as unofficial documents. These are proposals from Yulia Tymoshenko, a member of the Batkivshchyna party, and proposals for amendments from the Verkhovna Rada Committee on National Health. But, as of ten o’clock in the morning (the interview was recorded on Wednesday, December 18 – ed.), these documents have not been officially registered. That is, we can now talk to you as a draft of some documents that may in one way or another affect the model of drug supply in Ukraine. 

– I would like to hear from you about the main theses. What confuses you the most among them? 

As a pharmacist, I am confused by several things in these projects. First, Ukraine declares seven-mile steps to adapt all Ukrainian legislation to European standards, regulations and directives. And the pharmaceutical industry has not stayed away from these processes, and this is normal. However, if we take the practice of the European Union, professional non-governmental organizations are among those who are actively involved in the preparation of various regulatory acts in a particular country of the European Union. This is the first thing.

Secondly, we are concerned that recently we have been feeling like a crowd in these processes, not participants, we are practically not heard, and decisions are being made that have no economic justification, some slogans and nothing more. Therefore, we, specifically the All-Ukrainian Chamber of Pharmacy, have been actively involved in the analysis of similar regulatory documents that exist in the European Union. 

For example, we are looking into the initiative to allow these medicines to enter Ukraine without the registration procedure. Please excuse me, but as a pharmacist with many years of experience, I do not understand how this could be initiated, because Ukraine is a member of the international Pharmaceutical Inspection Cooperation System (PIC/S). Member countries have a simplified registration procedure. And here is a proposal to launch it, whoever wants and how they want. I’m sorry, but this is, let’s say, a time bomb that can simply destroy a part of the Ukrainian population, because no one will be responsible for quality control, the cold chain, and so on. Then, of course, it will be cheaper, because no one has gone through the registration procedure, no one has gone through the clinical trial procedure, no one has approved these documents with the regulatory authorities of Ukraine. In our opinion, this is an unacceptable proposal, and I think it was prepared by people who are far from the healthcare system. 

– among the amendments that are being discussed, there are plans to limit the purchase of medicines to 20% of the total volume of the manufacturer. What do you think might be the consequences of such a decision? 

There is still no national policy of drug provision in Ukraine. This is a fundamental policy that is approved in any EU country. Our excerpts are focused exclusively on the financial model. A market that has been formed solely at the discretion of the market for many years in a row. Because the state said-This is not our question, develop, we can do everything that the law does not deny. And each business representative has formed the market system that he has formed.

Manufacturers have become 100% private since independence. What we got as a result – we got one of the best economies in Ukraine, one of the most powerful pharmaceutical economies in the world. Today, Ukraine exports to more than 86 countries of the world, No one was waiting for us there, we came there with effective medicines and affordable prices. This is the first one.

Secondly, when Ukraine became independent, all pharmacies were municipally owned. Today, there are about 1% of such pharmacies, and in many regions there are none at all. Again, this is an indicator of the inefficiency of the state as a manager in managing an extremely important section of drug delivery to patients. 

And thirdly, and very importantly, it seems that the culprit of all the troubles, that the price of medicines in pharmacies is high, is solely the fault of the pharmacists themselves. But this is not the case. I just want to give two examples. In the EU countries, where the reimbursement model works (payment of compensation – ed.), the sale of medicines for the hospital group varies from 30% to 55%. In Ukraine, it is about 10%. And all these procurements are paid for by budgets, both regional and state. So, again, the role of the state is minimized.

I want to ask one more question for all students to think about: every year a certain amount of funds is allocated for the Affordable Medicines Program. Last year it was about 5.7 billion, but one billion was not used. In 2022, they were also not used. In no year has the entire allocated amount been used under this program. Who among the officials responsible for that list of medicines answered – Are they effective or ineffective? And how effective is the treatment with this medicine? In other words, these are also very important indicators. 

In other words, the entire pharmaceutical community supports the need to make changes and adapt them to European legislation. But all entities – the state, the manufacturer, the distributor, the pharmacy, and the public-should participate equally. The population should not be indifferent to their health. do not self-medicate, but go to the hospital. The population should demand appropriate steps from the state. We understand that there is a war going on. We understand that there are not enough funds, but we did not use a billion, is this not funds? These are funds. In other words, we are fully in favor of the model of European regulation of the pharmaceutical market, starting from the manufacturer and ending with the pharmacy, each at its own stage should be regulated. 

We, as the pharmaceutical community, urge all participants who are part of the state, before proposing anything, to sit down with the professional community, with representatives of the healthcare system and go through each point. Because, you know, as they say, when they imitate listening to you and make completely different decisions, you lose faith in the state.

– Okay, going back to the question of restrictions, do you think that this could work in such a way that there will be a shortage on the market of medicines? 

I started a little longer. The fact is that there are restrictions in the European Union. Let’s find out how they exist. For example, there is the country of Slovenia with a population of 2.2 million, two multinational companies Lek and KRKA, which provide most of the world with their effective medicines. And there is a restriction to the distributor – a quota for the sale of medicines abroad, that is, it is determined by the health system of this country that these drugs must remain on the territory of the country. 

For example, there are similar quotas in the Czech Republic, where the distributor is told: you must provide medicines to certain regions. Thus, on the contrary, this regulation is aimed at 100% ensuring. 

What do we get from this proposal? Suppose Plant X produces 100 or 200 drugs that were fully distributed in Ukraine. Today they are told that you have the right to sell only up to 20% of them through this company, which has received all the necessary certificates. 

But why did the issue of quotas arise in Ukraine? When Ukraine gained independence, there were about 250-280 different distributors – tiny, regional, regional, etc. Where did they go? They went bankrupt.

Today, there is a proposal from the initiators of the amendments to regulate the market so that there is no monopoly. I apologize, but we have an institution in Ukraine called the Antimonopoly committee of Ukraine. This is his mission. Let the Antimonopoly Committee investigate the activities of these entities (distributors), bring it to the public that this is a cartel agreement and a violation of the antimonopoly legislation. In the end, the most humane Pechersk court will make a decision. You can’t just indiscriminately take it and say that this is wrong. The price of explanation is a cry of the soul. Because these initiators did not think about what would happen to the patient who came to the pharmacy. Regulate, but only within the limits of European legislation.

No other European country is working the way Ukrainian pharmacists and Ukrainian doctors are working today. Just look at it: today everything is fine, but tomorrow, God forbid, a big city is shelled, and many people move to another region. And you have to move the entire supply chain, from the production program to the distribution program to the pharmacy, so that people don’t feel that they are missing a pill. We all remember the times when, in the first days of a full-scale war, there was no brilliant green, no iodine to buy. I’m not talking about something serious. We remember this, we remember how Farmak’s warehouses were bombed, did the state compensate at least one penny? We are all silent about it.

We all understand that all these expenses were borne by representatives of this business. Business in order, as they say, to develop and compensate.

Therefore, we believe that this issue should be very seriously considered, informed decisions should be made, and, you know, such drastic changes that are proposed should be postponed until the war ends. We are talking about something: if we are going to the European Union, then let’s go in the dress code that is used in the European Union, and not in the dress code that has Ukrainian specifics and Ukrainian realities. 

– It is also proposed to introduce a single electronic catalog that will regulate the prices of medicines, and is there a need to regulate prices by creating such an electronic catalog?

At a meeting on Saturday, which took place on December 14 at the Ministry of health, I asked the initiator of this proposal: please tell me, which EU country has such a model? There is no such model. Yes, there are electronic catalogs in the European Union and around the world, but they are used exclusively in public procurement, in procurement under UN or UNICEF programs. Pharmacies –do not use this tool in any country in the world. This is nonsense. 

What the initiator of these changes suggested: there is a model for obtaining credit resources at 5-7-9%. If you log in to the electronic catalog system, you must have a confirmed availability of funds that are blocked on the account. If there are no such funds in the account, then you need to take out a loan, and this is interest.  

– then how can the pharmacy remain profitable? 

Then what will happen: if this business is not profitable, then who will force and what tool to work at a loss? Who will compensate for all this? There is an interesting model here that everyone is silent about, and we, as a professional community, are talking about – this is nothing more than creating a new business. After all, the production of medicines, distribution, and pharmacy retail trade are strictly regulated by the license terms. And here the initiators insert manna from heaven in the form of these auctions (electronic catalog – Ed.). This is a business that does not require licensing, but it will have the most informative base, what the manufacturer produces, what  has a distributor, and what the pharmacy sells. Thus, a new tool of pressure on business appears. 

– in the mentioned amendments to the bill, among other things, it is proposed to ban marketing contracts in general, what consequences will this have?

Let’s go back to European legislation. European legislation clearly defines the role of marketing agreements – they are included in the price. The state approves the cost of medicines to the manufacturer, and the manufacturer, when forming the cost of medicines, opens the price structure, where it shows the cost price, advertising costs and marketing costs. Thus, the state has approved marketing as well. 

Marketing there works as a tool for reducing prices due to the fact that market consolidation in the European Union is taking leaps and bounds. That is, the more medicines a pharmacy has sold –  the greater the discount, and thus it can reduce the price by this amount. It’s like a price reduction tool. We have a distorted understanding of marketing, and we “all-Ukrainian pharmaceutical chamber” today are the initiators of the fact that it is necessary to regulate the price of the state with the manufacturer. 

Now for the second part – in the EU, only the price that is reimbursed by the state is regulated. If the state does not participate in the reimbursement of the cost of medicines, the prices for these drugs are regulated exclusively by the market. 

– If these amendments are adopted, do you think that global drug manufacturers will continue to be interested in cooperation with Ukraine and supplying us with new innovative medicines and their own pharmaceuticals here?

Today we had a meeting with the deputy head of the Regulatory Service of Ukraine, where all associations, foreign producers and the European Business Association took an active part. Everyone is categorically against these things, because I don’t want to make predictions, but it will be a disaster. It will be a disaster. The catastrophe is connected with the destruction, or let’s say, with the distortion of the very system of medical supply. 

If one of the initiators put, as they say, a technical report with figures, what it gives, then you can sit and analyze some figures, why so. Well, we hope that the BP Committee on national health and the Ministry of Health will not allow this. 

– Regarding the amendment proposed by MPs on quotas for the supply of critical medicines. These include insulin, various vaccines, and antibiotics. Critics of these amendments noted that the initiators did not take into account the specifics of the logistics for drugs and how well large distributors are able to provide it. In your opinion, is this kind of quota necessary at all? And what are the consequences, what are the consequences of what you said could be a catastrophe? 

The first thing I want to say as a pharmacist with 50 years of experience is that we remember the experience of  drug quotas in Soviet times. We know what quota means: Petro sat around and counted who had brought in what and how much to prescribe a quota. In a way, we are returning to the terrible Soviet times of corruption. 

And  during the independence of Ukraine, this has almost disappeared. Is there a problem buying medicine today? Today there is no problem to buy medicines, there is a problem in the person, because the state does not support him and I, as a patient, am forced to take 100% of all expenses on myself. In the European Union, part of the costs is borne by the state. For 30 years, we have not created a system of compulsory health insurance. And this is a tool that reduces the burden on the patient.

the last thing we wanted to clarify is,  in your opinion, is it possible, if we really reduce the supply of medicines from foreign companies, from foreign firms – to replace them with Ukrainian analogues or Ukrainian companies, is it possible, or is this already a fantasy? 

This is not from the science fiction section. I would divide this issue into two parts: there are drugs on the world market that are called Original and are under patent protection. These drugs can only be produced by the companies that developed them, and they are guaranteed by the patent legislation of the world that no one has the right to reproduce them. 

The development of a drug that is not original takes on average from the moment you pick up a blank sheet of paper, and to the fact that this drug will appear on the shelves of the pharmacy – this is at least 5-6 years. I don’t even want to name the numbers, money and how much you need to spend, it’s not just to sit down and prick. It is necessary to conduct clinical trials. That is, it is a zero cycle that is not visible, but it requires huge costs. Today in Ukraine, just to register a drug – with all these studies – from 30 thousand euros is required. That is, if, relatively speaking, someone would like to do this, then you need to know it, there are relatively speaking 5 years left to do it.  so I don’t want to think that this can happen, because it will be a disaster.  

See the full version of the interview at Link.

* in the photo before the novelty, the head of the Board of the All-Ukrainian Pharmaceutical Chamber, member of the People’s Federation of Pharmacy (FIP), member of the American Pharmaceutical Association (APhA) Oleg Klimov (Chetverty ziva) in the warehouse of the delegation of the People’s Federation of Pharmacy (FIP) to the General Assembly All-holy Organization, bury your health. FIP General Secretary P.K. Duggan was angry, followed by FIP President  D. Jordan.