“This is not about pressure on pharmacies, it’s about fair rules of the game for all market participants”: MP Kuzminykh on the new regulation of the pharmaceutical market

From March 1, 2025, Cabinet of Ministers Resolution No. 168 came into force in Ukraine, which provides for new rules for regulating the pharmaceutical market. In particular, restrictions were introduced on markups on supply and marketing and retail allowances for all medicines, and not only for certain categories. In addition, the resolution prohibits retail from entering into marketing agreements with pharmaceutical manufacturers, which allowed pharmacies to offer discounts to patients, implement social projects and conduct training for pharmacists.

The head of the subcommittee on pharmacy and pharmaceutical activities of the Verkhovna Rada Committee on National Health, Serhiy Kuzminykh, in an exclusive interview with UNN, spoke about the new regulation, marketing restrictions, fair markups and why the changes were needed now.

— Mr. Serhiy, you voted for draft law No. 11493, which resulted, among other things, in CMU Resolution No. 168, which restricts markups and prohibits marketing agreements. But many experts say that this regulation was poorly calculated economically and hit the pharmacy market. Who is responsible for the calculations, and were there any at all?

— It was a decision of the National Security and Defense Council to develop draft law No. 11493 and vote for it in the Verkhovna Rada. The law itself does not prohibit marketing, but there is a decision of the National Security and Defense Council and it reads verbatim as “to prohibit marketing agreements until the introduction of reference pricing”.

Regarding markups: previously, they were regulated only for drugs included in the National List of Medicines. Now it is established: 25% — for prescription drugs, 35% — for over-the-counter drugs, and 10% — as before, for “Affordable Medicines”. In my opinion, this is the right initiative, all drugs sold in pharmacies should be controlled, and this resolution gives us the opportunity to do so.

Regarding the prohibition of marketing. The marketing that allowed selling medicines or medical devices was prohibited. I repeat for the hundredth time, a pharmacy is not a store, a pharmacy is a healthcare facility. Therefore, they should not sell based on any marketing services. Some minimal marketing in the form of renting shelves may be – this is a normal story. Therefore, the Ministry of Health is currently holding public discussions on a resolution on marketing regulation. Currently, it stipulates that marketing should not exceed 10% of the total turnover of drugs in a pharmacy. In my opinion, the percentage of marketing should be calculated from a specific drug, and not from the turnover of funds of the pharmacy. I have already sent my comments to the Ministry of Health.

Note from the editors. At the same time, Serhiy Kuzminykh’s colleagues drew attention to the fact that despite the ban on marketing agreements between pharmacies and manufacturers, which, in fact, freed the plants from the need to pay interest to retail, prices for medicines not only did not decrease – they continue to rise rapidly. Pharmaceutical plants stated that they were forced to pay pharmacy chains 40-60% of the cost of the drug under marketing agreements, and this affected the selling prices of medicines. However, after the ban on marketing, manufacturers did not reduce the selling prices by these 40-60%.

– In response to our request, the State Tax Service reported that Ukrainian pharmaceutical manufacturers paid only slightly more than UAH 4.5 billion in taxes in 2024. This is almost a billion less than pharmacies, and more than twice as less as distributors. Experts have already predicted that due to the new regulation of the pharmaceutical market, the state will not receive about UAH 10 billion in tax revenues per year. How are you going to compensate for the shortfall in the budget, because, according to statistics, manufacturers pay the least taxes?

– I have heard about this story and even talked to the head of the State Tax Service. Marketing is included in the manufacturer’s price – if the drug costs, say, UAH 100 + UAH 10 marketing payment, then it is sold for UAH 110. And we pay this as consumers.

And what is the tax paid on? From profit. For pharmacies, marketing payments do not go as profit, but as a service. Therefore, the ban on marketing will not affect tax revenues in any way.

Note from the editors. It is worth noting that, according to experts’ forecasts, the new regulation will still lead to a decrease in tax revenues for several reasons: 

• the markup restriction reduces the profits of pharmacies and distributors, from which, as Serhiy Kuzminykh noted, taxes are paid; 
• 20% VAT is paid on services, and now, due to the ban on marketing agreements, there will be no tax revenues. 7% VAT is levied on sales of medicines. Therefore, even if the promotion costs remain in the price, the taxes will still decrease by at least 13%.

– In your opinion, how exactly do changes in pricing policy affect the availability of medicines for Ukrainians? After all, more than 80% of drugs from the TOP 100 list cost up to UAH 250, while the average check of a pensioner for drugs against cardiovascular diseases ranges from UAH 500+ per person per month. The most expensive drug that the state offers to people at a reduced price costs up to UAH 560. 

– The logic was as follows – to take those drugs that are most often bought. Drugs were selected so that as many people as possible could quickly feel that there is a certain decrease in cost. Of course, it was a little funny when vitamins appeared in the list, but that’s what people buy. Now they will add about 160 more drugs.

– So the goal was just to show people that prices have become lower, and not to lower prices for really necessary drugs?

– No, wait. Previously, pharmacies also sold what they wanted and what they paid for marketing. Now the pharmacist provides some pharmaceutical service, and does not choose what marketing is given for or not given for, what is more profitable to sell or not more profitable in a particular pharmacy.

Note from the editors. At the same time, doctors criticized the Ministry of Health’s approach to forming a list of drugs for price reduction by popularity. In particular, due to the fact that the list of drugs included unproven drugs that are in demand, but do not have proven efficacy. In addition, Deputy Head of the Office of the President Iryna Vereshchuk was skeptical that the list of popular drugs, the prices of which should be reduced, included clofeline.

– Patients on social networks complain that medicines of Ukrainian production that are not included in the lists of the Ministry of Health have become more expensive. How can you comment on this? Do manufacturers act according to the same scheme as for drugs from the list – first we raise prices, and when they say to lower them, we lower them a little and stay with profits?

– Manufacturers have definitely not raised prices this year. The State Consumer Service controls the cost of medicines in pharmacies and has already received 1,200 complaints from citizens in March, violations were detected during 44 inspections, and fines were issued for 220,000 hryvnias. So who is to blame in this story?

Note from the editors. Ukrainians on social networks are massively complaining about rising prices for medicines that are not included in the Ministry of Health’s list, and blame manufacturers for this, who form 72% of the cost of the drug.

– Again, if we return to patient feedback. On social networks, Ukrainians drew attention to the fact that, according to the data on the Tablets.ua website, prices for medicines that were included in the lists for cheapering were raised back in the fall of 2024, and after the introduction of new regulations, manufacturers reduced them even not to the level of the summer of 2024. In this regard, the question arises, have medicines really become cheaper, or have manufacturers simply been able to outplay the Ministry of Health and people’s deputies, having formed a “safety margin” before that?

– Tablets.ua formed the cost, not the manufacturers. I am a father of three children and I also buy medicines in pharmacies. It was like this – you go to a pharmacy chain and choose drug X, and then you go to the Tablets.ua website and choose the same drug in the same chain, then it is already 20% cheaper through the website. Therefore, the issue of banning marketing arose. Now, if you go to Tablets.ua, you will see that the cost is generally the same, both in the pharmacy and on the website. And this is a great story if we can buy any drug in any pharmacy, or order it online, and it will be at the same price for everyone. And we need to go to this, because this industry has not seen reforms for a long time.

Note from the editors. For the sake of objectivity, it is worth noting that pharmacies pay rent for premises, utilities, and salaries to employees, and therefore their markup on certain drugs may be slightly higher than on the website. In addition, the Tablets.ua website does not form the cost of medicines, but rather is an aggregator that reflects the current cost of drugs.

– Some foreign manufacturers have stated that if reference pricing is introduced, they will be forced to leave the Ukrainian market, because the compliance of international companies obliges them to set the same price for drugs in all countries. Also, due to marketing agreements in Ukraine, pharmacies could provide discounts on drugs. But now it is forbidden. Will these factors affect the shortage of medicines or their rise in price? What is your opinion?

– Indeed, there was such a risk due to the restriction of 8% for distributors and importers who have an official representative office in Ukraine. We consulted with the European Business Association, the American Chamber of Commerce and made changes that allow importers to continue working normally.

Note from the editors. At the same time, patients complain that due to the introduction of new regulation, access to imported drugs has decreased.

– You emphasize the need to introduce uniform qualification requirements for pharmacists and create a unified register of pharmaceutical workers. Do you not think that such initiatives may lead to a shortage of qualified personnel in pharmacies, especially in rural areas, as well as in frontline territories?

– Separate provisions are currently being developed for frontline territories. Consultations are being held with all market participants. Simplified conditions are really needed there, because there is a problem with personnel. 

But in cities such as Zhytomyr, Kyiv, there is a different problem with pharmacists. I spoke with the Academy of Pharmacy in Kharkiv (National University of Pharmacy – ed.). The trend is very bad – people are not entering to study as pharmacists, because the pharmacist has become not a pharmacist, but just a seller in a pharmacy.

A pharmacist is a person from the medical world who provides a medical service, not just a seller, no matter what. And I want to be sure that I am served by a pharmacist in a pharmacy. Because, if we talk about the prescription group of drugs, then I go to the pharmacy with the active substance, and then the pharmacist must provide me with a quality service.

– Representatives of small businesses tell us in the comments that there are only 1,200 pharmacy-sole proprietors operating in Ukraine and the new regulation, in particular, the markup restrictions, will force them to close. Why is the position of small businesses not taken into account? Do you understand what you will do if small pharmacies, which usually operate in rural areas, stop their work?

– I also talked to small pharmacies. They say that they have started earning better than before. Let me explain why they started earning. They have never had marketing in their lives. Competing, they could not raise the price higher, because large chains crushed them. Now there is no marketing, the markup cost is the same for everyone, and that’s it, small pharmacies say that they have started earning at least something. They have become competitive. 

Note from the editors. At the same time, in the comments to UNN, representatives of small pharmacies are concerned about the established markup restrictions and ask to increase their size in order to “survive”. 

– But we talked to representatives of small pharmacies, and they complain that the markup restriction, on the contrary, will “crush” them and, on the contrary, force them to close. Do you think this is not true?

– Talking to the Ministry of Health, we agreed that we need to look at the market in March-April. The goal is not to close pharmacies or make this business unprofitable, the goal is to regulate correctly so that it is a pharmacy, and not something else. And if we see after April that these markups are really not enough, then the resolution will be changed. 

Now there are a lot of manipulations going on – from the side of pharmacies, manufacturers and distributors. But, when you receive data from the tax authorities or other structures, everything is a little different. The goal is not to close pharmacies.

Note from the editors. Owners of small pharmacies complain that they are forced to work at a loss and if this continues, they will be forced to stop their work.

– So I understand correctly that there is a “plan B” if it becomes clear that pharmacies have started to close en masse, and there will be a revision of those norms that have already been adopted? 

– Of course. Now pharmacies in the chains have started to close. But they close not in villages, but in large shopping centers. In villages, it is a priority for pharmacies to work. 

– Mr. Serhiy, you are actively promoting new regulatory measures regarding the activities of pharmacies, in particular, the introduction of reference pricing and restrictions on marketing payments. Why have pharmacies become the object of such strict changes, because studies indicate that the main cost of the drug (72%) is laid down by the manufacturer. Why does this remain beyond the attention of legislators?

 – Look, now there are manipulations on all sides – manufacturers, distributors, pharmacies. Reference pricing will affect manufacturers. On January 1, 2027, a law comes into force, which quite thoroughly, according to all European directives, prescribes everything for manufacturers. 

It cannot be said that regulation concerns only pharmacies. For pharmacies, we only have limited markups, it is determined what a pharmacy chain is, but this was a request of the Antimonopoly Committee, and marketing. It hurts, but we didn’t take it away, that was the decision of the National Security and Defense Council.

– So in the future there will be initiatives that will regulate the activities of manufacturers? 

– Of course, this is not a story about let’s close pharmacies.

Note from the editors. According to the Apostrophe publication, at a meeting chaired by Deputy Head of the Presidential Office Iryna Vereshchuk, a decision was made to conduct inspections of all links in the drug supply chain – manufacturers, distributors and pharmacies – in order to find out where exactly the price reduction is “stuck”.

– Talking to representatives of the pharmaceutical market, we received information that during the development of changes to CMU Resolution No. 168 on drug prices, Moldova was excluded from the list of countries that can be used as reference. This was lobbied by large Ukrainian manufacturers, because they currently sell some of their drugs in Moldova cheaper than in Ukraine (“Analgin”, “Taufon” drops, “Naphthyzin” drops, “Corvalol” drops). Do you consider it normal situation when medicines of Ukrainian production in Ukraine are more expensive than abroad? And here again the question arises, why are manufacturers not regulated by anyone and in any way?

– It seems that Moldova has not been excluded yet, only discussed. I doubt that Ukrainian manufacturers sell cheaper medicines abroad than to us, Ukrainians. I doubt that “Analgin” is sold in Europe at all.

Note from the editors. UNN compared the prices of some medicines of Ukrainian production, which are sold on online services in Moldova. 

For example, 10 ampoules of “Analgin” produced by the Ukrainian company “LekHim” in Moldova cost about UAH 56.60 (at the NBU exchange rate). The average price of the same drug in Kyiv is about UAH 77.

In addition, “Taufon” eye drops (10 ml) from the Ukrainian manufacturer “Farmak” cost from UAH 43.30 in Ukraine, the average price in Kyiv is approximately UAH 60. In Moldova, the price of the Ukrainian drug is twice as low – 12.32 lei, which at the official NBU exchange rate as of April 2, 2025 is approximately UAH 28.38.

Another example is oral drops “Corvalol” (25 ml) from the same manufacturer:

• in Ukraine – from UAH 29.51 to 38.77;
• in Moldova – 11.24 lei (UAH 25.91).

– You are actively advocating for the prohibition of marketing agreements between the manufacturer and the pharmacy, because this is supposed to reduce drug prices. However, as experts in the pharmaceutical market point out, in the EU countries, economic relations between manufacturers and pharmacies are not controlled or restricted by the state. In this regard, the question arises, does the new regulation not contradict Ukraine’s European integration aspirations and does it not distance our accession to the EU? Did people’s deputies consult with Vice Prime Minister Olha Stefanishyna and European partners on European integration issues before adopting innovations regarding the regulation of the pharmaceutical market?

– Indeed, in the EU countries, markups on OTC drugs are not regulated. But we have a situation where the state was forced to intervene in this story. In our country, the manufacturer, distributor and pharmacy chain began to do some surrealism and forgot that they are engaged in a socially important product for Ukrainians. Therefore, they intervened in this story. 

Note from the editors. Serhiy Kuzminykh  promised to talk to Vice Prime Minister for European and Euro-Atlantic Integration Olha Stefanishyna about whether the new regulation of the pharmaceutical market contradicts European legislation.

– How do you assess the current state of cooperation between legislators, the Ministry of Health and pharmaceutical market participants? Do you believe that the existing dialogue is effective enough to develop balanced solutions that take into account the interests of both consumers and businesses? 

–  The main thing is that there is communication, someone will always be satisfied, someone will be dissatisfied. We are trying to find a golden mean that would suit everyone. Both manufacturers, distributors, owners of pharmacy chains, and small sole proprietors. So that any patient can receive quality medicines and pharmaceutical services. 

Note from the editors. The head of one of the professional pharmacy associations, Olena Prudnikova, in a comment to UNN emphasized that the Ministry of Health does not hear small businesses and protects only manufacturers. 

– By the way, how do you like the list of TOP 100 medicines, the prices of which should be reduced? Do you often use oak bark and pine buds?

– Never. Maybe sometime, but I don’t remember. I agree that there is a certain surrealism in this story. But I understand the logic of the Ministry of Health. They are asking for discounts on the TOP 260. If we buy corvalol or validol well, then they got into the list.

Note from the editors. Earlier UNN reported that at one of the meetings chaired by Deputy Head of the Presidential Office Iryna Vereshchuk, it turned out that the so-called TOP 100 or the list of drugs, the prices of which should be reduced by 30%, was formed not by the Ministry of Health at the proposal of doctors, but by the manufacturers of medicines themselves.

“This list was not prepared by us, it is what the manufacturers gave us,” said Deputy Minister of Health Edem Adamov.

– As Dr. Komarovskyi says: “If you are not sucking validol yet, then we are coming to you.” 

– Komarovskyi is not a doctor. This is also a problem of marketing and Komarovskyi.

Note from the editors. Yevhen Komarovskyi is a Ukrainian pediatrician, candidate of medical sciences, doctor of the highest category.

– And the last question. How do you feel about the fact that individual officials or ministries violate the legislation of Ukraine? The State Regulatory Service officially informed us that the draft CMU resolution was not submitted to them for examination, which is a violation of the Law on Regulatory Policy. The Ministry of Health is directly accountable to your committee. Do you plan to investigate this situation and bring those responsible for violating the law to justice?

– Send me the information, I will look into it.

Note from the editors. It is worth noting that the State Regulatory Service in response to a request from UNN reported that the draft CMU resolution No. 168 was not submitted for approval or consideration to the SRS. At the same time, the regulatory service emphasized that the effect of the law on regulatory policy extends to all draft regulatory acts. The SRS also added that the specified resolution is regulatory. UNN sent Serhiy Kuzminykh the response of the State Regulatory Service.