Activities of Kazakhstani pharmaceutical and medical enterprises in the new economic environment are complicated by a number of problems

The National Chamber of Entrepreneurs of Kazakhstan "Atameken" held an extraordinary meeting of the Committee of the pharmaceutical and medical industry and medical services. Its purpose was to discuss the current state of the pharmaceutical market and medical services in the conditions of the guaranteed volume of free medical care in connection with the introduction of the new monetary policy in Kazakhstan.

The event was chaired by a member of the Management Board, Deputy Chairman of the National Chamber Yuliya Yakupbaeva.

Before the meeting, the deputy chairman of the Chamber solemnly handed the president of association of suppliers of medical equipment "FarmMedIndustria Kazakhstan" Serik Sultanov a medal "The twentieth anniversary of the Constitution of the Republic of Kazakhstan". Shortly before that, Serik Egelevich was presented with this award by the presidential decree for his significant contribution to the development of the pharmaceutical industry in the country.

During the discussion of topical theme of functioning of subjects of the pharmaceutical market in the new economic conditions, there were made proposals on the formation of the "Plan of measures to promote economic growth in the medium term", developed by the Ministry of National Economy of Kazakhstan.

The panelists criticized the inadequate pricing mechanism for products purchased in the framework of guaranteed medical care. It was noted that the existing procurement procedures should be improved and, in particular, there should be applied the coefficient of exchange rate of tenge to the dollar.

During the discussion, pharmaceutical manufacturers and distributors have expressed concern about reduced profitability of their companies, and pointed to the possible risk of disruption of the activities of drug provision of the population.

"Today it is necessary to take into account a number of important points: the price margin of  LLP "SK-Pharmacy" at a rate of 9% was excluded, the cost of business credit line in the amount of 3% of the monthly payment for the delivered products. The single distributor makes the payment for the delivered products after 90 business days "- drew the attention of the audience the general director of "Stofarm” Anvar Erlepesov.

According to him, before adjusting the rate of tenge, pharmaceutical companies have negotiated lowering of prices with the Ministry of Health and Social Development of the Republic of Kazakhstan. According to their results the price of essential medicines has been reduced by 20%. Further steps of reduction of the cost of medicines and drugs led to lower prices, a total of 50%. However, ministry officials believe that this is not enough.

"Ministry compared our prices with the indicators of the Russian market, which creates unequal conditions for Kazakhstani businessmen. If manufacturers are often willing to work at reduced prices in Russia because of the large volumes of sales, it is not possible at the Kazakh market", - said A. Erlepesov.

Participants of the meeting shared other pressing problems.

"In services of distributors import equals to 100%. At the same distributors have an important task to ensure uninterrupted supply of public medicine. The transition to international standards of GDP also requires significant investment. According to the results of operations for 2014, we received a loss of nearly 3 bln., of which only 20% were offset by foreign partners. Limited access to borrowing and expensive certification procedures increase non-production costs of distributors. If no measures are taken, the distributors will soon refuse to supply products to the population", - said the General Director of  LLC "KFK Medservice" Zhanat Karimov.

Among other issues touched upon by the businessmen were discussed frequent "spontaneous inspections" of pharmaceutical companies by government agencies. The state authorities refer to cost containment on pharmaceuticals, which is inconsistent with the business solutions. "In March of this year, business associations signed a memorandum to curb the price for 200 items of medicines and medical supplies intended for the Ministry of  Health and Social Development of the Republic of Kazakhstan. Recently, however, in Karaganda, representatives of the local department of the Antimonopoly Committee checked the number of pharmacies for cost containment, in accordance with its own list of drugs. What does it mean? Another memorandum was signed without our consent? How many such lists are there? "- said with indignation the representative of LLP "Amanat" Alexander Shvechihin.

There are also other administrative barriers, encountered in a pharmaceutical business.

"I recently received an order of the Minister of Health and Social Development of the Republic of Kazakhstan dated by May 29, 2015 № 421”On Approval of the Rules of pharmaceutical control of drugs and monitoring of side effects of medicines, medical devices and medical equipment”. This document stipulates that manufacturers should provide updated periodical reports about the safety of medicines, medical products and medical equipment to the authorized organization with the translation of information from English into the state and Russian languages. Such reports usually have more than one thousand pages. Their translation costs businesses between $ 1,000 to $ 5,000. It is clear that these costs will be included in the final price of the products. It is necessary to reconsider this procedure ", - suggested the representative of the company "Johnson & Johnson" Ravil Blatov.

Executive Director of the Association of International producers of Kazakhstan Svetlana Ospanova noted the problem of dual certification.

"We need to eliminate the double certification (Safety and Quality Assessment) of drugs. Currently this check is done by evaluating the conditions of production abroad with the visit of the production site at the expense of entrepreneurs. But, at the same time, we check every batch of products. And these costs are reflected in the price of the finished products in Kazakhstan and reduce its competitiveness", - said Svetlana Ospanova.

President of the Association of private medical institutions Gulnara Otepova and president of the Association of suppliers of medical equipment "FarmMedIndustria Kazakhstan" Serik Sultanov noted the significant support provided by the National Chamber for the support of domestic producers and on the interaction of businesses with government agencies in the framework of improving the Sanitary Rules, taking into account the features of private medical organizations.

Following the meeting, members of the pharmaceutical and medical industry and health care providers have adopted a number of decisions. First –to make consolidated proposal to the "Plan of measures to promote economic growth in the medium term", with a clear rationale for the revision of prices and procedures for procurement of medicines in the framework of guaranteed medical care, no later than by September 1 for further directions in the NEM RK.

The Committee decided to send a letter to MHSD of the Republic of Kazakhstan on the need to review the prices of medicines and medical products in the framework of SGBP with the introduction of the new monetary policy in Kazakhstan.

It was decided to establish a working group to reduce administrative barriers to the implementation of entrepreneurial activity in the health sector, to include analysis of regulatory framework.