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Ukraine's current healthcare market: Uncertainty, pricing reforms, and calls for the health minister's resignation

28 July 2014 Kavita Rainova

Over the past few weeks reports have been surfacing in the Ukrainian media over calls for the resignation of Ukraine's current Health Minister, Oleg Musiy. Although it is difficult to gauge the reliability of the reports - as to whether this is something that is indeed being seriously considered by policy makers - the reports nonetheless provide a window into some of the uncertainty faced within the country's healthcare system.

Instability takes its toll
Given the current socio-political instability in the country, uncertainty in the healthcare system is not surprising. However, some of the news coming from the country is dire in terms of the implications for the access of medications to the population:

  • In June concerns were raised over the Ministry of Health (MoH) not having conducted the auctions for the provision of drugs under the various government programmes, which include treatments for conditions like tuberculosis, diabetes, cancer, and HIV/AIDS.
  • In the same month, it was reported that reimbursement under the country's pilot hypertension scheme, which introduced state pricing regulations, and a mechanism for the partial reimbursement on certain hypertension drugs, had not been carried out for some time. This necessitated pharmacies to sell these medications at the full price.

The MoH has since issued a press release stating the hypertension programme is continuing, which to some extent contradicts other reports. Considering the varying reports, the status of the various programmes, procurement process, etc. is not clear. However, if delays are in fact occurring in the procurement and reimbursement process, on top of the 7% VAT on medicines put in place earlier, this will have serious consequences in terms of reducing the affordability and accessibility of medications especially to the more vulnerable sections of Ukraine's population.

Planned changes to healthcare provision
In the meantime, while breaks in the current system are being reported. The MoH has also announced several major initiatives changing the healthcare provision landscape in the country. One of these is the planned introduction of reference pricing on certain drugs. Specifically, the system of price regulation, which is to include international reference pricing, will affect medications procured by healthcare institutions through state and local budgets. Countries to be included in the referencebasket include Bulgaria, Hungary and Moldova, among others, representing a comparatively low-cost basket. The introduction of a system of price controls, on the one hand, no doubt, represents a negative development for the pharma company. On the other hand, from the perspective of the MoH, controlling the price on drugs procured through state and local budgets, presents a way to contain costs.

At the same time as the pricing on the aforementioned drugs is in the process of being put in place, the Health Minister has also announced the planned creation of a new "management model" for provision of healthcare which would involve a "two-tiered" system of financing. The model represents Musiy's aim to create a more decentralised system of healthcare, whereby for instance, specialised care would be financed at the national level, and primary and secondary care at the regional level. The model is reportedly being created by taking into consideration the WHO's recommendations. Although the introduction of a more decentralised model may, for instance, mean that potential delays at the central level may not affect all the regions, it, however, also raises questions over ensuring sufficient funding at the regional level.

In conclusion…
Overall, Ukraine's aim of bringing its legislation closer to that of the EU may bring a degree of predictability for foreign companies and may be beneficial in particular for European companies looking to access or expand into the Ukrainian market - even if it also brings significant risks on pharmaceutical pricing. For the time being, however, the process of implementing changes in the system, and the continuing economic and political instability, makes the country an uncertain and difficult market for pharma companies to operate in.

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