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Our View: Pharmacies get a taste of their own medicine

EVERYONE likes to complain about the high prices of medicine in Cyprus, but nobody is prepared to do anything about it. Earlier this week, comments by the Auditor-General Chrystalla Yiorkadji sparked the customary round of moaning by politicians and media, without anyone coming up with suggestions as to how prices could be reduced.

Ms Yiorkadji played the populist hand, alleging during a House committee meeting that she had received threats from drug importers after she accused them of profiteering at the expense of the public. She spoke like a true politician when she said “my top priority remains the issue of the cost of medicine as they are expensive and this affects the public.” And like a politician she chose the easy target – the pharmaceuticals importers – to blame for the high prices ignoring all other causes.

But there is a long list of reasons that account for the very high prices. First, Cyprus is a tiny market and the small quantities of drugs bought from pharma companies, means the discounts are smaller. Second, the four reference countries Cyprus uses to calculate the average wholesale prices for drugs are among the more expensive in the EU. Former health minister Stavros Malas said that if the reference countries were changed prices could have come down by between 10 to 15 per cent. Third, the state pharmaceutical services might not give approval for the import of the most competitively priced make of drugs, as the media have reported on several occasions.

Fourth, some drug importers may indeed be working with big profit margins, but the biggest factor contributing to the high prices is the fifth – the excessive number of pharmacies, the extortionate profit margins of which are guaranteed by law. There are 486, which according to Malas works out at one for every 1,700 customers compared to one for every 17,000 in Denmark. The law stipulates that drug prices would incorporate a profit margin above 30 per cent for pharmacies, which is why there are so many more than the size of the population justifies.

If the profit margin was reduced to 15 per cent, prices would come down by the corresponding percentage. Some pharmacies might have to close down, as a result, thus reducing the distribution costs of the importers. There are obvious practical steps that could be taken to reduce drug prices by at least 25 per cent, so why is nothing being done by the politicians that are so concerned? Why does Ms Yiorkadji, as an independent state official for whom “reducing the price is one of my main goals,” not issue a proposal on how drug prices could be reduced, instead of engaging in populism?

Enough words, we need to see actions.

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