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Our View: Cutting med prices is not the solution

EVERYONE knows that medicine prices in Cyprus are among the highest in the world. This was also noted in a report by the World Health Organisation (WHO), which said that drugs in Cyprus were among the most expensive in the world. However, last year’s WHO report warned that a drastic reduction of prices “may have adverse consequences… in terms of availability, and therefore needs to be studied carefully before being implemented.”

As would have been expected, the reductions were implemented without the “careful study” advised. In January, Health minister Philippos Patsalis slashed prices of about 2,000 medicines by, on average, 15 per cent although it was said that some cuts were as high as 80 per cent. He also announced additional cuts of up to 10 per cent by last month, but did not stick to the plan, instead issuing a decree by which all medicines with prices above €10 would be subject to an 8.5 per cent reduction on June 29.

This slapdash approach by the ministry has raised the danger that the WHO report had warned about last year. “The price cut should not be too substantial in order to ensure the continued supply of product on the Cypriot market,” it warned. These supplies are now being threatened, according to the Cyprus Pharmaceuticals Association (CPA), by the ministry’s pricing policy. The association said that drugs manufacturers abroad were considering stopping the supply of certain drugs, because the expected, additional price cut would make them unprofitable.

This should come as no surprise as no business is prepared to sell its products at a loss. Patsallis’ response to this was that if importers stopped bringing in drugs, the state would undertake this. In such a case, drugs would still not be available given how inefficient and slow the state services are, not to mention the risk of corruption affecting decision-making. The state cannot be trusted to do the job which means the Health ministry needs to go back to the drawing board.

The answer is staring everyone in the face, but nobody dares mention it. The state should amend the obsolete law that guarantees a margin of close to 30 per cent on all medicines sold by pharmacies. Once the margin is cut down to 15 per cent, or left to importers to negotiate with each pharmacy, prices could be reduced immediately. This would not even affect pharmacies that much, as drugs account for a relatively small proportion of their turnover. But even if a few pharmacies were forced to close down, because of the smaller margins, it would not be a problem as there are far too many at present.

Of course, Patsallis and the government avoided touching the super-profits of the pharmacies, enshrined in law, because they were terrified of the reaction of a few hundred chemists. They would rather leave the country without many drugs than anger the chemists.

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