The Association of Young Financiers and Businessmen (AYFB) has developed the Panaskerteli Index for monitoring of medication prices. The AYFB conducts the research work on monthly basis and supervises prices of 200 most in-demand medications. Under the research results, medication prices continue declining over the past 4 months.
Tinatin Turdziladze, head of the Healthcare Experts Club, comments on this issue:
According to the AYFB reports, medication prices are declining over the past 4 months. Do you agree with this conclusion?
This research exposes certain dynamics of change in consumer prices on the market. This information is not sufficient for me for making extrapolation of the price decline conclusion, but based on this and other reports, I can note that we witness eroding medication prices.
These processes are quite complicated, as expected. I suppose prices have declined after cheaper generics were imported to the Georgian market. At the same time, prices have increased on the so-called blockbusters of the Georgian market that still remain untouchable by the competitive environment.
The business sector is expected to compensate losses in this way, even more so holding companies prioritize selling their own products in their own pharmacies. It is clear that this aspect will create serious problems to retail sales of the competitive product. Thus, we witness quite contradictory processes.
Do you mean imports of cheap medications by Humanity Georgia have driven a contraction in medication prices?
Naturally, I mean that the Humanity Georgia strategy for cheap generics have inspired eroding prices on the Georgian market.
In general, what effect do new players bring to the existing situation?
The influence of a new player is determined by many factors: investments volume, strategy, commodity portfolio… Before entrance of Humanity Georgia, thousands of economic agents were working on the market, but their influence was commensurate with their commodity ratio on the market.
I expect that the major commodity portfolio of Humanity Georgia and its strategy will substantially change the Georgian market realities. The final outcomes of this process depends on how valuably and professionally generics and simulates will be separated. If this separation ends successfully, the main task will be fulfilled.
As to companies that were creating the Georgian market landscape, they may shift focus onto the branded segment and private insurance reimbursement, while another part may remain in the sector of cheap generics, but they will have to sell these medications for the price of generics. The business sector remains in the competition regime under this model and both the state and the society will benefit. This process is very interesting.
In the free market, as a rule, the Authorities apply two leverages: tightening regulations and promotion-support of competition. Our Authorities have chosen the second way by promoting the appearance of new players.
How would you appraise this policy for encouraging free competition to ensure price declination on medications?
Our objective is not freedom of market or its regulation in itself. Our objective is to provide access to efficient and high-quality medications. A reasonable set of regulations and competition exists to this end. At this stage, the competition injection was made on the pharmaceutical market.
This is a correct decision but this does not suffice….It is correct because we need reduction of costs, but this does not suffice for real affordability, because the generics of approved efficiency cannot be cheapened endlessly. Our population will need financial support in the component of medications.
Therefore, co-financing schemes should be introduced in the form reimbursement or subsidization. In this case, the Authorities may also apply price regulations instrument too. At this stage, therapy of prices is carried out through cheap generics. The objective is to erode the monopolistic prices. In theory these schemes are correct, but it remains contradictory anyway amid the existing business models.