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7 Pharmaceutical companies suspected of banding together to raise prices. The list could get longer

03.02.2009   

The Anti-Monopoly Committee’s preliminary findings suggest that a conspiracy between several pharmaceutical companies could have heightened a rise in prices of medicines. They suspect companies in Kyiv and Dnipropetrovsk. Radio Svoboda looked into the allegations and reaction to them in a recent broadcast.

Since  October last year the price of some medicines have jumped sky high, sometimes by as much as 100%  Members of the Government decided that extra charges on medicines were not economically justified, and the Cabinet of Ministers placed a restriction on them. The President, however, suspended the force of this Cabinet of Ministers Resolution. For its part the Anti-Monopoly Committee began an investigation into the additional charges. It expects to conclude the investigation in March, but thus far reports that 7 companies have artificially hiked prices – 5 in Kyiv, and 2 in Dnipropetrovsk.

Radio Svoboda approached the two in Dnipropetrovsk but these refused to make any comment.  However managers from their sales department say that their firms do not produce the medicines, but only export them and are therefore directly dependent on the exchange rate. They add that they don’t have to make excuses to the public – all explanations are to the Anti-Monopoly Committee.

The regional authorities report that prices in the region are stabilizing and say that they have signed a Protocol of Understanding with the producers, importers and vendors of medicines, agreeing on the prices and minimum retail stocks of a list of socially significant medicines.

Yet regular monitoring of the price situation by the authorities and the threat of financial sanctions on the pharmaceutical companies has little impact: the prices in chemists are gradually going up. Some medicines, like painkillers and cold remedies, particularly in demand at present, have doubled since last year.

The companies say that if they obey the Cabinet of Ministers precepts, they will be working at a loss since 75% of the medicines in the region are imported, and following the sharp fall of the UAH against foreign currency it was impossible to maintain the old prices.

The situation is not much better in Kyiv’s chemists. Pensioner Kateryna Mykhailivna has to regularly buy medicine to stabilize arterial pressure and for the heart. She needs different types of drugs, but they are all united in one thing: they have risen in price by at least 40%, and some have doubled.

While a representative of a pharmaceutical company insisted that the reason for the increase lies in the exchange rate fluctuations, spokesperson for the Anti-Monopoly Committee, Bohdan Yakymyuk asserts that the exchange rate is simply a cover to justify their actions.

Economist Oleksandr Zholud is inclined to agree that the main spur has been the sharp weakening in the position of the hryvnya.  He believes that freezing prizes will lead to the cost price exceeding the amount earned by sales, and production could stop leading to a shortage of medicines.

On the other hand, the Chair of the National Council on Healthcare issues, Advisor to the President and former Minister of Health Mykola Polishchuk is adamant that in a time of crisis, the state must stipulate a guaranteed minimum of medical care provided to the public. He believes that the Ministry of Health should as soon as possible draw up a list of vital medicines, and the Cabinet of Ministers should regulate prices on medicines.

The Anti-Monopoly Committee say that the list of companies suspected of artificially hiking up prices may get larger. If the suspicions are confirmed, the companies could face penalties of up to 10% of their annual profits.

Based on material at www.radiosvoboda.org

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