Sociologist from Malta

Friday, January 22, 2010

Making medicines affordable

Michael Briguglio

The Times 22nd January 2010

The prices of medicines in Malta are among the highest in Europe. Statistics tabled in Parliament last year show that, on average, Maltese consumers pay about 40 per cent more for imported medicinal products than anywhere else in Europe. Why is this happening?

The small size of Malta's economy might have to do with this but one suspects there are other reasons that have economic and political implications.

Here, one has to take into account the power of big-business pharmaceutical companies capable of fixing prices in the supposedly "free" market. It seems to be the case that such companies have their chosen importers in Malta who, in turn, do not help matters in giving fair prices to patients and consumers here.

With Malta's entry in the EU, where markets became more liberalised and parallel imports were allowed, one would assume that, if prices in Malta are excessive, it would pay for some outlets to import them from countries where medicinals are cheaper.

It appears, however, that mother companies, especially of drugs with patent protection, do their utmost to stop this from happening by withholding supply to outlets in countries that encourage parallel imports to Malta. In this way, the local importers are sheltered from the competition of parallel imports. Besides, if parallel imports do not result in cheaper prices of medicinal products, it would mean the method is simply used to increase profits.

From our analysis of the situation, Alternattiva Demokratika - the Green party believes there are various factors that are distorting the market.

With regard to the importation of medicinal products sold by the private sector, we believe the most effective way to ensure this is not a profit-maximising operation to the detriment of patients is to have direct government importation of essential medicinal products, without restricting private businesses from also importing them.

Here, the government will be competing with other local companies, possibly benefitting from economies of scale, which will affect prices of products imported.

The government can also distribute such medicines to pharmacies for them to sell at a cheaper price than those prevailing now. Of course, this should not free the government of its responsibilities regarding the distribution of free medicines in the public health sector.

Another reform, which should be carried out, has to do with practices involving pharmacies.

In the first instance, we believe that Malta should look into practices being adopted in EU member states such as Britain and Italy, where products that do not require a doctor's prescription can be sold at other shops beside pharmacies. This can result in more competition and, hence, lower prices in the case of such products.

Besides, one should also query Malta's policy regarding the restricted number of licensed pharmacies, which, in itself, encourages monopolistic practices. In 2007, the Ombudsman pronounced himself on the situation regarding licensing of pharmacies ( and said that "it is not legally and administratively correct for the government to perpetuate the stagnant situation in respect of pharmacy licences by further postponing the issue of regulations in respect of geo-demographic criteria for the grant of pharmacy licences in terms of subsection 66(2) of the Medicines Act".

The Ombudsman had also said that "since the freeze has now lasted nearly 11 years, I again strongly urge the government to resolve the present impasse. Considering that, in my opinion, the situation in question, besides being legally and administratively untenable, constitutes a violation of fundamental human rights or, at least, is a threat to them, I am recommending that such solution be reached as soon as possible.
The government is obliged to publish without further delay regulations on geo-demographic criteria in terms of subsection 66(2) of the Medicines Act".

To date, the government has not acted on the Ombudsman's recommendation. Some questions immediately come to mind: Is it just to have a restricted number of pharmacies in Malta?

Is it a coincidence that prices of medicinal products are identical in different pharmacies? Can one speak of fair competition in this sector?
Does this not violate the EU Services Directive, which clearly lays down that restricting outlets on the presumption that the market is saturated is not permissible?

AD is looking into the various issues regarding medicinal prices and it seems that, while certain issues can only be resolved by political decisions, others can be tackled through legal challenges.

It is useless talking about fair prices of medicines without having policies, practices and legislation that truly address the issue. In this regard, we are ready to form alliances with civil society organisations that are worried about the matter. For us, patients, pensioners and social justice come before business interests.

The author is chairman of Alternattiva Demokratika - the Green party.

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