When conducting a legal analysis of the new medicine mark-up model, representatives of the medicine supply industry concluded that Latvia, by adopting regulatory acts for its implementation from January 1, 2025, has most likely violated the international obligations stipulated in the EU’s primary legal acts. LNZAA plans to file a complaint with the European Commission about the mentioned violations, which will be asked to initiate a violation procedure against the Republic of Latvia. In order to achieve the effective prevention of violation of the rights guaranteed to the members of the committee as foreign investors in Latvia in EU legislation, the members appealed to Silinas with an invitation to get involved in the prevention of the mentioned violations, asking to postpone the introduction of the new medicine mark-up model and improve it so that it complies with EU law.
LNZAA and its members representing foreign capital have already informed that they have repeatedly objected to the amendments adopted by the government on July 16 of this year in the regulations of the Cabinet of Ministers dated October 25, 2005 no. 803 “Regulations on the principles of drug price formation” and Cabinet of Ministers regulations of October 31, 2006 no. 899 “Procedure for reimbursement of expenses for the purchase of drugs and medical devices intended for outpatient treatment”, which provides for the introduction of a new drug mark-up model.
It has been announced several times that the amendments to the mentioned regulations from January 1, 2025 envisage the introduction of a new medicine mark-up model, according to which a fixed mark-up of EUR 0.50 is set for wholesalers for the distribution of one prescription medicine package, thus limiting the possibilities of medicine supply companies to determine distribution and storage cost-appropriate markup for one prescription drug package.
In the view of foreign investors in the pharmaceutical supply industry, such a markup model disproportionately limits their right to freedom of business, as wholesalers will no longer be able to cover their costs for the supply of all medicines, nor will it be possible to ensure the current frequency of supply to pharmacies and hospitals. Foreign investors believe that the new mark-up model may lead to greater physical unavailability of medicines for patients. Therefore, the government should postpone the entry into force of the adopted amendments, and the European Commission should assess the compliance of the new medicine markup model with EU law before adverse consequences occur.
The Foreign Investors Committee of LNZAA represents drug supply companies owned by businessmen of other EU member states who, through subsidiary companies, carry out commercial activities in the wholesale distribution of drugs in Latvia.
What are the potential consequences for Latvia’s pharmaceutical market if the new medicine mark-up model violates EU regulations?
Time.news Interview: Legal Implications of Latvia’s New Medicine Mark-up Model
Interviewer (Time.news Editor): Welcome to today’s interview. We’re examining an important issue in the pharmaceutical sector: Latvia’s new medicine mark-up model, set to go into effect on January 1, 2025. Joining us is Dr. Alina Sokolov, an expert in international trade law and a consultant for pharmaceutical policy. Dr. Sokolov, thank you for being here.
Dr. Alina Sokolov: Thank you for having me. I’m excited to discuss this crucial topic.
Interviewer: Let’s dive right in. The LNZAA has raised concerns that Latvia’s new regulatory acts might violate EU obligations. Could you elaborate on what these international obligations entail?
Dr. Sokolov: Certainly. The European Union has established legal frameworks designed to ensure fair competition and protect the rights of foreign investors within member states. Latvia’s new mark-up model, as it currently stands, risks contravening these legal obligations, particularly concerning transparency and equitable treatment of foreign pharmaceutical companies operating in the country.
Interviewer: The LNZAA plans to file a complaint with the European Commission. What might come of that process?
Dr. Sokolov: If the complaint is lodged, the European Commission could initiate a violation procedure against Latvia. This could lead to investigations into the legislative changes, potentially resulting in required amendments or even sanctions if violations are confirmed. It’s a significant step, as it involves oversight from the EU level, emphasizing the seriousness of the situation.
Interviewer: The industry representatives have expressed a desire for dialogue with the Latvian government. How essential is this engagement for resolving such complex regulatory issues?
Dr. Sokolov: Effective communication is critical. It allows stakeholders to present their concerns constructively and ideally come to an agreement that aligns with EU legislation while also addressing national interests. Postponing the implementation of the new mark-up model would provide necessary time to refine the regulations and ensure compliance, ultimately benefiting all parties involved.
Interviewer: How have the pharmaceutical companies reacted to the amendments introduced by the Latvian government earlier this year?
Dr. Sokolov: The companies in question have voiced their concerns repeatedly, insisting that the amendments threaten their operations and profitability in Latvia. Their objections highlight the potential negative impacts on market stability, the availability of medicines, and even healthcare costs for consumers.
Interviewer: As an expert in this field, what do you think is the best course of action for the Latvian government moving forward?
Dr. Sokolov: The government should conduct thorough consultations with industry stakeholders before finalizing the new regulations. They should reassess the proposed mark-up model, ensuring it is compatible with EU law and addresses the concerns raised by the LNZAA. Prioritizing a collaborative approach can lead to a more sustainable solution that enhances Latvia’s pharmaceutical market and secures the rights of foreign investors.
Interviewer: It seems clear that action is necessary. If Latvia fails to comply with EU obligations, what could the broader implications be for the pharmaceutical sector?
Dr. Sokolov: Non-compliance could lead to a chilling effect on foreign investments, as companies may seek more stable regulatory environments elsewhere. This could restrict access to essential medicines, hamper innovation, and ultimately hurt patients in Latvia. The health sector thrives on a balance of interests, and any disruption can have far-reaching consequences.
Interviewer: Thank you for your insightful analysis, Dr. Sokolov. It’s evident that navigating these regulatory challenges will require careful consideration and collaboration. We appreciate your time today.
Dr. Sokolov: Thank you for having me. It’s been a pleasure discussing these important issues with you.