Ministry of Health Proposes Measures to Improve Availability of Medicines in Latvia
The Ministry of Health (MoH) in Latvia has put forward several proposals to promote the availability of medicines in the country. These proposals include a further reduction of the value added tax (VAT) and measures to curb the markup of medicines.
The Ministry has developed a conceptual report on the financial availability of medicines, in response to a resolution issued by Prime Minister Krišjānis Kariņš. The report highlights that personal payments for the purchase of medicines in Latvia constitute a significant portion of household expenses for healthcare, compared to other European Union (EU) countries. These expenses are also increasing every year, with the burden being higher for those who are less well-off.
The report also reveals that Estonia and Lithuania spend more on healthcare per inhabitant as a percentage of the gross domestic product (GDP), with the majority of expenses being covered by the state budget. In Latvia, a reduced VAT rate of 12% is applied to all medicines, while Estonia applies a 9% rate for all medicines and Lithuania applies a 5% rate for compensable medicines. Other countries in the EU have even lower VAT rates for medicines, such as Finland (10%), Hungary (5%), Poland (8%), Romania (9%), Slovakia (10%), Slovenia (9.5%), Sweden (0% for prescription drugs), and Great Britain (0% for prescription drugs). Denmark and Germany apply the standard rate of VAT to medicines.
The Ministry also highlights that wholesalers’ and pharmacies’ mark-ups for non-reimbursable medicines in Latvia are higher than in Lithuania and Estonia. Additionally, there is no limited wholesale fee for medicines in Latvia, unlike in the other Baltic countries. The Ministry suggests aligning drug mark-ups in all Baltic countries and implementing a markup ceiling in Latvia, similar to Lithuania and Estonia.
Furthermore, state funding for drug reimbursement in Latvia is significantly lower than in other EU countries, including Lithuania and Estonia. This leads to many necessary drugs not being included in the national list of compensable drugs. The Ministry states that the population covers approximately half of the total annual drug consumption from their own funds.
To address these issues, the Ministry proposes five measures. Firstly, it suggests reducing the VAT rate for prescription drugs from 12% to 5%, which would lower drug prices and patient co-payments. However, there is a risk that manufacturers may increase drug prices to offset the reduced VAT.
The second measure involves revising the principles of drug pricing to reduce the final price of drugs for patients. This includes establishing that the pharmacy price of compensable drugs outside the compensation system is the same as in the compensation system. The Ministry also proposes that the price of non-reimbursable prescription drugs should not exceed the sales price of the manufacturer or the wholesale price in Estonia and Lithuania.
Additionally, the Ministry suggests that the price of over-the-counter medicines should not exceed the sales or wholesale price in Estonia and Lithuania. It also aims to ensure that drug mark-ups in Latvia are not higher than in Lithuania or Estonia.
The final measure aims to reduce patients’ direct payments for the purchase of medicines. It suggests setting a maximum allowable total amount of co-payment for compensable medicines at 250 euros per calendar year and introducing a new prescribing principle for non-compensable prescription medicines.
These proposed measures by the Ministry of Health aim to improve the financial availability of medicines in Latvia and reduce the burden on patients.Ministry of Health Proposes Measures to Improve Availability of Medicines
The Ministry of Health (MoH) has put forward several proposals to promote the availability of medicines in Latvia. These proposals include a further reduction of the value added tax (VAT) and curbing the markup of medicines. The Ministry aims to address the high personal payments for medicines in Latvia compared to other European Union (EU) countries.
According to a report by the Ministry, personal payments for medicines in Latvia constitute a significant portion of household expenses for healthcare, especially for the less well-off. The report also highlights that Estonia and Lithuania spend more on healthcare per inhabitant as a percentage of the gross domestic product (GDP), with the majority of expenses covered by the state budget.
One of the key differences between Latvia and its Baltic neighbors is the VAT rate applied to medicines. In Latvia, a reduced VAT rate of 12% is applied to all medicines, while Estonia applies a 9% rate for all medicines and Lithuania applies a 5% rate for compensable medicines. The Ministry suggests aligning Latvia’s VAT rate with those of Estonia and Lithuania to reduce the financial burden on patients.
Furthermore, the Ministry points out that wholesalers’ and pharmacies’ mark-ups for non-reimbursable medicines in Latvia are higher than in Lithuania and Estonia. The Ministry proposes bringing drug mark-ups in all Baltic countries closer together, with Latvia’s mark-up aligning with the levels of Lithuania and Estonia. Additionally, the state funding for drug reimbursement in Latvia is significantly lower than in other EU countries, resulting in many necessary drugs not being included in the national list of compensable drugs.
To address these issues, the Ministry of Health has proposed five measures. Firstly, it suggests reducing the VAT rate for prescription drugs from 12% to 5%, which would lower drug prices and patient co-payments. However, there is a risk that manufacturers may increase drug prices to offset the reduced VAT rate.
The second measure involves revising the principles of drug pricing to reduce the final price of drugs for patients. This includes establishing that the pharmacy price of compensable drugs outside the compensation system is the same as in the compensation system. The Ministry also proposes that the price of non-reimbursable prescription drugs and over-the-counter medicines should not exceed the sales price or wholesale price in Estonia and Lithuania.
The Ministry’s other measures include setting a maximum allowable co-payment for compensable medicines, improving the financial availability of reimbursed medicine, and promoting the rational use of medicines and nutritional supplements. The implementation of these measures is estimated to cost the budget 141.3 million euros in 2024.
The Ministry’s proposals are still under coordination, and the Cabinet of Ministers will ultimately decide on their implementation. The aim is to improve the financial accessibility of medicines for patients in Latvia and bring the country’s healthcare system more in line with its Baltic neighbors.
How will aligning drug mark-ups in all Baltic countries and implementing a mark-up ceiling in Latvia benefit patients in terms of medicine affordability?
Ies’ mark-ups for non-reimbursable medicines in Latvia are higher than in Lithuania and Estonia. The Ministry proposes aligning drug mark-ups in all Baltic countries and implementing a mark-up ceiling in Latvia, similar to its neighbors.
In addition, the state funding for drug reimbursement in Latvia is significantly lower than in other EU countries. This results in many necessary drugs not being included in the national list of compensable drugs. The Ministry suggests increasing state funding for drug reimbursement to ensure that vital medications are covered for the population.
To address these issues, the Ministry proposes several measures. Firstly, it suggests reducing the VAT rate for prescription drugs from 12% to 5%, which would lower drug prices and patient co-payments. However, there is a concern that manufacturers may increase drug prices to offset the reduced VAT.
The Ministry also wants to revise the principles of drug pricing to reduce the final price of drugs for patients. It proposes that the pharmacy price of compensable drugs outside the compensation system should be the same as in the compensation system. The Ministry also suggests that the price of non-reimbursable prescription drugs and over-the-counter medicines should not exceed the sales or wholesale prices in Estonia and Lithuania.
Another measure proposed by the Ministry is to set a maximum allowable total amount of co-payment for compensable medicines at 250 euros per calendar year. It also recommends introducing a new prescribing principle for non-compensable prescription medicines to further reduce patients’ direct payments for the purchase of medicines.
These proposed measures by the Ministry of Health aim to improve the financial availability of medicines in Latvia and reduce the burden on patients. The Ministry hopes that by reducing the VAT rate, curbing mark-ups, and increasing state funding for drug reimbursement, more individuals will have access to the medications they need without incurring excessive costs.
