Why medicines cost more in Malta

Most of us who have had the opportunity to either live or travel abroad would have come across medicinal items at lower prices than Malta.

If one is dealing with an originator medicine, which refers to the patented original medicine behind which there would be a high cost of many long years of research and development, one would expect prices to be similar to abroad. But it’s often not the case.

Once the 10 to 12 year grace is over and the monopoly on the production of the particular medicinal is up, different companies can copy the previously patented drug and produce what are called generic medicines. Several local companies are involved in this market with great success.

The result of the production of generics is that the medicine is the same as the originator drug and therefore as safe and effective, but a lot cheaper. In fact, it is shown that in most European countries the price of the medicine once generics start being produced drop by up to 80 per cent within the first year. The savings are passed on to the state, individual or third party payer. In Malta this effect is not really enjoyed for various reasons.

First, one has to bear in mind that all medicines are brought to our shores by regulated drug importers who then distribute medication to the Government Health Procurement Services (GHPS) unit, which represents the purchasing arm of the Health Department, and to local pharmacies, for consumer availability.

By and large, the government is the main source of income for drug importers in Malta, the majority of whom are also pharmacy owners. The GHPS then distributes the drugs for free under different regulated schedules. Therefore, directly and indirectly, the state through the GHPS has a great influence in dictating market prices.

This occurs for two main reasons. First, the government requests delivery of medicine by the selected importer within six to eight weeks of date of tender. This turns out to be a perennial problem for all importers as foreign manufacturers/wholesalers operate on an eight- to 12-week delivery basis.

As the government’s policy is to impose fixed penalties if medicines are not delivered on time, this means local importers must raise the price in order to compensate for the regular penalties imposed by the government. This would obviously also have a ripple effect on the price of the same medicine on the private market.

The second issue is the method of payment. While the foreign manufacturer/supplier requests a down payment from the local agent on requisition, particularly in view of recent financial turmoil, the government’s policy is to pay local importers within 150 days.

This means the local importer would have to pay in advance and wait up to eight months to get his money back from the government. This added cost would obviously have to be transferred onto the cost of the medicine.

These factors are leading to a hidden tax on all consumers buying medicinals in Malta, and it’s all due to the archaic modus operandi of state purchasing.

These problems are further compounded by the rather common scenario of inconsistent and contradictory tender documents that lead to cancellations of tenders, delayed acceptance and late disjointed placement of issue of tenders that all lead to medication ending up being out of stock sometimes both in the state and peripheral local pharmacies.

These problems are increasing the economic pressures on our patients, some of whom already have serious health problems to wrangle with.

Another issue leading to a higher cost of medicines is the fact that the medical professionals prefer to prescribe the original drug or a branded generic (which has a certain amount of marketing behind it) rather than the simple and cheaper generic.

Obviously the demand dictates the already very restricted market and therefore a drive towards prescribing and supply of non-branded generics to our patients is desirable to most. On the other hand, most patients are not aware that they can request a generic and cheaper substitute to the prescribed medication.

Therefore, a change in the prescribing habits within the medical profession coupled with a common sense sync of the government’s tendering, with the requirements of actual market scenarios as dictated by manufacturers, in order to limit the costs on local importers, would lead to the desirable effect of consistently lowering the prices of medicinals in Malta for good.

Mr Mercieca is an ophthalmic surgeon and prospective Labour Party candidate.