Price war threatens pharmacists

21st May 2008, Comments 0 comments

Continuing reduction in price of medicine will cause pharmacist to lose EUR 0.5 billion in sales.

21 May 2008

THE NETHERLANDS - The price of some patent-free medicine is to drop considerably from June, some by as much as 80 to 90 percent. The price cuts come as a result of health insurers' "preference policy", introduced three years ago, whereby they only reimburse drugs at the lowest available price. This has led to a price war among suppliers.

When the cholesterol-reducing drug simvastatin came on sale in 2003, it cost EUR 49 a packet. In January 2008 this dropped to EUR 8, and it has now fallen to just EUR 1.25. Other commonly prescribed drugs are now between 74 and 88 percent cheaper.

Vektis, the centre for health insurance information and standardisation, says the price cuts mean a saving of around EUR 350 million for health insurers. This could in turn lead to lower premiums.

However, pharmacists throughout The Netherlands are concerned about the price reductions and claim they will lose EUR 0.5 billion in sales.

The professional association of pharmacists says this will cost the average pharmacist EUR 160,000. The association argues that some of its members will be forced to close and, in the long run, others will not be able to offer the full range of drugs available.

Pharmacists used to receive a bonus for dispensing a particular drug, but the insurers' preference policy put an end to the practice.

At first, the preference policy had little effect. No manufacturers cut their prices, so the market pressure envisaged by the insurers failed to materialise. Then a company with a small market share decided to challenge the competition with lower prices, and a price war finally broke out.

[Radio Netherlands / Expatica]

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