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POLAND PLANS FIXED RETAIL DRUG PAYMENTS

October 21, 2005

Poland's outgoing Minister of Health has suggested that the government should introduce a fixed payment for all retail medicines, in order to cut state and consumer health expenditure.

Under the current system, there is only a maximum price level, with the reported effect that pharmacies can lower prices indiscriminately. Many retailers do this to promote new products, with profit levels impacted by the fierce competition. The lack of a fixed price also means that wholesalers can put undue pressure on pharmacies to reduce or forego their margins.

The Polish Pharmaceutical Chamber has welcomed the proposed legislation and has called for the reforms to go even further and include fixed wholesale prices. Further, the body wants margin limits to be scrapped, with pharmacies receiving set payments from the state for each sale of a reimbursable drug.

According to plans under consideration by government officials, such a payment could be between PLN1 (US$0.31) and PLN2 (US$0.62), depending on the product. It is estimated that consumer drug prices could fall by as much as 14%15%. The system is already in use in Germany, the UK, South Africa and the US.