Preventing the Extinction of Traditional Pharmaceuticals: Explanation and Methods
In Kazakhstan, the pharmaceutical sector is undergoing significant changes as the government grapples with the impact of strict drug price regulations and the proposed deregulation of over-the-counter drugs.
The state regulates drug prices through the Ministry of Health, with Order No. 94 setting maximum prices. This regulation, implemented in 2019, has led to a halving of the assortment of drugs supplied to the country, leaving more than 130 types of essential medications unavailable in pharmacies, leading to a drug shortage.
The strict price controls aim to make essential medications affordable for the general public, especially in a country where access to healthcare is a significant concern. However, they can create challenges for local pharmacies and pharmaceutical companies.
Strict price regulations can limit profit margins, making it challenging for businesses to maintain profitability and invest in new products or services. They can also lead to shortages if pharmacies and manufacturers cannot cover their costs, reducing the availability of certain medications. Companies might be less inclined to invest in new drug development or introduce new products to the market if they cannot recoup their costs due to price controls.
Companies and pharmacies may also face additional administrative costs to comply with these regulations, which can be burdensome. The government, however, is criticised for lacking good economists who can calculate and forecast the consequences of such decisions for businesses and the population.
The President has ordered a "phased rejection of state intervention in price formation," and the Ministry of Health is gradually beginning to deregulate the prices of 240 drugs. This deregulation is proposed to affect over-the-counter drugs in the commercial sector, potentially increasing the range of products available by around 1800 out of the total 7,500 drugs.
While prices might initially increase due to deregulation, they are expected to decrease as the market regulates itself and healthy competition ensues. This could lead to improved accessibility and affordability of medications for the public.
However, the government is being questioned about the qualifications of private entities to provide quality additional education services in medical specialties. The Ministry of Health has limited private businesses' ability to provide these services, citing a threat to the health of the population. This decision has led to a shrinkage of the market of service providers by at least half, as medical educational institutions are primarily located in major cities.
Private organizations that previously provided these education services have undergone accreditation and have contracts with clinical bases. Universities often lack resources and hire the same private organizations as subcontractors for accreditation, creating a situation where accreditation is conducted de jure by the university but de facto by the private entities.
The government's decisions in the pharmaceutical sector are primarily made by doctors, and economic issues may be secondary for them, leading to decisions that may not consider the interests of all parties. This has raised concerns about corruption risks associated with state price regulation.
As Kazakhstan navigates these changes, it is crucial for the government to strike a balance between ensuring affordable healthcare for its citizens and fostering a viable pharmaceutical sector. This requires a careful consideration of economic factors and the involvement of experts in both healthcare and economics to make informed decisions that benefit all stakeholders.
- The strict drug price regulations in Kazakhstan, while aimed at making essential medications affordable within the health-and-wellness sector, can pose challenges for local pharmaceutical businesses due to limited profit margins, potentially dissuading companies from investing in new science projects or developing innovative medical-conditions treatments.
- Simultaneously, the deregulation of over-the-counter drugs could impact the finance sector, as prices might initially surge due to market forces, but are expected to drop as healthy competition ensues, subsequently improving healthcare accessibility and affordability.
- In the realm of medical-education, the government's restrictions on private businesses offering additional services in medical specialties have caused a contraction in the service market, leading to economic concerns in the business sphere, particularly in light of potential accusations of corruption risks associated with state price regulations.
