On high cost of medicines in Armenia and counterfeit drugs: It's about VAT, but not only

In Armenia, medicines continue to be the most expensive in the region, and the issue of registering vital medicines, which the manufacturers themselves do not register in our country because of the small size of the market, is still unresolved. For many years there have been discussions about VAT exemption for medicines, control marks, and the need to reduce the price of registering medicines, but the issue is still unresolved. In 2020, the government allowed individuals to import medicines (including those not registered in Armenia) in limited quantities for personal use, but doctors and representatives of the pharmaceutical industry have recently started talking about the danger of this permission - this way counterfeit drugs can get into the country.

Oncologists were the first to speak out about the problem. Cancer drugs, especially the latest generation of immunotherapy, are very expensive. Patients buy them themselves and bring them to the hospital for injection. Chemotherapist Levon Badalyan had suspicions about the medication Tecentriq (made by Roche), a bottle of which costs about 1mln AMD in Armenia, while the patient bought it by hand for 500 thousand.

The doctor told NEWS.am Medicine that he compared the medicine that the patient had brought with him with the original and that both the packaging and the bottle aroused his suspicions. After that, he said, there have been several other instances where immunotherapy drugs brought in by patients seemed suspicious to him and he did not administer them and suggested that the patients return the drugs to where they were taken and also contact the police. But, according to him, patients take these medications somewhere by acquaintance and, as a rule, do not want to disclose their sources.

Levon Badalyan explained that doctors have no possibility to test and find out what is in a suspicious vial. The Center for Expertise of Medicines and Medical Devices, which is designed to control the authenticity and quality of medicines circulated in Armenia, does not have such capacities either.

According to him, as a rule, counterfeit ampoules contain saline, which will not harm the patient's health, but the doctor will not be able to adequately assess the effectiveness of treatment. The doctor pointed out another problem that arises with individual importation of medications for personal use. Many medicines require a certain temperature storage mode, which can be violated during such transportation, and this can affect the quality of the medication.

Levon Badalyan said that only one drug, the Roche company Tecentriq, was sent for examination to the Swiss head company, from which the reply came that the vial contained another chemotherapy drug, Cisplatin, which is dozens of times cheaper.

The Armenian Health and Labor Inspectorate issued a statement that Hoffmann-La Roche's Tecentriq series H0238B01 was found to be a counterfeit by the manufacturer. Interestingly, the genuine drug with that number had been imported into Russia, of which the Russian distributors were also notified.

In this regard, a working discussion was recently held at the Standing Committee on Health of the parliament, which was attended by oncologists, representatives of the Ministry of Health, the pharmaceutical industry and patient organizations.

Oncology consultant at the Ministry of Healthcare Haykuhi Gyokchyan told NEWS.am Medicine that they discussed the high cost of medicines, as well as the opportunities for expert examinations to reveal counterfeit products. The doctors presented the following proposals to the head of the commission, Narek Zeynalyan:

• To exempt vital drugs from value added tax
• To set the upper limit of the markup for these drugs for importers and pharmacies
• To reconsider the medicine registration procedure and costs in Armenia
• To strengthen the capacities of the Centre for Expertise of Medicines and Medical Devices
• To increase the powers of the inspection body

Haykuhi Gyokchyan explained that many medicines are imported to Armenia from Georgia, where they are much cheaper, since VAT is not applied there. If we compare the benefits to the Armenian treasury from VAT and the losses from replenishing the treasury of the neighboring country, they will not, in her opinion, be in favor of VAT. The issue of access to medications for oncology patients in Armenia will also be solved by introduction of compulsory health insurance, she added.

As regards the registration of drugs, according to her, it costs 1-1.5mln AMD to register one drug in Armenia, which is quite expensive taking into account the small size of the market. That is why many drug manufacturers simply do not register these medicines in Armenia.

After the discussion, Narek Zeynalyan said on his Facebook page that two legislative initiatives will be put into circulation based on the suggestions received: one of them will give the inspection body an additional tool for stricter control, and the other is a law on drugs, which will be amended in principle.

But the pharmaceutical industry representatives interviewed by NEWS.am Medicine found these measures insufficient. First of all, all medicines should be exempted from VAT, and not only those of vital importance. Secondly, medicines in Armenia are more expensive than in Georgia not only because of VAT and high margins of local importers. According to them, the price difference between Armenia and Georgia is about 40% (VAT in Armenia is 20%), and the reason for that is also the fact that the producing companies sell medicines in Georgia at much more affordable prices, than in Armenia. Until all these issues are resolved comprehensively, the left flow of cheaper medicines from different countries will not stop.