The Interim Commission of the Parliament, studying the pricing structure of food products, medicines, and fuel, with the participation of pharmaceutical companies, began discussions on the structure of the medicines market, the pricing chain, and the sector’s operational processes.

Today, the Commission listened to local pharmaceutical manufacturers and representatives of international manufacturing companies, namely: GMP, Aversi-Rational, Biopharm, Biochempharm, GMPh, Berlin-Chemie/Menarini Distribution Georgia, and Novartis Pharma Services.

According to the Chair of the Commission, Shota Berekashvili, the activities of pharmaceutical companies are regulated, and the sector operates under monitoring and supervision. He noted that since 2023, the reference pricing program has been in effect, and at this stage, the Commission’s objective is to assess the pricing chain over the past two years, the dynamics of medicine prices, and how the reference pricing program functions.

The invited guests answered questions from the Commission members, which concerned mark-ups on medicines from production to pharmacy networks, inventory management, prices before the introduction of the reference pricing program, competition among manufacturers, and price differences between generic and original medicines.

A Commission member, Vice Speaker of Parliament Nino Tsilosani, addressed a question to the Director of GMP, asking why medicine prices had been significantly higher before the introduction of the reference pricing program.

“After the introduction of the reference pricing program, within your capabilities, you reduced your margin and successfully continued your operations. Does this comply with business ethics, when you are able to maintain a reasonable profit? If it were not for reference prices and specific intervention by the Ministry, would our citizens have had to purchase these medicines at much higher prices? I would like you to explain where the mechanisms for protecting patients are. Before reference pricing, you were earning significantly higher profits, and none of the manufacturers or pharmacy chains experienced any discomfort, even though this harmed consumers and our citizens”, - Nino Tsilosani stated.

According to Commission member Dimitri Khundadze, the price difference between generic and original medicines in pharmaceutical networks is minimal, and the approach that generics should be more affordable than original medicines does not function in the Georgian market.

Representatives of local and international manufacturing companies spoke about the pricing structure of medicines, their operational activities, and the challenges faced by pharmaceutical enterprises.

According to them, the involvement of local manufacturers in medicine pricing is minimal, and prices are determined by the pharmaceutical market and the competitive environment.

The issues discussed were summarized by the Chair of the Commission: “An interesting and productive meeting was held with representatives of pharmaceutical companies. The reference pricing model is functioning successfully in the market and does not create problems for local manufacturers, which is very important. I believe that the expansion of the reference pricing model is possible without causing sharply negative reactions in the market. It is also important that local production has export potential, which we welcome. It should be noted that the GMP certification mechanism in Georgia functions well and protects the quality of medicines. It is also noteworthy that the pricing chain consists of two components—manufacturers and network distributors—which means there are no additional operational costs from a third intermediary level”.

The Commission will hold several more meetings with the participation of pharmaceutical companies in order to further study the structure of the medicines market, the pricing chain, and the sector’s operational processes.