Doubts about Kazakhstan's single drug distributor remain
This article was originally published in Scrip
Kazakhstan's health ministry hopes that the establishment of a single public-private company for purchasing and distributing pharmaceuticals for guaranteed free medical services will improve availability for patients and help to curb price growth. The new distributor was scheduled to become operational on July 1st, but the industry is unsure if it will.
The state plans to sign a contract with the new company, which will be able to deal directly with domestic and foreign manufacturers. State orders for locally made pharmaceuticals and long-term supply agreements should stimulate the development of the domestic industry, which uses only around half of its capacity at present.
The Kazakhstani Pharmaceutical Herald reported that a working group presented the project and a plan of transition to the new distribution system at a meeting in the health ministry at the end of last year. The plan earmarked a gradual increase of the new distributor's share in state drug purchase – to 30-40% next year, 50-60% in 2011 and 80% in 2012.
The new company was scheduled to purchase around 5% of the total state drug order covering 30 trade names during electronic trading sessions carried out before the end of May this year. The government and the working group stressed that electronic trading would help to avoid illegal agreements among drug suppliers and medical service providers.
After stocking the required amounts of pharmaceuticals in its warehouses (scheduled to be completed in June) the new distributor was expected to sign contracts with public hospitals and clinics and start deliveries. The availability and regular supplies of ordered medicines were to be guaranteed by stockpiling three months' supplies. A full list of products, which the company would deliver, was expected to be approved by August 1st.
However, state medical institutions are reluctant to change their purchasing habits, and a special government decree would oblige them to buy pharmaceuticals from the new company. Other national laws and regulations were also to be amended and new ones be adopted for the execution of the project.
The national fund of wellbeing called Samruk-Kazyn might be the main founder of the new company and receive a 51% stake. The government believes that Samruk-Kazyn, which has sufficient financial resources and seven affiliated companies involved in food logistics, has a suitable business infrastructure that could be adjusted to cover pharmaceutical distribution as well.
However, the industry worries that the time allocated for executing the project was insufficient, that there are too many technical problems, such as lack of storing facilities and staff shortages, which it would be difficult to solve quickly, and that the decision to create the single distributor was not transparent. It believes that two to three years are needed to change the distribution system and that a temporary consortium of a few leading distributors could manage drug supplies during this transition period.
The working group also warned about risks and shortcomings of the project which included a lack of related regulations, underdeveloped technologies and general opaqueness.