Georgian Prime Minister Irakli Garibashvili announced today that companies would be allowed to import, without further national authorization, all pharmaceutical products approved by Turkey. PM Garibashvili hopes the decision would significantly reduce rising drug prices.
Until now, Georgia’s list of countries, introduced in 2009, recognized regulatory pharmacy authorities of the EU and multiple other European states, the U.S., Australia, New Zealand, Japan, and South Korea.
Skeptics of the decision, among them Irakli Margvelashvili, Director of the Association of Representatives of Pharmaceutical Companies, questioned with Netgazeti online news outlet if the benefits of parallel imports from Turkey outweighed accompanied risks.
Margvelashvili argued that Turkey fails to meet international standards for examining drug quality and that the circulation of counterfeit medicines is much higher there than in any other country from where Georgia previously allowed parallel imports.
Kakhaber Jakeli, professor at the Black Sea University, has also argued with local media that medicines from Turkey would not eradicate Georgia’s problem of expensive drugs, as the primary cause of the problem lies with monopolies reigning over the market and reducing competition.
Meanwhile, Prime Minister Garibashvili also tasked recently appointed Health Minister Zurab Azarashvili to create a working group to implement recommendations issued by the National Competition Agency on January 10 after examining the country’s drug market.
According to the Competition Agency report, in 2020, compared to 2016, the cost of medicines in Lari, Georgian national currency, increased by 41%, and by 7% in US dollars. The increase, the Agency said, is directly related to changes in the GEL exchange rate and/or an increase in the cost of medicines to be purchased in foreign currency.
December 2020 public opinion survey by the National Democratic Institute Georgia found that 46% of surveyed Georgians named the cost of medicine as the biggest healthcare issue.
Pharmaceutical Market in Georgia
The report by the Competition Agency also noted that the Georgian pharmaceutical market lacks regulations compared to that of its European counterparts and is dominated by single entities and groups.
According to the Agency, the market is characterized by horizontal and vertical integration, with companies growing by both acquiring their direct competitors in the supply chain as well as those that are either in a lower or higher level of the chain hierarchy.
This structure, according to the document, allows holding(s) to influence those responsible for prescribing medications. “The resulting decisions may not be in the best interests of the patient, but in the commercial and business interests of a particular holding group/groups,” it argued.
As of 2021, there are 10,450 medicines registered in the country and sold nationwide in 3,213 pharmacies. In total, the three largest companies own 927 pharmacies — almost 30% of the market share.
The report noted that as of 2020, the three largest importers (JSC Gefa, PSP Pharma, and Aversi-Pharma) were responsible for 67.5% of the market share of the imports.
95% of PSP Pharma shares are owned by long-serving lawmaker and businessman Kakha Okriashvili, currently MP from UNM bloc who broke from the Georgian Dream ranks shortly before the 2020 parliamentary elections. Some critics have pointed at the government taking steps to address rising drug prices only after the major pharmaceutical entrepreneur departed from the party.