Abstract
Total drug market expenditure in Lithuania will be affected heavily by the
depreciation in local currency
against the US dollar. Pharmaceutical
market spending will increase from LTL1.7bn (US$701mn) in
2008, to
LTL2.0bn (US$593mn) by 2013, with a compound annual growth rate of 4.04% in
local
currency terms, and -3.28% in US dollar terms. As we note throughout
our forecasts in this report, local
currency values will highlight a
growing market, while US dollar values indicate a contraction. This is
solely due to unfavourable exchange rates and should be considered when
assessing the market as a
whole. We also add that growth in the drug
market is likely to be modest, in line with our forecasts for
other
emerging Europe countries. Lithuania is supported by a relatively static
population with low per
capita spending. However, increases in expenditure
can be attributed to widening access to medical
services and improved
health awareness boosting the OTC sector.
Lithuania’s Ministry of
Health is facing significant challenges relating to providing access to
affordable
medicines. With the state’s fiscal situation looking
tenuous and medicine value-added tax (VAT) hikes
due to be implemented in
July 2009, the State Medicines Agency (SAM) has implemented a programme
for improving availability and price reduction – largely geared towards
attaining price reductions from
pharmaceutical manufacturers.
VAT on
medicines is set to increase from 5% to 19% from July 1 2009, as the
government abolishes the
preferential rate previously applied in order to
boost much-needed fiscal revenues. While it is hoped that
the rate hike
can be averted through ongoing dialogue between the Ministry of Health and
the
government, Lithuania’s fiscal shortfalls make a reversal
unlikely. As a result, the SAM has been in
negotiations with drugmakers,
hoping to negate the impact through price reductions – and
successfully
negotiating lower costs for 264 medicines. For those yet to
agree price reductions, the Ministry has raised
the possibility that their
products may be removed from the 2009 reimbursement list. Manufacturers
and
distributors have also been cautioned that any increases must not
exceed the 14% rise in VAT.
Following a review of pricing procedures in
2003, which uncovered the fact that prices in Lithuania were
considerably
higher than the EU average, prices are now calculated twice a year according
to the centrally
imported price (CIP) plus standardised trade mark-ups.
The government only reimburses the base price,
with consumers forced to
pay all distributor mark-ups. Basic prices are calculated based on product
class
groupings.
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