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On 20 April 2016, at the session of the Healthcare and Social Issues Committee of the Parliament of Georgia, the Minister of Labour, Health and Social Affairs of Georgia, Davit Sergeenko, spoke about the entry of a new company on Georgia’s pharmaceutical market and the decreasing prices of medicine. The Minister stated: "The facilitation of competition has already given us results. The entrance of a new player has already resulted in a new trend with prices of commonly used medication having dropped by 20%-23%."

FactCheck

took interest in the statement and verified its accuracy.

According to the National Statistics Office of Georgia, prices of widely used medications did not change in the first three months of 2016 whilst they did decrease by 7.6% in April. The tendency of a drop in prices of commonly used medication continued in May as well with the prices having become less expensive by 1.9% as compared to the month of April.

Graph 1:

 Changes in Medicine Prices in January-May as Compared to Previous Months (%)

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According to the data of the National Statistics Office of Georgia, prices of medication showed a trend of decrease in the period of 2011-2013. In 2014, medicine prices increased by 14.2% and by 18.3% in 2015. Notwithstanding the fact that the prices of medicine have been on the decrease in the last months (as compared to the previous months), prices did increase in January-May 2016, showing a 15.2% rise as compared to the same period of the previous year.

Graph 2:

 Changes in Medicine Prices in 2011-2016 (%)

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The National Statistics Office of Georgia observes changes in the prices of commonly used medications such as antibiotics, vitamins, painkillers, vasodilator drugs, anti-inflammation drugs and medications for the digestive system. The Minister of Labour, Health and Social Affairs did indeed highlight the declining prices of commonly used medications. However, the numbers given by Mr Sergeenko do not correspond to the statistical data of the National Statistics Office of Georgia. FactCheck

requested information in regard to the prices of medicine from the Ministry of Labour, Health and Social Affairs but we were not given the information. The Ministry replied that import prices of medicine are not within the realm of public information and so it was not able to provide this sort of data. The Ministry was unaware of the market prices of medications.

On 17 March 2016, three leading pharmacy chains, Aversi, PSP and Pharmadepot, released statements indicating that the falling prices of medications was caused by the appreciation of the exchange rate of the national currency. This means, too, that any future appreciation and stabilisation of the GEL exchange rate will bring the prices of medicine down further.

The appreciation of the GEL exchange rate started in March 2016 and so its impact cannot yet be reflected in the prices of imported production. The currency exchange rate can have a real impact only in the case when existing stocks of production (medicine) are depleted and new inflows of production enter the market. At this stage, it seems that pharmaceutical companies have decided to decrease their profits by decreasing the prices of medicine.

Healthcare experts are of the assumption that the drop in the prices of medication was caused by the entrance of a new player on the pharmaceutical market, Humanity Georgia, which imports generic medication at considerably lower prices. Moreover, the entrance of a new company has resulted in increased market competition.

The Association of Young Financiers and Businessmen together with the Healthcare Platform NGO monitor the changes of the prices of medicine through the so-called Panaskerteli Index. This Index analyses the changes of the prices of 200 of the most requested medications. According to the Panaskerteli Index, the prices of the most widely used medications showed a decrease from December 2015 to May 2016. However, the prices increased again in May 2016 as compared to April 2016. The research also highlights that Humanity Georgia offered consumers generic medications at least 30% cheaper as compared to the aforementioned major pharmaceutical chains. In response, the companies significantly decreased their prices which was confirmed by the Panaskerteli Index. Nevertheless, the effect of Humanity Georgia’s entry on the market faded after five months and so pharmaceutical companies then promptly increased the prices of the medications.

Conclusion

According to the National Statistics Office of Georgia, prices of widely used medications remained almost unchanged in the first three months of 2016 but then dropped by 7.6% in the month of April. The trend of falling prices of medicine was observed in May as well. According to the Panaskerteli Index, the prices of 200 of the most requested medications showed a monthly decrease from December 2015 to May 2016. According to the same Index, prices grew again in May. The Ministry of Labour, Health and Social Affairs did not provide us with data on the changing prices of medication, indicating that the details were not public information.

In our assessment of Davit Sergeenko’s statement, we do not take the data from May into account in that this information was not known at the time he made his comments. The Minister’s statement about the decrease in prices of commonly used medications is correct, however, the numbers he gave do not correspond to the statistical data.

FactCheck concludes that Davit Sergeenko’s statement is HALF TRUE.