Parallel Trade in Polish Pharma: The Good and the Bad


Poland’s entrance into the EU has been a catalyst for growth that has allowed the country to flourish, shown by the nation’s ranking as the eighth largest economy in Europe according to the World Bank. The introduction into Europe has sprung the borders open, and for the Polish pharmaceutical industry this exposed them to a foreign concept that had been present in Europe for decades: parallel trade.


The Good: Parallel Imports

“The parallel import sector is gradually eating into the pharmaceutical market share, though this rate is still fairly low at 1.5 percent compared to the other markets with a longer history in the business segment, such as Netherlands at roughly 14 percent and Sweden at 20 percent,” details CEO and founder of Delfarma, Tomasz Dzitko, the largest company within this space that was set-up in 2004 and now has over 700 products. “There is huge potential and we believe a 10 percent market share is an achievable goal,” he continues.

[Parallel imports save] Poles around USD 30 million annually, with the ability to double this if correct reimbursement is achieved

Tomasz Dzitko, Delfarma

The growth of the sector has been hampered by the Polish government’s reluctance to grant reimbursement to parallel imported treatments. Dzitko acknowledges that, “The government is quite receptive to our ideas, though I feel they fear listening to us will open Pandora’s box, and then innovators and generics companies will want a stronger voice.” Nevertheless, parallel imports are essential to creating a more sustainable healthcare environment as even within the current non-reimbursed space parallel imports save “Poles around USD 30 million annually, with the ability to double this if correct reimbursement is achieved.”

This saving equally has a micro-effect that impacts patients’ pockets as “Poland is a peculiar market as there is a huge prescription market that is not reimbursed, and a co-payment is made with patients.” In this regard, the introduction of Delfarma’s “cost-efficient products that are equivalent to what is on the market, will allow patients to continue with their medicine and receive better healthcare.” These cheaper solutions are critical within the Polish landscape as “roughly 40 percent of patients do not complete their prescriptions via co-payment as they cannot afford to do so.”

A possible reason behind this reimbursement black-balling has been another side of the industry: innovators. Dzitko believes these innovative “companies may dislike us as they think we are killing their profit and taking money away from their R&D operations.” He feels they should be less emotional towards parallel importers as “Companies must understand we are helping them distribute their products at a lower price; therefore, allowing them to compete with the dominant and low-priced generics market of Poland.”

Despite the positive impact of the import practise, Marcin Czech, deputy minister and undersecretary of state at the Ministry of Health, has a different perspective and warns that “when drugs are imported at a very low price and have no distribution, their low prices then freeze the reference pricing level of the jumbo group and do not allow other drugs to enter that group.”

These jumbo groups are used to classify drugs and are designed on a lowest-price wins model that allows any equivalent treatments to enter the group but only at a lower price. Therefore, if drug distribution levels cannot be met of these cost efficient parallel imported products, it will result in drug shortages and patients not receiving treatments. As a result, in the soon to be implemented 2016 reimbursement amendment act (RTR Plan) the government is considering, highlights Czech, to “stop parallel importers without sufficient distribution power from entering the jumbo group pricing model.”


The Bad: Parallel Exports

The cost-containment measures put in place during the implementation of the 2012 Reimbursement Act achieved the desired objective of positioning Poland as one of the cheapest countries in Europe. In fact, “of the ‘volume x prices’ equation, Poland has significantly lower prices with a consumption that is on the European average,” details Maciej Kuźmierkiewicz, general manager of IQVIA Poland and Baltics. Nevertheless, this quick fix has brought about an unwanted side effect: parallel exports. This phenomenon involves wholesalers exporting products originally imported to a particular country to another country, usually where they can obtain a higher price. As a result, “in many cases Polish pricing drives parallel exporting, which in turn leads to serious concerns around product availability,” highlights Kuźmierkiewicz.

These drug shortages have been a concern throughout Europe for a while, affecting other nations in the region such as Greece and the Czech Republic. In many cases, parallel exporting was a contributory factor to the European drug shortage crisis, with others, according to the European Medicines Agency (EMA), including “manufacturing difficulties or problems affecting the quality of medicines that can impact on patient care.” The EMA also states that “most medicine shortages are dealt with at national level … however, the EMA can be involved in certain situations, for example when a medicine shortage is linked to a safety concern or affects several Member States.”

Despite this expressed involvement by the EMA, Poland is attempting to fight back against this growing export trend. Currently, export margins are not set due to this not being incorporated into the 2012 Reimbursement Act. However, with the possible implementation of the much talked about 2016 Reimbursement Amendment Act, a five percent wholesale margin will be applied to all products, including those intended for export. This aims to create a less profitable parallel export market to ensure Polish drug shortages become a myth of the past. The contentious issue is if the proposed legislative change by the Ministry of Health will fit within EU law, in particular the principle of free movement of goods.

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