Lack of competition fuels high drug prices in Costa Rica

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December 5th, 2012 (InsideCostaRica.com) Little or no competition in the local private pharmaceutical sector, the result of a highly concentrated industry, results in Costa Rica being one of the most expensive countries in Central America to buy medications.

 

In Costa Rica, there can be huge differences in the price of a medication from one pharmacy to another – sometimes up to 1,000%.

 

In 2011, of the 6,743 drugs that are registered with health authorities in the country, 80% (5,415) were distributed exclusively by one pharmaceutical wholesaler.

 

“This is clear evidence that competition is almost non-existent, which allows high profit margins to be maintained on the 80% of medications that are managed exclusively by a single wholesaler,” according to research carried out by the Development Observatory of the University of Costa Rica (UCR).

 

“The wholesalers are the key to understanding the lack of competition in this area,” the document states.

 

Prices for medications are typically negotiated first between laboratories and the wholesalers, who then in turn negotiate prices with the pharmacies.

 

Only 6 wholesalers hold 51% of the medications registered in the Health Ministry.

 

Corporacion Cefa- the supplier for Fischel pharmacies, the second largest in the country – distributes 853 drugs, which represent 15% of the total.

 

According to the research, the General Health Law grants the import of medications and raw material to produce new medications exclusively to wholesalers.

 

In addition, the law prohibits national laboratories from “importing their own supplies from foreign places,” which also results in higher prices for consumers.

 

The Ministry of Economy, Industry and Commerce (MEIC) believes the country must find mechanisms to lower the differences in the market prices; others, like the wholesalers, appeal for free competition.

 

In the meantime, legislators in the National Assembly are looking towards creating a new law that will regulate the prices and profit margins of the sector. The law proposes that the MEIC control prices of medications, by setting minimum and maximum prices based on comparisons with other markets, or according to inflation.

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