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Ukraine: Imported Pharmaceuticals Numb Market

Kyiv, 12 February 1998 (RFE/RL) -- Diabetic Maria Vasilkova pays almost two-thirds of her monthly pension of about 38 dollars for insulin to control her disease. The money goes to her local pharmacy on Kyiv's Zhigelevska boulevard, where the only insulin regularly in stock comes from Bulgaria.

She could buy cheaper Ukrainian-made insulin, but finding it is problematic, often involving a long commute. Government officials say that Vasilkova and millions of other Ukrainians pay more for insulin and most other drugs, because the chaotic pharmaceuticals market favors imports over domestic products. Those importing foreign medicines counter that their products are simply filling an enormous gap in the ex-Soviet market.

Vitaly Varchenko, vice chairman of the State Committee for the Medical and Macrobiological Industries (SCMMI), says the real reason Vasilkova and others have to pay more for imports is, in his words: "Today most of the insulin being brought into Ukraine arrives in suitcases." Still worse, he says, not only does smuggled insulin cost more than necessary, but quality is diminished by lack of refrigeration.

A pharmacologist for 25 years, Varchenko's job is approving all contracts to import drugs into Ukraine. Besides import licenses, which can cost several thousand dollars each, medication brought into Ukraine must be approved by Varchenko's organization item by item. The process takes three weeks and incurs a fee.

SCMMI statisticians calculate that last year the domestic Ukrainian industry provided the country only 30 percent of the its pharmaceutical needs, amounting in value to less than $301 million.

The Soviet medical infrastructure left behind an extensive network of modern and well-equipped pharmaceuticals laboratories, as well as a legion of capable pharmacists. With many key ingredients for medication available in Ukraine, the Soviet collapse didn't have significant impact on production capacity.

Also, Varchenko contends, domestically-produced drugs are as good as their foreign competition.

It was the economic collapse of the early 1990s that weakened the industry. Importers moved quickly to fill the gap, opening links with pharmaceutical manufacturers abroad to provide the sedatives, psychotropic compounds, and prescription cold remedies Ukrainian companies had stopped producing. By 1995, Western manufacturers like Biocon and Faldi had penetrate the market.

Those marketing foreign drugs in the country dispute the notion that they have invidious advantages over domestic rivals. Biocon Kyiv office spokesman Vladimir Melnikov says his company worked long and hard to establish itself. One of the largest participants in the market here, Biocon began large-scale imports in 1995.

Wholesale trade in a country of 50-million people implies a sophisticated distribution network. Private industry with strong foreign backing has met the challenge.

The domestic pharmaceuticals industry is in a very different position. With few exceptions, domestic manufacturing remains state-owned and moribund. And without a steady supply of drugs coming off the line, the state distribution pipeline often is dry. As a result, consumers like Vasilkova with diabetes and other severe and chronic diseases, often turn - not to the cheapest or most reliable drugs on the shelves of their local pharmacy - but, to the products provided by the most effective distributor.

As a self-described consumer advocate, Varchenko says he believes it would be in the interest of people's pocketbooks and the national trade balance to support domestic drug manufactures.