In October 2016, Rama government decided to propose increase the price of prescription drug control excises charged through so-called “stamps” for any prescription drug marketed in the country.
From around 2 lekë (without VAT) for each prescription drug box (€14.43 for one thousand control stamps) the price for each stamp will become 2.4% of the price of the medication. This will increase the stamp’s price for every drug that is more expensive than 83 lekë.
Rama’s turn
This decision of Rama government is another abandonment of people’s interests in favor of the oligarchs, and yet another 180 degree turn of Rama’s previously held positions. Because In January 2014, Edi Rama declared that he would cancel the concession of control stamps calling it unacceptable:
The concession of control stamps is a big problem because it doesn’t guarantee a change in quality of this service. It hasn’t attracted considerable investments of any sort or any admirable technological improvement that can be considered trustworthy. The result is that it withdraws money from the state’s account, unreasonably weighing on business and the state’s budget without bringing any improvement. This is an unacceptable situation. The Ministry of Economy is at the end of its study period, and soon enough will make its approach public, and we will bring to the Parliament to save businesses from this monopoly and alleviate the budget.
Two years later, in October 2016, he did the opposite, not only did he not change or cancel the concession, but he approved it, and issued a draft law to Parliament that increased the prescription drug control stamp at the expense of the citizens and the budget, and provided other perks for the concession holder.
Unexpectedly for the government, the Democratic Party opposed the draft law in the healthcare committee, and LSI tagged along with this opposition. With their votes, the draft law was rejected in the committee and returned to government for reassessment.
However, the government profited from opposition’s boycott of Parliament in the first months of 2017, reassessing the draft law on the last day of the previous legislature of the Parliament. As this move was made public and the LSI refusal to vote against it, the government withdrew its last-minute attempt to pass the law.
A third attempt
Now, given Rama’s absolute majority in Parliament, the draft law has reemerged, unaltered, on the calendar of the next four weeks, and its approval will be simply a formality.
In an unjustifiable and unreasonable manner, the draft law changes the payment method to the holder of the control stamps concession, from a fixed price to a price relative to the price of the drug.
As it was stated above, the current price of 2 lekë per stamp will become 2.4% of the price of the medication. This means that the stamp price of all medications higher than 83 lekë will increase, which means that practically every prescription drug box that is sold in the country will be affected. This will lead to a tenfold increase in the control stamp price for expensive medication, and for rare medications that cure chronic diseases the increase will be tremendous and unprecedented. This manifold increase of the control stamp price will cause, without a doubt, an increase in the price of consumer drugs, because the cost of the stamp will always be passed on to the consumers by the pharmacists.
Judging from past experiences, it can easily be guessed that the increase in price for prescription drugs will be higher than the price increase of the control stamps. This added cost will directly weigh on the patients and the public budget in the case of prescription drugs used in public medical centers and hospitals.
The elderly will be affected more than others by this price increase, as they spend more on medications when compared to other social groups, while they also are that part of the population with lower income.
Legal violations
The government has justified the change in price with the change of the type of stamp that will be used, pretending that the new stamp will have better security. But this reasoning cannot justify the continuous legal violations in this concession by both the Berisha and Rama governments since 2011.
Previously, the service that produces and tracks control stamps was previously offered directly by the Ministry of Finance. In 2011, the government decided to give it out through a concession, when it accepted an unrequested offer by the Swiss company Sicpa Solutions s.a. The tender that was opened had as primary criterion the offering price for each fiscal stamp for alcohol and tobacco and every control stamp for medication. Unsurprisingly, the winner bidding the lowest price was the Swiss company Sicpa Solutions s.a. The contract was signed without considering the opinion of Competition Authority, as required by law, it was not published in the Public Bulletin and it was never made public, in violation of the law.
The Competition Authority and Prime Minister Rama himself (cited as above) have admitted that the concession has not brought any technological improvement or any new effective approach in the war against tax evasion and smuggling, compared to when stamps were produced and monitored directly by the Ministry of Finance.
The standards applied by Sicpa for services are at a far remove from international standard practices used to fight illegal markets and falsification. Even though the reason for using the control stamp is avoiding evasion and falsification, these have continued as before the concession. Meanwhile, the income deriving from excises on tobacco, alcohol, and medication haven’t improved, and in some cases they have gotten significantly worse.
Price increases
Even though in 2011 the winning concession hold had on based on its competitive price, this price has inexplicably increased 2 to 6 times ever since.
The price of fiscal stamp for tobacco has increased from €3.60 for one thousand pieces (0.49 lekë/stamp) in the initial contract to €20.00, or 560%. The price of fiscal stamp for alcohol has increased from €8.60 for one thousand pieces (1.2 lekë/stamp) in the initial contract to €22.00 for one thousand pieces (3 lekë/piece) for beer, and €32.00 for a thousand pieces (4.4 lekë/piece) for other alcoholic beverages, so, 220% and 370% higher, respectively. Overall these prices are 2–3 times higher than prices that are applied in other countries for the same service, raising serious questions regarding the concession.
Beyond the extraordinary increase in price, the clear scandal was the fact that these price changes occurred after the tender and the signing of the contract. This is a violation of the honesty and equality principle during competition, because the concession holder has won over other competitors, offering a lower price, while in reality offering the service at a much higher price.
Meanwhile Sicpa has ensured astonishing revenues, increasing the total cost of fiscal stamp service from thousands to million of euros a year. These costs are entirely borne by the business, consumers, and taxpayers, for a service that wasn’t different at all from the one offered by the government at a minimal cost.
Now, the government has decided to yet again increase the price of the medication control stamp, which, different from the fiscal stamps for alcohol and tobacco, had remained so far on the level offered in the tender. For this increase the government has found a new justification: it will change the type of stamp, thus increasing its cost of production without evaluating cost of this change. Even if this were the real reason, the government must reopen the tender for the concession, taking into account the new security features, rather than renewing the existing contract.
In any case, the biggest scandal regarding the new formula for stamp payment is that now the price will not be fixed per stamp, but it will be a percentage of the price of the traded prescription drug. Even though the cost of the stamp itself and monitoring service is fixed, the price of the stamp will change in relation to the price of the medication. In other words, the increase of price cannot be reasonably matched to an increase in cost.
No responsibility
As we highlighted above, the new price of stamp will be higher than the actual one for all types of medication. The income of concession holder will increase nearly 25 times. Currently, the income from the control stamps for mediation is around €200,000 per year, while with the new concession formula it will receive around €5.3 million. The total pharmaceutical market in Albania is around €123 million a year.
Apart from this extraordinary increase in profit, it is also assured. Different from before, when the payment of the fiscal stamp was made by medical importers or producers, the new contract proposed by the government provides that the concessionary payment will be made by the National Agency for Medication and Medical Device Control.
Moreover, the new contract gives concession holder the right to interrupt the supply of prescription drug stamps, giving it the power to block the supply of the market with new medication entirely, if the National Agency of Medication doesn’t pay the bills issued for the imported drug, no matter the origin of the drugs. The concession holder wouldn’t hold any responsibility for the consequences of such a blockade.
Additionally, the contract doesn’t stipulate any responsibility for the concession holder regarding any delays or problems caused in fulfilling the contract’s provisions that would affect the of continuity of the prescription drug market. Whatever happens, the concessionary’s income is assured and has no other responsibility.
All of this shows just one thing: this is contract made for a corrupt clientele, and not to improve medication safety in Albania.
