Competition for marketing: The Ministry of Health is changing its approach to drug pricing, but there are nuances
28 May 14:27
In 2025, Ukraine’s pharmaceutical market will undergo an important update: pharmacies will be allowed to compete directly with drug manufacturers in providing marketing services. This issue was discussed at a regular meeting of the working group on improving state regulation of prices for medicines, "Komersant Ukrainian" reports.
Health Minister Viktor Lyashko said that from now on there will be no limit on the percentage of marketing for pharmacies. This will allow pharmacies to compete with each other by offering quality marketing services described in the resolution. This will also benefit smaller chains that previously did not have access to marketing.
Previously, producers were forced to pay just to get on the shelf, without transparency about services. Currently, the Ministry is working on safeguards to ensure that marketing does not affect the price of medicines, but stimulates the promotion of quality products in a competitive market.
However, as noted by ThePharmaMedia, despite the ban on marketing since March 1, there has been almost no reduction in drug prices, except for 300 drugs for which manufacturers have reduced prices by agreement.
The expected automatic price reduction did not happen, although marketing was previously included in the price. Stakeholders explain this by the complexity of reassessment, but no such problems arise when prices increase (for example, due to changes in the exchange rate).
Pharmacies complain about losing profits due to the marketing ban and margin caps, even though the number of pharmacies in cities exceeds the need. Their competition reduces margins, but the cost of maintaining redundant infrastructure is also included in the price.
Marketing percentage for pharmacies: what the Government says
As Edem Adamanov, Deputy Minister of Health of Ukraine, explains, the direct impact of marketing agreements on the cost of medicines is a complicated issue, because companies’ revenues are generated from the entire portfolio of drugs, and advertising, although not regulated, also affects pricing. There is no clear solution yet, and the search process is ongoing.
The official confirmed that marketing payments are the most controversial. The Ministry of Health recognizes that a complete ban on marketing is unrealistic, so it proposes a compromise: to ban marketing for prescription drugs (Rx) and limit it to 12% of the total pharmacy income. This caused a debate because the percentage includes Rx drugs for which marketing is formally prohibited.
The Ministry of Health explains that it is not technically possible to separate Rx and OTC (over-the-counter) drugs in the reporting, otherwise it would overburden the regulatory authorities. If the limit is calculated only from OTC sales, it will encourage pharmacies to sell more OTC drugs, which the government does not want.
Pharmacies want a higher limit of 15% (previously it was 20%), but the Ministry of Health considers 12% a balanced compromise that will allow to keep pharmacies, particularly in villages.
In addition, the new resolution explicitly prohibits demanding marketing payments as a condition for cooperation – marketing should be voluntary.
Because now some manufacturers say that pharmacies simply demand these funds to get the drug on the shelf. Pharmacies object, saying that it is voluntary, and since we have a saturated generic market, if a pharmacy has 10 INNs from different manufacturers, they just need to prioritize them in some way,” Adamov said.
He added that pharmacy chains reproach manufacturers at meetings, saying that if pharmacies demand marketing payments from manufacturers, why none of them complained to the AMCU or other controlling body.
It is not clear why. Either they are afraid to quarrel, because pharmacies will stop selling their products altogether, or the reason is different,” the Deputy Minister of Health of Ukraine suggested.
Why Ukraine is demanding to limit marketing payments
Meanwhile, the Union of Consumers of Medical Services, Medicines, and Medical Devices is demanding to limit marketing payments that increase the cost of medicines.
The Union has already sent an open letter to Health Minister Viktor Liashko (as well as to the Prime Minister, the President’s Office and the Deputy Minister), expressing concern about attempts to legalize so-called “marketing services” in the pharmacy business. According to the authors of the appeal, this will lead to an even greater increase in drug prices and will finally destroy the essence of pharmacies as an element of the health care system.
The essence of the problem is the lack of professional control over pricing. Drug prices in Ukraine are increasingly determined not by production or logistics costs, but by commercial agreements between pharmacy chains and pharmaceutical companies. The price includes hidden bonuses, marketing, and incentive payments to pharmacies, which means that the consumer pays for all of this.
The head of the Union , Vladyslav Onyshchenko, notes that pharmacies are no longer places where patients receive care, but rather platforms for selling what is better paid for by manufacturers. Pharmacists are forced to sell “profitable” drugs, not those that people need. This turns pharmacists into sales agents.
Patients may suffer from this decision because:
- Medicines become more expensive due to hidden markups.
- The choice is limited: effective and cheap drugs are being pushed out.
- Quality suffers: drugs with unproven effectiveness are promoted.
- The state overpays due to improper treatment and side effects.
What the Union offers:
1. During the war, completely ban marketing payments to keep medicines affordable.
2. After the war, limit such payments to a maximum of 5% of OTC sales, and only within one pharmacy.
3. Transparency: the patient should see in the receipt how much he or she pays for the medicine and how much for “marketing”.
4. Legal regulation: a clear definition of permissible services and their cost to avoid manipulation.
The CSO emphasizes that pharmacies should return to their original role of helping, not selling. A pharmacist should be guided by the interests of the patient, not commercial plans, and manufacturers should compete on quality, not kickbacks. If nothing is changed, Ukrainians will finally lose access to reliable and affordable medicines, and pharmacies will no longer be trusted as a medical institution.
What you need to know about marketing, pharmacies and medicines
On March 1, 2025, new rules came into force that prohibit pharmacies from entering into marketing agreements with drug manufacturers. This means that pharmacies can no longer receive financial rewards for promoting certain drugs or brands. Also, margins on medicines have been set and state control over prices has been restored through inspections by the State Service of Ukraine on Food Safety and Consumer Protection.
Representatives of pharmacy chains expressed concern about the new rules. Mykola Shcherbyna, CEO of the ANC chain, noted that the ban on marketing agreements could lead to the closure of pharmacies in small towns and higher drug prices. A similar opinion was expressed by Taras Kolyada, CEO of the Podorozhnyk chain, emphasizing that marketing payments helped to reduce margins and make medicines more affordable for consumers.
Health Minister Viktor Lyashko insisted on the prohibition of marketing agreements, arguing that it was necessary to ensure fair pricing for medicines. According to him, marketing payments artificially increased the cost of medicines for Ukrainians. He also noted that the new regulations have already reduced the prices of the top 100 most popular domestic drugs.
Meanwhile, the Government plans to introduce a state mechanism of reference pricing, after which the rules on marketing services in the pharmaceutical sector may be revised or clarified. Until then, pharmacies must comply with the new requirements and focus on ensuring the availability of medicines to the public.
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