Big Pharma vs State Duma

Big Pharma vs State Duma


The pharmaceutical industry announced a 15 % increase in prices of medicines ahead of Pharmacist Day marked in Russia for the first time this year in a clear snub to proposed measures to rein in drug costs.

The announced price hike was a kind of ultimatum to the State Duma which was poised to pass the bill on the regulation of pharmacy networks and improvement of drug supply to residents, as well as a “gift” to people in response to the lawmakers’ bid to make drugs more affordable.

The pharmaceutical industry in Russia can hardly be viewed as undeveloped. For example, there are a lot of districts in Moscow where one can easily find five or six pharmacies of various chains within walking distance of the metro station. You might assume that these pharmacies offer competitive prices, but in actual fact, searching for cheap drugs turns into a multi-level quest for the consumer.

It is clear that not only can large pharmacy chains influence consumer behavior or promote certain medicines in which they are most interested, but also lead the domestic pharmaceutical industry to decay by taking out inexpensive Russian drugs and pressing imported counterparts on the consumer.

Once I was looking for a home-made joint rub. It was a good alternative to the widely advertised imported analogues. Suddenly it turned out that it had disappeared from all Moscow pharmacies. Moreover, the situation became almost anecdotal. An assistant at an allegedly low cost Moscow network pharmacy admitted that there was no ointment on sale. So, he advised going to a nearby pharmacy of another network, where the ointment was available, but at a much higher price. I also found out that both pharmacy chains belonged to the same owner, and, accordingly, the most sought-after drugs were sold in the chain operating for the high yield segment.

Such situations are not infrequent for consumers. However, if affordability is the consumer’s key point of reference, this policy might create serious financial problems for Russian manufacturers. Meanwhile, it is bringing enormous profits to the owners of networks.

This explains their growing concerns over the bill on pharmacy networks regulation and drug supply improvement. For example, the document requires pharmacies to indicate the bottom price and availability of drugs. The entire line of drugs coming under different brand names, starting with cheaper analogues, will have to be shown to the consumer.

The Pharmpotreb social movement conducted a customer satisfaction survey as it assumed that the consolidated opinion expressed by the head of the Russian Association of Pharmacy chains, might really affect the pricing system in the pharmaceutical sector and sabotage the positive initiatives of the proposed law. The study sought to answer the ethical question: why retail pharmacy business in the healthcare system is often focused on keeping and increasing its own capital rather than people’s health. Admittedly, pharmacies tend to use upselling to boost their revenue.

Based on more than 1,000 negative reviews of pharmacy chains Rigla, 36.6, Neopharm, Stolichki, Doctor Stoletov, Pervaya Pomoshch, Ozerki and Vita, the study said that service level topped the list of complaints. Over 28% of customers said that pharmacists were irritated, inattentive to people and in some cases rude. Addressing these complaints, pharmacists lamented their working conditions which they often described as substandard. In other words, the owners of pharmacy chains seek to not only rip off customers but also save more on their own employees, by not providing them with decent working environment.

For example, during the COVID-19 pandemic, pharmacies often had only one person to provide services, who had to do a 12-hour shift, not being able to take off their face masks, except to replace them, even when there were no customers, (under the threat of constant video surveillance). Of course, it's much cheaper to impose bans on a pharmacist and install CCTV cameras than organize shift work. You can hardly be surprised at the level of service delivered by the person who has no right to take a breath of fresh air throughout their workday.

Overpricing (23% of the reviews) is the second most common complaint against the pharmacies belonging to the Russian Association of Pharmacy chains. Consumers compare them with other pharmacies in their region. Apparently price regulation and sales methods in pharmacy chains require urgent solutions.

Consumers importantly made upselling a separate complaint.

At the same time, there is a high probability of price collusion between drug manufacturers and pharmacy chains, especially suppliers of imported drugs that are naturally more expensive. Unsurprisingly, pharmacists often recommend them to consumers, even if these drugs can be replaced by cheaper analogues. People are persuaded that the imported drugs are of much higher quality than their Russian counterparts. Moreover, higher price is the only argument for quality.

There are also complaints against pharmacy chains’ websites, the inconsistencies between price tags on the pharmacy website and in retail, and pharmacies’ manipulations with advertising information and sales. Pharmacy chains, for example, try to attract consumers with low cost of drugs and loyalty programs but often fail to honor the advertised terms.

In addition to studying the negative feedback, a Pharmpotreb social movement representative went out on the street to ask people what they wanted to wish the pharmacists on their professional holiday. He found that negative feedback overwhelmingly prevailed over “best wishes.” Following are some of the most frequent comments: "Pharmacists work for their profit. They hide cheap drugs and promote expensive ones."

"I wish they would offer less expensive drugs, especially at the Rigla pharmacy."

"I wish the pharmacists were more competent and offered the drugs needed by people, not salesmen or profiteers."

"We use folk remedies. Sometimes raspberries or horseradish."

Pharmpotreb reported the results of the customer satisfaction survey to the Federal Antimonopoly Service, the Prosecutor General’s Office, Roszdravnadzor and Rospotrebnadzor, as well as the dedicated committee of the State Duma. It expects the watchdog agencies to act on the price increase announced by the Russian Association of Pharmacy Networks and resist the cartel collusion between some major players in the pharmaceutical market, which might sabotage the bill on improving the provision of medicines to the population.

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