Overview of the Estonian pharmacy market

02.03.2020 Overview of the Estonian pharmacy market

Ingeri Luik-Tamme, Senior Associate at TGS Baltic Estonia, summarises key legal developments related to the Estonian pharmaceutical market.

Pharmacy reform

A pharmacy reform with a transitional period of five years is expected to be completed by 1 April 2020, as a result of which retail and wholesale trade of medicines will be separated and only pharmacies that are owned at least 51% by pharmacists will have the right to operate. As on 15 February 2020, 187 pharmacies meet the requirement of being owned by pharmacists; 308 pharmacies do not meet the requirement. This means that the transfer of chain pharmacies to pharmacists has not taken place over the past five years. On 18 December 2019, chain pharmacies closed for half a day without a prior notice in protest against the pharmacy reform. Although, on the one hand, the state has been consistent in the implementation of the pharmacy reform, there are still three different draft legislations amending the pharmacy reform, which will be discussed at the Parliament of Estonia in the immediate future. The one which postpones the deadlines of the pharmacy reform is the most credible. Since it is unclear at the moment how the situation will be resolved, the chain pharmacies are making preparations to use a franchise scheme.

The goals of the pharmacy reform are to increase competition on the wholesale market, reduce dependence of the pharmacy service on the commercial interests of medicine wholesalers, and increase pharmacists’ professional liability for the quality of the pharmacy service.

Amendments to the Medicinal Products Act (MPA)

On 10 July 2019, a draft law amending the current MPA was published by the Ministry of Social Affairs of Estonia, which concerns, inter alia, improvement of the availability of unauthorised medicines for the purpose of the compassionate use and import rights of hospital pharmacies; the wholesale activities of manufacturers; import and export approvals and notifications; the terms and conditions of advertising medicines; and the possibility of buying scientific advice from the State Agency of Medicines. The draft law is still at an early stage. It was last updated in December 2019 and entry into force of the draft legislation was initially planned to take place in July 2020; however, it has now been postponed to September 2020.

Upon adoption of the amendments, hospital pharmacies will gain the right to import medicinal products to Estonia directly, without wholesale dealers’ participation. However, hospital pharmacies will not have the right to engage in retail sale of medicines and may import medicines for usage in healthcare services only. According to the explanatory memorandum of the draft legislation, decrease in prices of medicines for hospitals is expected as a result of the amendment. If a hospital obtains medicines without the mediation of an Estonian wholesaler, the turnover of the local wholesaler will decrease accordingly. The amendment does not exclude wholesalers of medicines from continually participating in procurement tenders. Considering the known distribution channels and experience of wholesalers, wholesalers may become more interested in finding the medicine necessary for a hospital as fast as possible.[1]

According to the MPA in force, a holder of a manufacturer’s licence may import pharmaceutical products from other manufacturers (from outside or within the EEA) without a separate wholesale dealer’s licence (if it has appointed a QP for wholesale). The present situation is in conflict with Art. 77(3) of Directive 2001/83/EC. Therefore, the draft legislation makes a clear distinction between these activities and requires a separate wholesale dealer’s licence for import of products manufactured by other manufacturers.

The procedure of import and export approvals and notification is simplified for all wholesalers. Also, the terms for advertising medicines have been modernized and the group of persons responsible for compliance with the requirements has been widened. The draft legislation stipulates the possibility of buying scientific advice from the State Agency of Medicines, the content of which is oral and written advice given to enterprises regarding carrying out of various tests and trials necessary for proving the quality, safety and efficiency of medicines.

Availability and reimbursement of medicines

According to the draft law mentioned above, in the future, upon distribution of medicines with the same active substance, a manufacturing authorisation holder or wholesale distribution authorisation holder, except for a wholesale distribution authorisation holder distributing medicines of just one marketing authorisation holder, must, as a priority, ensure the supply and availability of the most advantageous non-prescription medicines and medicines which are subject to a price agreement under the Health Insurance Act. Enterprises which belong to the same parent undertaking and groups of enterprises which are in a contractual relationship (e.g. titular holders) or agree on placing medicines on the market jointly are regarded as holders of the same marketing authorisation.

[1] Explanatory Memorandum of the Draft Act Amending the Medicinal Products Act and Health Insurance Act, page 61.