Government regulation of prices for medicines and medical devices in the Republic of Kazakhstan

In the Republic of Kazakhstan, as in many other countries worldwide, regulating prices for medicines and medical devices (MD) is one essential tool for monitoring the medicines market.

State regulation of prices for medicines and medical devices in Kazakhstan are regulated by the Code of the Republic of Kazakhstan dated July 7, 2020, No. 360-VI ЗРК “On Public Health and Healthcare System” (Healthcare Code) and the Rules for the regulation, formation of maximum prices and markups for medicines, as well as medical devices within the guaranteed volume of free medical care and (or) in the compulsory social health insurance system, approved by Order of the Minister of Healthcare of the Republic of Kazakhstan dated December 11, 2020, No. ҚР ДСМ-247/2020 (Price Regulation Rules).

The authorized body determines the procedure for state price regulation and affects only those registered and in circulation in Kazakhstan, sold wholesale and retail, and included in special lists of medicines whose prices are regulated. The state also regulates prices for registered medicines and MD included in the guaranteed volume of free medical care and (or) in the compulsory social health insurance system.

In Kazakhstan, as part of the state healthcare system, for example, as in France, Italy, Great Britain, Canada, and other countries, citizens are provided with medicines and MD free of charge when providing emergency medical care, inpatient, hospital-replacement medical care and sanatorium-resort treatment. Also, specific categories of citizens with certain diseases (conditions) within the guaranteed volume of free medical care are guaranteed free and (or) preferential provision of more than 600 types of medicines and MD purchased from budget funds.

In Kazakhstan, several mechanisms regulate prices for medicines and MD, including setting maximum prices, controlling manufacturer prices, and limiting trade markups.

When setting maximum prices for medicines and MD, the costs of production, transportation, insurance, storage, and the profit margin shall be considered. Relevant documents shall confirm the costs.

Markups on medicines and MD, including under special procedures, are differentiated by a regressive scale of markups depending on the cost of the medicines and MD; the more expensive the drug or medical device, the lower the markup. 

The list of medicines for wholesale and retail sale, whose prices are regulated by the state, is approved by the authorized body no more than once every six months in agreement with the antimonopoly authority. At the same time, the authorized body approves the manufacturer’s maximum prices and retail/wholesale prices for the medicine's trade name.

Compliance with pricing rules is controlled by an authorized body, namely the Committee for Medical and Pharmaceutical Control of the Ministry of Healthcare of the Republic of Kazakhstan and its territorial divisions.

All healthcare entities, including manufacturers, distributors, and pharmacies, must comply with maximum medicines and MD prices. Fines and other penalties are provided for violations of established standards. Exceeding the established price limits can lead to serious consequences, including administrative liability. According to Article 426 of the Code of the Republic of Kazakhstan on Administrative Offences, exceeding the established maximum prices for medicines entails the imposition of an administrative fine on individuals in the amount of 70 monthly calculation indices (MCI), on officials in the amount of 100 MCI, on legal entities - up to 1,000 MCI. Repeated violation within a year after the imposition of an administrative penalty entails suspension of the license and (or) annex to the license for pharmaceutical activities for up to six months.

Even though state price regulation aims to ensure the availability and quality of medicines and MD for the population and maintain a balance between the interests of manufacturers, suppliers, and consumers, since 2021, the Agency for the Protection and Development of Competition (APDC), together with the Ministry of Healthcare, has been working on the gradual abandonment of state medicine price regulation.

Above all, medicines that will remain under state regulation were identified. These are medications purchased for the treatment of:

• within the framework of the guaranteed volume of free medical care and (or) in the compulsory social health insurance system,
• socially significant diseases,
• cancer patients,
• orphan diseases,
• coronavirus infection (special order).

The remaining medicines are planned to be removed from state regulation in three stages, from 2022 to 2026.

At stage 1 – 2022–2023 – 2551 medicines. These are homeopathic remedies, dietary supplements, vitamins, and medications to treat simple diseases. They are all over the counter and available for sale.

At stage 2 – 2023–2025 – prescription medicines and antibiotics.

At stage 3 – 2025–2026 – the remaining medicines, except those that will remain under state regulation.

This process aims to reduce the number of medicines subject to government price regulation. It is expected that this will increase competition in the market, which, in turn, should lead to lower prices for consumers, improved quality of services provided, innovation, and the development of more effective medicines.

The gradual deregulation of medicines has already begun, but no active dynamics have been observed so far. Thus, on November 16, 2023, on the Open Legal Entities portal was published a draft order to amend the order of the acting Minister of Healthcare of the RoK, dated August 27, 2021, No. ҚР ДСМ-94 “On approval of manufacturer’s maximum prices for the trade name of a medicinal product, maximum prices for the trade name of a medicinal product for retail and wholesale sales”. The document contains 4913 names of prescription medicines, excluding over-the-counter medicines. This project complies with the Roadmap for developing competition in the healthcare sector, created by the Ministry of Healthcare and the APDC and approved on December 29, 2022.

However, the draft order published on December 7, 2023, already includes 6,953 names of medicines, including over-the-counter ones. Based on this, we assume the deregulation process can be suspended or modified.

 

Authors: Aliya Zhumekenova, Aidana Baitimova.