Overview Of Pricing Regulatory Issues In The Kazakhstan Healthcare Sector

• Published date: 01 April 2024
• Subject Matter: Food, Drugs, Healthcare, Life Sciences, Food and Drugs Law, Biotechnology & Nanotechnology
• Law Firm: GRATA International
• Author: Ms Aliya Zhumekenova and Darya Zhanysbayeva

As previously noted in our earlier reviews of regulatory legislation in the healthcare sector, the legislative framework is subject to dynamic changes, particularly in the regulation and pricing of medicines.

The latest version of the Rules for regulating prices for medicines dated April 19, 2019 (last amendments dated June 17, 2020) was repealed by the Order of the Minister of Healthcare of the Republic of Kazakhstan dated December 11, 2020 No. KR DSM-247/2020 "On approval of the rules for regulation,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 system of compulsory social health insurance" (hereinafter, the "Rules 247"). It should be noted that the edition of the Rules 247 from 2020 has also undergone several changes, the last of which is dated July 3, 2023.

Despite the dynamics changes in legislation in this area, pharmaceutical companies, both local and foreign manufacturers, still face challenging issues. It can be boldly stated that the regulation of drug pricing is far from perfect, and frequent changes in regulations governing drug prices do not always lead to the desired results.

As of today, there are still problems that concern the pharmaceutical business. Some of these are highlighted below.

Foreign manufacturers face currency risks

In our view, attention should be given to the issue of establishing and approving the maximum price, as procurement of medicinal products above the maximum price is not allowed. In this respect, if we consider it from perspective of the procurement of pharmaceuticals by a sole distributor from a foreign manufacturer, all currency risks are directly transferred to the foreign manufacturer.

Thus, in particular, according to the Rules for organizing and conducting the procurement of medicines, medical devices and specialized medical products within the framework of the guaranteed volume of free medical care, additional volume of medical care for persons held in pre-trial detention centers and institutions of the penitentiary (penitentiary) system, for account of budgetary funds and (or) in the system of compulsory social health insurance, pharmaceutical services (approved by the Order of the Minister of Healthcare of the Republic of Kazakhstan dated June 7, 2023 No. 110) (hereinafter, the "Rules 110"), when concluding a supply agreement in foreign currency, the price is fixed in this currency at the rate of the...