In this month’s newsletter we bring you a short overview of hot topics in the Life Sciences and Healthcare sector in the Baltics. Some of these topics were also discussed during our regional webinar on 12 September. Video of the webinar is available here.
Compulsory liability insurance for healthcare providers in Estonia
The new Compulsory Liability Insurance of Health Care Providers Act will enter into force on 1 November 2024. The aim of the act is to simplify the process of claiming for damages for patients if by the provision of healthcare services bodily injury, harm to health, or death has been caused to a patient.
Pursuant to the act, all healthcare providers operating on the basis of an activity licence for the provision of healthcare services are, as of 1 November 2024, required to enter into a liability insurance contract within 30 calendar days of the entry into force of the act, i.e. the relevant contract must be concluded by 1 December 2024. The sum insured will be 100,000 EUR per entitled person and 300,000 EUR per insured event. The sum insured per annual period of insurance following the conclusion of a liability insurance contract is 3 million EUR.
Unfortunately, for the time being, only one insurance provider offering this kind of insurance; hence, insurance premiums are higher than were expected. However, if a healthcare provider does not conclude the relevant insurance contract by the deadline, the Health Board will have to suspend its licence, and may ultimately annul the licence altogether.
New pricing model for prescription and reimbursable medicines in Latvia
In Latvia, market participants are actively preparing for the implementation of a widely discussed new pricing model for prescription and reimbursable medicines, which will take effect on 1 January 2025. Through amendments to the current pricing model, the Ministry of Health aims to reduce the prices of prescription and reimbursable medicines by up to 20%. Below is a summary of the key changes at each level of the distribution chain:
- Manufacturer level: A new rule for pricing prescription medicines will be introduced, stating that the price for prescription medicines in Latvia must not exceed the price in Lithuania or Estonia. Previously, when introducing medicines in Latvia, manufacturers were required to declare their selling price to the State Agency of Medicines. Now, this provision has been updated to include the requirement that “if the same prescription medicines are distributed in Lithuania or Estonia, the manufacturer’s price in Latvia must not exceed the lowest declared price of the medicine, excluding VAT, in those countries.” Additionally, manufacturers will only be allowed to change prices once every 12 months.
- Wholesaler level: A fixed mark-up will be introduced, regardless of the medicine’s price. This will add a correction amount of 0.50 EUR to the manufacturer’s price, along with the applicable VAT.
- Pharmacy level: Fixed mark-ups will be applied across three price categories, based on the wholesale purchase price of the medicine, excluding VAT. This pricing structure includes the purchase price, an adjustment amount and VAT. The adjustment amount will vary based on the purchase price: for prices up to 2 EUR, the adjustment will be 0.50 EUR; for prices between 2.01 EUR and 100 EUR, it will be 1.20 EUR; and for prices over 100 EUR, the adjustment will be 2 EUR.
Both wholesalers and pharmacies must adhere to the maximum permitted price.
No changes are currently expected regarding mark-ups for over-the-counter and unregistered medicines.
It is important to note that a mark-up system for medicine pricing existed previously, but it was based on a different calculation method (i.e., a percentage of the price). The new mark-up model aims to replace the non-transparent percentage-based system, which according to the Ministry of Health could have incentivised pharmacies to sell more expensive medicines rather than equally effective but cheaper alternatives. Instead, fixed mark-ups per product will now be applied, as described above.
News from Lithuania
Frequent disruptions in the supply of reimbursed medicines
The State Audit Office has identified significant issues in managing the Pricelist of Reimbursed Medicines (LRM). As of December 2023, adjustments to the LRM have not been properly managed.
Impact on pharma companies and patients:
- frequent changes to the LRM;
- uncertain availability of medicines.
These disruptions pose challenges for healthcare providers and patients alike, highlighting the need for better governance and oversight.
Instructions for use (IFUs) for medical devices may be in English (starting June 2024, Law on the Health System)
Instructions for use and care for medical equipment or devices supplied to Lithuania (professional use) will also be available in English only. New regulations allow Instructions for Use (IFUs) medical devices to be in English, provided that:
- the device is intended for professional use only;
- healthcare institutions and specialists agree to this arrangement.
Impact on medical device suppliers and patients: this change will potentially improve access to innovative medical devices in healthcare organisations (HCOs), but shifting the mindset of HCO personnel may present challenges.
Competition council updates guidelines on association activities
Inspired by the well-known “pharmacies case in Lithuania” the Competition council has updated its guidelines on association activities to prevent breaches of competition law. It offers guidance on the activities of associations and decisions taken jointly by members, identifying where there is the greatest risk of infringement of competition law requirements. Notably, entities within an association providing false information may now be considered in violation of competition law.
Impact on members of associations: lobbying activities could now pose even greater risks, with potential fines of up to 10% of a group’s global revenue for breaches.
Our international Life Sciences & Healthcare team is at your disposal, should you need advice on any legal issues you are facing.
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Contact our experts:
Regional co-head of Life Sciences & Healthcare sector group, Estonia
Head of Life Sciences & Healthcare sector group in Latvia
Head of Life Sciences & Healthcare sector group in Lithuania
