IMF Resident Representative in Ukraine Vahram Stepanyan
With deep respect and sincere appreciation for the cooperation and support to Ukraine by the IMF, we, the CF “Patients of Ukraine” and CO “100% Life”, are writing to you with a critical issue concerning the stability and efficiency of the healthcare system in general and the medical procurement system in Ukraine.
The CF “Patients of Ukraine” and CO “100% Life” are the largest organizations in Ukraine that work systematically and efficiently to support and protect the rights of patients. The number of patients whose interests we represent has significantly exceeded the mark of one and a half million people with severe diseases. We are actively fighting for 100% of Ukrainian patients to have 100% access to treatment.
One of the key factors of concern for us as a patient community is the expiration of the VAT exemption for the State Enterprise “Medical Procurement of Ukraine” (further – MPU). MPU conducts procurement procedures of medical products for the state budget funds in accordance with the lists approved by a resolution of the Cabinet of Ministers of Ukraine (CMU).
Medicines and medical products, that are included in the resolution of the CMU and that are procured by MPU had a VAT exemption (to increase the provision of these medical products to patients and to ensure equal conditions for non-residents and residents to participate in MPU procurements) until December 31, 2023. This VAT exemption was not extended. The absence of VAT exemptions for the procurement of medical products and medicines may lead to a number of serious consequences that threaten the stability and accessibility of medical care in Ukraine. Today, we cannot remain indifferent to this situation, as it affects the lives and health of all Ukrainian citizens.
The key factor justifying the exemption from VAT is that, if the exemption is not extended, there is a possibility that:
1. There will be a significant reduction in the amount of available medical devices and medicines that are vital for patients. This may result in many of our citizens not receiving the necessary treatment, which will worsen their health condition, or even lead to death. As currently it is not possible to cover 100% of patients’ needs from the state budget funds for all medicines and medical products needed, but without VAT exemption, their provision will significantly decrease, unfortunately.
2. In turn, a reduction in the number of medicines and medical devices will lead to an increase in their cost, which will also become an obstacle to the availability of treatment for patients.
3. Delays in the supply of medicines can lead to situations where vital medicines become unavailable at a critical time, endangering the lives and health of patients.
4. The VAT exemption expiration results in unequal access to MPU procurement procedures for residents and non-residents. In fact, makes it almost impossible for non-residents to participate in procurement, as they are not able to pay VAT. As a result, the involvement of non-residents in the procurement process would decrease dramatically.
This, in turn, will increase the influence of a limited number of distributors in the market and create conditions for the formation of a monopoly, reducing competition and choice, which will affect the pricing policy and the availability of medicines for patients.
We understand that VAT is one of the main budget-forming taxes in Ukraine. But, in the case of the MPU, this is illogical, since the MPU purchases medicines and medical devices with the funds of the state budget. Therefore, in fact, the termination of the VAT exemption will not affect the budget, but it will significantly reduce the number of purchased medicines.
Another problem that is urgent for Ukraine today is access to vitally necessary innovative medicines for our seriously ill citizens. Unfortunately, we are in a situation where the state is unable to fully provide proper treatment for patients with serious diseases, especially with innovative drugs. To improve the situation, Ukraine has introduced programs such as compassionate use of unregistered medicinal products and access to investigational medicinal products for trial participants after completion of clinical trials in Ukraine.
Thanks to these programs it is possible for pharmaceutical companies to provide patients with innovative medicines, especially unregistered, for free until the situation with access to these drugs improves in the country.
VAT during the import of such medicines into Ukraine on medicines under these programs will create an additional financial burden on pharmaceutical companies that are ready to provide high-cost treatment for free. This, in turn, may lead to the fact that such programs will not be developed and conducted in Ukraine. Therefore, we consider it important to exempt from VAT the import of medicines, in particular unregistered, for compassionate use medicines and investigational drugs which are provided after the completion of clinical trials in Ukraine. Ukraine as a state should do everything to treat our patients free of charge and create an attractive environment for international pharmaceutical companies to enter the market and not create obstacles for them.
If immediate measures are not taken to resolve the situation, in 2024 medical care for patients with severe diseases will be seriously restricted, leading to inevitable catastrophic consequences for their health and lives.
Given these serious potential consequences, we hope for your attention to these issues and the opportunity to work together to find solutions to make the medicinal products of the above categories exempt from VAT, because this is not only a matter of politics or economics – it is a matter of our lives, our families and the future of our country.
In conclusion, we would like to express our gratitude and sincerely hope for your understanding and support in this critical situation. Your suggestions for solving this issue could have a significant impact on millions of people who need support and protection.
Sincerely,
Inna Ivanenko,
Executive Director of the CF “Patients of Ukraine”
Dmytro Sherembei,
Head of the Coordination Council of the CO “100% Life”
