Drug suppliers press state over debt

VILNIUS - Lithuania's wholesale drug distributors agreed to stop supplying pharmacies with subsidized drugs because the state has failed to pay them the subsidies.

The Association of Wholesale Drug Trade Enterprises said all nine of its members, which combined control about 80 percent of the market, agreed to the move.

The companies contend the government owes about 196 million litas ($49 million) to pharmacies for state-subsidized drugs. Pharmacies owe the wholesalers an additional 100 million litas in payments for the drugs, according to association's head Remigijus Mielinis.

The government authority in charge of paying the bill said it would seek a state-guaranteed loan to cover the outstanding debt. It has proposed that pharmacies pay the interest on the loan.

"In a real business environment there wouldn't be any discussion about who should pay for a loan assumed by the state," said Mielinis. "Discussion should be about the amount the state should pay in late fees for not carrying out its obligations."

There are currently about 2,000 drugs that the state will subsidize for poor people. About 300 of them are in short supply, said Eduardas Tarasevicius of the Lithuanian Pharmaceutical Union.

This year the state set aside 326 million litas to pay for subsidized medicine, about 18 percent of its mandatory healthcare insurance fund.

Mielinis said the association would continue to supply subsidized drugs to hospitals.

He said the association would begin delivery to pharmacies again if at least part of the debt was paid.