The pharmaceutical sector currently operates on the basis of a positive list of drugs that defines which drugs are eligible for reimbursement by the compulsory health insurance. The HIF engages in procurement processes with manufacturers to purchase the drugs on the PLD for subsequent provision and distribution in the public health system. The sector is supervised by the Bureau for Drugs, which is part of the Ministry of Health. At present, however, the pharmaceutical sector is facing a number of challenges. Procurement practices need to be established to ensure that the health system is supplied with high-quality drugs in sufficient quantity and at the best possible prices. In this context the HIF budget set aside for drug procurement needs to reflect anticipated needs, these being established through regular and thorough needs assessments. Furthermore, the generic drugs sector must be strengthened and this must be reflected in the PLD. Rational prescribing practices by health care providers are to be encouraged through training of medical professionals and the development of evidence-based guidelines, and the sector’s regulation and the system’s supervision capacities must be significantly enhanced.

To strengthen the regulation of the sector, the existing Law on Medicaments, Remedial Medicines and Medical Devicesshould be revised and a number of by-laws passed. Although a drug policy document has been issued, a clear policy has yet to be drawn up and implemented. In addition, the sector’s regulation needs to be harmonized with EU legislation. In accordance with the provisions of the Law, the pharmaceutical department of the Ministry of Health has been transformed into the Bureau for Drugs, which is responsible for the monitoring and implementation of national drug legislation.At present, however, the bureau lacks the technical, administrative and financial capacities to take on the responsibilities of an independent drug regulatory authority. Drug registration and licensing are the responsibility of the Committee on Drugs, Medicinal Products and Medical Devices, appointed by the Minister of Health. A national quality control laboratory is yet to be established and so far quality control of pharmaceuticals has been ensured by two laboratories: one at the Republic Institute for Health Protection and the other within the Faculty of Pharmacy. Furthermore, a system for the monitoring of drug quality at the post licensing stage must be built up. The Drug Information Centre set up in 1998 lacks sufficient funding and is not officially recognized by the Bureau for Drugs. An Adverse Drug Reaction Centre has been founded which collects data on adverse drug reactions and makes recommendations regarding any withdrawal of a drug from the market that may ultimately be necessary.

A centre for pharmaco-vigilance is yet to be established. In the absence of easily accessible information systems and up-to-date literature, irrational prescription practice, especially in the primary care sector, takes place. Against the background of unclear and ineffective legal provisions, very often “prescription-only” drugs are sold over the counter.

The positive list of drugs is prepared by a scientific committee that is subject to frequent changes, as members are appointed by the Minister of Health. At present, work is being carried out on a new PLD, taking therapeutic guidelines and evidence-based medicine into account. It will replace the list that was prepared in 2003. An Essential Drug List (EDL) is yet to be drawn up, but it is in this context that the generic drugs sector should be strengthened. At present the HIF reimbursement practices for pharmaceuticals on the PLD take insufficient account of the pharmacists’ overhead costs. On the other hand, regulations of profit margin of payments by patients for drugs that are not part of the PLD are yet to be implemented.

In recent years a number of initiatives to increase capacities in the pharmaceutical sector in general and to improve drug procurement procedures in particular have been undertaken. A Drug Information Centre was established in the School of Pharmacy, an official National Drug Policy was adopted and two courses on the rational prescription of drugs were initiated, reaching more than 150 doctors in the PHC sector. In the Health Sector Transition Project supported by the World Bank, two tenders with international competitive bidding cycles have been conducted, which has led to a price reduction of up to 35–40% for the drugs in question. While these improvements need to be celebrated, a shortage of drugs in the public domain, especially those on the PLD, is still being reported. The HIF is in the process of establishing a reference price system for the drugs on the PLD.

Data collection on drug expenditure in the country is difficult as drug consumption is not monitored closely. Estimates of total annual turnover for the pharmaceutical market vary from US$ 40 million to US$ 300 million, which amounts to US$ 20–150 per capita per year. The local pharmaceutical sector is expanding and there are about 180 registered wholesalers (three of which claim an annual turnover of more than US$ 10 million) and three major manufacturers. The latter provide for an estimated 25% of the market and are able to provide the full range of drugs needed. While manufacturing is compliant with Good Manufacturing Practice (GMP) standards, prices seem high. Companies also export their products to neighboring countries. In 2004, the Parliament of the Former Yugoslav Republic of Macedonia adopted amendments to the Law on Health Care to authorize the privatization of public pharmacies. Two types of privatization have been agreed: sale and lease. Only pharmacies providing an internal drug supply to medical centers and hospitals are intended to remain under public ownership. The initial reluctance of private pharmacies to enter into contractual agreements with the HIF has been overcome by the privatization process that was started in 2005. So far 20 pharmacies have been sold, providing the central budget with an additional €6.5 million and another 45 pharmacies have been leased.