In Soviet times, pharmaceuticals and health care technology were supplied according to state plans. A monopoly state agency, Kyrgyz Pharmacia, imported and distributed drugs throughout the country. The network of public pharmacies distributed drugs to the population at fixed retail prices. With the break-up of the Soviet Union in 1991 and the independence of Kyrgyzstan, drug supply dramatically worsened and the country encountered a drugs shortage. The situation improved with the privatization of the pharmaceutical sector. In the early 1990s Kyrgyz Pharmacia was turned into a joint stock company. Pharmaceutical retailing has been privatized since 1996. Only a few municipal pharmacies are still in public hands.

The local pharmaceutical industry consists of 27 enterprises, the Bishkek antibiotics plant Aidan Pharma being the largest. The Kyrgyz-Chinese joint venture Golden Water produces solutions for infusions. There are also plans to build a pharmaceutical plant jointly with the Indian company Adjanta- Pharma. The output of local producers of pharmaceuticals remains low, while the assortment of products is limited to 70 types of drugs, including tablets, unguents, galenicals and herbal raw materials.

Ninety-seven percent of drugs are imported, mainly from the Commonwealth of Independent States. In 2003, the imports of pharmaceuticals and medical supplies amounted to 1149 million som, three times the value of imports in 2002. The number of licenses issued for pharmacist activities has also grown by 70% compared to 2002. This tremendous growth is likely to be the result of the cancellation of 20% value-added tax on drugs in January 2003.

Compared to 2000, the number of retail pharmacies has grown by 26%. In 2003, there were 1806 pharmacist facilities in the country: 41 were involved in production activities, 169 were warehouses, 656 were pharmacies, 812 were pharmacist points and kiosks, and 34 were departments of optical and stomatological products. There were 94 pharmacies in public hands, of which 86 were hospital pharmacies and 8 charitable pharmacist facilities. Of the total of 1468 pharmacies and pharmacist points, 67% were situated in urban areas, 18% in rayon centres and 15% in rural areas. They employed 1095 specialists with higher and 1223 with secondary pharmacist education.

The Department of Drug Supply and Medical Equipment, established under the Ministry of Health in 1997, is the key regulatory agency in the pharmaceutical sector. It is responsible for implementing the national drugs policy, the registration and licensing of locally produced and imported drugs, vaccines and medical products, the quality assurance of drugs and the monitoring of drug use. The Department has a subsidiary department in Osh city.

The Department of Drug Supply and Medical Equipment administers the Central Analytical Control Laboratory, which was created in 1996 to examine the quality of drugs. There are also two functioning accredited laboratories: an analytical laboratory of Kyrgyz Pharmacia and a laboratory of the Department of State Sanitary-Epidemiological Surveillance. In addition, a multisectoral system for the control of drug production and trafficking has been set up, consisting of the Ministry of Health, the Ministry of Finance, the Ministry of Interior and the National Security Service.

To achieve economies of scale, pharmaceuticals for health facilities in the public sector are centrally procured following competitive bidding, as set out in the Law on State Purchases. Health facilities can also purchase their own drugs, based on the Essential Drugs Formulary that promotes the use of generics. They can use funds from the mandatory health insurance to purchase drugs that are not included in the Essential Drugs List, but this purchase is limited to 10% of total procurement costs. The co-payments as a new funding source seem to have improved the provision of drugs to patients.

The first list of essential drugs was developed in Kyrgyzstan in 1996, based on WHO guidelines. It was revised in 1998, 2001 and 2003. A national drugs policy was adopted by government decree in December 1998. WHO provided technical assistance in the development of the essential drugs list and the essential drugs formularies. Since 1998, it has also supported the Drug Information Centre of the Department of Drug Supply and Medical Equipment.

The Drug Information Centre monitors the side-effects of drugs and issues a bulletin on rational drug use. Rational drug use has been promoted at all levels of health care. The development of 154 clinical protocols according to the principles of evidence-based medicine should enhance rational drug use.

In 2000, the MHIF introduced an additional drugs package on a pilot basis in three polyclinics in Bishkek and the Alamudun rayon of Chui oblast. As from the second half of 2001, it covered all family group practices of Chui and Issyk-Kul oblasts, the family group practices of Bakai-Ata rayon of Talas oblast and Bishkek. In 2002 the additional drugs package was introduced in all oblasts working under the single payer system, and, by April 2003, it was functioning in all rayons of the country except two in Osh oblast. As of 1 October 2004, there were 703 family group practices and 612 pharmacies working under the additional drugs package scheme. The additional drugs package forms part of the State Benefits Package.

In 2004, the additional drugs package consisted of 53 generic (including syringes) and about 250 trade names, based on the essential drugs list. Pharmacies that conclude a contract with the MHIF sell the specified drugs to insured patients at lower prices. The MHIF reimburses pharmacies in arrears using a reference price system and a computer-processed prescription form. The average reimbursement rate is 50% of the price. Even though the issue of physical access to 70 types of drugs, including tablets, unguents, galenicals and herbal raw materials, has largely been solved, their affordability remains a major problem. Budgets of health facilities are limited and a large proportion of the population lives in poverty and cannot afford necessary drugs. Access has been gradually improved: 10% customs duty on drugs was removed in 2001 and 20% value-added tax on drugs was cancelled in 2003. These measures, especially the removal of value-added tax, have resulted in a decrease of prices in the retail network, amounting to 21.7% in late 2003.

Foreign aid has been very important for the pharmaceutical sector. When the supply of drugs was interrupted after independence, foreign loans and grants were used to import emergency drugs, and additional drugs were donated as humanitarian aid. A special warehouse for storing the drugs received was established.

Health care technology assessment

In 1999, the Ministry of Health set up a database on medical equipment to assess needs for new purchases and identify sources of funding. In May 2002, the Fund for High Technologies and Costly Health Services was established by the Ministry of Health. This body will be involved with the Department of Drug Supply and Medical Equipment in the decision-making on purchases of medical equipment and expensive high technologies.

Private sector providers are free in their purchasing decisions, but health care technologies need to be licensed by the Ministry of Health. New technologies must also be patented in the State Agency on Science and Intellectual Property.

As mentioned above, capital investment from domestic sources has been very low and new equipment and technologies have been mainly financed by external donors.