In 1992, the two state pharmaceutical manufacturers, Profarma and the Antibiotics Factory, were on the verge of collapse and lacked money to buy imported raw materials for production. Albania received some foreign aid to
address the situation and began discussions on privatizing all or part of the industry. Both of the manufacturers have now been privatized. There are also a few small pharmaceutical companies that produce a limited number of drugs
and cosmetics.

These domestic manufacturers produce a number of essential drugs. There has been an increase in imported drugs, however, which are more expensive for consumers. Pharmaceuticals must be registered with the Ministry of Health
before they can be sold in the country.

Pharmaceuticals account for a high proportion of health service expenditures in most former Communist countries, where they are now a high priority in health care reform. In 1994, they accounted for 23% of health care spending in
Albania; in 1999, this figure was estimated at 25%, or 3 780 million leks. A national pharmaceuticals policy, drawn up in 1993, has been partially implemented over the last few years. It contains a number of goals such as the establishment of good manufacturing practice, the compilation of a national formulary and the periodic updating and expansion of an essential drugs list.

In 1994, an essential drugs list of 174 products was drawn up, adapted from the WHO Essential Drugs List. Only the pharmaceuticals on this list are reimbursed, either in part or in full, by the HII. The list was expanded to 278 drugs in 1997, and to 308 drugs in 2001. Drug reimbursement absorbed 70% of the HII budget in 2000, when it had reimbursement contracts with 754 pharmacies and pharmaceutical posts.

As of December 2000, only infants under one year old, invalids and war veterans received full subsidies for essential pharmaceuticals. Other subsidies are categorized by therapeutic application, for example, drugs used for cancer
or tuberculosis. Full subsidies account for about 31% of all HII drug expenditures.

Hospitals purchase essential drugs three months in advance based on anticipated need. As funding is very limited, they often run out of drugs before new supplies arrive, so that patients must often buy their medications from
private pharmacies. Drug reimbursement by the HII is not indexed to price changes and inflation, so that pharmacists pass on such additional costs to consumers.

Private pharmacies, which number more than 500, are well stocked and better managed than hospital dispensaries. There is no shortage of essential drugs, but the absence of a good regulatory framework allows poor practices to continue, such as the dispensing of drugs that are inferior quality, outdated or unregistered. The Ministry of Health recently established a body of pharmaceutical inspectors to make sure that drug distribution norms and regulations are respected.There are various policy proposals to improve the cost–effectiveness of pharmaceutical use. One proposal, for health care facilities to be responsible for purchasing consumables and drugs from their own devolved budgets, has now been implemented. Another proposal would require prescription training for medical personnel, so that they can both prescribe the most effective drugs and control costs. As part of a third proposal, the Ministry of Health is developing standard treatment protocols with technical assistance from the World Bank.

Until 1992, Albania produced all the vaccines used in its national immunization programmein the Institute of Hygiene, Epidemiology and Immune-biological Products, except for the poliomyelitis vaccine. Production took place under poor laboratory conditions, which was why the Ministry of Health decided to stop producing vaccines. Since then, all vaccines have been supplied by UNICEF or imported. However, quality control of imported biological products and drugs remains a problem, since Albania has poor quality control capabilities.

Health care technology assessment is an area that still needs to be developed. One proposal, which has not yet been implemented, is to only purchase expensive technology after assessment by an expert national body. There is also an urgent need to oversee the safe operation and proper maintenance of basic medical equipment (X-rays, laboratory equipment, etc.).