State vs. ICN Yugoslavia

The decision on the lawsuit between ICN Yugoslavia and the Serbian state, in which the latter damaged the former in the amount of 200 million USA dollars, after which it stated that it no longer wants to see ICN products in so-called state pharmacies, is still nowhere in sight.

Mr. Milan Panic, owner of ICN Yugoslavia (founded after the two-thirds privatization of the former “Galenika”), announced on Sunday (July 19) that a preliminary agreement with the Medical Health Insurance Bureau of the Republic of Serbia has been reached, but that a final solution is expected after talks with the representatives of the Serbian government.  The usually empty state pharmacies — in these ten days during which open war is being waged between the Bureau and ICN — are even emptier, but drugs from the signed-off manufacturer, if they are still around, can be had for free with a prescription.  How and from what sources, it is still not possible to ascertain.  Until last weekend, pharmaceutical institutions did not get any instructions on the new posture to be taken toward ICN.

As it usually happens in this region, the open war between the state of Serbia and Panic’s ICN began with announcements and a decree.  In the middle of last week, the Medical Health Insurance Bureau of the Republic of Serbia issued an internal memorandum to all of its affiliates in which is states that “drugs from ICN Yugoslavia will no longer be delivered to medical institutions in Serbia at the expense of the Bureau, because this institution no longer accepts the obligation of paying for those drugs,” and that the Bureau has discontinued its contract with ICN.

The action by the Bureau results in a theft of 200 million dollars from ICN, with which it credited the Serbian state in the past two years, and which the latter evidently has no intention of paying out.  As far as the citizens are concerned, they have been denied for the umpteenth time the right to free healthcare.  In the event that the argument continues, chaos in hospitals is yet to occur.

DONATOR: The story of Panic’s “Galienika” begins with the late eighties when this reputable American businessman of Serbian extraction decided to come to this region.  He won the initial good will of the regime at the time, the same one which continues to date, with a financial donation which enabled the First Channel of RTS to have its news programs and other shows seen on satellite, with a view to spreading the truth about Serbia.  In return for this Mr. Panic was allowed to become majority owner of the medical drug producer “Galienika”, at a time when it was only possible to dream about the privatization of strategic factories.  With the new system of operating, the factory was brought into order, the unprofitable lines of production were discontinued (production of penicillin), while workers “enjoyed” dividends from profits, just like in the West.

Despite Mr. Milan Panic’s activities on the political scene, ICN Yugoslavia became the leading manufacturer of drugs and the state’s partner in the area of medical drugs.  More than 50 percent of the drug demand of our market was covered by ICN’s production, and in the case of certain drugs this percentage went as high as 80 percent.  Without ICN drugs it is virtually impossible to imagine treatment of heart patients, those suffering from diabetes and epilepsy...  As far as antibiotics are concerned, it is not even necessary to mention them.  This factory is the only one in the country which manufactures the important antibiotic “longacef”.  If the conflict is not smoothed out, all drugs from the so-called positive list (i.e. those free of charge), the majority of which are manufactured by ICN, will only be available for money in private pharmacies.  Of course, that is only so long as Mr. Panic does not close his Balkan shop, which has already cost him several million dollars.

In the previous years, the Serbian state has brought the otherwise profitable and rich industry of medical drugs into an unenviable state with its program of non-payment.  Only in the first month of last year, its acknowledged and known debt to medical drug manufacturers amounted to more than a million dinars.  That was a time when drugs were suddenly disappearing from pharmacies and hospitals, while the state warned domestic manufacturers that it will turn to the importing of drugs in order to solve the drug shortages, which will snuff the anti-patriotic domestic factories which no longer want to deliver free drugs to the state.

With unpaid credits exceeding 100 million dollars in 1996, ICN management decided last year to credit the Serbian state with an additional 50 million dollars.  Professor Ljubisa Rakic, President of ICN Yugoslavia, explained the agreement between the government of Serbia, ICN Yugoslavia, and “Velafarm” as an attempt by this medical drug manufacturer to “help the state and to prevent the importation of drugs.  If the state were to begin importing drugs, it would not do so from world known manufacturers, but from Indian and Pakistani companies whose drugs are of suspect quality...”

LOWERING THE RAMP: In this way ICN bound itself to delivering 50 million dollars worth of medical drugs in the months of March, April, and May of last year, which gave a new credit to the state, which in its part once again promised to pay off the credit within one year of the delivery of the drugs.  The agreement stipulated that 80 percent of all the funds which will be allotted to medical drugs, will be paid to companies who are signatories and will also be freed from paying personal income tax.  The amount of the credit was specified in a convertible currency, and the giving of the credit was subject to ICN’s condition that the borrowed money be deposited in the Commercial Bank, where the Bureau holds its funds.  In this way the ICN manufacturer and “Velefarm”, in which Panic also holds a little less than 40 percent of shares (this company was otherwise the biggest ICN debtor), won the title of privileged companies in production and distribution of drugs.  They did not give their goods on credit to anyone except the state.  In his last public address, Mr. Milan Panic in a way acknowledged the policy mistake by saying that in the past the company should have turned more toward the private sector.

More than ICN Yugoslavia, the state has defrauded and duped for an umpteenth time its own citizens.  Even at the time of best relations with ICN, it was still difficult to acquire so-called prescription drugs.  Free medical drugs and healthcare are a fraud which the regime continues to doggedly feed to the citizens and the public at large.  Firstly, there are insufficient amounts of drugs for several years already, both in hospitals and pharmacies.  Secondly, free drugs are paid, and usually two times for each drug: in order to get a prescription for a free drug you have to pay nine dinars at your health institute (in the first two months of participation, that was only one dinar), then in state pharmacies you again pay another nine dinars for every box of free drugs.  Now follows the most important thing: most often the prescription drugs are not available so that with or without them, people with medical problems regularly pay for their drugs in private pharmacies.  The more adamant could save a bit on prescriptions while the deal with ICN functioned.  With an Act that signs off the biggest manufacturer of medical drugs, the state has freed itself from the obligation of offering free healthcare to citizens.  It transferred all the weight on Milan Panic who is demanding that he be paid back his credit, that his debt be acknowledged, and that his medical drugs be paid for.

In countries which take care of the well-being of their citizens, you need a prescription for everything except vitamins and skin lotions.  Of course, drugs are paid, but its every use and quantity are monitored and controlled, twice each time: at the doctor’s where you get your prescription and at the pharmacy where you buy it.  Here the rule is different: your own doctor — and the fittest survive.