Access to affordable medicines is one of the most important foundations of a fair and effective healthcare system. Medicines are not a luxury; they are essential to health, dignity, and the daily well-being of millions of people. Yet in many low- and middle-income countries, the high cost of pharmaceuticals remains one of the biggest barriers to achieving universal health coverage. Georgia has been no exception. Despite a decade of reforms aimed at expanding access to healthcare, the price of medicines has continued to place a heavy burden on families, especially those with lower incomes and chronic diseases.
In this study, my colleagues and I set out to understand how recent government policies have influenced the cost of medicines for Georgian households. Over the last several years, Georgia has implemented a number of interventions to regulate the price of drugs and make them more affordable. We wanted to see whether these policies actually worked and how much difference they made for people’s monthly spending. To do that, we analyzed national household income and expenditure data from 2015 to 2023, covering more than eighty-eight thousand families across the country.
Medicines have long represented the largest share of out-of-pocket health spending in Georgia. For the poorest households, this can reach as much as ninety percent of their total health expenditure. This is not just a financial concern; it also has real social consequences. When families must spend so much on drugs, they often postpone treatment, skip doses, or cut spending on food, education, and other essentials. Many fall into debt, and some are pushed into poverty. The situation had been worsening despite the introduction of the Universal Health Coverage Program in 2013, which expanded access to healthcare services but did not substantially reduce the cost of outpatient medicines. By 2022, out-of-pocket payments still made up more than forty percent of the country’s total health spending, far above the European average.
To address this issue, the government introduced three main policy actions between 2017 and 2023. The first was the Drug Reimbursement Scheme for Chronic Conditions, initiated in 2017. It aimed to subsidize essential medicines for people with diseases such as hypertension, chronic obstructive pulmonary disease, type 2 diabetes, and thyroid disorders. In 2019, the scheme was expanded to include medications for Parkinson’s disease and epilepsy. Although this was an important step forward, in its early years the program had limited reach. Its budget was small, and few people were enrolled, so it was unlikely to have an immediate effect on national spending levels.
The second measure came in January 2022, when Georgia allowed the parallel import of medicines from Turkey. The goal was to introduce cheaper alternatives into the local market. Because pharmaceutical prices in Turkey were much lower, the reform was expected to increase competition and drive prices down. This policy generated considerable public interest and optimism, as people hoped it would finally make common drugs affordable.
The third and most comprehensive policy was the introduction of external reference pricing in December 2022. This reform set an upper limit on the prices of selected medicines based on the average wholesale prices in four comparable countries: Latvia, Montenegro, Bulgaria, and North Macedonia. In practice, this meant that pharmaceutical companies could no longer charge more than the capped amount for regulated drugs. The measure was supported by legislation and backed by penalties for violations. It represented a major shift toward active price regulation and brought Georgia closer to the pricing standards used in other European health systems.
To evaluate the impact of these policies, we used an interrupted time series analysis, a statistical approach that helps assess the effect of policy changes over time. This allowed us to compare household spending on medicines before and after each intervention while accounting for seasonal trends and differences in household characteristics. All figures were adjusted for inflation to reflect prices in constant 2015 lari.
The results were clear and revealing. Of the three policies, only the introduction of external reference pricing in 2023 produced a strong and statistically significant reduction in medicine costs. Immediately after the policy took effect, the average monthly spending on medicines per household dropped by nearly seven lari—about thirty percent lower than before the reform. This reduction continued in the following months, leading to an estimated total saving of more than forty-three million lari for households during 2023. The impact was both immediate and sustained, suggesting that price regulation, when properly enforced, can have a rapid and meaningful effect on affordability.
The earlier measures had more limited results. The drug reimbursement scheme did not lead to significant changes in average spending, likely because its coverage was still too narrow and the subsidies too small to make a measurable difference on a national scale. Over time, as the program expanded, it benefited specific groups especially pensioners and people with chronic illnesses but it was not strong enough to shift the overall trend in household expenditures.
The policy allowing parallel imports from Turkey showed mixed results. At first, there was a small decline in medicine spending, but the effect was temporary. Prices soon rose again, possibly because of logistical challenges, exchange rate fluctuations, or a growing preference among consumers for imported brands, which were not always the cheapest options. Although the policy increased the diversity of available medicines, it did not deliver lasting financial relief.
In addition to policy effects, our analysis also revealed clear seasonal patterns in spending. Expenditures on medicines were highest in winter months, reflecting higher rates of infections and the seasonal worsening of chronic diseases. This pattern is consistent with healthcare utilization
trends in other countries, where colder seasons often bring spikes in medicine use.
Overall, the findings confirm that direct price regulation through external reference pricing is a powerful mechanism for reducing household costs. Unlike subsidy programs or market-based import initiatives, it does not depend on individual enrollment or consumer behavior; it affects prices system-wide and benefits everyone who buys medicine. For Georgia, this reform represents one of the most successful steps toward improving financial protection in recent years.
However, the study also highlights the need for continuous monitoring and complementary measures. Price regulation alone is not enough to ensure fair and sustainable access. It must be supported by transparent procurement processes, reliable supply chains, and strong competition among distributors. The government also needs to ensure that savings from lower prices are passed on to consumers, rather than being absorbed by intermediaries. Moreover, it remains important to strengthen the reimbursement program so that the poorest and those with chronic conditions continue to receive targeted support.
The Georgian experience offers valuable lessons for other low- and middle-income countries. Many of them face the same challenge: balancing the need to provide affordable medicines with limited public budgets and fragmented markets. The evidence from Georgia shows that even in such contexts, well-designed pricing policies can produce significant savings for households in a short period of time. External reference pricing, in particular, is a practical tool that can be adapted by countries with similar economic structures and healthcare systems.
Behind all the numbers and technical findings, this study is ultimately about fairness. The cost of medicine should never determine whether someone receives treatment or not. When people are forced to choose between buying drugs and meeting their basic needs, the system is failing its most fundamental purpose. Reducing the price of medicines is therefore not just an economic decision; it is a social and ethical one. It restores dignity and security to people’s lives and strengthens the overall trust in the healthcare system.
Georgia has taken an important step forward.
The introduction of reference pricing has already brought tangible benefits to families, demonstrating that data-driven policies can produce real change. But continued attention and effort are needed to maintain this progress and ensure that affordability remains a cornerstone of health reform. Achieving universal health coverage means more than providing access to hospitals or doctors; it means ensuring that essential medicines are within everyone’s reach, every day. This study shows that it is possible and that smart, evidence-based policymaking can turn that goal into reality.
Authors: Tsotne Gorgodze, Akaki Zoidze & George Gotsadze
