Cabinet’s reliance on buying medicine abroad caused Dutch firm’s bankruptcy: Report

Leiden generic medicine manufacturer InnoGenerics blames its bankruptcy on the Ministry of Public Health not fulfilling its promise to get Dutch health insurers to buy more medicines in the Netherlands. Because InnoGenerics had virtually no orders from Dutch health insurers, the factory only operated at 25 percent of its capacity last year, director and co-owner Lucas Jan Wiarda said to Financieele Dagblad.

“Closing this factory would not have been necessary at all if the Ministry had kept to the agreements. Those commitments were essential,” Wiarda said.

According to Wiarda, when InnoGenerics was in trouble in December 2020, the Ministry promised to get health insurers to buy more medicines “close to home.” The agreement aimed to keep one of the Netherlands’ largest pharmaceuticals healthy and running while also reducing Dutch dependence on medication from India and China.

According to a report of a conversation between InnoGenerics and top officials from the Ministries of Public Health and Economic Affairs, a public health official said that “the lowest bid will no longer be leading” in tenders by health insurers. In those talks, top official Marcel van Raaij of Public Health assured InnoGenerics that there was the will and willingness to buy more medicines in the Netherlands, FD wrote.

But that didn’t happen, Wiarda said. When awarding tenders, the insurers elected only based on the lowest price, he said. “It was a matter of money,” Wiarda said to FD. “If the factory had been able to run at half its capacity, we would have already broken even.”

A spokesperson for the Ministry of Public Health told FD that it only promised to stress the importance of less dependence on foreign manufacturers to the health insurers. “A commitment to more drug orders from manufacturers close to home was never made to InnoGenerics. It is up to insurers to determine which criteria they use.”

InnoGenerics went bankrupt last month. The pharmacists' organization KNMP warned that this could lead to medicine shortages in the Netherlands.