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New Rules Proposed for Pharma Imports to Russia
19 March 2015
New Rules Proposed for Pharma Imports to Russia

How will a decrease in state procurements of pharmaceuticals from abroad affect patients in Russia?

This article was published as part of USRCCNE's free monthly newsletter.

 

New Pharma Rules Proposed for Russia

How will a decrease in state procurements of pharmaceuticals from abroad affect patients in Russia?

Russia’s Ministry of Industry and Trade has proposed that imported pharmaceuticals not be allowed for state procurement if there exist two or more tenders of delivery from manufactures from countries of the Eurasian Economic Union (i.e., from Russia, Belarus, Kazakhstan and/or Armenia). Officials believe that the introduction of these limitations will help the state attain its goals as outlined in the “Pharma 2020” state program. According to the program, by 2018, 90% of "essential medicines" in Russia should be Russian pharmaceuticals.

The Village, a Russian-language Internet publication, asked a pharmaceutical manufacturer and the editor of a medical journal what the new draft bill could mean for patients, such as those with diabetes or cancer patients, whose lives depend on quality medications.

This translation has been sponsored by USRCCNE.

 

Ivan Glushkov, Deputy General Director of STADA CIS (holding company of NIZHPHARM and HEMOPHARM).

The program proposed by the Ministry of Industry and Trade will not affect the average consumer at all. It is divvying up the money between companies that have already localized their manufacturing in Russia and companies that have not localized it yet. Currently 24,000 medications are registered in Russia; approximately half of them are listed for state procurements, and it is difficult to predict what fraction of them will be affected by this draft bill.

The restrictions encompass only the medications that have analogs produced by local manufacturers; proprietary medical products do not have analogs. For example, oncology patients will not be affected by this draft because most oncological conditions are treated by patented pharmaceuticals. A fraction of non-patented medications is already manufactured in Russia. Diabetic patients also will not be affected as two out of three world leaders in insulin production already have their own manufacturing plants in Russia. Patients with rare conditions are mostly treated with patented medications; therefore, the new law will not affect them as well.

Most ado right now is created by companies which missed their opportunity to establish their production in Russia. Today, people do not believe politicians even if they suggest truly efficient and reasonable measures. The same applies here: for the most part this decision is beneficial for the patients because it will force companies that have not made the decision to localize their production, to start finally manufacturing their products in Russia. In time (not immediately) it will help lower prices for medications.

 

Dmitry Kryazhev, Publisher and Chief Editor of Vademecum, a healthcare industry magazine

What will change as a result of implementing new system of trading privileges suggested by the Ministry of Industry and Trade? In physical terms (number of packs) the percentage of Russian pharmaceuticals will definitely grow. There are many pharmaceutical tenders taking place, their participants have very different interests, and some of them may be very interested in this arrangement where Russian medications may become more appealing than imported ones.

Now let us imagine that trading is regulated exclusively by healthy competition. According to our calculations, following the “three’s a crowd” rule (this is a nick name for the proposed draft on the market – editor’s note), through honest trading Russian manufactures (as well as companies from Armenia, Kazakhstan, and Belarus) could consolidate their positions in state procurement for another one-third of essential medications. Thus, from 600 items on the established list of essential medications only slightly less than 200 will belong to foreign manufacturers. However, this redistribution will not take place quickly and will not produce a critical effect on the percentage of imported pharmaceuticals money-wise: many imported medications that already have Russian analogs are not very expensive.

It is clear that major players on the Russian market of state procurement will gain additional opportunity to manipulate the market: they will be able to affect the decision of which medication – Russian or imported – will be purchased by the state and included in the federal supply. Certainly, the introduction of the “three’s a crowd” rule will benefit Russian manufacturers that produce pharmaceuticals under contract or license. They will obtain new clients who will be ready to entrust them with the promotion of their products.

For average patients this will not create any immediate or drastic changes. The market for oncological medications and insulin has been shaped a long time ago, and the major players are known, and for them this proposal is very beneficial. They will determine, depending on market conditions, what medications will be included in the state procurement. Thus, there is no revolution here.

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