Russia. Pharmaceutical Market Access Barriers 2014

State Regulation of Prices of Medicines on the Essential Drug List (EDL) and Reimbursement Debate

In February 2013, the Russian Ministry of Health approved its Drug Provision Strategy 2025 which includes pilot programs and a full-scale pricing and reimbursement system. Among the ―tasks‖ established as part of the Strategy, the Government of  Russia also seeks to implement registers of patients eligible for free or discounted drugs in an outpatient setting, streamline pre-clinical, clinical, and production requirements, introduce a system of reference pricing, and increase the qualifications of medical and pharmaceutical workers.


While the Health Ministry‘s long-term Drug Provision Strategy provides an important opportunity for healthcare reform in the country, a fundamental objective of the Strategy is for the Russian Government to maintain control of drug prices through registration of the prices of medicines including on the EDL. The EDL system, however, has significant defects. For example, there is no developed or transparent assessment procedure for updating the EDL, and the EDL was not updated in 2012 or 2013. In fact, according to the Russian Government‘s Decree no. 2199-r (December 19, 2013) the EDL effective in 2012 and 2013 shall continue to be effective in 2014. The failure to update the EDL inhibits patient access to new medicines and is in conflict with the Law ―On the Circulation of Medicines,‖ which requires an update to the EDL at least once per year. This decision has been criticized by the medical community, patients‘ organizations and the chair of the State Duma (lower house) Committee on Health.

Other aspects of Russia‘s current pricing and reimbursement system limit market access of U.S. innovative biopharmaceutical companies. For example, the current Russian pricing and reimbursement system discriminates against foreign producers by allowing only domestic producers to request annual adjustment of their registered prices. Russia also imposes international reference pricing based on the lowest price in the basket of 21 reference countries (with a maximum price based on internal referencing of drugs priced in Russia with the same INN). This system is suboptimal as it incorrectly assumes that the economic conditions, patient populations and needs, and healthcare systems in the reference countries are relevant to Russia.

PhRMA and its member companies believe that Russia should adopt a pricing and reimbursement system that appropriately values and rewards innovation while increasing patient access to new medicines. PhRMA and its member companies look forward to engaging with the Ministry of Health in reforming the current system to meet these goals.

Discriminatory Practices in Public Procurement

Russia committed to working toward accession to the WTO Agreement on Government Procurement (GPA) as part of its accession to the WTO last year. To this end, Russia became an observer to the GPA on May 29, 2013 as a first step toward full accession to that agreement. Notwithstanding these commitments, Russia continues discriminatory practices in its government procurement system. The Government of Russia maintains a 15 percent price preference for ―local‖ manufacturers at the federal and municipal procurement auctions. Other preferences are also being considered for local manufacturers – a term not clearly defined. This constitutes clear discrimination against foreign manufacturers, including PhRMA member companies.

At the same time that Russia expresses its intent to accede to the GPA, it continues to implement new measures that favor locally manufactured products in tender processes:

In 2012, amendments to the ―Law on the state procurement‖ regarding public procurement of drugs came into force. Those amendments require that for public procurement purposes, tender lots must be formed according to INNs except for those drugs put on a special list by the government. This practice discriminates against innovative drugs because although the law allows mentioning trade names in tender documentation, the list of such trade names is still to be compiled (see below).

At the end of November 2013 the Russian government approved a decree that would allow public procurement of medicines according to their trade name in cases when drug substitution is impossible. The list of branded drugs to be procured will be developed by a special governmental sub-commission. There is no requirement for additional clinical trials to prove ―substitutability‖ of the subject drug and references to international practice (in particular, European Medicines Agency and U.S. Food and Drug Administration data) are allowed. Still, procedures for inclusion lack transparency and leave room for arbitrary decisions.

Also in 2013, Russia‘s Industry and Trade Ministry drafted a few regulations proposing restrictions on public procurement of imported drugs and medical devices. According to a draft government decree on preferences in state purchases to locally produced drugs, only Russian and Belarusian drugs would be eligible for government procurement tenders if two or more local manufacturers are registered in the market in a particular product category (INN). Locally produced drugs for the purpose of this decree are drugs manufactured in Russia or Belarus, and ―manufacturing‖ means full production cycle including API, or production of dosage forms, or primary and/or secondary packaging or labeling (although the last criterion will only be sufficient until December 31, 2014).

Registration and Clinical Trials

Overall, Russia‘s clinical trial system is strong and accessible. Clinical trials in Russia benefit from highly qualified medical staff, adherence to Good Clinical Practices standards, relatively lower costs, and good access to patient populations. There is, however, room for improvement in some key areas like the clinical trial approval process to increase transparency and speed of approvals. Moreover, according to the Law on the Circulation of Medicines governing clinical trials, pre-registration clinical trials must be conducted in Russia before the medicinal product can be given market authorization (with some exceptions). The corresponding provisions have been implemented, causing delays in the registration of new products, thus limiting patient access to innovative medicines.

The Ministry of Health has taken steps to increase the transparency of the decision-making procedures of the Ethics Committee related to clinical trials. PhRMA especially appreciates the Ministry‘s willingness to allow medical organizations, medical science bodies, medical universities, non-governmental organizations, churches and the media to propose candidates for this body.

Interaction between HCPs and Pharmaceutical Companies

On November 25, 2013 Vladimir Putin signed into law certain amendments to various legislative acts of the Russian Federation due to adoption of the Federal Law ―On Health Protection of the Population,‖ imposing further constraints on companies‘ interactions with healthcare professionals. A special chapter to that effect was added to the Law ―On the Circulation of Medicines.

In particular, the revised law bans ― creating obstacles for participation of competitor companies in scientific events for medical and pharmaceutical professionals organized and financed by a pharmaceutical company or companies. The law stipulates that representatives of sponsoring companies must not have more time to make a speech or more space for demonstration of their products or to have more advertising materials than other participating companies. Under the law, different terms of participation in an event are acceptable only if they are grounded in differences in companies‘ contributions to the event and if a financing agreement is concluded between the companies. These restrictions limit the beneficial and legitimate interaction and communication between pharmaceutical company representatives and healthcare practitioners.

FDI Barriers

On June 24, 2013, the Russian government expanded the scope of technologies deemed to be critically important for the domestic economy or defense to include biotechnology and vaccines. As a result, foreign manufactures of vaccines face greater challenges when investing in Russia. For example, the Russian Government‘s Commission on Foreign Investment‘s rejected Abbott Laboratories' bid for Petrovax, a Russian manufacturer of vaccines, on national security grounds.

Orphan Drugs Legislation

The Law on the ―Health Protection of the Population‖ introduced an orphan disease definition, though eligibility criteria are stricter than in the U.S. and the EU. There is still no definition of orphan drug in Russia‘s legislation and the general registration procedure, set by the Law on the Circulation of Medicines, creates significant challenges for the registration of orphan drugs in Russia. Ministry of Health officials have acknowledged this issue. While developing amendments to the ―Law on the Circulation of Medicines,‖ the Ministry proposed an accelerated registration procedure for orphan drugs that eliminates the need for otherwise obligatory local trials. Although industry, as a general matter, supports accelerated pathways for orphan drugs, the proposed procedure lacks sufficient detail to fully evaluate.

Biologic and Biosimilar products in Russia

While Russian law refers to ―immunobiological products,‖ there is currently no specific definition for biological products or a specialized approval process for biosimilars. In 2013, the Ministry of Health developed draft amendments to the ―Law on the Circulation of Medicines,‖ including proposed definitions for a biologic and a biosimilar. Although PhRMA‘s members welcome this development, there remain some concerns regarding aspects of those proposed definitions. Furthermore, the proposed amendments do not address the lack of a regulatory pathway for biosimilars. As a result, a manufacturer of products that should be regulated as biosimilars must simply demonstrate that its product is bioequivalent to the innovator product (the same standard as for small molecule generic drugs) rather than demonstrate that the product is sufficiently similar to the original product in terms of quality, safety, and efficacy such that product may be considered biosimilar and therefore expected to produce the same clinical result. A purported showing of bioequivalence per the traditional generic pathway is not in line with global best practices for regulation of biosimilars. The lack of clear statutory definitions of biologics and biosimilars, combined with the lack of a regulatory pathway for biosimilars has facilitated the market entry of products which would not be approved under international norms, to the potential detriment of Russian patients.

Damage Estimate 

At the time of reporting PhRMA is not able to provide a specific estimate of the damages incurred in 2013 attributable to trade barriers related to intellectual property protection and market access.

Source: PHARMACEUTICAL RESEARCH ANDMANUFACTURERS OF AMERICA(PhRMA)SPECIAL 301 SUBMISSION 2014
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