Legal Developments in the Pharmaceutical Sector: Moving Forward
The pharmaceutical industry remains one of the most important sectors of the Ukrainian economy. Recently, Ukraine took several important steps to improve regulation of the pharmaceutical market, recognizing its investment attractiveness as well as its social importance. Below, we would like to outline the most significant changes that occurred during last six months, along with ones that are being considered at the moment.
On April 20, 2016 the Cabinet of Ministers of Ukraine adopted Resolution No. 312 “On Amending the Procedure for the State Registration (Reregistration) of Medicinal Products.” This resolution simplifies the procedure for the state registration of all medicinal products that have been registered by a competent authority in the United States, Switzerland, Japan, Australia, Canada or the European Union.
In particular, the resolution limits the maximum period for an expert assessment of registration materials for medicinal products already marketed in these jurisdictions to 20 business days. The resolution also shortens the period for the Ministry of Health to authorize the registration of such medicinal products from one month to ten business days.
We expect that such amendments will significantly simplify the access of international companies and their new products to the Ukrainian market and, thus, establish market conditions for robust competition.
In February 2016 two draft laws, in particular, draft law No. 2162 “On Medicinal Products” and draft law No. 2162-1 “On Medicinal Products,” were submitted to the Ukrainian parliament. Both drafts aim to implement the provisions of EU Directive 2001/83/EC “On the Community Code Relating to Medicinal Products for Human Use” and provide for the mandatory application of such standards as good manufacturing practice, good distribution practice, and good clinical practice. Both drafts also quite strictly regulate the advertising of medicinal products. If either of the drafts is adopted, companies may be required to review their business processes and adapt to new legal requirements.
Another significant proposal regarding medical trials was introduced to the Ukrainian parliament in draft law No. 4074, dated 16 February 2016. Under this draft, all results of medical trials (apart from confidential information) will be made publicly available. This proposal should restrict the access of medicinal products with low effectiveness and safety to the Ukrainian market. It should also counteract corruption during the registration of medicinal products.
Ratification of amendments to TRIPS Agreement
On Feb. 3, 2016 Ukraine ratified a protocol amending the TRIPS Agreement, dated Dec. 6, 2005 (the “Protocol”). The Protocol authorizes WTO member states to export medicinal products produced on the terms of compulsory licensing to countries that cannot manufacture the necessary medicinal products themselves. Currently, the TRIPS Agreement permits the application of compulsory licensing provisions only to meet demand on the national market.
The compulsory licensing mechanism authorizes member states to grant licenses to use intellectual property protected by a patent without the prior consent of the patent holder. Resolution No. 877, adopted by the Cabinet of Ministers of Ukraine on 4 December 2013, sets out the procedure for compulsory licensing in Ukraine. The Protocol sets out certain restrictions aimed at preventing possible abuses and protecting the rights of patent holders. In particular, the Protocol requires member states to notify the Council for TRIPS of its intention to export compulsorily licensed pharmaceuticals.
The Protocol will come into effect after all WTO members ratify it. According to information published on the official website of the WTO as of May 2, 2016, 74 out of 108 states have already ratified the Protocol.
The Protocol may potentially be of use to Ukrainian generic companies who can manufacture compulsorily licensed products. It may also affect international companies, whose medicinal products may be compulsorily licensed.
On Dec. 7, 2015 the Antimonopoly Committee of Ukraine (the “AMC”) clarified its own Recommendations, which were issued to participants of the pharmaceutical market on March 5, 2015 (the “Recommendations”). The Recommendations are based on the results of retail market research and relate to the impact of marketing services on the ultimate prices of medicinal products.
In particular, the Recommendations state that the pricing of marketing services should be comparable to actually incurred expenses. In the view of the AMC, this means that such costs should be economically reasonable. At the same time, it does not preclude companies from gaining profit from the provision of such services. Besides, the AMC clarified that pharmaceutical companies may support pharmacies by providing financial incentives, depending on the amount of sold medicines. However, such incentives must not affect the competition on the pharmaceutical market (e.g., obstruct market access to other participants).
The Recommendations give certain guidance for determining the pricing policy and marketing strategy for medicinal products. Considering the significant importance of marketing in the industry, business should pay proper attention to compliance with the Recommendations.
*** The recent steps taken by the Ukrainian authorities show there is a strong intention to improve the regulation of the Ukrainian pharmaceutical market and bring it into line with EU standards. We are looking forward to the further improvement of the regulation of the pharmaceutical market, and expect that all of the above-mentioned commitments will significantly increase transparency in the sector.