Le­gal De­vel­op­ments in the Phar­ma­ceu­ti­cal Sec­tor: Mov­ing For­ward

Kyiv Post Legal Quarterly - - Chemical Industry -

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.

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