Milestones ’09
For the past few years, including the last one, Ukraine has become a growing market for Pharma-companies. There are many reasons that can explain this occurrence:
- one of the biggest Pharma-markets in Europe;
- Ukrainian legislation is up-to-scratch with international standards;
- attractiveness as a Clinical Trial basis;
- the all-encompassing centralized healthcare system is rich in competent professionals, high-level medical institutions and an extensive database.
This undoubtedly attributes to the fact that despite the global financial decline, this sphere remains attractive and developing, regardless of the turbulences that occur in this sphere from time to time.
In this article we shall try to stress some current developments of the past year, that may occur with most of the pharmaceutical companies, CROs, medical services providers in their everyday activity, including import, wholesale, retail, storage and clinical trials that should be taken into account whilst trading in this area in Ukraine.
Target: Reforming the System
It all began in September 2008 through December 2008, when the Decree of the Cabinet of Ministers introducing a new controlling body — the State Inspection on Quality of Medicinal Products — was adopted. Granted with very extensive powers in the sphere of quality control and licensing of wholesale, retail and manufacturing of medicinal products, it also tends to initiate new reforms to the Pharma-sector by issuing new regulations and having the power to monitor prices.
One example of such novelties is the Order of State Committee on regulatory policy and entrepreneurship, State Inspection on Quality of Medicinal Products On Adoption of the Rules of Control for Observing the License Provisions for Conducting Entrepreneurial Activity on Manufacturing Medicinal Products, Wholesale and Retail Sale of Medicinal Products, which was adopted in June 2009. It stipulates the control for observing License Provisions, which is to be conducted in the form of routine checks and unscheduled checks by the State Inspection on Quality of Medicinal Products and its territorial divisions and State Committee on regulatory policy and entrepreneurship and its territorial divisions.
The unsatisfactory results of probes may serve as grounds for annulment of the license.
Market Regulations: Prices, Mark-ups and Taxes
Alongside reform of the quality control sphere, the Cabinet of Ministers also issued Resolution No.955 under the motto “cheap medicines for everyone”, stipulating sudden state price regulations for all medicines, thereby marking the end of the free market and introducing the state into the Pharma-market. This immediately triggered open discussion on price regulation in the pharmaceutical market, the results of which finally materialized in the Resolution No.333. It stated reasonable price regulations for a limited list of medicines, thereby eliminating the previous harsh regulations and the immediate risk of empty pharmacy shelves.
October 2009 saw a sequel appear to the price-regulation. At the end of October Parliament adopted an Act placing a moratorium on prices of all medicinal products until the end of the current financial crisis. This document is significant not only because it proposes to freeze prices at the level of July 2008 — the period just before Ukraine was hit by the financial crisis, and introduces new state bodies on price and mark-up regulations, reforming the price-regulation system once again, but also because its provisions do not correspond with the Constitution.
As of the beginning of November, when this article was being written, the Act had not yet been signed by President V. Yushchenko. This means that for the moment at least there is a significant chance that the President may veto the Act, which will not be defeated by Parliament, or appeal to the Constitutional Court demanding that the Act on the moratorium be recognized as unconstitutional.
Another step by the Government has been to try to levy Value-Added Tax on medicinal products, which are currently not subject to VAT. VAT in Ukraine is not the same as VAT in European countries, and so the expediency of this move is at issue.
Ukrainian legislation prohibits changing taxes during the year. Moreover, the current situation makes it impossible to introduce VAT in any case, except in the event that the amendments to the On Value-Added Tax Act of Ukraine are adopted before June 2009 have drawn to an end. Even in such a case the levying of VAT on imported medicinal products will only come into effect from 1 January 2010. So, for the time being, the risk of such regulations being implemented is minimal.
Yet not only has the financial crisis proved to be a reason for state regulations. In October-November 2009, since the worsening of the “swine flu” epidemic (at least in the news), the Government has introduced a few regulations stipulating the level of wholesale and retail prices for anti-viral medicines. It had been stated that these prices are to be frozen till the end of the epidemic, even though the list of medicines and their prices can be amended by the Ministry of Health. A new list of medicinal products to be always present in pharmacies was also adopted. This is a compulsory document for pharmacies to comply with, otherwise they risk having problems with the controlling bodies.
News in Marking and Packaging
September 2008 also saw implementation of compulsory Braille markings on the packaging of medicinal products: starting from 1 January 2010, every single outer packaging of medicinal products must have Braille markings bearing the name of the medicinal product, dosage and pharmacological form.
The most problematic part of this regulation is that this Amendment, which constitutes just one article, is the only legislative regulation concerning this topic, and which makes it almost unenforceable or, if enforceable, unclear in terms of procedure.
Regulations on Narcotic Substances
There should also be mention of a recently adopted Resolution of the Government of 3 June 2009 On Adoption of the Order of Conducting Activity that is Connected with Turnover of Narcotic, Psychoactive Substances and Precursors, and control of such circulation states that activities connected with the turnover of medicinal products containing drugs, psychoactive substances and precursors is to be carried out in accordance with the license on the production, wholesale and retail sale of medicinal products. It should not actually be regarded as a novelty, but as a systematization of the existing regulatory acts in this sphere.
Clinical Trial Novelties
In July the Ukrainian Health Ministry introduced for debate the Draft Act On Changes in the Civil Code of Ukraine. This Draft Act stipulates two novelties to be included in the Civil Code of Ukraine: to allow clinical trials of medicinal products involving children under 18 and legally incapable persons on condition that parents or guardians have consented to this. Thus the Draft Act is to eliminate the discrepancy between the Civil Code and the On Medicinal Products Act of Ukraine which stipulates that clinical trials may be conducted with regard to children and incapable persons and, in case of adoption, will serve as a “green light” to clinical trials involving children and incapable persons.
Autumn 2009 saw the introduction of a new Order on the Procedure of conducting clinical trials and investigation of clinical trial data and typical regulation on the ethics committee. Once this Order is officially registered as a valid legislative act it shall serve as a modern basis for clinical trial regulations, to the fullest extent harmonized with European and world clinical trial practice in, among others, questions of insurance clinical trial subjects.
Introducing: IPR
In the past few years the protection of IPR has escalated to a new level. For now the Ukrainian IP sector has successful cases in registration of medicinal products, protection of data exclusivity rights, rights of patents holders and the trend is a positive. The year of 2009 was marked with a few patent cases in favour of the patent rights holders — major pharmaceutical companies.
The Future’s Bright
Another step forward is creation of a new working group under the Ukrainian Parliament, uniting legal and healthcare professionals to create the new On Medicinal Products Act of Ukraine so as to eliminate the faux pas of the previous and raise legislative acts to a new level. Hopefully, the text of the Act, including the points of view of all healthcare operators, will be drafted by the end of this year.
All in all, healthcare and pharmaceuticals remain spheres with some of the most dynamically changing and progressive legislation.