Regulating Medicine Prices in Russia

On 26 February, representatives of FAS Department for Control over Social Sphere and Trade took part in a meeting of the Healthcare Committee at Franco-Russian Chamber of Commerce. Due to the recent changes in the law, the key item of the discussion was regulating medicine prices.

At the outset of his speech, Head of FAS Department for Control over Social Sphere and Trade, Timophei Nizhegorodtsev pointed out: Today the entire world is moving towards indicative pricing with choosing the reference countries. It is the mainstream and Russia is fully in line with the global trends.

In particular, he emphasized that the time of a fragmented world when global corporations could manipulate data and build up their pricing policy on separate markets is gradually receding into the past, giving way to universal approaches.

Additional competitive advantages will be gained by those companies that are able to adapt to the new reality faster, - added Timophei Nizhegorodtsev.

Deputy Head of FAS Department for Control over Social Sphere and Trade, Nadezhda Sharavskaya pointed out that price analysis in the reference countries covers not only imported but also domestic medicine.

She said: We think that Russian people should be able to get medicine at prices not higher than in other countries, regardless of whether these drugs are domestic or imported.

Regarding new rules and methods of registering medicine prices, Deputy Head of FAS Department highlighted that the main goal of drafting a new document was to exclude discrimination of Russian pharmaceutical manufacturers.

It determined the transition from a non-transparent method of price registering which was discriminating and labour-intensive for Russian manufacturers to the indicative method, enabling objective price regulation, - explains Nadezhda Sharavskaya.

Medicine prices depend on the company’s will, which is based on a demand-supply balance. Therefore, we request from manufacturers that prices on the Russian market, which is nearly always bigger than the reference markets, are no higher. It means we act as a competition authority that eliminates discrimination of the Russian market in comparison with other markets, - confirms Timophei Nizhegorodtsev.

For example, according to the expected rules, if a medicine price in one of the reference countries goes down, the manufacturer must submit information about adjusting the price to the Ministry of Healthcare of the Russian Federation.

The frequency of changing prices in the reference countries depends on the will of the company – holder of the patent certificate. It is this company that determines the circulation frequency due to the changed price, - clarifies Timophei Nizhegorodtsev.

Verifying the data, the Antimonopoly Service uses open sources. If we understand that prices in the revealed sources are lower than announced by a pharmaceutical company, an enquiry will be sent to the latter with a reference to a particular source. In this case, the company has the right to explain the situation or reduce the price, - continued Darya Starykh, Head of FAS Unit for Regulating Medicine Prices.

Darya Starykh answered questions about calculating prices when presentations or dosages change, estimating the average weighted price and applying a decreasing coefficient.

Another item was on-line commerce with medicines. The market power of pharmacy conglomerates is growing and putting pressure on medicine manufacturers.

At the moment competition on the pharmacy market is weak. Therefore FAS as the competition authority is trying to find mechanisms to keep independent players on the pharmacy market, particularly, tying on-line sales of medicines directly to pharmacies,- summed up Timophei Nizhegorodtsev.

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