In this issue:
- Federal Anti-Monopoly Service clarifies re-registration of maximum ED selling prices The Government intends to clarify the "ED actual selling price"
- The Ministry of Healthcare has developed rules to determine the registered drugs interchangeability
- Federal Anti-Monopoly Service comments on state pricing regulation for medical devices
- Changes in rules of admitting foreign medical devices to state procurements
Federal Anti-Monopoly Service clarifies re-registration of maximum ED selling prices
The Federal Anti-Monopoly Service of Russia, in its Letter #АК/27823/16 dd. April 25, 2016 "On re-registration of pharmaceuticals originating from Eurasian Economic Community" concluded that macroeconomic factors influence the state-registered prices for essential drugs (ED) equally for all the pharmaceuticals grouped under the same international non-proprietary name (INN). According to the Letter, ED maximum selling prices submitted for re-registration could be approved when the following two conditions are met simultaneously:
- overheads and prices for raw materials required for an ED production have grown for all the manufacturers of the ED grouped under the same INN, during the specified period;
- the growth of overheads and prices for raw materials used for calculating the planned maximum selling price submitted for re-registration does not exceed the minimum growth of the overheads/raw materials prices among all the manufacturers of ED products grouped under the same INN.
The Government intends to clarify the "ED actual selling price" interpretation
The Government has submitted to the State Duma a Draft law "On Amending Article 61 of the Federal Law "On Circulation of Pharmaceuticals". The document is supposed to eliminate legal uncertainty and ambiguity in interpretation of the term "ED actual selling price" when using this wording for the purposes of regional state control over ED pricing.
According to Paragraph 2 of Article 63 of the Federal Law #61-FZ, an ED is traded by wholesale and retail companies at a price not exceeding the sum of the actual manufacturer’s selling price and the wholesale and (or) retail markups.
At the same time, according to Paragraph 4 of Article 61 of the Federal Law #61-FZ, the ED price including the wholesale and retail markups should not exceed the actual manufacturer’s selling price, which contradicts the above-stated rule of Paragraph 2 of Article 63.
The draft law proposes to abolish the clause of Paragraph 4 Article 61 of the Federal Law #61-FZ which addresses the wholesale and retail prices for ED.
The Ministry of Healthcare has developed rules to determine the registered drugs interchangeability
The Ministry of Healthcare has placed for public debates the Draft Federal Law "On Amendments to Article 4 of the Federal Law "On Circulation of Pharmaceuticals" and Invalidating Certain Provisions of the Laws of the Russian legislation". The Draft Law proposes that the interchangeability of pharmaceuticals should be assessed in line with the parameters specified in Part 1 of Article 27.1 of the Federal Law # 61-FZ "On Circulation of Pharmaceuticals" dd. April, 12 2010 and in accordance with the requirements of Article 3 of the Federal Law #429-FZ "On Amendments to the Federal Law "On Circulation of Pharmaceuticals" dd. December 22, 2014.
Under Article 3 of the Law #429-FZ, interchangeability of pharmaceuticals registered prior the Draft Law enactment, shall be carried out by an expert commission of the federal budgetary institution authorized to perform pharmaceuticals examination. The examination shall include assessment of a pharmaceutical’s quality and (or) risk-benefit ratio, under the assignment by the Ministry of Healthcare, issued prior tp December 31, 2017 in response to an application submitted by the registration certificate holder/owner.
The pharmaceutical interchangeability assessment is conducted by way of comparing the following parameters of the assessed pharmaceutical and the reference one:
- equivalence of qualitative and quantitative characteristics of pharmaceutical substances,
- equivalence of the drug form,
- equivalence or comparability of the composition of excipients of the drug for medical use,
- identity of the means for administration and application,
- absence of clinically significant differences while a bio-equivalence study,
the manufacturer’s compliance with GMP standards.
Additionally, the Draft Law amends the definition of the reference drug, extending this definition to both newly registered pharmaceuticals and those registered and included into the statutory registers of pharmaceuticals before the Draft Law enactment.
The rules for determining the pharmaceuticals interchangeability were addressed also in KPMG Pharma Bulletin of February and October 2015.
Federal Anti-Monopoly Service comments on state pricing regulation for medical devices
Clause 6 of the Government Resolution #1517 dd. December 30, 2015 "On State Regulation of Prices for Medical Devices Included into the List of Medical Devices Implanted into a Human’s Body under the Program of State Guarantees on Free Medical Care Rendering to Citizens" encourages regional executive bodies to set the maximum wholesale mark-ups to prices for medical devices, in line with the methodology established by the above Resolution, until September 1, 2016.
The Federal Anti-Monopoly Service in its Letter #AK/19638/16 dd. March 28, 2016 stated that restricting wholesale mark-ups to the actual selling prices for medical devices is not provided for by the currently effective laws and is out of the scope of the Federal Anti-Monopoly Service’s responsibilities.
It is noted that the Ministry of Healthcare is responsible for providing explanations regarding the pricing methodology practical application.
Changes in rules of admitting foreign medical devices to state procurements
The procedure for admitting to procurement for state and municipal needs has been changed for certain medical devices originating from foreign countries, pursuant to the Government Resolution # 337 dd. April 22, 2016 " On Amendments to the Government Resolution # 102 dd. February 5, 2015" signed by Prime Minister Dmitry Medvedev.
Previously, the Government Resolution #102 dd. February 5, 2015 established the list of types of medical devices originating from foreign countries subject to restrictions when admitted to purchases for state and municipal needs.
The Draft Resolution #337 provides for the following amendments:
- no restrictions shall apply if the submitted applications (final supply offers) propose supply of medical devices produced by domestic manufacturers belonging to the same group of companies and meeting the criteria set by Article 9 of the Federal Law "On Protection of Fair Competition";
- a purchase order (lot) may not simultaneously include medical devices subject and not subject to restrictions;
- when executing the supply contract, it is prohibited to replace the initially purchased medical device to one originating from a foreign country (not a member of the Eurasian Economic Community) or to a the medical device of another manufacturer;
- should the application (final supply offer) not be rejected due to the said restrictions, the terms and rules of the state procurement, established by the Ministry for Economic Development, should apply.
Changes in property taxation for Moscow healthcare providers
According to the Law of Moscow #14 "On Amendments to the Law of Moscow #64 "On Corporate Property Tax" dd. November 5, 2003 and the Law of Moscow #74 on "On Land Tax" dd. November 24, 2004”, advance tax payments for the reporting periods shall be remitted not later than 30 calendar days from the date of the respective reporting period end. The amendments specify that for the taxpayers calculating taxes based on the cadastral value of the property the reporting periods are the first quarter, the second quarter and the third quarter of a calendar year (while other taxpayers should follow the general rule, defining the reporting periods as the first quarter, six months and nine months of a calendar year). The amendment applies to arrangements arisen starting from January 1, 2016.
Additionally, the new edition of the Law introduces the property tax exemption , reducing the property tax to 10% of the calculated tax amount in respect of buildings and premises designed and used for medical (healthcare) activities, provided these buildings and premises were firstly put into operation after January 1, 2013. The exemption does not apply to immovable property subject to taxation at the cadastral value. This new provision applies to arrangements arisen from January 1, 2015 through January 1, 2025.
The previous Pharma Bulletin issues are accessible our site.
Prepared for you by KPMG in Russia and the CIS, Healthcare & Pharmaceuticals Sector