The Hot Topics of Pharm Industry in Ukraine

New Anti-Corruption Legislation
After almost half a year of �corruption lawlessness�, on 7 April 2011, the Law of Ukraine On principles of prevention and countering of corruption in Ukraine, N 3206-VI and the Law of Ukraine On Amendments to Certain Legislative Acts of Ukraine concerning responsibility for corruption, N 3207-VI (hereinafter referred to as the �Anti-Corruption Laws�) were finally adopted. Both legislative acts entered into force on 1 July 2011.
The Anti-Corruption Laws have mainly affected the most widespread spheres of cooperation of private and public sector, namely marketing and promotion activities of the pharmaceutical companies. And most of all were affected organization and sponsorship of conferences, symposiums, seminars for medical specialists; distribution of samples and other brand reminders and souvenirs to medical specialists. This is due to the fact that the Anti-Corruption Laws reckon among the subjects to liability for corruption violations the medical specialists who work in medical establishments that are funded by the state or local budget and receive their salaries from the state or local budgets, and perform consultancy and organizational and/or regulatory duties. There are some practical grounds (however still questionable) to state that almost all doctors of the state hospitals and clinics could be subjects to liability for corruption violations.
In order to comply with the requirements of the Anti-Corruption Laws, the activities of the pharmaceutical companies have to be reconsidered, in particular, their internal anti-corruption and marketing compliance policies. In this respect, the key approaches to the adaptation of marketing activities of pharmaceutical companies are the following: conclusion of civil agreements for providing consultancy services by such medical specialists (e.g. writing an article; preparing presentation; conducting researches etc.); combining jobs (work for public and private sector, unless it its prohibited by the law); work with specialized medical associations or non-profit organizations as intermediaries.
New Tendencies in Advertisement of Medicinal Products
The Parliament proceeds with its numerous attempts to put a ban on advertisement of medicinal products. However, on 6 October 2011 the Verkhovna Rada of Ukraine did not supported the Draft Law #8065 On Amendments to Article 21 of the Law of Ukraine On Advertising regarding Restriction of Advertising Medicinal Products which was under its consideration since 3 February 2011. The Draft foresaw the possibility of the advertising of medicinal products (Rx and OTC) only in special medical publications, in internal advertising at drug stores, as well as at medical seminars, congresses and other events.
However, there is another similar draft law on ban of advertisement of medicinal products being registered in the Verkhovna Rada of Ukraine (#7007 of 21 July 2010). The mentioned Draft Law was adopted in the first reading on 21 December 2010 and is more likely to be adopted in full as it was initiated by the pro-government deputies.
It is worth noting that the Antimonopoly Committee of Ukraine also makes its contribution to restrict advertisement of medicinal products by actively performing the examination of advertising materials, either printed or video, and imposing fines on the pharmaceutical companies for violations, which are constantly increasing. The violations are mainly connected with the distribution of misleading information about medicinal products. Accordingly, each promotional and advertising material is subject to thorough legal examination. Due to the fact that no unified criteria for examination have been established, the Antimonopoly Committee of Ukraine adopts the decisions based on its subjective (practical) approach. Hence, the flexibility of the legal definitions promotes the ambiguous practice so far.
Price Registration
The Decree of the Cabinet of Ministers of Ukraine dated 08.08.2011 № 932 �On enhancement of State Regulation of Prices for the pharmaceutical products and medical devices procured using the funds of the state and the local budgets� (hereinafter - Decree 932) establishes registration of the prices for pharmaceutical products and medical devices. The price registration is the must for a business entity to access the State procurements of pharmaceutical products and medical devices.
The important innovation of the Decree 932 is the fact that instead of the declaration it introduces the state registration of the wholesale prices both for pharmaceutical products and the medical devices, in particular for every medical form, dosage and consumer packaging of pharmaceutical products, as well as all types, kinds, brands of medical devices. Moreover, it provides that in order to participate in the procedures of government procurements, the registration of the wholesale prices becomes a mandatory condition.
It is worth mentioning the following issues that find no clear reflection in the Decree 932:
- In order to get the wholesale price registered, the applicant files to the Ministry of Healthcare of Ukraine, among other documents, the informational certificate on the registered prices for the pharmaceutical products and the medical devices in the country of their origin and in the countries of CIS and EU, where the state price regulation is implemented, according to the form used in Appendix 2 of the Order;
- Filing the calculation of the wholesale price for the pharmaceutical products or the medical devices using the form presented in Appendix 1 of the Order, which provides that in case when it is not possible to fill out the form presented in the Order, the applicant may prepare it in any form;
- Re-registration (changes) of the wholesale price for pharmaceutical products or medical devices shall be performed in the same order as provided for its registration, no more than once per six months.
The Products Protection from the Competitors
The State registration of pharmaceutical products in Ukraine serves as the only and universal �key� to perform the economic activity in the pharmaceutical sector. It is clear that the product launch process has a number of risk factors involved; in particular, in case of the State registration of original pharmaceutical products various risks may be encountered related to the registration of its generic versions.
First of all, a generic product producer should make sure that the period of the data exclusivity for the original pharmaceutical products (5 years from the moment of the State registration) has expired. For this purpose it is necessary to address the State Expert Center of the Ministry of Healthcare of Ukraine to clarify the date of the initial registration of the original pharmaceutical product.
Secondly, it is necessary to check whether the manufacturer of the original product does not have the valid patents in Ukraine for the invention/useful model of the reference pharmaceutical product. After the positive response has been obtained we come to the third stage in the process � validation of the data concerning the bioequivalence of the generic pharmaceutical product towards its original product, because the State registration (the simplified procedure) provides references to pre-clinical and clinical data of the registration dossier of the brand. Basically, this is the core of the State expert evaluation of the registration materials for the generic pharmaceutical product.
Taking into consideration the aforementioned, the conclusion may be made regarding possible violations on the part of generic pharmaceutical product producers:
- Violation of data exclusivity period;
- Violation of intellectual property rights;
- Inefficient proof of the bioequivalence of the generic product towards the brand, and as result of this � unlawful reference to the pre-clinical and clinical data of the brand.
According to article 9 of the Law of Ukraine �On Medical Products�, the decision to decline the State registration of pharmaceutical products shall be made in cases when their effectiveness and safety may not be confirmed.
Considering the issues of intellectual property rights protection, we should note that according to part 17 of article 9 of the Law of Ukraine �On Medical Products�, the State registration may be declined in case the intellectual property rights protected by the patent, including the process of production, use and sale of pharmaceutical products, are violated in result of such registration. It must be mentioned that the refusal may occur both at the stage of the State registration application processing, as well as during the period of the registration certificate validity.
Summing up the above said, we would like to emphasize the importance of the legal support of the State registration and control over the launch of the pharmaceutical products of the competitors onto the Ukrainian market. Timely performed legal analysis shall allow a pharmaceutical product producer to prevent its competitor from the participation in the State procurements, prevent the appearance of the copy products on the market and make an incompliant competitor start negotiations prior to the court proceedings.
IPR Protection for Pharma
IPR protection for pharma is developing and has a huge potential in Ukraine. There are serious violations of IPR on the pharmaceutical market, among which I would like to highlight:
- infringement of originators� patents for medical substances (reactants), original combinations, pharm compositions, production method, method of use of pharmaceutical products;
- infringement of rights for trademarks;
- generics� misrepresentation while obtaining patents; and
- generics� fraud while registering pharmaceutical products (misuse of dossier).
There are couple similar cases in our hands concerning violations of IPR of pharm companies. Most commonly, generics use active substance that is defended by the patent of an originator. Usually, they do it without permission. Such actions could be a reason to bring in an action against generics about disaffirmation of the drug registration; cancelation of a public purchase; suspension the drugs delivery from abroad.
To ensure its IPR, a manufacturer of a pharmaceutical product must maintain term of the registration of a patent; monitor patents that belong to competitors; use experts� opinions on the IPR; consider advantages and disadvantages of litigation and/or mediation. Usually, there is a room for negotiations between an originator and a generic. However, we had a case where an originator sued its competitor for misuse of a trademark, and won the case.
Among the stakeholders in Ukraine that foreign manufacturers need to have a dialogue with when defending their IPR I would mark out: the Ministry of health, the State expert center, Ukrpatent, the Antimonopoly committee, The Ukrainian center of innovates, courts, the State customs, and last but not least the NGOs like EBA, ACC, AIPM, APRAD.
Our experience shows that NGOs like EBA and ACC are rather powerful organizations and are useful in lobbing the market interests, i.e. on any specific issues that disturb all the pharm market in general.
The NGO may influence on the process of adopting new legislative changes, on the approach of the state authorities to some specific issues, etc. However, these organizations are rather reluctant to help in solving individual problems of its members. Embassies also can be used; however, there is a tiny chance they would help in individual business problems with IPR.
Recent Changes in Legislation which Will Affect Foreign Pharma in Ukraine
There is a draft of the State conception of the import substitution of pharmaceutical products in Ukraine that can (if adopted) demolish businesses of some foreign pharm companies in Ukraine. The Ukrainian government may adopt it soon. Taking into account this fact, as well as rather strong lobby of local pharm manufactures, the foreign pharm companies in Ukraine should adopt their business strategies to new reality and mitigate these risks. These strategies include alternations to life management of the products, where IPR are the main factor.
We would like to mention new changes to article 9 of the Law about medicaments, which were adopted by the Parliament in first reading. These changes aim to ease entrance to the market for generics, shortening exclusivity term and introducing new rules for the use of registration dossier. When adopted, it would seriously influent on the IPR management of originators.
AUTHOR: Oleksiy Bezhevets and llya Kostin, Partners with Legal Alliance Company