FAS of Russia explains the pricing rules for the Essential Medicine List (EML)
Legal update No 644
Bryan Cave Leighton Paisner (Russia) LLP advises that, on 29 June 2018, the Federal Antimonopoly Service of the Russian Federation (FAS) issued clarifications “On setting sales prices for EML medicines depending on their purchase terms” (the Clarifications).
The Clarifications are addressed to all entities operating on the medicine market and focus on three key areas:
(1) Pricing of medicines newly included on the EML
The Clarifications address the situation when a medicine already traded on the market is included on the EML. If wholesalers and/or retailers purchase such a medicine before it is included on the EML at a higher price than the first-registered manufacturer’s maximum sales price, upon its subsequent sale, they must make a reassessment in line with the provisions of part 2, article 63 of the Federal Law “On Circulation of Medicines”.
In other words, the antitrust authority proposes that the cost of the medicine be recalculated so that its sales price does not exceed the first-registered manufacturer’s maximum sale price and applicable mark-up. It is possible that, if the price registered by the manufacturer differs from the actual commercial price, wholesalers and retailers will have to sell previously acquired products below their purchase price.
The Clarifications also note that entities dealing in medicines that purchase a medicine newly included on the EML before the inclusion date must draw up a price reconciliation statement (“protocol soglasovaniya tsen”) upon its subsequent resale. If the medicine was purchased from the manufacturer, it is recommended that the “actual manufacturer’s sales price not exceeding the registered maximum sales price” be specified. For medicines purchased from wholesalers, the FAS recommends that Field 5 “Actual sales price set by manufacturer, net of VAT (RUB)” should indicate the purchase price (from the upline wholesaler) “not exceeding the registered manufacturer’s maximum sales price”.
(2) Pricing and price reconciliation statements for medicines with a reduced maximum sales price
The FAS specifies that, if the manufacturer reduced its registered maximum sales price for a medicine (with the relevant entry being made in the Register), wholesale pharmaceutical companies and pharmacies are recommended to calculate the sales price applying mark-ups to the actual manufacturer's sales price as of the date when it is sold by the manufacturer.
In this, the Clarifications support the position previously stated in response to specific applications by market participants.
(3) Sales procedure for medicines when the decision on state registration of the manufacturer's maximum sales price is cancelled
The Clarifications note that, if the decision on state (re) registration of the manufacturer’s maximum sales price is cancelled, sale of such medicine is prohibited under part 4, article 61 of the Federal Law “On Circulation of Medicines”.
If, in the future, Russia’s Ministry of Healthcare registers a new maximum sales price for the medicine, medicine wholesalers and/or retailers that purchased it prior to the decision on its maximum sales price registration being cancelled will specify a price not exceeding the new registered maximum sales price in the price reconciliation statement field “Actual sales price set by manufacturer, net of VAT (RUB)”.
The FAS clarifications are not a regulation. Even so, in view of the FAS’s powers in controlling pricing on the medicine market, we recommend taking the Clarifications into account in the course of business.
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