Abolition of maximum price markups on pharmaceuticals (except for essential drugs) and medical goods.
Legal Update No. 174.
Goltsblat BLP advises that resolution of the Government of the Russian Federation of 8 September 2010 No. 694 “On amendment of the list of transport, supply and sales and trading organisation services on which executive authorities of constituent entities of the Russian Federation are entitled to introduce state regulation of tariffs and markups” came into effect on 21 September 2010.
The given list was originally approved by resolution of the Government of the Russian Federation (RF) dated 7 March 1995 No. 239.
Paragraph nine of the list granted executive authorities of RF constituent entities the right to set maximum wholesale and retail markups on the prices of both medicines not classed as essential drugs and medical goods.
Manufacturers and sellers of medical goods and pharmaceuticals objected to this list because the maximum markups set by the various regions did not cover their basic production and sales costs. The limits even applied to some goods for which there was hardly any justification for regulation (such as personal hygiene items).
The Russian Supreme Court’s ruling No. ГКПИ10-498 of 6 July 2010 recognised the given paragraph of the list as invalid in as far as it concerned maximum wholesale and retail markups on the prices of medical goods, indicating that regulation of prices and trade markups thereon had to be based on federal law.
The new Russian Government resolution essentially agrees with the Supreme Court ruling and abolishes the right of RF constituent entities to set maximum wholesale and retail markups on the prices of both non-essential medicines and medical goods.
Please note in this connection that maximum manufacturer’s prices, wholesale and retail markups on the prices of essential medicines are currently regulated by Federal Law of 12 April No. 61-FZ “On the Trade in Medicines”.
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