FAS to present draft of medicine price-tracking platform proposal in November - FAS official

03.10.2013

The Russian competition authority, Federal Antimonopoly Service (FAS), is set to present its proposal to create a platform for tracking and comparing prices of vital and popular medicines in Russia on 1 November, Nadezhda Sharavskaya, FAS deputy head of social sphere and trade department, toldPaRR.

FAS is compiling this presentation for first Deputy Prime Minister Igor Shuvalov, who oversees competition policy in the government. Shuvalov has requested that FAS evaluate the availability of medicines. This evaluation will be based on price analysis in Russia and in comparable markets, said Sharavskaya.

The Russian competition authority is reportedly considering whether to create a reference pricing system that will allow the agency to track and compare prices of vital medicines in different countries.

Igor Artemyev, FAS head, said that the regulator -- along with its Italian counterpart, the Autorita Garante della Concorrenza e del Mercato (AGCM) -- is setting up an internet platform allowing competition regulators from different countries to gather information on prices. Artemyev said that 11 countries had already agreed to participate in the platform and discussions were being held on the matter with regulators in 12 other countries. Artemyev added that it was hoped the platform would track prices of between 1,000 and 1,500 medicines.

FAS is going to study wholesale prices of what it considers “monopoly” expensive medicines, as well as retail and state procurement prices of popular medicines, according to Sharavskaya. For the November report, FAS will present its research on the process of such medicines in different countries, she added.

The term “monopoly” medicines appears to refer to the drugs that FAS perceives to have no substitutes, said Anton Subbot, a lawyer at Baker & McKenzie in Moscow. Curiously, an innovative drug that has no generics will be regarded as a monopoly drug despite the fact that there may be other innovative drugs that cure the same disease and can be substituted for one another, Subbot explained. This peculiar situation has its roots in the Russian system of state procurement, which requires drugs to be purchased by international non-proprietary names, he added.

FAS has sent enquires regarding medicine prices to competition authorities of the European Union, BRIC countries and Commonwealth of Independent States, said Sharavskaya. Antitrust bodies of the CIS have already provided such information. Trade representatives of Russia have provided such information in the EU and BRIC countries, she added.

The US Federal Trade Commission (FTC) is not involved, according to an FTC spokesperson.

On 9 September, FAS organised an international pharmacy working group meeting during a competition forum in Irkutsk, said Sharavskaya. Participants of this discussion concluded that it makes sense to regulate only “monopoly” medicine prices,
she said.

Prices on certain medicines are regulated in Russia, but it is not the case in all countries, said Vitaly Dianov, a competition lawyer at Goltsblat BLP, the Russian practice of Berwin Leighton Paisner (BLP). For this reason it is difficult to predict how a single platform would operate. Yet, medicine prices are monitored in many countries and that is why it should not be difficult to create an internet platform tracking and comparing prices of vital medicines, he added.

The Ministry of Healthcare and Federal Tariff service already has a system of pharmaceutical price regulation in place, said Subbot. However, the system proposed by FAS would likely be more advanced, he predicted. As an enforcement agency, FAS tends to see the imperfections of the current system better than other government bodies, he observed. PaRR has recently reported on FAS’s regulatory ambitions.

Implementation concerns

FAS anticipates obstacles in creating an international medicines price-tracking platform, as the agency will have to take into account differences in regulations, standards of living, drug subscription procedures and IP protection.

In order to make this platform operational, FAS and its partners will have to create a technical base, determine the list of monitored medicines, classify different types of prices (wholesale, retail, state contract prices), develop methodology and monitoring procedures, as well as solve confidentiality related problems.
Implementation of such a platform will require lots of time because it will be difficult to create a single system for EU countries and BRIC countries for example, Subbot observed. This project will require political will, he added.

Pharma companies do not necessarily have a unified view on the idea of price regulations, it is understood, because the way they view reference pricing systems depends upon how the system is implemented in a particular country.

Some countries claim that they want to track prices across multiple jurisdictions in order to get a fuller picture of drug costs, yet what they really want is to identify the lowest price, it is rumoured. If this were the system under consideration in Russia, drug firms might fear that Russian regulators would force the pharmaceutical companies to match the lowest price in any country participating in the Russian pricing platform, it was said.

An insider at a US pharmaceutical association was hostile to the idea: “Certainly we don’t like it when countries set up reference pricing so that it is a race to the bottom.”

There is an alternative system that pharma companies view as more sophisticated. In this system, regulators calculate an average price based on information from only those jurisdictions that are comparable. Pharma companies are more willing to work with countries with policies like that, it is understood.

Artemyev reportedly said that FAS and the Austrian competition authority Bundeswettbewerbsbehorde (BWB) were in the process of creating a similar scheme for oil products. Artemyev noted that FAS and BWB had set up an internet platform allowing competition regulators from different countries to gather information on oil prices. Artemyev said that 28 countries were already taking part in the scheme.

The project is at an early stage, FAS spokesperson told PaRR. The model could be extended to other sectors, such as rolled metal, Artemyev suggested.


by Natalia Lapotko in London and Ryan Lynch in Washington DC

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