FAS scrutinises foreign pharma companies over concealing contraindications

12.03.2014
  • Foreign pharma companies do not have full control over Moscow offices
  • Original drugs and generics should have identical instructions, FAS says
  • FAS is investigating six cases involving pharmaceutical companies, including AstraZeneca

Foreign pharmaceutical companies are under scrutiny by the Russian competition authority Federal Antimonopoly Service (FAS) for failing to list all contraindications of drugs they register in Russia, according to an FAS official.

FAS is currently investigating a foreign pharmaceutical company over failure to disclose all contraindications of a drug it registered with Russia’s Healthcare Authority, said Timofei Nizhegorodtsev, head of FAS control department for retail and the social sphere.

When the same drug was registered with the US Food and Drug Administration (FDA) and European Medicines Agency (EMA) these contraindications were only outlined, he noted. In this way the foreign company got a competitive advantage over rival firms that are bound to list all contraindications featured in drug applications in other jurisdictions, Nizhegorodtsev explained.

Some foreign pharma companies thus mislead Russian regulators, Nizhegorodtsev noted. Foreign companies provide all contraindications to regulators in Europe and the US, he said. However, companies do not have the same incentives in Russia, as fines for concealing data are smaller there than in the US and Europe, he added.

As a result, foreign companies get more chances to win Russian auctions where it is specified that drugs with certain contraindications cannot participate, said Nizhegorodtsev. Contracting rules normally specify that drugs with certain contraindications cannot participate in these tenders.

Intentionally misleading?

A company might not be listing the same contraindications in Russia and elsewhere, because medicines affect different populations in different ways, a US-based industry attorney said. “The populations could differ in their demographics – not everyone reacts the same way,” the attorney explained.

It is very unlikely pharma legal groups are attempting to stonewall Russian regulators, said Gary Giampetruzzi, a partner at Paul Hastings who previously worked at Pfizer. “I can’t believe for a second that a multinational pharmaceutical company is going to play games with compliance with regulatory requirements,” Giampetruzzi said, “let alone in an important market like Russia.”

Although fines for providing inaccurate information to the authorities in the country are not high, pharmaceutical companies may be forced to withdraw their products from the large Russian market, leading to substantial financial loss, said Dianov. Many foreign companies do not have full control of their Moscow offices, said Nizhegorodtsev. As a result Moscow offices become quite autonomous and violate compliance guidelines of their headquarters offices, he
added.

Representatives of Moscow offices, along with their friends and families, set up their own distribution companies and make sure that only they get to buy certain drugs, explained Nizhegorodtsev. Other industry players are sometimes excluded from business as a result, he said.

Complicating Russia’s regulatory efforts is the weak relationship between FAS and the head offices of pharmaceutical companies, Nizhegorodtsev said.

FAS sometimes cooperates with lawyers who represent these international pharmaceutical companies, but these lawyers are interested in extending the process of investigations rather than quick, efficient cooperation. It would be hard to call this cooperation fruitful, he added.

FAS efforts to tackle concerns over contraindications

To address the problem of contraindication as well as other discrepancies, FAS is currently proposing a requirement for original drugs and generics to have identical instructions so that producers of original drugs as well as generics will be required to list same contraindications to Russia’s regulators.

Currently, there is no single standard for drug instructions in Russia. Producers of original drugs, which are mainly foreign pharma companies, as well as companies producing generics try to use this state of affairs to their advantage, according to FAS.

Generics have a far more favourable procedure for registration than original medicines, noted Anton Subbot, a lawyer at Baker & McKenzie in Moscow. Because generics are by definition registered after original medicines originators are unlikely to be responsible for discrepancies in instructions, said Subbot, noting that these discrepancies may be a result of imperfect healthcare regulation in Russia.

If FAS initiative comes into force, producers of original drugs and generics will be required to provide the same instructions listing same contraindications, side effects and recommendations regarding standard dosages.

Russia’s Ministry of Health should be tackling the contraindications issue because it is primarily a pharmaceutical problem, which has indirect implications on competition law, said Vitaly Dianov, a competition lawyer at Goltsblat BLP.

Yet considering that FAS has recently initiated investigations against the ministry itself, cooperation among the authorities is unlikely to be fruitful, he noted.

In October 2013, FAS found that the Ministry of Health violated competition law by discriminating against insulin suppliers

The FAS initiative is problematic because the substitutability of original drugs and generics is frequently in question, said Subbot, adding that identical instructions may mislead consumers.

Dianov agreed, saying that if branded drugs and generics had the same instructions, it would be important to ensure that medicines were produced in the same way. It would be challenging for regulators to scrutinise each stage of drug production, he noted.

Currently, FAS is investigating six cases involving pharmaceutical companies, said Nizhegorodtsev. Three out of these cases are preliminary investigations, he noted.

In February, FAS announced a probe into the activities of pharmaceutical group group AstraZeneca to ensure that it is in compliance with Russian antitrust law.


by Natalia Lapotko in London and Ryan Lynch in Washington DC

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