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GEROPHARM took part in St. Petersburg International Legal Forum

24 May 2016

St. Petersburg International Legal Forum, one of the most important business events of the year that highlights the most significant events and current issues connected with law, authorities, management and legislative initiatives, was held on May 18-20 in St. Petersburg. Each year the forum brings together a number of senior officials of judicial authorities, courts, international organizations, partners of law firms and leading lawyers of the largest companies.

The panel discussion on fair and unfair competition in the pharmaceutical market, which was attended by the representatives of the leading Russian companies and experts in the field of legal market regulation, was held in the framework of the third day of the forum. The event was arranged by the Association of Pharmaceutical Manufacturers of the Eurasian Economic Community with the support of the Ministry of Trade and Industry.

The most important issues for the industry were discussed during the session - the borders of the competitive market, the turnover of counterfeit and fake products, the latest changes in Federal legislation and practical issues focused on legal regulations of public procurement of drugs andproducts for medical purpose. The Chief Legal Attorney of GEROPHARM Group Roman Dolzhansky and the Economic Security Director Andrey Akhantiev participated in the discussion.

Roman’s presentation was focused on the issues connected with law enforcement and specific aspects of regulatory and court practices in cases that GEROPHARM had faced at the time of insulin drugs procurement. He considered a number of identified problems and presented the facts when the law had been violated during the tendering process.

In particular, Roman reported that today the market of genetically engineered human insulins is highly competitive due to the fact that nearly 8-10 drugs of different brand names of both Russian and foreign production are introduced into civil circulation. By the current version of the Federal law 44, technical specification should be created on the basis of INN (International Non-proprietary Name), which means that all applications without regard to a trade name should be allowed to public tenders. In those regions, where the law is followed, real tenders are carried out, with a reduction to 40% of the initial price. Meanwhile, there are also some cases in a number of areas (37%) when insulins of specific brands are procured. This leads to one single application and the conclusion of the contract at the initial price.

Roman emphasized that such cases prevent fair competition and, eventually, increase budget costs. In order to control such cases, GEROPHARM resorts to legal ways to protect its rights – the company applies to the territorial administrations of FAS, as well as to central office of FAS Russia, which is the most effective way. Moreover, in 2016 the company took part in legal trials in Tambov, Chelyabinsk regions and Permsky kray, where the arbitration courts agreed with the position of GEROPHARM and local offices of FAS and recognized the violation of the Federal law 44 by the customers.

Roman added that after successfully implemented activities and new law-compliant tenders, the company’s share in Tambov and Chelyabinsk regions has reached 40-50%.

In conclusion, Roman suggested that in order to achieve fair competition, the following possible measures could be taken - more clarified provisions to Federal law 44, adoption of new regulations, issued by the Government of the Russian Federation, stronger centralization of FAS Russia, expanded oversight functions of the procuratorial authorities, consolidation of court practice at the level of high courts, and changes of sanctions for violation of the legislation.

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