On January 30, this year, perhaps the most detailed legal conference on regulation of the pharmaceutical market in Ukraine – the Final conference “Pharmaceutical business: Conclusions 2014, expectations-2015” took place.
The event, whose mastermind and organizer for the fourth consecutive year was Legal Alliance Company, was attended this year by over 120 representatives of the pharmaceutical market.
The experienced lawyers of Legal Alliance and invited experts delivered their reports on the state of the pharmaceutical market in different areas of its operation.
The conference addressed the issues of the regulation of drugs and medical products market, including the development of a new version of the Law of Ukraine ‘On Medicines’, the new procedure for declaring the prices for medicines, revolutionary changes in taxation, advertising of medicinal products, competition in the pharmaceutical market, management of intellectual property of pharmaceutical companies, new anti-corruption regilations and requirements of the EFPIA Code, as well as personal data protection.
REGULATION OF THE MARKET OF MEDICINAL PRODUCTS AND MEDICAL DEVICES
Traditionally, the first and the most extensive session of the event, which was moderated by Dmytryo Aleshko, the partner of Legal Alliance, was devoted to regulatory issues. The speakers of this session reminded the market representatives of the most important events that marked the year of 2014. They include:
In her speech, lawyer Natalia Modlenko covered the problem of implementing re-registration for indefinite term, simplification of registration process for certain categories of medicines, as well as the existing initiatives to reform this sector, including the perspective of reassignment of these functions to the State Drug Ukraine. The issue of salability of drugs upon expiry of registration aroused particular interest among the participants. The speaker explained that the determining factors were as follows: 1) date of expiry of a registration certificate; 2) putting this medicinal product on sale within the certificate validity period or after it. In addition, the report also touched the issue of capability of domestic producers to perform independent quality control of products in bulk during its import; abolition of licensing API import and prospects of its complete abolition for all medicines, as well as the completion of the pilot project to reimburse the cost of drugs for the treatment of persons with hypertension.
In turn, lawyer Olexander Yanev told the participants in detail about the progress of development of a new version of the Law of Ukraine “On Medicines,” which was entrusted to Legal Alliance team this year. Thus, among the main expectations from the document Mr. Yanev mentioned the implementation of a model permit for placing the drugs on Ukrainian market instead of a registration certificate, implementation of the European model of data exclusivity protection in obtaining permission for placement of generic medicines on Ukrainian market, implementation of a simplified model of GMP certificates recognition for production sites in the EU Member States, EEA, Australia, USA, Canada, Japan without a re-inspection, simplification of quality control procedures for certain groups of drugs during their importation, implementation of the European model of advertising and promotion of medicinal products.
Pavel Kharchik, President of the Association Medical Device Market Operators, and Daria Doroshchuk, Executive Director of the Association, spoke about changes in the market price regulation of medical devices. In their speech, they also touched on potential changes to the rules of putting into circulation of medical devices in 2015 and presented the audience with an overview of regulatory initiatives in the field of medical devices.
The second block of the regulatory session devoted to the new procedure for price declaration for medicines was covered by Natalia Lavrenova, the counselor of Legal Alliance. In particular, Ms. Lavrenova spoke about practical application of the new procedure, price registers in reference countries and the country of origin, the mechanism of price declaration, and choice of method for determining wholesale prices. The speaker also referred to the peculiarities of calculating the arithmetic mean, and pointed to the major mistakes that needed to be addressed and prevented in declaration procedure. Summing up her report, Natalia gave some practical advice on the preparation of documents for calculating the arithmetic mean and reminded of the need to go through the procedure of declaring wholesale prices until March 1, 2015.
A SMALL TAX REVOLUTION IN UKRAINE IN THE LIGHT OF PHARMACEUTICAL SECTOR
The second block, moderated by partner Alex Bezhevets, was devoted to tax issues, which in 2015 became particularly relevant for the pharmaceutical market due to the number of changes, allowing to call it a real tax revolution.
Headlining the program was Anatolii Menshikov, the partner of Legal Alliance, who leads the tax law practice of the company this year. In his speech, Mr. Menshikov told about the ‘New Year's eve tax revolution’, during which a set of laws was adopted to provide for new rules for accounting and administration of income tax, radical changes in the administration of VAT, introduction of customs duties on medicinal products and medical devices, new transfer pricing rules, innovations in tax audits, tax compromise, innovations in the taxation of employees of enterprises: personal income tax, ERUs, military training. A significant part of the report was dedicated to a tax audit procedure, starting from requests and act and ending with tax assessment notice. He spoke of the tax inspection requests and the provision of information, on the grounds for documentary checks and counter-checks, inspection results, drawing up tax assessment notices; appeal procedures for tax assessment notices, reported on trends in judicial practice relating to disputes on appealing tax assessment notices.
Among the expectations of 2015 in this area, the reporter touched the issue of changes for importers. In particular, he considered certain issues of import tariffs implementation (rates, effective date, tax exemption) and changes in the field of transfer pricing related to determining the entities whose operations are considered to be controlled, as well as the volume of transactions to recognize the operations as controlled.
Mr. Menshikov presented a forecast, actual for all market participants, relating to changes in income tax (Association of tax and accounting), VAT (electronic reporting, the application of a specific formula (transition period) restrictions in case of sale of goods at a cost lower than its acquisition cost etc), tax compromise (temporary opportunity to pay only 5% of the unpaid amount previously, terms of use), tax audits (new grounds, moratorium, etc.), as well as the taxation of salaries (procedure for payment of unified social tax, progressive personal income tax rate, military training, strengthening of responsibility for envelope salary).
Daria Doroshchuk, Executive Director of the Association Medical Device Market Operators, in turn, spoke about the problems relating to imposing VAT on medical devices, as well as the future tax policy for medical devices in 2015.
PHARMACEUTICAL MARKET: LEGAL INSTRUMENTS COMPETITION FOR THE BEST PIECE OF CAKE
Traditionally one of the most exciting and dynamic sessions is the session on marketing, competition and intellectual property. This year, it was moderated by associate partner of Legal Alliance Andrii Gorbatenko.
By tradition, the first report of the session was a report that presented the state of the Ukrainian pharmaceutical market in the figures. Irina Gorlova, CEO of SMD, spoke about the structure, participants and market trends.
Konstantin Boyko, a lawyer of Legal Alliance, dedicated his report to the regulations and rules of promotion of medicinal products and medical appliances in the realities of the market in 2014, and also spoke about the view of advertising in the new draft Law of Ukraine “On Medicines”. Konstantin also reminded the participants on the regulation of the issues of drugs telesales, sponsorship and proposals of a possible ban on advertising of medicines in the implementation of the coalition processes in Ukraine. Speaking on expectations in the field of advertising for the new year, the speaker anticipated active processes in the implementation in the legislation of Ukraine of the EU standards in this area, clear division of drug advertisement into the categories depending on customers group, the likelihood of introduction of new approaches to advertising requirements, restrictions on advertising of medicines, settlement of the issues relating to the activities of medical representatives at the legislative level, as well as a more detailed regulation of the issues of advertising medicinal products through the distribution of branded products and their samples.
Lydia Sanzharovskaya-Gurlach, a senior lawyer Legal Alliance, was the next on the conference program with the report on the situation of competition in the pharmaceutical market. The leitmotifs of her speech were weak points in the contracts with distributors and pharmacy chains that fell within the scope of attention of the Antimonopoly Committee of Ukraine last year. Lydia designated risk areas in the contracts for supply of medicines and provision of marketing services, and spoke about current approaches to minimize the risks and examples of investigations AMC in 2014. Among the key findings of last year, the speaker noted six proceedings regarding anticompetitive concerted actions of foreign manufacturers / wholesalers and large national distributors on the national market of wholesale drug supply, dismissal of the proceedings regarding anticompetitive concerted actions of Berlin-Chemi AG and five national distributors as a result of the successful implementation of the AMC recommendations, the beginning of study of the market of wholesale supply of drugs in the context of the relationship between distributor – pharmacy/drugstore chain, as well as the beginning of the study of markets providing marketing and related services in the context of the relationship between manufacturer/ largest wholesale supplier of drugs – pharmacy /drugstore chain and market research of retail sale of drugs. Among the forecasts for the current year Lydia noted the decisions in these five cases of anticompetitive concerted actions of foreign manufacturers / wholesalers and large national distributors on the national market of wholesale supply of medicines, as well as the beginning of hearing of cases qualified as violation of the antimonopoly legislation in the markets that the AMC started exploring in 2014.
The final report of the session, dedicated to the practical aspects of intellectual property in the pharmaceutical industry, was presented by Ilia Kostin, the partner of Legal Alliance, Attorney, Patent Attorney of Ukraine. He told the audience about the Association Agreement between Ukraine and the EU ratified in September 2014, which established new approaches in resolving certain issues in pharmaceutical sector, including in the area of intellectual property. The speaker also shared the company's findings on patent search in the interest of the pharmaceutical business. Mr. Kostin said that this year the area of intellectual property would be marked by measures, promoting transparency in the registration of intellectual property, and new requirements for the protection of industrial designs would be set up, including a new criterion for patentability – individual character. Changes of certain terms relating to the protection of intellectual property, including in the case of renewal, non-use of the object were also expected. Another trend is the strengthening of the customs border protection. In particular, it is expected to ban the import of goods that may infringe registered patents, trademarks, industrial designs. Also, given the consideration of draft laws to improve the protection of intellectual property rights, one should also get ready to changes due to adaptation to European standards.
COMPETENT PHARMACEUTICAI BUSINESS: ANTI-CORRUPTION AND COMPLIANCE
The final session of the Conference was dedicated to the Anti-Corruption and Compliance, which, due to the innovations in 2014, acquired a special urgency. Partner Oleksii Bezhevets and senior associate Lydia Sanzharovsky-Gurlach delivered a report in the framework of the session. Speakers presented an overview of changes in anti-corruption requirements that took place in 2014. As you know, on October 26, 2014, a new anti-corruption law was introduced, which will enter into force on April 27, 2015. The new anti-corruption law provides a considerable amount of innovations, including the renovation of the conceptual apparatus, introduction of new approaches to the regulatory aspect of receiving gifts and donations, conflict of interest and other actions aimed at the prevention of corruption. Given these changes, before the introduction of a new anti-corruption law, the pharmaceutical companies should review their internal procedures, policies, guidelines, standard documents relating to Compliance and charity.
Also among the major milestones of the past year, the speakers noted the following events: the establishment of new common restrictions and cost limits in the receipt of gifts, new consequences of violation of such restrictions, the establishment of mandatory requirements for the actions of legal persons in the prevention of corruption, increased fines under administrative responsibility, the application of penalties to a legal entity in the cases of administrative offenses by their officials or omission to take anticorruption measures.
As to protection of personal data, the audience's attention was focused on the introduction of a new definition of “consent of a personal data subject,” practical implementation of the procedure of notification of the Ukrainian Parliament Commissioner for Human Rights on the processing of certain personal data, including health data processing, as well as the structural division or a responsible person who organizes the work related to the protection of personal data during their processing.
The session also discussed the requirements of EFPIA Code regarding the disclosure of information by pharmaceutical companies on the transfer of property in favor of HCPs and HCOs.
AFTERWORD
Final conference “Pharmaceutical Business: Conclusions 2014, Expectations-2015” was supported by the Association of International Pharmaceutical Manufacturers, Association "Operators of medical device market," the companies Cegedim, SMD, MBA SIC, Ukrmedsert, Heath Media, magazines ‘Practice management of medical institution’, ‘Mister Blister’, ‘Pharmacy Practice’, ‘Modern pharmacy’, ‘Pharmaceutical courier’, ‘Pharmacy Audit’, ‘Pharmaceutical sector’, online media PRAVOTODAY, MEDFARMKONNEKT, ‘Legal Newspaper’, ‘Legal Practice’ newspaper. This year, the partners of the event have not only carried out high-end information support, but have also provided nice prizes for the participants, who were played between them in the breaks between sessions.
According to Natalia Duginova, Head of Legal Alliance Marketing Department: “This year we are celebrating a significant increase of interest in the conference among the first persons of the pharmaceutical companies. This can be accounted for not only by the traditional dynamic regulation of the pharmaceutical market, but also by unique structure of the program, allowing to obtain during one day a comprehensive overview of the main legal developments, trends and projections, which must be remembered by managers. In addition, the conference participants can get advice from experts in a variety of legal issues (from taxes to promotion) that are members of the team of the most renowned law company in the pharmaceutical sector. Following the event, we received a lot of positive feedback from participants, and we are pleased that every year we correspond more and more to their expectations. The next time we will traditionally gather in July sum up the results of six months.”
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