Lawyers of Legal Alliance Company Spoke at a Business Breakfast Dedicated to the Main Trends of the Ukrainian Pharmaceutical Market

On May 15th, 2017 Kiev hosted II Meeting of the 3D Tax Hub “Review of Pharmaceutical Trends – 2017” organized by Legal Alliance Company together with the audit company “Aksenova and Associates” GGI. The event was devoted to tax risks and trends, pharmaceutical regulation and promotion issues, as well as antitrust issues in the pharmaceutical field.

The event was attended by representatives of pharmaceutical companies - manufacturers, importers and distributors. The speakers of the second meeting were Olena Makeeva, audit company “Aksenova and Associates” GGI, Managing Partner, Svitlana Panayotidi, State Commissioner of the Antimonopoly Committee of Ukraine, Oleksii Bezhevets, Legal Alliance Company, Partner, and Natalia Lavrenova, Legal Alliance Company, Counselor.

During the meeting, the participants discussed changes and trends in pricing and promotion of pharmaceutical products, as well as related changes and gaps in legislation, tax aspects and legal risks. “Ukrainian legislation is quite flexible and dynamic in the field of pharmaceutical regulation. Companies have a wide arsenal of opportunities to promote their products, including by applying legislative rules and conditions in this area creatively”, commented Oleksii Bezhevets.

In her report on the status and prospects of the reform of medicinal products pricing, Natalia Lavrenova noted that participation in the reimbursement program is voluntary. In order to participate in it, it is necessary to declare ex-factory prices that should not exceed the threshold set by the Ministry of Health, where the maximum price is calculated as median, rather than the lowest price in reference countries; also for medicinal products included in the INN List there are mark-ups of 10% and 15% (for the free market and for the reimbursement program). Natalia stressed that the free sale of medicinal products included in the INN List is allowed.

Olena Makeeva, head of the board of directors of “Aksenova and Associates” GGI notes that the lack of a unified approach, on the one hand, and such a variety of existing tools to stimulate sales, on the other, are precisely the focus of attention of the controlling bodies. According to Olena, the approaches of the inspectors of the State Fiscal Service of Ukraine vary significantly, the essence of an economic transaction begins to prevail over the form and content of the primary document. If earlier the tax authorities checked whether there were or rather were not mandatory requisites in an accounting document, today the focus is on the economic transaction itself. “Unfortunately, the current legislation of Ukraine is imperfect and ambiguous. Nevertheless, honest display of the economic transaction in its legal formulation and, as a result, its demonstration in accounting and financial and tax reports will allow avoiding tax risks to the maximum extent possible”.

Svitlana Panaiotidi, special guest of the meeting, State Commissioner of the Antimonopoly Committee of Ukraine, spoke on the current practice of the Antimonopoly Committee of Ukraine and also answered numerous questions of the participants. Svitlana is convinced that the state regulation of prices in the pharmaceutical market should be gradually abandoned . ”Market must regulate itself, create the standards and rules under which everyone will work”. Asked about the discounts that are granted to distributors for certain sales achievements, Svitlana replied, “Discounts that are granted to distributors are often not an incentive for effective sales of products, as they are granted for the performance of standard contract terms. The position of the Committee has not changed regarding the transparency of the provision of discounts.” One of the latest innovations is that in the near future the Antimonopoly Committee of Ukraine will propose for wide discussion a guidance on the application of vertical agreements, which is supposed to clarify practical application thereof.

During the discussion of issues in the area of economic competition protection, associated partner of Legal Alliance Company Andrii Gorbatenko noted that the most anticipated step of the Antimonopoly Committee of Ukraine for the pharmaceutical market is the development of practice, both in the context of the current cases consideration and in the form of advisory explanations summarizing the Committee’s approaches that would give clear criteria of violations of competition law. Such clear criteria will allow the participants in the pharmaceutical market to build relationships with each other safely. Adoption by the Committee of advisory explanations for clarification of vertical concerted actions will be a significant step in this direction.