OREANDA-NEWS. March 25, 2014. The Working Group for studying the issues of competition in the pharmaceutical sector had a meeting in Moscow, co-chaired by Deputy Head of the Federal Antimonopoly Service (FAS Russia), Anatoly Golomolzin, and a representative of Italy’s competition authority, Renato Ferrandi.

Representatives of the antimonopoly bodies form ten countries - Azerbaijan, Bulgaria, Italy, India, Kazakhstan, Korea, Kyrgyzstan, Romania, Russia and Serbia - took part in the meeting. The discussion focused on the specifics of the drug market, unfair competition and exposing and suppressing cartels.

In particular, the Head of FAS Department for Control over Social Sphere and Trade, Timophei Nizhegorodtsev, gave examples when pharmaceutical companies created unreasonable advantages for themselves by concealing information. “”Astra Zeneca” registered “Meronem” in a presentation that does not exist, while the instruction did not specify a known serious by-side effect. Another producer of an expensive HIV medicine has failed to include in the Russian instruction some very serious by-side effects that were specified in the original instruction in Europe a long time ago”, said Timophei Nizhegorodtsev.

His Deputy, Nadezhda Sharavskaya, informed participants about the findings of the first comparative survey on drug prices in Russia, the CIS, the European Union and BRICS. Analysis covered around 20 expensive life-saving medications, over 40 most popular drugs in Russia and some cardiological medicines.

“The majority of the analyzed drugs are sold in Russia at higher prices than in other surveyed countries, primarily due to underdeveloped competition on the market of particular drugs, unresolved issues of determining drug substitutability and the shortcomings of state price regulation”, emphasized Nadezhda Sharavskaya.

According to Renato Ferrandi, each European also spends a significant sum per year for medicines: on average, around 430 euro. The size of spending is determined, in particular, by unfair practices of pharmaceutical companies. In February 2014, for instance, Italy’s Supreme Court confirmed legitimacy of a decision of the competition authority to fine a pharmaceutical company 1 million euro for delaying entry of generics of Xalatan – eye drops for treating glaucoma, to the market.

When the patent expired, the pharmaceutical company filed an application to acquiring another patent to develop a new products based on the first one. No other product was produced, however, and the obtained one was used as the means to delay entry of Xalatan generics.

Special attention was paid to the decision of Italy’s competition authority to recognize two drugs with different active ingredients as substitutes. “The case can be a precedent, especially for Russia, where the issue of drug substitutability has not been resolved yet even for the drugs with the same active ingredient”, pointed out Anatoly Golomolzin during the discussion.

The pharmaceutical companies agreed to exclude a cheap medicine – “Avastin” with a broad application for treating eye diseases, reorienting the demand to a more expensive drug – “Lutsentis”, developed specially to treat such diseases. A million potential patients and the price difference is over tenfold. As a result, additional costs of the Italy’s National Health Institute reached approximately 45 million euro.

Independent expert examinations showed that the drugs are substitutes. Each company was fined over 90 million euro.

A representative of Korea’s competition authority also gave an example of an anticompetitive agreement when companies had agreed to remove generics of “Zofran” antinauseant drug and not to compete with each other.

A FAS representative Evgeny Kozlov made a presentation on exposing and suppressing bid-rigging collusions.

According to FAS, the mainstream regulation must be in creating conditions for competition rather than administrative restrictions, which would stimulate drug price reduction, quality improvement and expand the range of drugs.

To this purpose, first, it is necessary to introduce a concept of “drug substitutes” in the legislation; determine the procedures for establishing substitutability, simplify generics registration, especially with those international non-proprietary names under which only one trademark is registered; harden patentability criteria to decrease the consequences of unreasonably granted patents, which artificially prolong monopolistic position of some companies; and ensure compliance with the requirement to prescribe drug on the prescription forms under international non-proprietary names, which would allow patients to chose between several substitute drugs at the best price.

Second, in view of the absence of competition on the market of monopolistic drugs and impossibility to considerably reduce prices for such drugs through tenders, before the patents expire such drugs must be procured directly from producers, with considerable discounts and guarantees. Tenders for the services for storage and delivery of medicines to the constituent territories of the Russian Federation must be separate. For the medicines circulating on competitive markets (drugs that have analogues) there should be a transition from strict administrative regulation of drug prices to a system of medicine compensation.

Third, a platform should be formed to display information about drug prices in different countries, initial (maximum) contract prices, as well as to expose unreasonably high prices for particular drugs in Russia and automate comparative surveys.

“Dynamic non-price competition, protected by the patent system, is typical for the markets supporting entry of new drugs”, commented Anatoly Golomolzin. “Antimonopoly violations, particularly, abusing market dominance and anticompetitive collusions are accompanied by abuses of exclusive rights. Examples from foreign practices stress a very fine line between bona fide possession of exclusive rights and abusing ethical rules.

To capably use the best experience and practices, the Working Group also discussed the importance of creating a Common Information Platform, which would describe the best cases, give information about country-specific regulation and the basic principles of market analysis, he issues on drug substitutability, etc.”