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Conduct of Russian Pharma practices came into force on April 19, 2016

After crash of the USSR our reality was marked with arrival of global manufacturers to Russia. They are strong world companies, with great investment potential and longstanding experience (oftenly for centuries) of production and sales worldwide.

Global companies became significant part of the Russian economy and started to contact with government, population and Russian business as a partner as follows: supplier, purchaser, employer, investor or distributor.

Relations mean mutual interests, and, in some cases, may cause conflicts. Of course, such causes are regulated by law as Labour, Civil or Criminal Codes of Russia, but in Europe it is a habit to lower potential of conflict by negitiations and agreements. One of ways to agree, which is tested globally, is Conduct of conscientious practices, where principals and confines of companies dealing on the market are written.

Our article is dedicated to start of Conduct of Russian pharma practices, represented on joint press-conference of Association of European Businesses (AEB) and Federal Antimonopoly Service of Russia (FAS), and is based on the materials of the press-conference.

Who needs Conduct of Russian pharmaceutical practices here?

According to Dr. Frank Schauff, the Conduct was prepared in 1.5 years by 15 pharma producers, members of AEB committee for Health and Pharmaceuticals, in response to proposal of head of FAS I. Artemiev, which was given in September 2014. The above companies will be the first who sign the Conduct.

Dr. Frank Schauff

The first beneficiary is initiator, FAS. The service is interested in decreasing quantity of complaints and applications, which means conflicts. According to I. Artemiev, the office needs to transfer positive European experience and expects following benefits:

  • Openness and transparency of pharm-market in whole
  • Clearness in relationship among dealers and pharm-makers
  • Antimonopoly effect

Coming of the current Conduct into force was named by I. Artemiev as demonstration of «good, justice and democracy».

Pharmaceutical producers (means remedies only, the Conduct doesn’t tought substances, technics and so on) are also winners. At first, majority of them is ready to work by Conducts based on global experience, usual for global companies.

Yury Litvischenko

Second. One of the Conduct’s targets is accordance of business with the state. Upon Yury Litwischenko, head of AEB committee for pharmaceutical and health and General Director of Chiesi Pharmaceuticals, the Conduct «is aimed at decrease of risks of antimonopoly impact» for pharmaceutical companies.

Now there are 2 key risks, connected to possible decisions of FAS: compulsory licensing of pharmaceutical companies and implementaion of alternative import (through official dealers of pharmaceutical companies in other countries, for example).

General Director of AEB also believes, that the Conduct can stricke a blow for «self-controllability of pharmaceutical industry» of Russia in general.

How the Conduct works?

Key operations by the Conduct will be executed by AEB Committee of Heath and Pharmaceuticals. Arbitration composed by pharm-makers will dispute resolutions before application to FAS or court. At the same tine FAS will give orders about non-intervention to these settlement and will legalize it on the federal level.

Content of the Conduct includes:

  • Interaction with distributors (open rules and criterion for choice of distributors)
  • Business-modes of the participants (industrial-sales chains, co-working and requirements for distributors)
  • Commercial terms of contracts and state supplies (right to sell directly to state buyers)
  • Harmonization of guidelines on drug applications
  • Exclusion of corruption

The most importants things for Russian investors (distributor of drugstore) are moments of possible stoppage of the contract. There are some arguments for the stoppage written in p.4.5. of the Conduct: suspension of license, bancruptcy or considerable debt.

At the same time the above things do not bind the companies and represent just recommendories, appealing to International law, common sense and «high standards of doing business».

Prospects

Conducts of this kind will be implemented on the other markets and agriculture, codifying co-working of manufacturers, retailers and other market participants. Thus, experience of market Conducts of auto makers and pharm-makers – is just a start. In addition, the service discusses signing of corresponging intergovernmental aggreements (Eurasian Union and BRICS).

Igor Artemiev

According to I. Artemiev, at the moment especially agriculture needs actual trade Conduct. Players of agricultural market complaint for oppression from retail chains – and this means that former Conduct became antiquated, revising is needed.

All the above-mentioned suggests, that the further way is long and is will have stoppages and comprehensions. Thus, Conduct of pharm-makers will change subsiquent to life, will be corrected and discussed.

Sources: Association of European Businesses, Conduct of Russian pharma practices.