Interchangeability of pharmaceuticals: a key milestone in Russian pharma market development

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Pharmaceutical sector is rapidly developing in Russia, with numerous products being launched every year and new manufacturing facilities being opened across the country. Russian government continuously pushes for modernization of pharmaceutical sector, and new regulatory amendments are aimed to protect the customer on the one hand and stimulate competition on the other.

The key change in the law, suggested by the Federal Antimonopoly Service of Russian Federation (FAS), which is now the ‘hot topic’ inside pharmaceutical community, is the introduction of “interchangeability of pharmaceutical products” concept. According to Head of FAS Social and Trade Control Department, Timofey Nizhegorodtsev, “adoption of this amendment will increase the level of fair competition in the markets and create the environment for lower prices of medicines”. The amendment has been already discussed in government with several rounds of iterations and is still in process of adjustment in September, 2014.

In most developed countries the principle of interchangeability of pharmaceutical products is widely used. There are different ways of developing, approving and maintaining the lists of interchangeable medicines, but the key purpose is always the same: provide patients with cheaper products without deterioration in quality or reduction of the effect. Absence of interchangeability concept in Russian regulation was leading to substantially higher market entry barriers for generics (mostly of Russian origin), higher price of medicines for patients and disproportionately large share of branded generics category.

The law amendment regarding interchangeability is considered to be one of the most anticipated changes by the pharmaceutical industry participants. However, some of the amendment’s definitions and implications as of now are too ambiguous and unpredictable, potentially leading to additional difficulties for manufacturers and quality issues. According to EY pharma survey 2014 conducted among pharmaceutical products’ manufacturers, almost a quarter of the respondents expect that the new law amendment will cause a decrease of availability of high-quality and safe medicines for the patients. Several manufacturers anticipate that the amendment will prevent some innovative medicines from being launched on the Russian market.

As a common world practice, quality control is maintained by compliance with specific quality measures – i.e. GMP, which not only ensures the quality of the products, but also helps avoid additional tests and verifications making the process of quality control transparent, manageable and effective. For example, in Germany in order to be considered interchangeable, medicines should have similar active substance, concentration, formulations and approved indication. Compliance with GMP ensures adequate quality level of the product and is sufficient to prove interchangeability without, for example, additional proof of therapeutic equivalence, which is required for non-biological medicines by the current version of the new amendment. Such proof, according to some experts’ opinions, not only contradicts the international practice, but might be simply impractical.

There are several other issues related to the amendment. The interchangeability of pharmaceutical products is supported by the amendment on reduction in duration of the so-called “data exclusivity clause” for preclinical and clinical studies of pharmaceuticals manufacturers. The purpose of the amendment is to further support generics’ producers and decrease their market entry barriers. Yet, the new regulation negatively impacts producers of original pharmaceuticals. Federal Antimonopoly Service of Russian Federation and pharmaceuticals authorities are currently in process of discussion of the necessary adjustments to the current version of amendment by early September.

According to EY research, most participants of Russian pharmaceuticals market believe that introducing “interchangeable pharmaceutical product” concept will lead to increase of generics share in the public sector of the Russian pharmaceutical market and will cut prices for medicines purchased by public sector, which should shift pharmaceuticals market in Russia towards more developed peers – generics constitute the major part of most mature pharmaceutical products’ markets. Despite several issues, which will hopefully be minimized by further corrections, the new amendment is another step in a process of positive changes in the Russian pharmaceutical industry.