FAS Russia strengthens control over the pharmaceutical market

Since the beginning of 2018, FAS Russia forms the law enforcement practice and strengthens control measures in the field of medicine pricing of the products that are not on the lists of vital and essential medicines. In April last year, the department filed a case on violation of antimonopoly legislation at the request of the Government of Moscow against the Russian subsidiary of one of the largest international pharmaceutical corporations (1).

Government of Moscow has stated that to provide citizens entitled to state social assistance, the Health Department requested commercial offers from the potential suppliers. As a result of the analysis, the applicant revealed a significant overestimation of the cost of medicines compared to 2015.

The antimonopoly authorities established that at the time of the consideration of the violation case, the respondent company was dominant (the supplier of the oncological drug was unique on the territory of the Russian Federation) and increased the price of the drug from 118,481.82 rubles up to 159 950.46 rubles, (by 35%) per packing.

The antimonopoly body also established that the company purchased oncoproteins at a price of 22.8% lower compared to previous periods. In particular, the price for packaging in September-October 2015 was 114,210.39 rubles. And from October 2015 to March 2016 inclusive, the purchase price even decreased to 88,220.88 rubles per package.

As a rule, when considering this category of cases, the antimonopoly authority takes into account the economic, technological, legal, other justification for establishing a particular price. According to the company's explanations, the increase in the price of the medicine was caused by a change in the commercial treatment conditions of the medicinal product on the market due to the difference in trade policies and bonuses (discounts), as well as by a significant decrease in the ruble's exchange rate against the euro.

However, the antimonopoly authority did not find these explanations convincing, and on January 11, 2018, it found the violation of the Clause 1 Part 1 Article 10 of the Federal Law No. 135-FZ of July 26, 2006 "On Protection of Competition" regarding the establishment of a monopolistically high price and issued an order to eliminate the overstatement of prices on oncoprotein, urging the rest of the pharmaceutical industry to stop manilulating the price of medicine.

It is important that the medicine indicated in the present case does not belong to the list of vital and essential medicines (VEN). This means that the state does not participate in regulating its price. At the same time, as the representatives of the antimonopoly authority note, the case initiated by the request of the buyer - the Government of Moscow, which acquires the drug for patients in the framework of the state guarantees program, is precedent because it was the first in this category (2), namely, manufacturers of drugs not included in the VEN list.

The case shows a purposeful strengthening of control measures by the antimonopoly authority in the field of drug pricing, including drugs not included in the VEN list.
Given that in November 2017, Prime Minister Dmitry Medvedev announced the need to put things in order in the Russian pharmaceutical market, we can assume that the antimonopoly authority has begun to actively form law enforcement practice in cases of pricing in pharmacy.

The representative of the antimonopoly authority in the press expressed his hope that the pharmaceutical community will take into account the decision of FAS Russia and "refrain from manipulating the prices of medicines, including those not included in the list of VEN." (3).

Regarding legislative basis and regulatory practice in pharmacy, please contact Irina Akimova, Counsel, head of group of competition practice.

1. Definition of the FAS of Russia on the appointment of the case No. 1-10-30 / 00-18-17 on the violation of the antimonopoly legislation for consideration
2. https://fas.gov.ru/news/23636
3. https://www.rbc.ru/society/12/01/2018/5a5865b19a7947135a9e476e