Timophey Nizhegorodtsev: drug substitutability help prevent bid-rigging
Head of FAS Department for Control over Social Sphere and Trade, Timophey Nizhegorodtsev reviewed large-scale changes in the pharmaceutical sector in the past ten years
“The market has changed considerably in the past ten years. Earlier pharmaceutical companies could pursue any unfair practice on the Russian market which was under-regulated: they created artificial monopolies and restricted market entry of counteragents”, said Timophey Nizhegorodtsev at the session on the “Open dialogue with the regulator”, Russian Pharmaceutical Forum.
In the past ten years drug substitutability, stemming from the practice of the antimonopoly body, has become a part of the Russian law and the Action Plan of the Ministry of Health Care and the Ministry of Industry and Commerce of the Russian Federation. According to Head of the profile FAS Department, investigations whether drug prices are reasonable are carried out using the indicative method, based on the substitutability principle for similar drugs.
Today FAS has access to verified data sources on drug prices across the world. The number of such sources is growing, which considerably reduces possibility of manipulating drug prices. “Pharmaceutical manufacturers understand that we cooperate with our colleagues from around the world and we have information about unfair practices on the pharmaceutical markets in other countries. We rely on international experience and as any reasonable regulator always verify the information submitted by pharmaceutical manufacturers”, emphasized Timophey Nizhegorodtsev. In spring 2017 the 10th session of the International Working Group for studying competition issues on pharmaceutical markets took place in Moscow. Such close cooperation, experience exchange widen possibilities of competition authorities on suppressing unfair practices of international pharmaceutical companies.
“Unfortunately, the practice of drug substitutability at the regional level is still archaic. Time and certain pressure is needed to implement it but we will make sure it becomes the mainstream. Today jointly with the Ministry of Health Care we are compiling a list of substitute drug. There are particular content and organizational issues but the tasks are set and goals are determined and we will certainly reach them”, said Timophey Nizhegorodtsev answering a question from the session moderator, General Director of DSM Group, Sergey Shulyak.
The issue of industry cartelization was also discussed. According to Timophey Nizhegorodtsev, the high level of cartelization at tenders shows that substitutability works. He explained: “Previously pharmaceutical companies did not need cartels. Manipulating drug dosage forms and strength, therapeutic indications, they “tooled” tender documentation to suit themselves. Substitutability reduced possibilities of machinations with tender documentation, forcing companies to collude”.
Increasing the number of bidders makes cartelization more difficult. FAS anti-cartel methods include: improving joint work with the Ministry of Interior on exposing and punishing violators, cases on criminal prosecution of violators and maximizing market entry of substitute drug manufacturers to the market.
Special attention was given to countering price damping, specifics of proving cartels at Courts and remote drug delivery from pharmacies.