Pharmaceutical Law Kyiv Client Alert April 2015 Ukraine has taken the first step towards public procurement of certain pharmaceuticals and medical products involving specialized organizations On 19 March 2015, the Verkhovna Rada of Ukraine adopted Law of Ukraine No. 269-VIII On Amendments to Certain Laws of Ukraine (regarding Timely Access of Patients to Essential Pharmaceuticals and Medical Products through Public Procurement, Assisted by Specialized Procurement Organizations) (the "Amendments"). The Amendments became effective on 25 April 2015, i.e., as of the publishing date, and shall continue in effect until 31 March 2019. The Amendments establish a legal basis for introduction in Ukraine of a temporary (until 31 March 2019) public procurement procedure in respect of certain pharmaceuticals and medical products involving the following specialized organizations: specialized funds, organizations and mechanisms of the United Nations Organization, IDA Foundation (the Netherlands), Crown Agents (UK), Global Drug Facility (Switzerland) and Partnership for Supply Chain Management (USA). Such public procurements will only be carried out on the basis of an agreement between a specialized organization and the Ministry of Healthcare of Ukraine, in accordance with the internal policies and procedures of such organizations. The Law of Ukraine On Public Procurement does not apply to the public procurement procedure established by the Amendments. This procurement procedure, in particular the list of pharmaceuticals and medical products allowed to be purchased under the procedure, the specifics of the specialized organizations' selection process, signing of procurement agreements, publishing of procurement information shall be established in accordance with a Resolution of the Cabinet of Ministers of Ukraine to be adopted within one month from the effective date of the Amendments, i.e., by no later than 25 May 2015. Based on the public discussions of the draft Amendments, it is expected that the new procedure will apply to the procurement of vaccines and pharmaceuticals for treatment of tuberculosis, hepatitis, HIV/AIDS, etc. In addition to the above, the Amendments simplify, to some extent, the registration procedure, the labelling requirements and the procedure for importation into Ukraine of pharmaceuticals that are subject to procurement pursuant to the procurement procedures carried out by a specialized organization. www.bakermckenzie.com For more information, please contact: Oksana Simonova, Partner +380 44 590 0101 Oksana.Simonova@bakerm ckenzie.com Olha Demianiuk, Senior Associate +380 44 590 0101 Olha.Demianiuk@bakermckenz ie.com Mariana Marchuk, Counsel +380 44 590 0101 Mariana.Marchuk@bakermcke nzie.com Baker & McKenzie Renaissance Business Center 24 Vorovskoho St. Kyiv 01054, Ukraine In addition to the Amendments, on 9 April 2015, the Verkhovna Rada of Ukraine adopted the Law of Ukraine On Amendments to the Tax Code of Ukraine regarding Tax Exemption for Certain Pharmaceuticals and Medical Products (Draft Law No. 2151, the "Law"). The Law provides for a temporary (until 31 March 2019) exemption from the value added tax (7%) of the import and first supply on the territory of Ukraine of pharmaceuticals and medical products procured by the above specialized organizations. Further, such pharmaceuticals and medical products shall be exempt from the import surcharge (5%). The Law becomes effective the day after its publishing date, and shall continue in effect during the effective period of the Amendments. As of today, the Law was submitted to the President for signing, but has not yet been signed. Conclusion The Amendments are the basis for introduction in Ukraine of a new temporary procedure for public procurement of certain pharmaceuticals and medical products assisted by specialized procurement organizations. However, introduction of this procedure depends on adoption of Resolutions of the Cabinet of Ministers of Ukraine, as provided for in the Amendments, and other regulations. The Amendments aim at eliminating corruption risks during publicly-funded procurement of pharmaceuticals and medical products. Introduction of the Amendments is expected to reduce the delivery time and the costs and to improve the quality of procured pharmaceuticals and medical products. Additional notes This LEGAL ALERT is issued to inform Baker & McKenzie clients and other interested parties of legal developments that may affect or otherwise be of interest to them. The comments above do not constitute legal or other advice and should not be regarded as a substitute for specific advice in individual cases.