Reference pricing and reimbursement

As reported in the previous issue of our Newsletter, on 9 November 2016, the Cabinet of Ministers of Ukraine (the "CMU") approved regulations "On the State Regulation of Prices for Pharmaceuticals" No. 862 (the "Pricing Regulation") and "On the Introduction of the Reimbursement of Prices for Pharmaceuticals" No. 863 (the "Reimbursement Regulation"). In December 2016, the CMU introduced certain amendments into the Pricing Regulation. Additionally, the MOH developed and approved a number of bylaws required for implementing the Pricing and Reimbursement Regulations.

Pricing Regulation: implementing by laws and further proposed changes

By way of background, the Pricing Regulation established that, as of 1 January 2017, the maximum wholesale prices for a number of pharmaceuticals should not exceed the reference prices established by the Ministry of Health of Ukraine (the "MOH"). Furthermore, the Pricing Regulation declared invalid the maximum retail and wholesale mark-ups for both the retail and public procurement market which were established by CMU Resolution "On Measures to Stabilize Prices for Pharmaceuticals and Medical Devices" No. 955 dated 17 October 2008. On 28 December 2016, however, the CMU re-enacted this resolution by way of adopting Regulation No. 1006. Consequently, the previously eliminated regulation of mark-ups has been reinstated. In addition, CMU Regulation No. 1006 has established a transition period during which pharmacies can sell pharmaceuticals purchased at prices exceeding the maximum wholesale prices until 1 February 2017.

It should be noted that, formally, the Pricing Regulation is effective as of 1 January 2017. However, its actual implementation is subject to the approval of certain MOH orders. Some of the required MOH orders have been adopted as detailed below, while approval of the remaining order establishing the procedure for calculating maximum mark-ups for the respective pharmaceuticals is pending.

On 29 December 2016, the MOH approved the Procedure for Calculating Maximum Wholesale Prices based on Reference Prices No. 1423 (the "Price Calculation Procedure") (text in Ukrainian is available here). Maximum wholesale prices are set for those products included on the list of INNs, the prices for which are subject to reimbursement (as detailed in the annex to the Reimbursement Regulation). Maximum wholesale prices will be calculated based on prices for pharmaceuticals with the same INNs in five reference countries (Poland, Slovakia, Czech Republic, Latvia and Hungary). The maximum wholesale price should not exceed the minimum price of each dose and strength of the respective pharmaceutical in the reference countries. The register of maximum wholesale prices was approved by MOH Order No. 53 dated 23 January 2017 (available in Ukrainian here).

On 29 December 2016, the MOH published the draft procedure for calculating maximum mark-ups (the "Mark-Ups Calculation Procedure") (text in Ukrainian available here). The draft Mark-Ups Calculation Procedure sets out the formula for calculating the maximum purchase price for wholesalers and the maximum retail price for pharmacies. The maximum wholesale mark-up will be calculated based on the maximum wholesale price (i.e., the reference price established by the MOH). The maximum retail mark-up will be calculated based on the maximum pharmacy purchase price. As of the date hereof the Mark-Ups Calculation Procedure has not been approved.

New register of reference prices for insulin preparations

On 29 December 2016, the MOH approved a new version of the Register of Reference (Reimbursement) Prices for Insulin Preparations (available in Ukrainian here).

As noted in the previous issue of our Newsletter, this register is required to enact CMU Resolution "Issues of Implementing State Control of Prices for Insulin Preparations" No. 73 dated 5 March 2014, which provides for the launch of a pilot project on state price regulation and reimbursement for insulin preparations as of 1 April 2016. The pilot project has not been implemented in practice due to the absence of the necessary implementing acts. Currently, the only remaining act required for project implementation is register of patients requiring insulin therapy.

Draft procedure for calculating reimbursement sums On 23 December 2016, the MOH published the draft procedure for calculating the reimbursement sum for pharmaceuticals covered by the Reimbursement Regulation (text in Ukrainian is available here).

Based on the draft, the products covered by the Reimbursement Regulation will be divided into two groups:

1) products which cost should be reimbursed up to 100 percent; and

2) products which cost will not be reimbursed.

The first group will include pharmaceuticals the wholesale price of which falls into a range between the maximum wholesale price (established based on external reference pricing) and the minimum wholesale price (established based on internal reference pricing). As currently drafted, it may be interpreted in such a way that, potentially, the prices for pharmaceuticals covered by the Reimbursement Regulation may exceed the maximum wholesale prices (established based on external reference pricing). However, this would contradict the Pricing Regulation, which sets out that the wholesale prices may not exceed the reference prices established by the MOH.

As follows from the draft, the reimbursement price will be based on the wholesale reimbursement price, with due regard to the maximum wholesale and retail mark-ups as well as the VAT. In turn, the wholesale reimbursement price will be calculated as "the minimum between the maximum wholesale price and the minimum wholesale price".

The draft also stipulates that the prices for pharmaceuticals will be included into the register of reimbursement prices based on the application of the products' marketing authorization holder or its representative. However, as already mentioned above, this provision may not override the mandatory nature of maximum wholesale prices established in accordance with the Pricing Regulation.

Licensing of pharmaceutical activities The long-awaited licensing conditions on turnover of pharmaceuticals become effective

On 30 November 2016, the Licensing Conditions for Conducting Business Activities on Manufacturing, Wholesale and Retail Trade in Pharmaceuticals, Import of Pharmaceuticals (save for active pharmaceutical ingredients) were approved by Regulation No. 929 of the CMU. The Licensing Conditions consolidate requirements for all types of economic activities connected with pharmaceuticals, specifically: import, manufacture, wholesale and retail trade. To find out more about this development, please follow the link to the dedicated legal alert. > Back to Top

State registration of pharmaceuticals

Procedure for reviewing registration materials for pharmaceuticals registered in strict jurisdictions

On 17 November 2016, the MOH adopted the Procedure for Reviewing Registration Materials Submitted for State Registration (Re-Registration) and Materials on Amending Registration Materials While Registration Certificate is in Force for Pharmaceuticals Registered by the Competent Authority of the United States of America, Switzerland, Australia, Canada, as well as Pharmaceuticals Registered under the Centralized Procedure by the Competent Authority of European Union No. 1245 (the "Procedure") (text in Ukrainian is available here).

The Procedure became effective on 30 December 2016. The Procedure sets out the following:

  • the list of documents and application forms required for state registration and variation of registration materials for pharmaceuticals registered in the United States of America, Switzerland, Australia, Canada and the EU (under the centralized procedure);
  • the timelines and the procedure for reviewing materials submitted by the applicant to the State Expert Centre of Ministry of Health of Ukraine (the "SEC") for state registration, re-registration and variation of registration materials for the above pharmaceuticals;
  • the procedure for verifying the fact of registration/variation by the SEC in one of the abovementioned countries; and
  • the grounds for rejecting the registration of a pharmaceutical.

The Procedure also repealed the Procedure for Verifying Materials Supplementing the Application for State Registration of Pharmaceuticals regarding their Scope as approved by MOH Order No. 460 dated 23 July 2015. As such, a new procedure has been established for expert review of registration materials for certain pharmaceuticals registered in the US, EU, Switzerland, Japan, Great Britain, Australia and Canada. Approval of the Procedure is a significant step forward in implementing the simplified registration procedure introduced into the Law of Ukraine "On Pharmaceuticals" on 31 May 2015. Nevertheless, full implementation of this procedure requires amendments to the procedure of state quality control of pharmaceuticals imported to Ukraine and the procedure for confirming compliance of pharmaceuticals’ manufacturing conditions with good manufacturing practice. No respective bylaws have yet been adopted.

New guidance on bioequivalence studies

On 12 January 2017, the MOH adopted the Order "On Approval of the Guidance "Pharmaceuticals. Bioequivalence Studies" No. 22 (the "Guidance") (text in Ukrainian is available here). The Guidance repealed MOH Order No. 396 "On Approval of the Guidance "Pharmaceuticals. Bioequivalence Studies" dated 13 June 2014. The Guidance sets out the rules for design, conduct and assessment of bioequivalence studies that are harmonized with EU legislation. > Back to Top

State control over business activities Laws on liberalization of state control activities

On 1 January 2017, two laws on the liberalization of state control over business activities became effective, specifically: the Law of Ukraine "On Special Aspects of Conducting State Surveillance (Control) Measures in the Area of Business Activity" No. 1726-VIII (the "Law on Moratorium"); and the Law of Ukraine "On Amending the Law of Ukraine "On Basics of State Control (Surveillance) over Business Activities" related to "Liberalization of the State Control (Surveillance) System over Business Activities"" No. 1728-VIII (the "State Control Law").

The Law on Moratorium established: (i) a moratorium on scheduled inspections of business entities until 31 December 2017; and (ii) a limited list of grounds under which an unscheduled inspection can be conducted by a state supervision authority. More details regarding the Moratorium Law can be found in the previous issue of our Newsletter. The State Control Law introduced a number changes to the business entities' inspections procedure, including, among others, the following:

- introduction of an integrated automatic system of state control. This system will be freely available to the public and will include information on planned scheduled inspections, their results, imposed sanctions, etc.;

- limitation of the frequency and duration of scheduled inspections, as well as grounds for conducting unscheduled inspections;

- allowing business entities to rely upon consultations issued by state inspection authorities within relations with government and municipal authorities as well as in court. A business entity cannot be held liable if it acted in compliance with the consultation, in particular, if such consultation was repealed or amended; and

- establishing that for first-time violations, the fine cannot exceed the minimum amount established by the respective law.

Furthermore, the scope of the Law of Ukraine "On Basics of State Control (Surveillance) over Business Activities" has now been extended to cover additional state authorities, including the State Fiscal Service of Ukraine, the architectural and construction surveillance authorities, the labor law control and other authorities. The specifics governing inspections by such authorities are set out in separate laws.

Approval of the State Control Law is an important step towards enhancing transparency, predictability and certainty of state controlling activities, in particular due to the introduction of the online inspection tracking system and allowing business entities to rely on consultations issued by the state inspections authorities in relations with state authorities and in court.

Fines for violations related to providing information at the AMCU's request

In December 2016, the Antimonopoly Committee of Ukraine (the "AMCU") fined a major Swiss pharmaceutical company for failure to provide information at the AMCU's request. The amount of the fine is UAH 108,800 (approximately USD 4,076). The AMCU also imposed a fine on one of the biggest Ukrainian distributors for untimely provision of information to four AMCU requests. The amount of the fine is UAH 432,000 (approximately USD 16,184).

The fines were imposed in the course of the ongoing investigation of the Ukrainian pharmaceutical market. More information regarding previous fines imposed on other market participants can be found in the October and November issues of our Newsletter. > Back to Top

Public procurement

New version of the National Essential Medicines List

On 27 December 2016, the MOH published the draft Regulation "On Amending the Regulation of Cabinet of Ministers of Ukraine dated 25 March 2009 No. 333" (the "Draft Regulation") (text in Ukrainian is available here).

The Draft Regulation provides for the following:

  • restatement of the National Essential Medicines List (the "NEML");
  • abolishment of the List of Medicines Produced Domestically and Abroad That Can Be Purchased by Healthcare Institutions Using Full or Partial Financing from State or Municipal Funds, as approved by CMU Resolution No. 1071, dated 5 September 1996; and
  • entities financed from state or local budgets may only procure pharmaceuticals included into the NEML.

The Draft Regulation provides for a transition period until 1 January 2019 during which entities financed from state or local budgets will be entitled to purchase products not included into the NEML, provided they procure 100 percent of the required quantity of pharmaceuticals included into the NEML. Based on the Draft Regulation, the MOH will set out the procedure for defining the required quantity of pharmaceuticals. Additionally, within such procurement, preference should be given to pharmaceuticals included into the healthcare industry standards (i.e., clinical protocols, etc.)

The Draft Regulation is currently undergoing public discussion.


New procedure for conducting pharmacovigilance

On 6 January 2017, the Procedure for Conducting Pharmacovigilance, approved by MOH Order No. 996 dated 26 September 2016 (the "Procedure") (text in Ukrainian is available here), became effective.

The Procedure contains a number of novelties, including:

  • updated classification of adverse reactions;
  • more detailed requirements as regards investigation of adverse reactions to immunobiological products;
  • the requirement to establish a causal link between an event and the use of vaccine, tuberculin to classify such an event as an adverse reaction;
  • detailed requirements for the person responsible for pharmacovigilance;
  • updated requirements for the marketing authorization holder (the "MAH") related to pharmacovigilance (among others, the format of the pharmacovigilance master file and list of safety-related events to be reported by the MAH have been updated);
  • revised frequency for submitting safety reports;
  • detailed requirements regarding the MAH's pharmacovigilance risk management system;
  • extended rights of the SEC. Among other things, the SEC can provide recommendations to the MOH on fully or partially banning a pharmaceutical in case the MAH does not comply with registration certificate requirements or fails to perform all legal obligations; and
  • a separate procedure for approving and conducting post-marketing non-interventional studies.


Obtaining consent to terminate employees responsible for implementing anti-corruption programs

On 16 December 2016, the Procedure for Obtaining Consent to Terminate the Employee Responsible for Implementing an Anti-Corruption Program, approved by Decision No. 74 of the National Agency on Corruption Prevention, dated 7 October 2016, came into effect. This act established a procedure for terminating the employment agreement of such employees. For more details please refer to the following link. > Back to Top