Implementation of the initiative on mandatory labeling of medicines by 2020 is something to bear in mind when entering Russian pharmaceuticals market

Drug Labeling
Drug Labeling

Despite the fact that labeling will become mandatory only in two years, representatives of the pharmaceutical industry are already expressing their concern that they will not have time to fully implement this initiative. In particular, they draw attention to the fact that the Russian Government has not yet established the procedure for the creation, development, commissioning and decommissioning of the monitoring information system, the procedure for the provision of information contained therein and the procedure for interaction of this system with other information systems (part 6 of article 67 of the Federal law of April 12, 2010). No. 61-FZ “On circulation of medicines”).

At the end of last year, the President of the Russian Federation signed the law on mandatory labeling of medicines beginning January 1, 2020 (Federal law of December 28, 2017 N 425-FZ “On amendments to the Federal law “On circulation of medicines”; further – Law N 425-FZ). It is assumed that this will allow any citizen to check the legality of the drug with a special monitoring system. In addition, the experiment started on February 1, 2017 on labeling drugs was extended until December 31, 2018 (the decree of the government of the Russian Federation of December 30, 2017). N 1715 “On amendments to the decree of the Government of the Russian Federation dated 24 January 2017 N 62”).

“While there are no specific requirements, all of what we are doing today is elective. Law N 425-FZ has been in force for two months, but we still do not know the rules by which we must play. Therefore, our position now is to “delay and evade”. In the absence of regulations of the Government of the Russian Federation I do not see any reason to force things to happen”, – said the Chairman of the Board of Directors of JSC “Marbiopharm” Grigory Levitsky during the business brunch “Labeling of medicines: man and law”. In his opinion, at least five years must pass for the full implementation of the requirements of the Law N 425-FZ on mandatory labeling. “Two years is too optimistic of a term for this,” he added.

Academician of RAS, President of the National Association of Manufacturers of Pharmaceutical Products and Medical Devices “APF” Sergey Kolesnikov, in addition to the lack of rules for the implementation of labeling, called other problems that pharmacists face in connection with the entry into force of Law N 425-FZ requirements:

– technical: introduction, installation and commissioning of new equipment;
– external: excessive cost of equipment and its maintenance;
– internal: integration of new equipment into the production and warehouse process, personnel, economic changes, etc.

The expert also noted that the introduction of mandatory labeling will affect the interests of more than 350 thousand participants in the drug market, will require labeling of about 10 billion packages of drugs and will directly affect pricing. Small distributors, according to his forecasts, will practically disappear as won’t be able to adapt this system for themselves, – they shall merge with larger distributors. “It is difficult to share the optimism of the legislator that we will finish this process with brilliant success in almost 1.5 years,” – stated Mr. Kolesnikov. He proposed the following model for the initiative. Firstly, to abandon the labeling of all drugs for now, and start defining price segments, which should be labeled in the first, second, third stage, etc. Secondly, to implement the new system gradually, analyzing it until 2022, and introducing it only in 2023, establishing a mandatory transition period for re-equipment of enterprises.

Nevertheless, the presence of difficulties in the implementation of the labeling process can not be presumed, said information technology adviser at the office of the General Director of JSC “Synthesis” Pavel Bulgakov. The likelihood of difficulties depends on factors such as the financial state of each individual enterprise and the segment in which it participates. Having decided to take part in experiment on labeling of medicines, JSC “Synthesis” was compelled to suspend it. “Our plant has 30 packaging lines built between 1976 and 2015. Each packaging line is an experiment of its own and takes time before being launched. This is a technically complex project. Considering that the plant makes products presented in a low price segment, the project has serious economic consequences – both at the expense of cost of the equipment, commissioning, and at the expense of indirect losses such as line’s idle time which are comparable to the cost of the equipment. In this case, we are talking about hundreds of millions of rubles of direct negative economic effect,” – said the expert. However, the financial problems could be solved. Government subsidy programs can significantly help businesses, Bulkagov believes: “this would allow us to “swallow” the costs incurred without transferring them to the market. Otherwise, the cost of medicines will certainly increase.”

It should be noted that such an initiative can really be implemented in the near future. “The Ministry of Industry and Trade has developed a program of financing for this project, it allocated 1.5 billion rubles. The procedure for providing these subsidies is currently being negotiated and approved. The loan will be issued at 1% for a period of two years”, – said the Head of the Department of Licensing and Inspection of drug production of the Ministry of Industry and Trade of Russia Madina Sottaeva.

In addition, the cost labeling equipment is expected to be significantly reduced. “We will begin to supply fully localized and import-substitution equipment in the coming weeks. At the same time, such equipment will be 20-30% cheaper than foreign analogues. And by the end of the year, we will have sold about 200 sets,” added Anton Kharitonov, Head of the Pharma product line of the Center for the Development of Advanced Technologies.

Recognizing the presence of serious questions from industry representatives, Madina Sottaeva also pointed out that the operator of information support of the program is the FTS of Russia, and it is there tfor help in the event of certain difficulties associated with the implementation of the drug labeling project.

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