Health Economics blog of Oleg Borisenko

Russian Ministry of Health and Social Development (MoHSD) developed a set of draft regulatory documents for medical devices. These actions related to the adopted of 21^st of November 2011 Federal Law N323-FZ On Basics of Health Protection of Russian Citizens. The purpose of developing documents is to ensure compliance of current legislation with new Law’s conditions.

MoHSD has developed drafts of the following documents:

• About Approval of Order of Organization and Conducting of Quality Expertise, Effectiveness and Safety of Medical Devices
• About Approval of Order of Conducting of Conformity Assessment in the Form of Technical and Toxic Testing, Clinical Trials of Medical Devices for the Purpose of State Registration
• About Approval of Nomenclature Classification of Medical Devices
• About Monitoring of Safety of Medical Devices
• On Approval of Order of Import of Medical Devices into Russian Federation for purpose of State Registration
• About Approval of Order of Reporting about Adverse Effects of Medical Devices, Not Mentioned in Instructions for Use or User’s Manual, Negative Effects During Use, Interaction of Different Devices, about Facts of Risk for Life and Health of Citizens and Medical Professionals during Use
• About Approval of Regulations about State Control of Medical Device Circulation (Draft of Decree of Government of Russian Federation)
• About Approval of Order of Registration of Medical Devices (Draft of Decree of Government of Russian Federation)
• About Approval of Order (Rules) of Maintaining of State Register of Medical Devices and Manufactures of Medical Devices (Draft of Decree of Government of Russian Federation)
• About Approval of Administrative Regulations of Federal Service for Surveillance in Health Care and Social Development On Providing of State Service of Registration of Medical Devices, as well as Providing Information to Citizens and Organizations about Registered Medical Devices

Also, MoHSD issued Order N1198n of 27-Dec-2011 About Approval of Rules of the Sphere of Medical Device Circulation.

Even without taking into account timeframe of approval and procedure/way of implementation of abovementioned documents, Russian medical device market will experience substantial changes, the first “wave” of significant regulatory and marketing changes since 2006.

By the way, next “wave” will come soon, which is related to development of uniform legislation between participants of Custom Union – Belarus, Kazakhstan and Russia. Introduction into WTO may also bring additional changes to legislation.

It is too earlier to draw any conclusions, as for Russian market it is important to see, how regulation works, but it is no doubt that coming year will be “hot” enough for regulatory specialists of medical device companies. Recently, Synergus organized two successful meetings, dedicated to Russian medical device market – regulatory seminar in Stockholm at 1^st of November 2011 and market access conference in Moscow at 24^th of November 2011. You may keep track of upcoming meetings at our Web: www.synergus.com. Stay informed about recent developments of Russian medical device market.

According to Russian legislation, Ministry of Health and Social Development issues new Essential Drug List annually by October. 28^th of September Ministry issued project of the EDL for 2012.

There are two important news: Ministry deleted drug formulations from the list to avoid violations of antimonopoly legislation (1). Also there are 24 new medicines in the project of the List. These new candidates include several oncology products: Nelarabine, Cetuximab, Gefitinib, Dasatinib, Nilotinib, Sorafenib, Sunitinib, Lenalidomide, as well as Abatacept for rheumatoid arthritis, Everolimus for transplant rejection prophylaxis, Ranibizumab for macular degeneration and Darbopoetin Alfa for anemia (2).

Such broad action looks interesting, if we recall that last year it was a battle with almost no inclusions with potential impact on the budget. EDL is not a reimbursement list, it is supposed to be used only for price control purposes. But it is rational to consider EDL as the first step before real reimbursement. If so, Ministry is going to take serious action with inclusion of many effective products. But the only way to deal with necessity of funding at once for 15-20 expensive products is development of risk-sharing agreements. Market should be ready for this.

Lower Chamber of Russian Parliament (State Duma) continues discussion on the project of Federal Law on Basics of Health Protection of Russian Citizens. This project divide medical and administrative community into two parts: “for party” – headed by Ministry of Health and Social Development, United Russia political party, and “against party” – driven by medical care professionals from All-Russia Pirogov Physicians’ Movement, Communist political party.

Opponents argue that the project has several major disadvantages:

• Lack of conceptuality;

• Absence of responsibility of federal state for health care;

• Absence of clear division between free and paid services;

• Lack of financial guarantees of minimal basket of health care services.

It’s obvious, that MoHSD received support from regional authorities, but there is lack of dialogue between two camps. Duma will accept amendment to the Law up to 19th of September, but it does not guarantee adoption of amendments. This autumn session of Russian Parliament will give an answer to the question – what will be the new face of Russian health care?

In the middle of August Russian Minister of Health Tatiana Golikova reported that under Program of Modernization in Health Care regions have already received 2.55 bill. euros. Total budget of the Program for 2011-2012 about 15.45 bill. euros. Program includes several key elements: capital repair of buildings, procurement of medical devices, integration of standards of medical care and development of informatization in health care.

By the middle of August tenders on repair procedures were conducted in about 28 regions, and procurements of medical devices were made in 3 regions. During August Ministry of Health and Social Development issued several recommendations on development of informational systems in medical organizations.

There are two issues, which may hamper realization of the Program: Program was developed in a hurry (1) and increase of social taxes (difference will be spent on the Program) may lead to less effective collection of taxes, especially from small- and middle-scale business (2). But it seems that in pre-election year (2011 – elections to the Parliament, 2012 – elections of President) Government will proceed with the Program successfully, even without due effectiveness.

Russian Parliament postponed adoption of the Law on Basics of Health Protection of Russian Citizens. Representatives of Committee for Health Protection of State Duma announced that reconsideration of the Law may start in early September 2011.

This train was stopped by Communism Party of State Duma and several leading health care experts, mainly involved into All-Russia Pirogov Physician’s Movement. Experts and Party had several important claims to the project of the Law, which should replace older Law, approved in 1992:

• Absence of responsibility of federal state for health care;
• Absence of clear division between free and paid services;
• Absence of staffing policy;
• Lack of financial guarantees of minimal basket of health care services.

But the main claim is related to lack of any conceptuality of the Law, which looks like a patchwork blanket. Concept of Development of Health Care Up To 2020 was widely discussed, but has not approved yet. In absence of basic concept any targeted amendments will be of low value. Another claim was regarded to the speed of consideration of the project. The process was similar to the process of consideration of Federal Law on Circulation of Medicines, approved in April 2010. Fasten consideration without wide public discussion raised disapproval in professional society.

On the other hand, this Law is very important to the Ministry of Health and Social Development, as soon as it is needed as twin-law for already approved Federal Law on Mandatory Medical Insurance. Current project would legalize and introduce some legal novels, already included into Law on Mandatory Medical Insurance.

As for me, this situation illustrates not a battle between David (expert community) and Goliath (MoHSD and Parliament), but sadly discordance between important social institutions. It is no doubt that the Law will be approved, may be even with no or minor changes. Institute of open dialogue between Ministry, Parliament, regions and expert community was lost one day. But do you see any readiness to find it again?

Following preparation of the List of registered Russia-manufactured medical devices with maximum manufacture prices Government is going to take further actions on price regulation for medical devices and optimization of state tenders. During last week Ministry of Health and Social Development issued two projects of Decree of Government: one – on approval of list of sources of information to determine initial price of state contracts on procurement of medical devices; second – on additional requirements for participants of state tender of medical device procurement.

Project of Decree of Government may introduce mandatory mechanism of setting price for state contacts on procurement of medical devices. Project determines three sources of pricing information: answers from manufactures and a wholesale to requests of tender’s organizer; database of state and municipal contracts on procurement of medical devices; the List of registered Russia-manufactured medical devices with maximum manufacture prices. Government proposes mechanism of setting initial price of state contract, where minimal price from one of the proposed sources will be used for to determine initial price of contract.

Second project may introduce the additional requirement for participants of state tenders on procurement of medical devices. This will include guarantee letter from manufacture that confirms rights of tender’s participant (distributor) to distribute medical devices, conducting after-sales service etc. Ministry argues that this may decrease number of intermediaries on state tenders, and at end of day – decrease spending on devices.

Proposed Decrees may significantly influence pricing and procurement policy in the field of medical devices. In fact, under-regulated Russian medical device market needs clear and transparent rules, especially in pricing.

Russian Minister of Health Tatiana Golikova announced that all Russian regions developed and approved Programs of Modernization if Health Care in 2011-2012 years. Program of modernization is one of the important steps of reform in Russian health care. Previously federal Ministry of Health and Social Development prepared template of program, which was further adopted in every region. Each program consists of spending on capital construction, procurement of medical devices and suppliers, development of informatization in health care, support of implementation of standards of medical care. All procurement of medical devices will be done according to the Medical Care Regulations, which are approved by MoHSD for many disease areas. Medical Care Regulations contain minimal requirements for equipment with medical devices in medical organizations of different types.

There are in total 83 regional programs. Detailed description of each program is available at Web-sites of regional Ministries of Health (500-600 pages each). Description contains information about funds available in 2011 and 2012 years, spending in each medical organization, rationale for procurement, description of regional health care system and facilities. These two years will be “hot” enough for medical device manufactures and distributors in Russia, and provide additional opportunities at the market. The total budget of the program (including procurement) for 2 years is $22 bill. About $16 bill. will come from mandatory medical insurance and rest $6 bill. – from regional budgets.

Russian Ministry of Industry and Trade issued list of medical devices, manufactured in Russia. Minimum (for 1-year guarantee period) and maximum (for 5-year guarantee period) manufacture prices are also provided. List was prepared by Russian Union of Manufactures and Traders.

It’s a real little step forward normal regulation on market. The idea is that the list should serve as unofficial reference price list. It is too small step, but everyone understands, that current situation with overestimation of cost during state procurement of medical devices can not last forever. One of the main problems of Russian market of medical devices is lack of information about prices, which makes assessment of state tenders complicated. Lack of information leads to easy-go corruption. In this situation, prices can be two or even three times higher, than is other countries. Inspection of state tenders by Control Department of President of RF and Attorney General’s Office revealed losses of about $116 mln. during procurement of CTs in 2008-2010. According to the available information 22 out of inspected 49 companies, participated in tenders, used grey financial schemes.

Russian Government started price regulation on pharmaceuticals almost two years ago, and it is obvious that the process will continue in medical device market. Ministry started with prices on domestic devices, but up to 70% of the market is formed by import. In some segments there are almost no Russian analogues for foreign medical devices. But along with actions of approved Federal Target Program on Pharmaceutical and Medical Manufacture Development, this may lead to some changes in pricing for foreign devices (if Russian analogue exists).

At 18th of May Prime-minister Vladimir Putin signed Decree N387, which removed taxes for custom clearance for non-registered drugs, stem cells and bone marrow, which are intended to be used for certain patient under life-saving indications. Previously, medical organizations or charitable funds paid 10% custom duties for such drugs. This is real success of patient and charity community, as soon as previous unofficial information indicated, that only oncology pharmaceuticals will be free from custom duties. This Decree will come into action at 25^th of June, and it eliminates first important barrier before normalization of situation with non-registered drugs import and use.

The second important barrier is necessity to receive approval for import non-registered drugs for certain patient in Ministry of Health and Social Development. The whole process takes 5 days, but in fact it may last longer. This practice significantly differs from EU and US approach, where only notification on import pharmaceutical for certain patient is needed, and no permission from regulatory authority. As soon as such practice continues, the main way of import non-registered drugs for individual use is contraband. Since end of June there will be only one barrier to be broken before normalization of this complex market, which predominantly serves for severely ill patients.

In my post “Stop clinical trials. Sale agreements on mutual acceptance” from 27 of February I wrote about confusing statements of Russian Minister of Health Tatiana Golikova, that Russia and EU are ready to develop an agreement on mutual acceptance of clinical trials. Since that Association of Clinical Trials Organizations (ACTO) made an enquiry to European Commission and issued press-release on this theme at 25 of April.

“There are no mutual recognition agreements on clinical trials. The European Union accepts the clinical trials performed in accordance with Good Clinical Practices,” runs the official answer by the European Commission to a request filed by ACTO.

Practice of acceptance or non-acceptance of results of clinical trials, based on country of conduct has no legal basis and unethical. It has no analogues in the rest of the world. Faulty basis of insistence of MoHSD lays in the Federal Law N61-FZ “On Circulation of Medicines”, which introduced practice of mandatory local clinical trials during drug registration. Two exceptions from this were allowed: if Russian sites participated in multicenter international trials (formal) and if country of trial’s origin has agreement on mutual acceptance with Russia (informal and impossible, which was confirmed by European Commission). So, it’s another confirmation of fact that rollback to practice, when trials are accepted solely on the GCP criteria, is needed.

Press-release of ACTO is available here: http://acto-russia.org/index.php?option=com_content&task=view&id=242