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From April 1st to April 19th, 2020, international procurement of medicines will not be regulated by anything - Dmytro Aleshko

Interfax-Ukraine, 4th of November, 2019

Dmytro Aleshko, partner, attorney-at-law at Legal Alliance Company

A partner at Legal Alliance Company, Dmytro Aleshko, told Interfax-Ukraine agency why a gap appeared in the regulatory framework governing international procurement of medicines and medical devices from April 1st to 19th, 2020.

- What has changed in the field of procurement of medicines after the adoption of the new version of the law "On Public Procurement"?

- Our company considers the adoption of this law as a step forward, since the law regulated a number of issues that have accumulated over the past few years. In particular, this concerns pre-threshold purchases: the threshold has been reduced from UAH 200 thousand to UAH 50 thousand. Now, any purchase of over UAH 50 thousand should be carried out through the Prozorro platform. This is a fairly positive point in terms of overcoming possible corruption risks.

In addition, the new version of the law finally resolved the problem associated with formal errors in bids. In the current practice, due to incorrectly executed documents, bidders who offered a lower price at the proper quality of the goods were disqualified from the auction. The new version of the law gives the participant 24 hours to correct the documents, and to the customer to accept the offer with a lower price.

- Does this imply an error in the documents or any inconsistencies with the criteria?

- Error in the documents. Previously, participants could have been disqualified only due to the fact that they had formality problems in the submitted documents, as a result of which the customer accepted the offer with a higher price. This resulted in additional costs from the state budget, but now this problem is solved, which, of course, is progress. In addition, the new edition provides for the possibility of procurement through a centralized procurement organization. For the healthcare sector, this is especially true, because a year ago the state-owned enterprise "Medical Procurement of Ukraine" (MPU) was established, and it should take on such a function.

- It has been created, but has not yet begun to work ...

- I can’t say that it is not working. A fairly progressive team was gathered there: young and decent guys who are now gaining experience, including the international one. They study, collect information on the best European practices for their adaptation and application in Ukraine. I believe that the MPU has a good prospect if they are allowed to work without outside interference. In fact, the Ministry of Health will give a chief doctor of any hospital in Ukraine a choice: either use their own resources and make purchases on their own, or contact the Ministry of Health and purchase the same goods through them, but 10-15% cheaper. This will be possible due to the aggregation of volumes of purchased drugs from the MPU. As part of the reform, when hospitals gain the status of communal non-profit enterprises, it will be beneficial for them to make purchases through a centralized procurement organization to make the cost of medical services more competitive. Returning to the innovations of the law, I would like to draw attention to the fact that the ProZorro platform will signal the supply of an abnormally low price - 40% or more lower than other offers. In this case, the customer will have the opportunity to respond to the threat of adisruption of bidding.

- What is the problem with the low price? Why should you be wary of a low price?

- There are cases when suppliers who offer too low a price refuse to supply and disrupt the tender. This is especially sensitive in November-December, when a new tender can no longer be held, since the fiscal year is ending. The customer is in a difficult situation.

- Not always a low price means an abnormally low price, it happens that the price is just a little lower than the market one. Will it be possible to win the tender by submitting not an abnormally low price, but simply low?

- Yes. When we talk about an abnormally low price, we mean a price that is lower than the market price by 40% or more. In this case, the system will react. I also draw attention to the fact that the law obliges the government to determine the rate for filing a complaint with the AMCU. Based on the statements made before the vote for this law, it is assumed that the fee for filing a complaint with the AMCU will depend on the amount of the tender. Thus, it will be possible to minimize the possibility of disruption of bidding. Today, any participant can pay UAH 5 thousand and appeal the bidding results or documentation, thus delaying the tender. At the end of the year, such actions can serve as leverage for blackmailing the customer. According to the new version of the law, such actions will be a problem, since application to the Antimonopoly Committee of Ukraine will cost completely different money. Accordingly, the participants will apply to the AMCU if there is really significant evidence of violations committed by the customer.

- Is it possible to consider that the new version of the law removed all the questions and solved all the problems?

- The thing that has not been settled is that Ukraine continues to purchase medicines based on the same procedures as for other goods. Unfortunately, medicines are bought from us based on the same rules as, relatively speaking, wagons. Medicines are still a special product, and not always what is cheaper is suitable for specific patients. Often the patient cannot start taking another, cheaper medicine. However, even in the new law, the main focus remains on the price. This problem is especially acute in the procurement of immunosuppressants and insulin. This is a wron approach to procurement of medicines. In my opinion, sooner or later Ukraine will come to practice when medicines will be removed from the scope of the basic procurement law, and a separate law will be adopted, which, at the choice of a drug, will focus primarily on the needs of the patient.

- We know a lot of stories when doctors choose a drug based on some not very objective criteria. What to do with this?

- This also happens, and not only in Ukraine. To avoid this, it is necessary to create a transparent system for selecting medicines for procurement for budget money. The problem of possible lobbying by doctors of specific pharmaceutical manufacturers can be solved, including with the introduction of individual licensing of doctors. Both the old and the new staff of the Ministry of Health do not reject the idea of individual licensing. Such a procedure obliges the doctor to be responsible for his decisions, not with the license of the clinic, but with his own. However, one cannot look at this question from only one side. It also requires increasing the level of motivation of medical personnel, paying market wages to doctors and increasing the prestige of the medical profession. It is necessary to study the issue of professional liability insurance for doctors. The introduction of individual responsibility alone will not solve all the problems

- In your opinion, should it start with an individual license?

- This is a multicomponent question. We should start with the treatment protocols. Can they be foreign with translation into Ukrainian, as the previous leadership of the ministry have decided? In my opinion, protocols can only be based on international experience and should be adapted to Ukrainian realities and approved by orders of the Ministry of Health of Ukraine. The National List of Essential Medicines deserves special attention, where medicines must be included after passing the medical technology assessment.

- We have a national list, but it does not have, for example, orphan medicines ...

- We are at the beginning of the journey. Medicines for the treatment of patients with orphan diseases cannot mostly be on the National List. They do not correspond to the philosophy of the National List, which is a list of essential medicines. For such drugs, a separate list is needed. To date, a department for the evaluation of medical technologies has already been created as part of the State Expert Center (SCE). It is actively working, continuing to recruit and train specialists. I think that in the very near future they will be ready to give the necessary results in order to optimize the selection processes of high-quality and affordable medicines for Ukrainian patients. All these tools were invented a long time ago, you just need to take the best and adapt to Ukrainian realities.

- Some specialists, doctors, believe that it is only necessary to treat patients with original drugs, and someone says that it is necessary to purchase generics, focusing on the price. Can this issue be settled legislatively?

- The budget of healthcare in Ukraine for 2019 is UAH 98 billion and approximately 3.3-3.4 billion euros. The UK National Health Service budget is £ 100 billion. In fact, the difference is 30 times. I believe that today Ukraine cannot afford the choice of drugs similar to the UK. Of course, this issue is not always so simple. There are cases when the original drugs have no analogues, or they are more effective for a treatment course, or when it comes to vulnerable categories of the population, such as children. Today the economic situation is what it is. It is necessary to start with what we have in our pocket, because the need in medicines per each Ukrainian is much more than the amount of funds allocated for these purposes. If we talk about patients with orphan diseases, then in almost all European countries, they use the procedure of direct negotiations with manufacturers. These negotiations are confidential, the price itself is confidential. This does not mean that these negotiations are held somewhere behind the scenes. They are held in state institutions or in relevant departments authorized by the government. Negotiations are recorded on video and minutes are taken. They are saved in case there is a need for verification. Due to such negotiations, the government has the opportunity of making purchases directly from manufacturers, in particular, of original and innovative drugs. Often in such cases there is only one manufacturer, there is no competition, and the tender is initially absurd. Such a negotiation procedure allows buying drugs with a fairly big reduction in prices.

- The negotiation procedure has been take about for many years. Why is it not accepted? Are manufacturers really interested in it?

“They are extremely interested.” But I know for sure that in the previous composition of the Cabinet of Ministers, representatives of the Ministry of Economic Development were categorically against such a procedure, motivating their position with the fact that any procedure outside ProZorro is opaque. The new composition of the Ministry of Economic Development has not yet formed its position in this regard. I believe that the Ministry of Health needs to raise these issues actively and try to convey to the government the positive experience that has long been working in the European countries. It is only necessary to introduce two paragraphs into the law, approve the order by the Cabinet of Ministers and, thus, launch the negotiation procedure in Ukraine. Moreover, a significantly larger number of patients will be provided with medicines for the same money that the government is spending now. All that is needed is political will.

The situation with the extension of international procurement looks similar.

- What is the problem with international procurement? After all, it has been extended for two years ..

- I can say today that international procurement has not been extended for two years. I can make this conclusion on the basis of many years of personal practical experience in the field of pharmaceutical regulation. In order to see such small things, it is necessary to work with the legislation every day.

- How long has it been extended for?

- So far, it has not been extended. The last statutory international procurement day is March 31st, 2020. Law No. 269-VIII, which launched international procurement, was adopted on March 19th, 2015. Last time it was extended until March 31st, 2020. The official website of the Verkhovna Rada reports that this law expires on April 1st, 2020.

The new version of the Law of Ukraine "On Public Procurement" (Law No. 114-IX) was voted for on September 19th, 2019. When it was being adopted, it was obviously assumed that it would be adopted earlier, would have time to hand it over to the president for signature and publish it. If it had been published before October 1st, 2019, there would be no problems. But in fact, the law was published only on October 19th, 2019. It states that the document comes into effect six months after publication, that is, on April 19th, 2020.

- What is the danger of this “gap” in the regulatory framework?

- This is not just a “gap”, it is a problem, as the old law No. 269-VIII should cease to be effective on April 1st, 2020, and the new version of the Law of Ukraine "On Public Procurement", which was supposed to extend international procurement for two years, will come into effect only on April 19th. Tell me, is it possible to amend the law which became invalid on April 1st, 2020 on April 19th, 2020? The answer is no.

To settle this problem, it is necessary to amend the final provisions of thenew version of the Law of Ukraine "On Public Procurement". Otherwise, from April 1st, 2020, registration certificates for medicines registered for international procurment will not be valid, problems will arise with the supply of drugs and their prescriptins by doctors.

- Is it known in the Ministry of Health?

- I have not heard anyone express concern about this. But once again I draw attention to the following: in order to track these things, you need to work with this legislation, study everything thoroughly and carefully. I am sure that there is no private interest by those working on the new edition of the Law of Ukraine "On Public Procurement". You just need to fix this situation. I think that the fastest solution will be the preparation of a bill aimed at solving this problem by the parliamentary committee on national health, medical care and medical insurance.

- Are international organizations aware of this?

I guess not. When we started reading the published law, we came to the conclusion that there is a conflict of laws that creates big problems with international procurement in 2020. I want to emphasize that in the state budget for 2020, UAH 4.8 billion is allocated for procuremen under centralized programs, including through international organizations. Some official from the Ministry of Health will have to take responsibility for signing payment orders to transfer this money in the presence of such aconflict. This is a difficult management decision, and before takin it I would advise to think seriously. In any case, the most constructive way is to solve the problem by introducing amendments to the adopted law.

- Back to the public procurement law. Did it solve the problem when the customer formed the lots, writing down the conditions for one supplier?

- The issue with the lots has not been settled. The practice of handling complaints in the Antimonopoly Committee for regional tenders shows that customers often form lots in such a way as to reduce competition. For example, 17 drugs are combined into one lot, relatively speaking, while 16 drugs can be delivered by anybody, and the 17th is a drug contains narcotic substances. Only companies that have a license in the field of narcotic substance supply can make delivery for such a lot. Thus, the circle of potential suppliers narrows to one, two or three companies in the region. This issue has not yet been settled by law.

In addition, the problem of forming technical requirements to the subject of procurement remains. There are still cases where formally procurement is carried out based on INN (international nonproprietary name), but due to the establishment in the tender documentation of a specific form of release and / or dosage form of the drug, the conditions are developed for a particular manufacturer.

- How do you assess the prospect of adopting a new edition of the law on medicines? You took part in the preparation of one of the final versions of the bill. Is this law needed at all?

- Now, as far as I know, active work is carried in this area.

Everything is very simple. Ukraine has signed an Association Agreement with the European Union. Within its framework, we must implement the norms of European legislation into Ukrainian laws, including in the field of regulation of medicines circulation. Obviously, the new law should be based on 83 Directive of the European Union. This Directive defines the main directions and approaches to regulating the circulation of medicines in the countries of the European Union. The Directive cannot dictate which law should be adopted in a particular country, but any law that is adopted by a member state should not contradict the basic principles of the Directive.

- Does our legislation contradict any requirements?

- It does not fully correspond. There are questions where it largely meets the requirements of EU Directive 83, for example, with regard to terminology and approaches to evaluating the materials of the registration dossier for medicines that are submitted for registration. A lot has already been adopted from the Directive, but there are still many positions that need to be brought into line with it. If, for example, a trade license is issued for a drug in the EU, then in Ukraine this procedure is still registration. They also have slightly differentproduction licensing procedure, distribution regulation and quality control. These and other aspects need to be adopted in our regulatory framework.

The bill that we prepared in 2015, together with MP Andrii Shipko and specialists from domestic and foreign specialized associations, largely corresponded to the Directive. We even got an opinion from European experts who were involved by the WHO European office. Based on these recommendations, we could prepare a final version of the bill that is in line with European principles.

- Why didn't this happen?

- There has been a change in power, new opinions, other influence groups have appeared in the new composition of the parliamentary committee. In the end, our bill, in the preparation of which so many experts were involved, was recalled, and a new revised bill was introduced instead, which is now being discussed at the Ministry of Health. In its current version, this bill is much less compliant with EU Directive 83 than the bill that we worked on and which was recalled. I’m not saying this because I’m advertising the original version of bill No. 2162. As a specialist, I can draw professional conclusions. By the way, we are now working on this, preparing a comparison of the new bill and the Directive: compliant/not compliant. For each article.

- Why was your version recalled?

- Firstly, not my version, but the version of the working group created under the VR Committee, which we have finalized with my team. I don’t know, you can ask a question to the deputies who were at that time in the committee. As far as I know, Andrii Shipko (deputy, author of the bill) recalled bill No. 2162 in order to find some compromise with his colleagues from the committee. The new version was finalized without my participation. When I saw the new version on the VR website, I found in the text the intersection of interests of various influence groups. In my opinion, this is wrong. Take for example similar laws in the Czech Republic, Germany, Denmark and Poland. In none of them you will see a hint of protectionism. Each of these laws is balanced, the patient is always at the forefront, the goverment must ensure the right to safe, effective and high-quality medicines.

- How relevant is the topic of intellectual property in the pharmaceutical market of Ukraine? For example, patient organizations are very active against some manifestations of patent protection that exist in Ukraine, against evergreen patents ...

- There are more civilized ways. Let me give an example: there is a project - the Patent Pool with an office in Geneva, which conducts negotiations with large pharmaceutical companies that have drug patents, and convinces them to give voluntary production licenses for a fee. After that, by combining orders from interested states, the Patent Pool attracts generic manufacturing companies for the production of such drugs. Obviously, the price of such drugs is significantly lower than the original ones during the patent period. Why don't we use this tool?

- Do we have a chance to enter the Patent Pool?

- Of course. I know that individual patient organizations are negotiating with the Patent Pool. However, such negotiations should be carried out by the Ministry of Health of Ukraine, which spends the money of Ukrainian taxpayers. To do this, just change the law and conclude an agreement.

- Does this mechanism provide an opportunity to gain access to innovative drugs?

- Yes. The matter is that instead of using these tools, we observe in the media wars of patients and manufacturers. Although the solution lies on the surface: just change the law by authorizing the Ministry of Health or the State Enterprise “Medical Procurement of Ukraine” to enter into negotiations with the Patent Pool. This can be solved in three to four months.

- What is the legal practice at the pharmaceutical market today? How do producers sue each other?

- This is a separate story. There are disputes between foreign and Ukrainian manufacturers, at the same time there is a very positive trend - there are much less of them. Domestic manufacturers feel tight in the country, because there is very high competition and they enter foreign markets. But the road is not always open for a Ukrainian manufacturer if it violated intellectual property rights in the past. Of course, you can’t judge everything equally. We have a number of manufacturers who are well-known far beyond the borders of Ukraine. For those who previously committed violations of intellectual property rights, the market itself forced a change in approach. I believe that Ukraine has taken a big step forward in this matter. I completely support the development of domestic production of medicines, increased exports and earnings in foreign currency. All these processes should take place in a civilized manner in compliance with intellectual property rights.

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