The PBN Company
Unofficial Translation

Rossiya
October 11, 2001
Page 4

Don't Buy Medicines
Russia hasn't yet learned how to fight against counterfeit drugs

By Alexey Smirnov

Russia's domestic pharmaceutical market is being threatened by the following:
1.) Introduction of VAT on medicines starting January 1, 2002 2.) Ever increasing flow of counterfeit drugs. This was acknowledged at the International Conference on the Fight Against Counterfeit Drugs In Russia. However, even if it is still possible to oppose the government introduction of VAT by means of parliamentary procedures, it is impossible to fight against counterfeits. There is no legal basis. The Law "On Medicines" does not even supply a definition for what constitutes a counterfeit drug. And the number of counterfeits keeps on growing. It is difficult to 'catch' them, as the existing drug quality control system is not effective enough to spot fakes in a timely manner and on a wide scale.

Frankly speaking, the development of recommendations to fight against counterfeit drugs was the objective of the Conference. The following amendments should be introduced to the above-mentioned law: 1.) A clear definition for 'counterfeit drugs' and the methods to control, identify, seize and destroy them. 2.) An administrative and financial (up to 200 minimum salaries) penalty for the sale of counterfeit drugs in small amounts. Additionally, the following amendment should be introduced to the Criminal Code: producers, wholesalers and officials encouraging the production and sale of counterfeit drugs shall be subject to a penalty starting from a minimum fine of 500 minimum salaries up to a sentence of prison confinement for a term of up to ten years dependent upon the amount and nature of a crime.

The Ministry of Health also intends to establish a pharmaceutical commission to cooperate with the Ministry of Internal Security, the State Customs Committee and the Federal Security Service to identify producers, sellers and importers of counterfeit drugs.

Background Information

The turnover of the domestic pharmaceutical market is 100 billion rubles per year.

According to official information from the Ministry of Health, 5-7% of medicines in Russia (according to unofficial information - up to 30%) are counterfeit, 67% of which are produced in Russia.

The number of reported cases of counterfeit medicines in Russia has increased ten times since 1998. Counterfeit medicine victims filed over twenty-five lawsuits to demand compensation for their losses. None of these cases were resolved.

Only 45% of the population can currently afford modern medicines. As soon as the likely VAT tax goes into effect, this figure will shrink to 10% of the population.