The PBN Company
Unofficial Translation

Vedomosti
October 10, 2001
Page B7
The Ministry of Health Threatens With Prison
…Producers of counterfeit medicines

By Roman Kutuzov

In their fight against counterfeit medicines, producers are forced to rely on their own efforts rather than on the law enforcement agencies: the reason for this is that there is no legal basis. Deputy Minister of Health Anton Katlinsky announced yesterday that the Government is preparing a set of amendments to the legislature aimed at rectifying the situation. If the government draft laws are approved, producers of counterfeit medicines will face up to ten-years' imprisonment.

According to the RF Ministry of Internal Affairs (MIA), counterfeit medicines constitute as much as 7% of the Russian pharmaceutical market. Antibiotics and products containing hormones are the most frequently counterfeited medicines. According to AIPM, legal producers may be losing up to $100 million as a result of counterfeiters. Around 60% of counterfeit medicines are produced in Russia, the rest are imported.

The issue of counterfeit medicines is not a welcome subject for discussion since it can frighten away customers from original products. Baker & McKenzie undertook legal action on behalf of Pliva for the counterfeiting of its product "Sumamed". Vladimir Schitikov, a patent attorney with Baker & McKenzie says, "We filed several applications to law enforcement agencies. Over the whole year our applications were 'booted' from one place to another, and in the end they disappeared. Counterfeiting cases are complicated, and the law is weak, so the MIA is unwilling to get involved in these cases."

It took Pliva until summer to solve the counterfeiting problem on its own after completing a campaign of total marking of "Sumamed" with special three-level holographic protection stickers, and starting up the company's own service for monitoring drug stores.

Speaking at yesterday's conference on the fight against counterfeit drugs in Russia Alexandra Shvetsova, Prosecutor of the General Prosecutor's Office, said that at present the term "counterfeit drug" does not exist in Russian law. The militiamen use to apply Article 159 of the Criminal Code (fraud) to the counterfeiters. However, last year, the RF Supreme court decided that this criminal offence should be qualified according to Article 200 (deception of the consumer). "At this point we are forced to re-qualify the cases according to this article," complains the Senior Officer of the Economic Crime Department, Oleg Dvoryankin. "Fraud is a serious crime, and the counterfeiters were afraid of being accused of it."

According to Anton Katlinsky, Deputy Minister of Health, who spoke at the conference, an interagency committee for combating counterfeit medicines was formed in compliance with the Health Ministry's order. The committee consists of representatives of Federal Security Service, Ministry of Internal Affairs, State Customs Committee, Ministry of Industry and Science, Ministry of Justice, and the Procurator-General's Office. The committee has developed a package of amendments to the current legislation aimed at substantially toughening the penalties for counterfeiting medicines. A definition of counterfeit drugs is going to be introduced into the Law "On Medicines." The Civil Code will include a criminal penalty for acquiring and selling counterfeits on the retail market amounting to 200 minimum salaries. The harshest penalty is foreseen by the Criminal Code, which will be amended with Article 171.2: Pirates will face up to ten years in jail for production, labeling and sale of counterfeit drugs.

The clock is ticking for the process of adopting tougher legislation: if efforts by the pharmaceutical lobby are unsuccessful and if from 1 January 2002 medicines are subject to VAT, counterfeiting will be an even more profitable business.