EAEU First

In a bid to boost domestic drug manufacturers, the Russian authorities want to cut foreign competition out of public procurement

In mid-November, Russia’s Ministry of Industry and Trade (Minpromtorg) published a draft decision that would give Russian drug manufacturers a leg up in public procurement. The proposal would ensure that drugs produced in the Eurasian Economic Union at all stages of manufacturing would be favored in public procurement auctions, automatically beating out international competition. To test drive this initiative, Minpromtorg has proposed a pilot project involving 15 drugs used to treat HIV, cancer, diabetes and tuberculosis. But NGOs warn that the proposed procurement rule could lead to shortages of vital medications.

Taking out foreign competitors

In a draft decision published in mid-November, Russia’s Ministry of Industry and Trade (Minpromtorg) outlined plans that would give some Russian drug manufacturers a significant advantage when it comes to public procurement. In essence, the resolution would ensure that if a company enters a public procurement auction with a drug that’s entirely manufactured (from ingredient production to packaging) in the Eurasian Economic Union (EAEU), it will automatically beat out all other companies that don’t meet this requirement.

So far, Minpromtorg has proposed launching a pilot version of this initiative involving 15 drugs, most of which are used to treat HIV or cancer. The list also includes two different types of insulin used to treat diabetes and two anti-tuberculosis drugs. The selection was drawn from Russia’s list of “strategically important medications.”

As stated in the supporting documents, the goal of this draft decision is to incentivize manufacturers to transfer drug production to Russia. This would make Russian patients less dependent on supplies from abroad, make medications cheaper, and develop the industry, the documents say. According to Minpromtorg’s calculations, of the 215 medications included on Russia’s “strategic” list, 79 are manufactured using foreign ingredients and 31 aren’t produced in finished dosage form in Russia at all.

The draft decision has drawn criticism from a number of NGOs. In September, the Finance Ministry also spoke out against the same EAEU-first procurement rule, after it was introduced in the field of medical devices. Russia’s Federal Antimonopoly Service has also opposed similar regulations in the past.

On the government’s online forum, 3,110 people voted in favor of the draft decision — 3,567 voted against it. “Right now, when there are 24 hours until the end of voting, we’re seeing a rapid increase in votes for,” Elena Gratcheva of the AdVita Fund, a charity that supports cancer patients, wrote on Facebook on December 2.

The potential downsides

In the supporting documents, Minpromtorg indicates that the proposed procurement regulation could lead to shortages of the selected drugs. At the same time, the ministry claims the risks are low.

Meanwhile, NGOs are primarily concerned that the lack of competition will affect the quality of Russian-made pharmaceuticals. “Currently, there aren’t many full-circle manufacturers in Russia, which runs the risk of lowering the incentive for these companies to produce competitive, quality drugs,” wrote the International Treatment Preparedness Coalition, a project that monitors government procurement of drugs used to treat HIV and related diseases.

NGO workers also stress that being dependent on one supplier always puts patients in a vulnerable position. The proposed procurement rule could lead to shortages of the selected drugs to the fact that:

• Foreign companies that are effectively excluded from public procurement may leave the Russian market altogether;
• Domestic companies that are unable to localize production in Russia may stop manufacturing certain medications, because already localized competitors will bypass them at auctions automatically.

In the end, this could lead to a situation where Russian pharmaceutical companies with completely localized production are unable to meet demand. The result? Shortages of vital medications.

Officials are also assuming that all drugs available on the market are equally good, but this isn’t necessarily the case. “Of course you can say there’s a difference between drugs from different manufacturers,” said tuberculosis specialist and blogger Olga Vinokurova. “We have European-made drugs in our arsenal and we know that they are better tolerated. […] [Sometimes], if a person can’t tolerate a Russian- or Indian-made drug, he, on his own initiative, orders the original drug from Germany (this is, however, expensive) or we make purchases through the hospital whenever possible. So the patient gets the opportunity not to discard this drug from their [treatment] regimen. This is a common story for us. But in most cases we use whatever we have.”

(As Vinokurova notes, this varies from person to person; some patients may respond well to Russian-made medications, while the original drug may cause severe adverse reactions.)

As NGO workers underscore, production needs to be localized — and this could, in fact, offer protection against supply disruptions. But the new procurement rule will only create favorable conditions for the emergence of monopolies (the Federal Antimonopoly Service has yet to give an opinion on the draft decision). “Again, we see that the main approach is not to support domestic production so it would be easier for it to become competitive, but to simply drive out all competitors,” the AdVita Fund’s Elena Gratcheva wrote back in November. “We must not produce monopolies. We must not make people’s life and health dependent on a single manufacturer.”

In a comment to the publication Takie Dela on December 4, Gratcheva suggested a different approach — “support domestic producers with subsidies and other incentive measures to make [Russian-made] drugs competitive.”

The short-term forecast

The list of drugs included in Minpromtorg’s pilot project shouldn’t lead to serious problems for patients in the near future.

NGOs that help cancer patients are the most vocal critics of the proposed procurement rule. The four cancer drugs included in the pilot project — imatinib, bevacizumab, rituximab, and trastuzumab — are common treatments used in modern oncology. And past shortages have affected patient care. For example, shortages of rituximab, which was subject to a procurement rule that favors drugs partially manufactured in the EAEU over foreign medications, led to its inclusion on a list of exceptions with more flexible purchase rules in 2020.

As the trade publication Vademecum notes, only the Russian company Biocad offers completely localized manufacturing of three of the four cancer drugs included on the list. “However, the [original manufacturers] lost their share in the Russian market for public procurement of cancer drugs even earlier, when Biocad released its biosimilars into circulation,” Vademecum wrote. “But, for example, the original trastuzumab (Herceptin from Roche) was still purchased for 2.2 billion rubles [nearly $30 million] in 2020.”

In addition, Alexey Mikhailov from the International Treatment Preparedness Coalition told Kommersant that the overwhelming majority of biddings for antiretroviral drugs (medications used to manage HIV/AIDS) only involve one supplier.

The logic behind the two anti-tuberculosis drugs chosen for the pilot project is also far from clear. One of them, Perchlozon, doesn’t have any competitors on the market. And both of these drugs (the other being prothionamide) aren’t particularly vital. According to Olga Vinokurova, the tuberculosis specialist, even if these anti-TB medications were to disappear altogether, few people would notice.

Both medications are included in Russia’s clinical guidelines for treating tuberculosis; prothionamide is also included in the World Health Organization’s guidelines. But they aren’t listed as key treatments. “These drugs are actually part of the regimen for patients with multiple and wide-ranging drug resistance,” Vinokurova explained. “However, in both cases, they are named as alternatives. […] These drugs aren’t always used in the treatment of drug-resistant forms of tuberculosis. We have other alternatives, and ones that are easier to tolerate and work better.”

As for the types of insulin included in the pilot project, Vademecum writes that the new rule could lead to the main foreign manufacturers that sell these drugs in Russia — Sanofi and Eli Lilly — losing their positions. That said, Russian-made insulins can be of high quality and are well tolerated by patients.

“At the moment, it seems to us that there are more fears than specific complaints,” said Anna Karpushkina, the head of CAF Russia’s pediatric endocrinology charity program Alfa-Endo, in a written response to Meduza. “Before, patients were also afraid of [domestically-produced] human growth hormone, and now they’re not. Right now there’s no objective data that domestic insulin is worse.”

Endocrinologist Natalya Volkova also didn’t see a problem with the use of these insulins that are entirely manufactured in Russia. According to her, half of patients already use them and those who make the switch to Russian-made insulins generally keep taking them. “I know of patients who refuse to use Russian insulins simply out of fear. They buy the insulin they’re accustomed to,” the specialist said. “There’s no reasoned response that [the Russian-made insulin] doesn’t work for them. I think it’s fear.”

Story by Daria Sarkisyan

Abridged translation by Eilish Hart