Igor Derevyanko
Lawyer, Senior Partner DEGA PARTNERS
Kateryna Brodska,
Head of the Department of Criminal Law and Business Security DEGA PARTNERS, Lawyer, Ph.D.
The pharmaceutical market is one of the most powerful and, at the same time, one of the most difficult in Ukraine.
During the 13th Specialized Conference-Workshop “Pharmbudget-2020”, which took place on September 12-13, 2019, the following prospects for the development of the Ukrainian pharmaceutical market were forecast: in 2019 the volume of the retail market of medicines in the national currency may increase by 14-18%, and in 2020 – by 11–14%. In the categories of “pharmacy basket” goods (drugs subject to state monitoring: domestic and imported antibiotics (10 tablets or capsules), domestic and imported vasodilators (10 tablets or capsules), antipyretic and analgesic drugs, 10 domestic and imported (1 sachet)) there was a continuation of the trend towards increasing the share of dietary supplements (over the past 5 years, their share has doubled).
With both the objectively justified and the accelerated development of online trade in the quarantine restrictions imposed by COVID-19, the demand for the purchase of medicines on the Internet is projected to grow significantly.
However, the imperfection of regulation and control over the activities of entrepreneurs in the Internet space will lead to increase in number of abuses and violations by unscrupulous online retailers, including those related to the sale of drugs and medical devices.
Resolution of the Cabinet of Ministers № 220 of 23.03.2020 in an emergency mode amended the Licensing Conditions for economic activity in the production of medicines, wholesale and retail trade in medicines, import of medicines (except for active pharmaceutical ingredients), which legalized online trade in medicines for the period quarantine actions.
Thus, in accordance with paragraph 27-1 of the License Terms, in case of Cabinet of Ministers of Ukraine establishes quarantine in accordance with the Law of Ukraine “On Protection of Infectious Diseases” or the imposition of a state of emergency in accordance with the Law of Ukraine “On Legal Status of State of Emergency” Licensees licensed to conduct business in the retail sale of medicines are allowed to trade in medicines and related products remotely, organize and deliver medicines and related products directly to consumers in compliance with the storage conditions of medicines specified by the manufacturer during their transportation, in particular with postal operators involvement on a contractual basis.
Thus, for the quarantine period, pharmacies (pharmacies) that have a license to conduct business in medicines sales, are legally allowed to trade remotely and deliver medicines both on their own and with courier services.
It is likely that thanks to the state permit for distance trade in medicines, many fraudsters will be able to take advantage of the “white spots” in the legal regulation of online trade in medicines, and do not neglect the opportunity to gain the trust of consumers.
The current legislation of Ukraine stipulates that medicines registered in Ukraine may be imported into the territory of Ukraine in the presence of a quality certificate of a batch of a medicinal product issued by the manufacturer and a license for import of medicinal products (except API) issued to the importer (manufacturer or person represents the manufacturer of medicines on the territory of Ukraine), in the manner prescribed by law.
Medicines are a special product that requires special conditions of transportation and storage. Failure to comply with these conditions may result in loss of quality and efficiency and, as a result, harm to the lives and health of patients.
The Executive Director of the Health Committee of the European Business Association noted that counterfeiting and “gray” imports are very common in the pharmaceutical market of Ukraine.
They forge absolutely all types of medical products: medicines, medical devices, dietary supplements and food supplements. Counterfeit both very expensive drugs for cancer treatment and cheap painkillers.
Both counterfeits and drugs that enter Ukraine through “gray” imports can be counterfeit. Even if medical devices are manufactured to all standards, in the case of unauthorized import of such products, there is no guarantee that they have been stored and transported properly. As a result, the effect of such products may be absent or even reversed.
The “gray” import of medicines undermines the image of producers, leads to losses of the state budget in the form of unpaid taxes, and, ultimately, has negative consequences for the lives and health of consumers.
If the control over the offline sale of medicines has a legal mechanism, then the online trade in medicines is beyond the control of the state, and law enforcement agencies are generally unable to even identify so-called “illegal” online pharmacies.
According to the Resolution of the Cabinet of Ministers of 30.11.2016 № 929 online trade in medicines is prohibited.
However, the sale of drugs, including immunobiological and prescription, through Internet sites has become widespread.
Moreover, medicines delivery services are offered both on sites under the brand of business entities that have a license for retail trade in medicines, and on the sites of intermediaries, and medical products can be found in general on marketplaces and price aggregators.
The State Service of Ukraine for Medicinal Products in this regard noted that trade in medicinal products outside the places of activity defined by law is a direct violation of licensing conditions and may pose a direct threat to life and health of consumers of medicinal products.
Earlier, the Ministry of Health stated that it does not advise Ukrainians to buy medicines online, because the sale of medicines online in Ukraine is currently not regulated by law.
However, self-medication remains a “folk tradition” of Ukrainians. In addition, treatment is not prescribed by a doctor, but on the basis of advice from friends who had “similar” symptoms. At the same time, 75% of Ukrainians buy drugs once a month and even more often, and are looking for an opportunity to buy drugs at a discount, including online.
Despite the outright ban on online drug trafficking, consumers have been able to buy medicines online, as large pharmacy chains have long found “spots” in the law, adapted and traded.
But is it always that what consumers buy online and put in the cart when ordering online is actually a quality medicine and generally relevant to treatment?
Earlier, the Ministry of Health stated that it does not advise Ukrainians to buy medicines online, because the sale of medicines online in Ukraine is currently not regulated by law.
However, self-medication remains a “folk tradition” of Ukrainians. In addition, treatment is not prescribed by a doctor, but on the basis of advice from friends who had “similar” symptoms. At the same time, 75% of Ukrainians buy drugs once a month and even more often, and are looking for an opportunity to buy drugs at a discount, including online.
Despite the outright ban on online drug trafficking, consumers have been able to buy medicines online, as large pharmacy chains have long found “spots” in the law, adapted and traded.
But is it always that what consumers buy online and put in the cart when ordering online is actually a quality medicine and generally relevant to treatment?
According to the WHO, more than 50% of drugs sold online are counterfeit.
Every year, 700,000 people worldwide die from counterfeit drugs.
Thus, the lack of regulatory regulation of the sale of drugs online, proper state law enforcement control over the implementation of this type of activity, leads only to negative consequences.
As can be seen from the experience of many foreign countries, including Denmark, Germany, the United States, Spain, Poland and others, legal regulation of online trade in medicines is necessary.
Thus, since 2004, online trade and mail delivery of both over-the-counter and prescription drugs (excluding vaccines, extemporaneous drugs, etc.) have been allowed in Germany. Such trade is carried out by ordinary retail pharmacies, which must obtain a special license for this purpose (currently such licenses have about 3 thousand pharmacies, but only some of them are actively working in this format). Germany also allows online commerce from a limited number of EU countries according to a list established by the Ministry of Health.
03.04.2020 In the Russian Federation the Law which allows remote sale of over-the-counter medicines, and also possibilities of sale of prescription medicines is signed. Moreover, this Law was adopted by the Duma in the first reading in 2017.
In the United States, the FDA (American counterpart of the State Medical Service) website has a list of pharmacies where you can buy drugs online.
We believe that online trade in medicines in Ukraine must be regulated.
First, such trade still exists, and secondly, in many cases, the only option is to purchase drugs online.
For example, people in rural areas where there are no pharmacies also need some treatment; lonely elderly people are not able to move around the big city for a long time in search of the necessary medicines; Patients in inpatient medical facilities are also deprived of the opportunity to find medication in inpatient pharmacies.
In addition, under quarantine, online drug trafficking is a requirement of today.
However, the online trade in medicines, the quality of online medicines must be strictly controlled by the state.
Thus, the register of official online pharmacies should be available on the official websites of the State Medical Service and the Ministry of Health. Moreover, the permit for online trade in medicines must be directly related to the inpatient activities of pharmacies. That is, only stationary pharmacies can sell drugs online, and such trade should only apply to those drugs that are available on pharmacy shelves.
In addition, there should be a register of drugs allowed for online sale. Of course, drugs that contain drugs and some prescription drugs cannot be sold online.
It can be predicted that the development and implementation of a set of appropriate regulatory mechanisms for online trade in medicines will require a lot of time and effort from both the state and the pharmaceutical market operators.
However, since for the period of quarantine, the Resolution of the Cabinet of Ministers of 23.03.2020 actually legalized online trade in drugs, such activities must meet the requirements of regulations governing internet trade in Ukraine.
The Law of Ukraine “On E-Commerce” defines the organizational and legal framework for e-commerce in Ukraine, establishes the procedure for electronic transactions using information and telecommunications systems and defines the rights and responsibilities of participants in e-commerce.
In addition, activities in the field of e-commerce are based on compliance with the requirements of the Civil and Commercial Codes of Ukraine, the laws of Ukraine “On Consumer Protection”, “On Advertising”, “On Electronic Documents and Electronic Document Management”, “On Information Protection in Information and Telecommunication Systems” , “On Telecommunications”, “On Electronic Digital Signature”, “On Payment Systems and Funds Transfer in Ukraine”, “On Financial Services and State Regulation of Financial Services Markets”, “On Personal Data Protection”, etc.
At the same time, taking into account the nature of drugs as a commodity, online pharmacies should not only provide consumers with complete, comprehensive and accessible information about the drug, its dosage form, pharmacological properties, indications and contraindications, interaction with other drugs, features and method of use, side effects, storage conditions, but also to properly guarantee the quality of purchased online medicines.
You can buy medicines on the Internet in both Germany and Ukraine, but the German regulatory system and the activities of relevant structures minimize the likelihood of buying a low-quality drug, while in our country this is not the case.
(https://blogs.pravda.com.ua/authors/badikov/5ad85923c3e0c/)
It is seen that online trade in medicines should be subject to the same state control and response measures as online trade in any other goods, with additional strict control by the State Medical Service and the Ministry of Health.
In addition, it is advisable to use a set of mechanisms on the Internet to combat counterfeiting and “gray” drugs both by the state and by official manufacturers and legal dealers.
It is the active position of pharmaceutical manufacturers, aimed at preventing online trade in drugs of unconfirmed quality or obscure origin, will significantly reduce the scale of illegal sales of drugs and medicines.
The distribution of counterfeit medicines negatively affects the reputation and profits of the pharmaceutical manufacturer, leads to state budget losses, and, at best, does not affect treatment in any way. In the worst case, the use of such drugs is harmful to human health and can lead to the death of the patient.
An effective and efficient means of combating counterfeiting and “gray” drugs on the Internet is a set of actions by pharmaceutical manufacturers and legal dealers aimed at protecting intellectual property rights.
In general, the search for ways to effectively and legitimately counter “gray” imports has always been relevant for manufacturers of medicines and medical devices.
Thus, during a working meeting in August 2018 on combating “gray” imports of representatives of the Association of Medical Devices Market Operators (AMOMD) and the leadership of the State Medical Service of Ukraine, the following ways to combat “gray” imports by the state were identified: planned and unscheduled inspections, verification of product characteristics at the venue of fairs, exhibitions, shows and other product demonstrations, tracing the origin of a medical device from the manufacturer to the final consumer, etc.
But this is not enough.
We believe that rights holders / legal dealers of medicines and medical devices should actively and constantly oppose “gray” imports by protecting intellectual property rights, including by preventing the introduction of “gray” drugs and online.
The protection of medicines is possible through various institutions of intellectual property law: as an object of copyright or as an object of patent rights. In addition, the original name of the drug may also be protected as a trademark, the manufacturer’s designation – in the form of a trade name.
The difference between the name of the drug and the brand is their functional purpose.
The trademark serves as a distinctive sign – a means of individualization of goods of a particular manufacturer in the market of homogeneous products. The name of the drug performs a general informative function associated with the appointment of certain drugs.
Thus, given the current state of regulation of online trade in medicines, confirmed sales of counterfeit and “gray” drugs over the Internet, given the special requirements for the quality of drugs and the possible consequences of online sales of drugs of unconfirmed quality or unclear origin, we can draw the following conclusions:
Internet trade in medicines and medicines actually exists, and since March 23, 2020 – it is also allowed by the Resolution of the Cabinet of Ministers;
The activity of selling medicines on the Internet requires the development and implementation of a set of appropriate regulatory mechanisms using the positive experience of foreign countries;
Until the introduction of a separate standardization of online sales of drugs, the activities of online pharmacies must meet the requirements of regulations governing the conduct of online trade in Ukraine;
Online pharmacies should be subject to the same state control and response measures as online trade in any other goods, with additional strict control by the State Medical Service and the Ministry of Health;
An effective and efficient means of combating counterfeiting and “gray” drugs on the Internet is a set of actions by pharmaceutical manufacturers and legal dealers aimed at protecting intellectual property rights.