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Russia: The challenge of access to medecines

"Better to be rich and healthy than poor and ill", according to a Russian proverb, a saying especially true in a country where the public health system is no healthier or wealthier than its patients.

In the last decade the health of the average Russian has grown significantly worse. Life expectancy has fallen from 70 years in 1988 to 65.3 in 2002. Russian men in particular are at risk, living on average 59 years, 13 years less than women.

The three major causes of illness among Russians are respiratory diseases, which account for about 40% of all illnesses, circulatory disorders and injury and poisoning. The leading causes of death are circulatory disorders, injury and poisoning, tumors, digestive diseases such as ulcers, respiratory diseases such as pneumonia and bronchitis, and infectious diseases, with tuberculosis the principal cause of death in this last category.

Yet despite these alarming statistics, public health is not a high priority on the government's agenda: only about 3% of GDP is spent on health.

Free Health Care - In Theory

All Russian citizens are entitled to free medical care, but the State only spends about 1,550 rubles ($50) a year per capita on health. This sum has to meet the costs of free medical care, funded from federal and regional budgets and obligatory health insurance funds, including hospital maintenance, doctors' salaries and some medications.

On paper, some statistics are impressive. On average, there are 42 doctors and 96 nurses per 1,000 population. The country also has 8,794 inpatient hospitals and 1.4 million beds for its 144.8 million population. However, doctors are poorly paid and most facilities lack modern equipment.

In a 1999-2000 survey covering several regions in the vast country, two thirds of the doctors interviewed said their hospital did not have enough drugs and medical supplies. "We have enough space to accommodate the patients and enough doctors to care for them, but we do not always have the means to treat them. Patients are often asked to bring everything from bed-sheets to syringes with them when going into hospital," explains Tatyana Siburina an expert in the Ministry of Health.

Meanwhile, the low wages paid to doctors mean that most have to seek alternative means of income ? from their patients or from the private sector. The average doctor's salary is about 3,000 rubles (less than $100) a month, less than the national average of about 4,300 rubles ($130). Less qualified employees working in health care earn considerably less. Not surprisingly, many professionals working in the public sector are enticed into pharmaceutical businesses or private clinics, where salaries are higher.

The acute state of the health service means that it is common practice for doctors to accept money and gifts from patients and their relatives for officially free services, while many public hospitals officially charge patients for "extra" examinations and treatment.

Who pays for drugs?

Theoretically, the cost of drugs is met by both patients and the state, with the state paying for cheaper, essential medicines and patients picking up the bill for more expensive treatments. The state takes responsibility for drugs on the Essential Drugs List, by providing those drugs free to patients in hospital and free or at discounted prices to the 30 percent of Russians entitled to receive them, particularly if they suffer from serious diseases such as HIV/AIDS, tuberculosis, children's celebral palsy, bronchial asthma, disseminated sclerosis or Parkinson's disease. In theory, drugs for these conditions can be obtained from special pharmacies, but in practice many patients do not always receive the drugs they need. Drugs that are not included on the Essential Drugs List must be purchased by patients themselves

The Essential Drugs List is compiled by specialists in different diseases. "They try to include as many necessary drugs as possible, but they cannot include many expensive drugs - the state cannot afford them," says Boris Vasserman of the Department of Public Health of the Medical Academy in Moscow. As a result, most of the medicines on the list are domestic or cheap imported drugs.

Access to drugs is "one of the greatest challenges of Russia's public health sector" according to Natalia Podgorbunskih, the Head of the Pharmaceutical division of the Ministry of Health. According to some estimates, 70 percent of all drugs purchased in Russia are bought by the patient, not the state. Robert Rosen, Executive Director of the Association of International Pharmaceutical Manufacturers in Moscow points out that per capita expenditure on medicines is less than 20 dollars a head in manufacturer's prices. "Naturally they cannot afford new innovative medicines," he adds.

Despite its commitment to providing adequate free medical care, the state cannot fulfill its commitments. HIV patients, whose number has been trebling every year in Russia, provide a striking example. According to Oleg Yurin, Deputy Head of the Federal AIDS Prevention Center in Moscow, "although on paper antiretroviral treatment is to be covered by the Federal AIDS programme, in reality it is available to very few".

While the cost of antiretroviral therapy has fallen in other parts of the world, it has remained at about $8,000 -$10,000 a year in Russia, making unavailable to patients in some parts of the country, while in others, such as Moscow or Tatarstan, where the program is funded from local budgets, most patients who need the treatment receive it. "However this will change and the prospects will become even gloomier as the number of patients in need of ARVs grows, unless the government is able to provide adequate funding," Yurin said.

Less effective treatment

Because the drugs they need are too expensive for the vast majority of Russians, "doctors are often forced to prescribe cheaper drugs because of the patient's low income and this can lead to ineffective treatment," explains Vasserman of the Medical Academy.

Antibiotics provide an example of how drug prices affect doctors' prescriptions. Outdated antibiotics such as Erythromycin are often prescribed to treat respiratory infections, and sexually transmitted diseases, even though imported substitutes such as Sumamed (Azithromycin) are more effective for the same range of diseases, as the latter is more expensive.

Vadim Chufistov, who has suffered several ischemic strokes and paralysis has been taking Prestarium (Perindopril), an imported medication for high blood pressure, for two years. Chufistov cannot afford to substitute Prestarium with Norvasc (Amlodipin Besylate), a more effective imported patented drug, because the latter is not included in the Essential Drugs List and costs over 1,000 rubles, more than a third of Vadim's monthly income of 2,600 rubles ($80).

Prestarium is not the only problem Chufistov has faced. "When I was in hospital last year I urgently needed an expensive Austrian medication, Cerebrolysinum, to help recover cerebral circulation. As the hospital had run out of this drug and it would take too long to order it, my relatives had to buy it for me," he said.

Commercial influence

The cost of a drug is always the only factor influencing prescriptions. Doctors frequently top up their incomes by acting as distributors for pharmaceutical companies. "Sometimes this leads to absurd situations when doctors prescribe not the drug they should be treating the patient with but the drug sold by the company they represent. In some cases a cheaper drug could be prescribed, but the patient ends up with a more expensive one, because this is in the doctor's interests," says Svetlana Grudachyova of the "Pharmexpert" Market Research Center in Moscow.

Rustam Gevishev from the Central Research Institute for Healthcare Organization says "there are numerous cases of doctors' abuse of power. Doctors often tell patients which pharmacy to use or prescribe drugs from companies they have a contract with." Gevishev adds that "There are also violations on a higher level, when the head doctor responsible for purchasing medicines for his/her hospital, chooses the supplier by criteria other than the price or quality of medications."

Price Control

In Russia prices for essential drugs are regulated to some extent, but measures vary from region to region and are often ineffective. According to Yulia Mikhailova of the Central Research Institute for Healthcare Organization, "the drug market is running wild and there is a lot of corruption. Prices are dictated by companies, the State doesn't have a say in price regulation. There are too many middlemen between the manufacturer and the final consumer."

Mikhailova claims that the only region to significantly improve access to drugs is the Komi Republic in the north of the country, where a drug insurance programme was launched in 1994 to regulate the market and guarantee that a fixed share of health budget was spent on medicines. Under this system those entitled to discounted or free drugs and who want to buy a more expensive drug than the one prescribed from the Essential List, only pay the difference between the prices of the two drugs.

Komi also centralised by establishing a state-controlled Pharmaceutical Chamber which purchases drugs for hospitals and state pharmacies directly from producers. This has helped to reduce drug prices by generating competition and reducing the number of middlemen between the producer and the final consumer.

"There was a lot of resistance from companies, because the program meant lesser profits for them," Mikhailova adds as one of possible reasons why Komi's example had not been followed by other regions.

However, opinions differ as to whether regulation helps reduce prices or forces them upwards. Alexander Afanasiev, Head of the Sub-Committee for Pharmaceutical Activity and Drug Security of the Russian Parliament says that "prices are often lower in the regions where they are not dictated by local authorities." He goes on to argue that where regions set a lower margin for cheaper drugs and a higher margin for more expensive drugs, manufacturers focused on expensive drugs and cheaper ones were ousted from the market. Others claim, however, that some companies focus on selling cheaper drugs in higher quantities.

Domestic Production

In Russia's drug market "cheap" usually means "domestically produced", while "expensive" means "imported". There are few domestic drugs for diseases requiring sophisticated medications. For example, hardly any Russian drugs exist for gerontological diseases, such as Alzheimer's and hereditary illnesses.

According to Pharmexpert Market Research Center, imported drugs comprise 68 percent of market value in Russia, but only 38 percent of its volume by package. In 2001 the top 5 foreign pharmaceutical suppliers, occupying 24% of Russia's drug import volume, were Aventis (France), GlaxoSmithKlein (UK), Novo-Nordisk (Denmark), Gedeon Richter (Hungary) and Sanofi Synthelabo (France).

Ninety percent of drugs produced by Russian manufacturers cost no more than 5 rubles ($0.15) in producer prices, according to Pharmexpert's estimates. "Manufacturers produce old, traditional and simple drugs rather than high technology ones. These medicines dating back to the Soviet times have a certain consumer market - people buy them out of habit and because they don't have the money to purchase more expensive drugs," explains Svetlana Grudachyova of Pharmexpert.

Russia has about 300 drug manufacturers, the top ten of which produce about half the country's drugs. The range of drugs produced by companies is limited and one medicine can occupy half of a company's production volume. Forty-four manufacturers produce haw tincture, a cheap medicine used to treat heart problems such as tachycardia, but the version produced by Ferein, the country's leading manufacturer, generates 30 percent of the company's sales. Enalapril, a medication for high blood pressure, is manufactured by 13 companies.

"Most manufacturers in Russia make the same cheap generics under the same trade-name. So they can only compete with each other by lowering the price," explains Alexander Tyulyaev, Marketing Director at Akrihin, Russia's number two manufacturer.

Counterfeit Drugs

Another challenge for pharmaceutical authorities and companies is fighting counterfeits, illegally made drugs hiding behind the name of a legitimate product and manufacturer. According to Robert Rosen at AIPM counterfeits occupy at least 12% of the Russian pharmaceutical market. "Counterfeit drugs can have the same active ingredients as the original product or have other components. You never know what's in there, that's where the danger is for the patient," - he argued.

To combat counterfeit drugs in Russia, "the legislation and penalty need to be strengthened, you need a definition of counterfeit drugs and, of course, you need much better enforcement, better coordination between the patents authority and the Ministry of Health not to register drugs that are infringing on patents or trademarks,"- Robert Rosen said.


Manufacturers complain that government authorities are not making their lives easy. Until this year essential drugs were exempt from the 24% tax on a company's profits, which has now been re-introduced. The government has also introduced a 10% value added tax on drugs, a measure criticized by companies, pharmacies and the media. "The introduction of VAT on drugs hit, once again, the patients' pockets," says Duma Deputy Alexander Afanasiev.

Domestic manufacturers also complain about government attempts to regulate prices for essential drugs. In 2002 the Moscow government issued a decree limiting the wholesale margin to 15% on local drugs and to 25% on imported. "This was a big blow for us. Our distributors said they would rather make 25 cents on each dollar than 15 kopecks on each ruble," says Alexander Tyulyaev of Akrihin.

Another matter of concern for domestic producers is the Ministry of Health decree compelling them to obtain Good Manufacturing Practice (GMP) certification by 2005, in order to comply with international standards. The switch to GMP could cost up to three billion dollars, according to Tyulyaev, whose company has already started upgrading its factory to comply with international standards. "The day all Russian manufacturers have to comply with GMP, most of them will simply have to close."

Most experts argue that the introduction of GMP and other international standards will onlt be beneficial, particularly as the quality of domestic drugs is likely to improve. However, Rustam Gevishev of the Central Research Institute for Healthcare Organization argues that the introduction of international standards will not necessarily remove low-quality and counterfeit drugs from the market. "Manufacturers that produce counterfeit drugs do it illegally anyway. They are not complying with national standards and will not comply with international ones." Gevishev fears that introduction of GMP could result in a reduction of the number of small domestic drug manufacturers and an increase in drug prices.

Research and Development

Duma Deputy Afanasiev believes that introduction of international manufacturing standards could help promote domestic pharmaceutical research. "One of GMP rules is to have a good laboratory - this might be the first step towards development of new Russian drugs." He adds, however, that unless the government takes development of new drugs under its wing, we are not going to have any new original drugs in any near future. Producers cannot afford and are not motivated to develop innovative medicines. That opinion is echoed by Alexander Tyulyaev of manufacturers Akrihin. "None of the Russian producers today have the money to invest into research and development."

"The general tendency is that companies manufacture generic drugs or drugs they developed long ago and have now obtained a patent on. Most Russian companies do not develop and patent new original drugs," explains Vladimir Semyonov, Head of the Department of Medicine at the Federal Institute of Industrial Property of Russian Agency for Patents and Trademarks (Rospatent).

Today pharmaceutical research institutes are largely state-owned but no longer state-funded. Vladimir Gunar, Deputy Director for Research at the Vitamins Institute in Moscow, says his institute does not have the money "to pay the bills and salaries of its remaining employees, let alone develop new medicines."

WTO Membership

Russia intends joining the World Trade Organization, and has begun to amend its legislation to meet international standards.

In the Soviet Union drugs were not protected by patents. Instead, "certificates of authorship" were issued, which, according to Ivan Bliznets, Deputy Director of the Russian Agency for Patents and Trademarks (Rospatent), were worth nothing, as all rights belonged to the state. To protect their drugs in the USSR foreign companies could patent the process of obtaining a certain chemical substance, but not the drug itself. Such patents were easy to get round.

The situation began to change in 1992 when the Law on Patents was passed, which recognises both products and processes, thus making drugs subject to patenting. As a result, "intellectual property rights for drugs are as well protected in Russia as they are in countries with most developed patent legislations," according to Semyonov of Rospatent. Indeed, in Russia not only drugs are protected by patents, but also methods of medical treatment, an object prohibited from patenting by many countries, including the participants of the European Patent Convention.

According to Rospatent statistics, the number of patents issued rose more than three-fold between 1993 and 2001. Patents for drugs and medical supplies were the largest of all patent categories, with 5,800 patents issued between 1993 and 2000. Robert Rosen of the Association of International Pharmaceutical Manufacturers agrees that patents legislation has improved dramatically in the last ten years and adds that the problem is not the law but its enforcement.

"While in general Russian legislation is in line with the TRIPs Agreement, there are certain discrepancies. To eliminate them, draft laws have been prepared and they are currently being discussed in the Duma," explains Valentina Orlova, Head of Rospatent Legal division. Laws already passed in first reading include amendments to the Patent Law, The Law on Trademarks, (Service Marks and Appellations of Original Goods and the Law on Legal Protection of Computer Programs and Data Bases).

One of the amendments to Patent Law is to allow patents to be extended for up to 5 years. This amendment, made to harmonise Russian legislation with article 62 of the TRIPs agreement, "was strongly opposed by some Russian manufacturers, as they are interested first and foremost in generic drugs," according to Semyonov.

Another measure opposed by local companies is the raising of duties payable by domestic patent and trademark applications, introduced to make Russian and foreign applicants equal. "Duties have already been raised, but foreign applicants are still paying ten-fold for patent applications. Duties are going to be raised further until foreign applicants are put on a par with Russians," Semyonov explained.

The introduction of international standards and legislation in the pharmaceutical industry will open the door to the international market for Russia. But some Russian companies argue this might turn out to be a one way passage. "What use is it to us if they lift export restrictions, when no one is interested in importing Russian drugs?" Alexander Tyulyaev asks.

Duma deputy Alexander Afanasiev said Russia was not ready economically to enter the WTO. "When Russia enters the WTO it will become even more open to imported drugs, but we will not get an opportunity to sell our medicines abroad in exchange, because they aren't competitive enough. I think domestic manufacturers should be given some time to get back on their feet before we rush to join the WTO."