Common Pharmaceutical Market Of The Eurasian Economic Union: Rules Of Access And Competition

Since the breakup of the Soviet Union, the former Soviet republics have been on a quest for independent development. At the same time, modern trends in international relations and inter-dependence of the post-Soviet economies, once part of a common and centralized economic complex, have prompted these nations to find ways to work together and integrate in order to expand economic cooperation.

Serious integration processes in terms of expanding economic cooperation began in 2009, when an agreement was signed to create a common customs space in the territory of Belarus, Kazakhstan and Russia. The agreements to establish a Customs Union became effective in July 2010, and in December of that year—at a summit of the Eurasian Economic Union—an agreement was reached to establish the Eurasian Economic Union (the EEU or Union) on the basis of the Common Economic space of Belarus, Kazakhstan and Russia. A couple of years later, the aforementioned agreement was implemented, and a tri-party treaty on the Eurasian Economic Union was signed on 29 May 2014 at a summit in Astana (the Treaty.) The Treaty came into force on 1 January 2015.

One of the first common markets within the Union will be a common market of pharmaceuticals which should begin functioning as early as 1 January 2016. Article 30 of the Treaty states that the member-states shall create, within the framework of the Union, a common market of pharmaceuticals which will comply with the standards of good pharmaceutical practices and be based on common principles. Taking into account that such a market should commence functioning in the near future, one of the first agreements signed within the Treaty's framework was, therefore, an Agreement on common principles and rules of turnover of pharmaceuticals within the Eurasian Economic Union, dated 23 December 2014 (the Agreement.) The Agreement was ratified in accordance with the law of the Republic of Kazakhstan dated 12 October 2015.

The Agreement sets common principles and rules for the turnover of pharmaceuticals within the common market. However, there remain a great number of questions about how this will be implemented in practice. Moreover, considering that many pharmaceutical companies are working in the territory of the member states through their distributors, there will be questions in this regard as well, in particular with respect to how the economic activity of the market participants will be coordinated. It should be noted that in view of Kazakhstan's recent acceptance to the WTO,1 Kazakhstan has assumed obligations whereby the import of certain goods (approximately one-third of the commodity items, including pharmaceuticals) into the territory of Kazakhstan for sale in the domestic market would be subject to lower customs tariffs as compared to the tariffs set for the EEU. It is anticipated that relevant administrative mechanisms will be introduced in order to regulate these matters which will allow applying the EEU customs tariffs when moving such goods across the border to the other EEU member states (i.e. out of the territory of Kazakhstan.)

This article examines the matters of access and sale of pharmaceuticals within the common pharmaceutical market of the Union as well as general rules of competition which will need to be followed by the pharmaceutical market participants.

Access to the common market of pharmaceutical products within the Union

Regulation of the common market of pharmaceuticals

As stated above, since the beginning of 2016 the common market of pharmaceuticals within the Union will be regulated in accordance with the Treaty and the Agreement. For the purposes of implementing the Agreement, which lays out the principal rules for the turnover of pharmaceuticals within the Union, it is also anticipated that a number of documents would be adopted by the Eurasian Economic Commission "which will result in a significant degree of harmonization of the systems of regulation of pharmaceuticals."2 In particular, it is anticipated that common rules for registration and expertise of pharmaceuticals, common requirements for labeling and package leaflets, as well as other documents, would be adopted. Through the adoption of such documents, the plan is to ensure the consistency of mandatory requirements for safety and quality of pharmaceuticals across the territory of the Union.

In terms of the practical implementation of the Agreement, it should be noted that the Agreement provides for a transitional period until 31 December 20253 during which the pharmaceuticals which have been registered before 1 January 2016 within the territories of the Union member states should be brought into compliance with the Union's requirements and rules. In addition, the Agreement envisages that those pharmaceuticals that were authorized for sale in the territory of the member...