The current unstable geopolitical situation raises many questions and provides few answers. With the introduction of the next package of sanctions by the USA and the EU, the issue of their impact on the healthcare market is being raised.
Currently, the United States of America can’t place direct blocking sanctions on the supply of medicines according to the provisions of Article 2b(2) of the relevant IEEPA (International Emergency Economic Powers Act) donations, food supplies, humanitarian supplies, medicines can’t be subject to humanitarian bans and restrictions.
In the text of the SDN (Sanctions List of Blocking Sanctions of the United States) there is no direct sanction on the supply of medicines, paragraphs 2 and 3 of the General license # 6 Treasury Office of foreign assets control (OFAC)), where emphasizes the special status of medicine and pharmaceuticals and that sanctions do not apply to this area (russia_gl6.pdf (treasury.gov).
Also, such a restriction is absent in the third package of EU sanctions against Russia, namely Article 3 and Article 3a of the Decision of the Council of the European Union dated February 25, 2022, (https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32022D0327) it is indicated that medical goods and medicines sent for non-military purposes are not subject to sanctions restrictions.
But it must be emphasized that sanctions, for example, may affect Russian pharmaceutical companies that are affiliated or have sanctioned state-owned companies.
In addition, the main unresolved issue is the increase in prices for vital and essential drugs (VED).
As a general rule, the cost increase will not affect drugs from the list of vital and essential drugs (VED). Their prices are controlled by the Russian government (Article 60 of the Federal Law “On the Circulation of Medicines”), and the manufacturer can raise them once a year and not higher than the official inflation rate. Registration prices for them are set in rubles, which is also insurance against a sharp jump. Thus, the fall of the ruble will not affect the prices of Vital and Essential Drugs.
The Federal Antimonopoly Service (FAS) also states that there are no prerequisites for price growth. However, a sharp jump in the exchange rate may lead to a disadvantageous position for foreign producers, a decrease in purchasing power and the likelihood of their exit from the Russian market, which may lead to a shortage of VED.
At the same time, in order to prevent a shortage of vital drugs due to the unprofitability of their production, the Government of the Russian Federation adopted Decree No. 1771 dated October 31, 2020. The mechanism prescribed in the document allows not only to identify a possible shortage of vital and essential drugs in advance, but also to set their prices to an economically justified level and thereby ensure their presence on the market.
On March 4, 2022, draft law No. 80712-8 (№80712-8 Draft Law: Legislative Activity Support System (duma.gov.ru) was submitted to the State Duma with a proposal to amend Part 9 of Article 61 of the Federal Law “On the Circulation of Medicines” after the words “medical care,” to add the words “change in the exchange rate of foreign currency”. Thus, the prices for drugs from the Vital and Essential Drugs List may directly depend on the exchange rate, which is a positive moment for manufacturers. But at the same time, the FAS may refuse to revise the cost of drugs and refer to the absence of boundaries for “changing such a course”.
We would like to emphasize that the issue of the logistics of foreign medicines remains unresolved, namely, there is no regulatory legal act from both the United States of America and the European Union regarding the logistics of this category of goods to the territory of Russia.
Despite the absence of direct sanctions, the Ministry of Health of the Russian Federation confirmed that today there are facts of delays in the supply of a number of medicines due to logistics.