Ukraine: Pharmaceutical Antitrust 2013

PHARMACEUTICAL REGULATORY LAW

1 Which legislation sets out the regulatory framework for the marketing, authorisation and pricing of pharmaceutical products, including generic drugs?

The fundamental legislation in Ukraine regarding pharmaceuticals is the Law on Medicinal Products dated 4 April 1996 No. 123/96-BP. Besides that, the main legal framework for the marketing, authorisation and pricing of pharmaceutical products is set out by:

• Resolution of the Cabinet of Ministers of Ukraine dated 26 May 2005 No. 376 on Approval of Procedure for State (re-)Registration of Drugs and State (re-)Registration Fee Amount;
• Decree of the Ministry of Health of Ukraine dated 26 August 2005 No. 426 on Approval of Procedure for Expert Examination of Drug Registration Materials Submitted for State (re-)Registration and Expert Examination of Materials on Amendments to Registration Materials within Registration Certificate Validity Term;
• Resolution of the Cabinet of Ministers of Ukraine dated 14 September 2005 No. 902 on Approval of Procedure for State Quality Control of Medicinal Products Imported to Ukraine;
• Resolution of the Cabinet of Ministers of Ukraine dated 17 October 2008 No. 955 on Measures for Stabilisation of Medicinal Products and Medical Products Prices;
• Resolution of the Cabinet of Ministers of Ukraine dated 25 March 2009 No. 333, Certain Issues of State Regulation of Drug and Medical Product Prices;
• Resolution of the Cabinet of Ministers of Ukraine dated 13 August 2012 No. 794, Issues of Declaring the Changes in Wholesale- Selling Prices for Medicinal Products which are Purchased at the Expense of State and Local Budgets;
• Decree of the Ministry of Health of Ukraine dated 3 February 2012 No. 78 on Approval of the List of OTC Medicinal Products Permitted for Use in Ukraine Sold in Pharmacies and their Structural Subdivisions;
• the Law on Principles of Counteraction and Prevention of Corruption dated 7 April 2011 No. 3206-VI;
• the Law on Advertising dated 3 July 1996 No. 270/96-BP;
• Decree of the State Drug Quality Control Inspectorate of the Ministry of Health of Ukraine dated 31 October 2011 No. 723 on Approval of Licensing Conditions for Exercise of Medicinal Products Manufacturing, Wholesale and Retail;
• the Law on Amending Certain Laws of Ukraine as regards Medicines Import Licensing and the Definition of the Term 'Active Pharmaceutical Ingredient' dated 4 July 2012 No. 5038-VI; and
• Decree of the Ministry of Health of Ukraine, dated 20 February 2013 No. 143 on Approval of Licensing Terms on Conducting of Economic Activity Regarding Medicinal Products Import.

2 Which bodies are entrusted with enforcing these regulatory rules?

The Cabinet of Ministers of Ukraine is the main decision-making body regarding the pricing and reimbursement of medicinal products. It approves wholesale and retail mark-ups for medicines and medical devices included on the national list of essential medicines and medical devices; and to the compulsory minimal assortment (socially oriented) of medicines and medical devices for pharmacies.

The Ministry of Health of Ukraine ensures state registration and control of manufacturing, storage, sale and quality of drugs and stipulates unified qualifying requirements for persons exercising pharmaceutical activity. The State Service of Ukraine for Medicinal Products; the State Expert Centre of the Ministry of Health of Ukraine; and the State Price Control Inspectorate are also entrusted with enforcing the regulatory framework for the marketing, authorisation and pricing of medicinal products in Ukraine.

The Antimonopoly Committee of Ukraine (AMCU) is the state authority that ensures protection of competition including combating misleading advertising.

3 Which aspects of this legislation are most directly relevant to the application of competition law to the pharmaceutical sector?

The main anti-competitive issues in the pharmaceutical sector appear to be distribution of misleading information in drugs advertising; non-provision of information in due time or provision of untrue, incomplete or inexact information requested by the AMCU; violation of public procurement procedures; anti-competitive concerted actions: relations of manufacturers with distributors, solid distributing programmes, bonuses and discounts, etc. Pricing is also relevant to the application of competition law to the pharmaceutical sector.

Article 15-1 of the Law on Protection against Unfair Competition dated 7 June 1996 No. 236/96-BP defines distribution of misleading information as communication by a business entity directly or through another person to one or several persons or to an undefined circle of persons, inter alia, of incomplete, inaccurate or untrue data, in particular the results of the chosen means of expressing or concealing separate facts or inaccurate formulations which influenced or may influence the intentions of these persons as to the purchase (ordering) or realisation (sale, supply, performance or provision) of goods, works or services from this business entity.

Misleading information (including in advertisements) in the meaning of article 15-1 covers, in particular, information containing incomplete, inaccurate or untrue data about the manufacturer, quality, completeness, suitability to application, standards, characteristics, peculiarities of goods' realisation, etc.

As stated above, the authority exercising control over compliance with legal entities with article 15-1 is the AMCU, which may request information, conduct inspections and initiate cases, and impose fines and other sanctions for infringement of the law on fair competition.

COMPETITION LEGISLATION AND REGULATION

4 Which legislation sets out competition law?

Ukrainian competition law is mainly regulated by:

• the Law on Protection Against Unfair Competition dated 7 June 1996 No. 236/96-BP;
• the Law on Protection of Economic Competition dated 11 January 2001 No. 2210-III; and
• the Law on the Antimonopoly Committee of Ukraine dated 26 November 1993 No. 3659-XII.

5 Are there guidelines on the application of competition law that are directly relevant to the pharmaceutical sector?

No, there are no specific guidelines on competition law for the pharmaceutical industry. However, the AMCU in 2009 issued the information letter dated 17 February 2009 No. 21-15/02-1244, No. 54/01 which inter alia refers to peculiarities of application of article 15-1 of the Law on Protection against Unfair Competition that has recently become very relevant to the pharmaceutical sector.

In addition, in 2012 the AMCU determined standard requirements to concerted acts of business entities regarding joint scientific and research or design and experimental works. Compliance with such requirements allows exercising of such concerted acts without obtaining an approval of the AMCU (Order of the AMCU No. 557 dated 15 August 2012). The clinical trials of medicinal products are a kind of scientific and research work and therefore the provisions of Order No. 557 are also relevant to the pharmaceutical sector.

Further, a new tool which was introduced in late 2011 is relevant for promotional activities of pharmaceutical companies, which may apply in advance to the AMCU with respect to compliance with article 15-1 of the Law on Protection against Unfair Competition for AMCU's explanation of whether planned actions or advertisements constitute are legitimate. However, in practice this procedure is problematic: the AMCU may take up to one month to give its opinion; the request must include every detail and provide documentary evidence of advertisement claims; and there is no possibility to amend the text submitted for the AMCU examination and amendments require a new application. Because of the above, there is almost no AMCU practice on this and no unified approach to the AMCU's consideration of applications.

6 Which authorities investigate and decide on pharmaceutical mergers and the anti-competitive effect of conduct or agreements in the pharmaceutical sector?

The AMCU may investigate and provide permission on mergers and decide on the anti-competitive effect of conduct and agreements.

7 What remedies can competition authorities impose for anti-competitive conduct or agreements by pharmaceutical companies?

In accordance with the Law on Protection against Unfair Competition, the AMCU may impose fines on a business entity of up to 5 per cent of its income from the sale of products (goods, works and services) for the fiscal year preceding the year in which a penalty is imposed. In 2012 the AMCU imposed the largest fine for misleading advertising of medicinal products on a local manufacturer of medicinal products – Farmak, PJSC. The fine amounted to 7.6 million hryvnas.

Under the provisions of the Law on Protection of Economic Competition for acts recognised by the law as anti-competitive concerted acts the AMCU may impose fines on a business entity of up to 10 per cent of its income from the sale of products (goods, works and services) for the latest fiscal year preceding the year in which a penalty is imposed. For instance, in 2012 the AMCU imposed a fine amounting in total to 128,000 hryvnas on five business entities for anti-competitive concerted acts resulting in bid rigging as to medicinal products.

8 Can private parties obtain competition-related remedies if they suffer harm from anti-competitive conduct or agreements by pharmaceutical companies? What form would such remedies typically take and how can they be obtained?

Business entities, individuals, associations, institutions and organisations may file a claim to the AMCU as a result of acts or omissions determined by the Law on Protection of Economic Competition and the Law on Protection against Unfair Competition as violation of such legislation.

Furthermore, in case such persons suffer harm as a result of such acts (or omissions), they may submit a claim to a court for compensation of such harm. The compensation of harm may include not only compensation for damages and other forms of reimbursement of property damage (pecuniary damage), but also compensation for moral damage (non-pecuniary damage). It should be noted that according to the Law on Protection of Economic Competition, persons found guilty of anti-competitive concerted action shall be liable to pay compensation of up to twice the amount of the harm suffered.

9 May the antitrust authority conduct sector-wide inquiries? If so, have such inquiries ever been conducted into the pharmaceutical sector and, if so, what was the main outcome?

In accordance with the Law on the Antimonopoly Committee of Ukraine, the AMCU may conduct investigations of the market, determine the commodity market boundaries and position, including monopoly position, of the business entities on this market, and take relevant decisions.

The first large-scale antimonopoly investigation on the pharmaceutical market was held at the end of 2009 during the flu epidemic in Ukraine. During this investigation the AMCU conducted 259 inspections throughout Ukraine and in 107 cases found signs of violation of competition legislation, related to unreasonable price rises for some medicinal products.

In 2011 the AMCU conducted an investigation in the market of medical services and medicinal products. The most widespread violations revealed by the AMCU related to unfair competition and, specifically, the provision of misleading information during advertising of medicinal products and dietary supplements. Another type of violation particular to the market of medical services and medicinal products at that time was abuse of dominance.

As regards 2012, the AMCU investigated 138 regional retail markets of medicinal products. As a result of the investigation, the AMCU has initiated 36 cases having signs of violations of the competition legislation. The most common violations on regional markets were abuse of dominance and dissemination of misleading information. In addition, in 2012 the AMCU has conducted deep investigation of 10 main wholesale players on the medicinal product market as to their compliance with the requirements of the competition legislation. The results of such investigation will be available in early 2013.

The AMCU will continue to focus its attention on the market involving sale of medicinal products in 2013. In particular, the AMCU has set itself the task of evaluating the market's competition conditions to improve market openness, removing unnecessary obstacles for business.

10 Is the regulatory body for the pharmaceutical sector responsible for sector-specific regulation of competition distinct from the general competition rules?

There is no special regulatory body responsible for sector-specific regulation of competition for the pharmaceutical industry.

11 Can antitrust concerns be addressed with industrial-policy type arguments, such as strengthening the local or regional research and development activities?

The main industrial-policy arguments concern state policy programmes or concepts of state development. For instance, in recent years the government of Ukraine has promoted and indirectly implemented the concept of import substitution of medicinal products with domestic ones. The concept provides for privileges and benefits (tax, customs, etc) for local medicinal products' manufacturers and for research and development. In light of the above the AMCU would rather clear conduct including mergers and acquisitions and anticompetitive agreements, which otherwise would have been deemed violations, if they lead to:

• improvements in production, purchase or disposal of goods;
• technological and economic development;
• development of small and medium-sized entrepreneurs;
• optimisation of export or import of goods;
• development and application of uniform technical standards for the goods; and
• rationalisation of production.

If the AMCU refuses to provide the approval for concerted actions, such approval may still be granted by the Cabinet of Ministers of Ukraine, which is more likely to consider the above arguments.

12 To what extent do non-government groups play a role in the application of competition rules to the pharmaceutical sector?

In accordance with the Law on Protection against Unfair Competition, unfair competition is any act of competition contrary to commercial and other fair customs in business activity.

Under article 33 of the Law on Protection against Unfair Competition, business entities with the assistance of the Ukrainian Chamber of Commerce and Industry and other interested organisations may develop rules of professional ethics to be adhered to in competition for the relevant sectors of the economy. Such rules of professional ethics should be approved by the AMCU.

In 2008, 32 pharma companies in Ukraine signed the Memorandum on the Rules of Good Promotional Practice. The Rules are a form of an agreement between the signatories to refrain from using unfair methods of promotion of medicinal products, and are not a legislative act. Besides, although the above-mentioned rules were not approved by the AMCU, they still may be considered as fair customs established by the pharmaceutical market players.

Under article 36 of the Law on Protection of Economic Competition, the AMCU may commence infringement proceedings based inter alia on the application of business entities, citizens, associations, institutions and organisations concerning the violation of their rights as a result of acts or omissions that violate the legislation on protection of economic competition.

REVIEW OF MERGERS

13 To what extent are the sector-specific features of the pharmaceutical industry taken into account when mergers between two pharmaceutical companies are being reviewed?

Mergers between pharmaceutical companies are caught by the general rules set up by the Ukrainian competition legislation, which does not stipulate any sector-specific features for the pharmaceutical industry.

14 How are product markets and geographic markets typically defined in the pharmaceutical sector?

As already mentioned there is no sector-specific competition legislation for the pharmaceutical industry.

The commodity market (product market) is defined by the Law on Protection of Economic Competition as the sphere of circulation of goods (substitutional commodities), which during a certain period and within a given territory are in demand and supply.

In accordance with the Methodology of Determination of Business Entities' Monopoly (Dominant) Position on the Market approved by the Decree of the AMCU dated 5 March 2002 No. 49-r, the commodity market boundaries are determined by forming a group of interchangeable commodities (commodity groups), within which a consumer under normal conditions can easily switch from the consumption of one commodity to another. Territorial (geographical) boundaries of the market of a certain good (commodity group) is determined by establishing the minimum area outside which, from the consumers' point of view, purchase of goods (commodity group) related to a group of interchangeable commodities (commodity group) is impossible or purposeless.

15 In what circumstances will a product and geographical overlap between two merging parties be considered problematic?

As a general rule, the AMCU has a formalistic approach and during the decision-making considers whether a merger will lead to monopolisation or considerable limitation of competition on the whole market or on a significant part of it.

Under the Law on Protection of Economic Competition, prior merger clearance from the AMCU is required if the assets or the worldwide turnover volume of the participants, taking into account the relations of control, for the previous fiscal year exceed the amount equivalent to e12 million, provided that:

• aggregate worldwide assets or the turnover volume of at least two participants, taking into account the relations of control, exceed the amount equivalent to e1 million per participant involved;
• aggregate assets or the turnover volume in Ukraine of at least one participant, taking into account the relations of control, exceed the amount equivalent to e1 million; or (irrespective of above-mentioned thresholds);
• individual or aggregate market share of the participants, taking into account the relations of control, exceeds 35 per cent and the concentration takes place on this or a similar market of goods.

If, in accordance with the competition legislation, approval is required, the participants are not allowed to close their transaction without the AMCU's consent.

If certain business parts of merging parties overlap horizontally, the AMCU, rather than prohibiting the entire transaction, would look for remedies (structural or behavioural – see question 17) whereby its competition concerns are allayed and the rest of the deal is allowed to proceed.

16 When is an overlap with respect to products that are being developed likely to be problematic?

See question 15.

17 Which remedies will typically be required to resolve any issues that have been identified?

Decisions of the AMCU granting permission for a concentration may be conditional on the concentration participants' fulfilment of certain requirements and obligations that eliminate or mitigate the negative impact on competition, such as the application of structural and behavioural antitrust measures. Structural measures may concern, in particular, restrictions in terms of the management, use or administration of property as well as obligation of the business entity to make divestments. Taking into account that there is no overall reimbursement procedure (except for single state pilot projects) and no compulsory health insurance in Ukraine, the pharmaceutical market is predominantly out-of-pocket, which makes it a highly socially and politically sensitive area and it is typical for AMCU to apply behavioural antitrust measures. Such measures could include maintaining the prices at the pre-deal level; reporting on prices and volumes of supplies in Ukraine over a certain period; maintaining the portfolio at the pre-deal level; refraining from obstructing access to (exit from) the market of certain products or purchasers, etc. In the event of non-fulfilment of such requirements and obligations by concentration participants, the AMCU may impose fines amounting to up to 5 per cent of the income of the business entity from the sale of products (goods and services) for the fiscal year preceding the year in which a penalty is imposed.

18 Would the acquisition of one or more patents or licences be subject to merger reporting requirements? If so, when would that be the case?

The acquisition of a patent or licence shall not of itself be subject to merger reporting requirements. Provided patents or licences as intellectual property assets are acquired within certain transactions involving acquisition of certain businesses, such deals may be subject to AMCU clearance. See question 15.

Meanwhile, if such acts cause or can cause prevention, exclusion or restriction of competition, they may be considered as concerted acts and thus require approval by the AMCU. Concerted actions as to intellectual property rights, which do not exceed the scope of IP rights granted by the IP laws, are exempt from getting approval of the antitrust authority, provided that these IP products are not exclusive on the market and these actions do not lead to significant distortion of competition. Agreements on assignment of intellectual property rights or assignment of rights on use of intellectual property, including patents, are not subject to approval by the antitrust authority, provided the restrictions do not exceed the scope of IP rights.

It is considered that restrictions do not exceed the scope of IP rights if the restrictions concern the scope of assigned rights, terms and territory of the licence, type of activities, area of use and minimal volume of production.

ANTI-COMPETITIVE AGREEMENTS

19 What is the general framework for assessing whether an agreement or practice can be considered anti-competitive?

Under article 6 of the Law on Protection of Economic Competition, anti-competitive concerted acts are acts which have led or may lead to prevention, elimination or restriction of competition and are related to:

• setting of prices or other conditions of purchase or sale of goods;
• restriction of production, commodity markets, technical and technological development, investments or the establishment of control over them;
• allocation of markets or sources of supply based on territory principle, range of goods, volumes of sale or purchase, sellers, buyers or consumers or by other means;
• bid rigging;
• application of different conditions to equivalent transactions with other business entities, which put the latter at competition disadvantage;
• conclusion of agreements on condition that other business entities assume additional obligations which by their content or in accordance with trade and other fair customs of entrepreneurship are not related to subject of these agreements; and
• substantial limitation of the competitiveness of other business entities on the market without objectively justified reasons.

20 Describe the nature and main ramifications of any cartel investigations in the pharmaceutical sector.

According to the competition legislation, anti-competitive concerted acts shall be deemed to have taken place in a product market where similar acts (or omissions) are being carried out by undertakings, which have led or may lead to prevention, elimination or restriction of competition, provided that analysis of the situation in the product market negates any objective reasons for implementing such acts.

As stated above, some pharmaceutical market players took advantage of the epidemiological situation and essentially increased prices of flu medicines in the past years.

Therefore, in order to prevent potential seasonal increase of prices for flu medicines, the AMCU at the end of 2012 recommended to 15 business entities, including the 10 largest domestic manufacturers and leading wholesale distributors of flu medicines to refrain from an economically unjustified increase in prices and creating artificial deficiencies of medicinal products.

Besides, many anti-competitive concerted acts are uncovered by AMCU in the bidding field within public procurement procedures. The conclusions of the AMCU on violations are usually made following similar mistakes or common features in the presentation of bidding documents which give reasons to believe that the bidders have exchanged information to rig the bid.

21 To what extent are technology licensing agreements considered anticompetitive?

Technology licensing agreements are not considered anti-competitive as long as the scope of the agreement does not exceed the scope of IP rights, like the term and territory of the licence, type of activity, sphere of use of the IP object, minimal volume of production.

22 To what extent are co-promotion and co-marketing agreements considered anti-competitive?

Ukrainian competition legislation makes no special reference to co-promotion and co-marketing agreements, thus the general rules are applicable (see question 19).

The most typical antitrust violations within co-promotion and co-marketing agreements are price fixing and allocation of markets (eg, private and public markets, regional and all Ukrainian markets).

23 What other forms of agreement with a competitor are likely to be an issue? Can these issues be resolved by appropriate confidentiality provisions?

Cross-licensing agreements may become an issue if the agreement scope exceeds the scope of IP, the IP products are exclusive on the relevant market and these significantly distort competition. Agreements on postponing the entry of a generic product onto the market may also become an issue from a competition law perspective if such agreement leads to an increase in the product's prices. Similar agreements that can lead to price regulation, or can restrict or block entry to the market of other products or competitors, are also questionable. In general, confidentiality provisions in the agreement cannot prevent the application of the competition legislation.

Under the Law on Protection of Economic Competition, a person who committed anti-competitive concerted acts, but voluntarily informed the AMCU and submitted information of essential importance for taking a decision on the case earlier than the other parties to the collusion is, as a general rule, relieved from liability for committing anti-competitive concerted acts.

See question 19.

24 Which aspects of vertical agreements are most likely to raise antitrust concerns?

In general, the competition legislation of Ukraine prohibits any agreements which led or may lead to prevention, elimination or restriction of competition. Major antitrust issues of vertical agreement are price fixing, exclusivity clauses and market sharing by geographical region.

25 To what extent can the settlement of a patent dispute expose the parties concerned to liability for an antitrust violation?

In general, settlement of a patent dispute does not expose the parties to liability for an antitrust violation, unless such settlement ends in the form of an agreement, such as a cross-licensing agreement, which can lead to abuse of dominant position, price regulation, restriction of production, markets, goods, limitation of technological development, distribution of markets or sources of supply, restriction of access to the market of other commercial entities, levy of additional restrictions incompatible with the subject of the agreement and similar consequences that can have negative impact and significantly distort the competition on the relevant market.

If the outcome of the settlement establishes restrictions of production, markets, goods, technical-technological development, sets control over these, or causes removal of competitors or setting the prices for the patented product concerned, etc, then it may be regarded as concerted action and thus subject the parties to liability for antitrust violation.

Besides, provided that a dispute settlement takes place within court proceedings, the parties must submit the executed amicable agreement for the court's consideration. The court considers the terms of the agreement as to their compliance, inter alia, with competition legislation of Ukraine. If provisions of an amicable agreement break the law or infringe rights and interests of any party as well as third parties, the court denies such an agreement.

ANTI-COMPETITIVE UNILATERAL CONDUCT

26 In what circumstances is conduct considered to be anti-competitive if carried out by a firm with monopoly or market power?

Under article 13 of the Law on Protection of Economic Competition, the abuse of monopoly (dominance) position on the market includes acts or omissions of a business entity with monopoly (dominance) position, which led to or may lead to prevention, elimination or restriction of competition. The abuse of a monopoly (dominant) position on the market is prohibited.

The Law on Protection of Economic Competition establishes a non-exclusive list of activities deemed to be recognised as abuse of monopoly (dominance) position on the market:

• fixing of such prices or other terms of purchase or sale of goods, which would be impossible under substantial competition on the market;
• application of different prices or various other conditions to equivalent agreements with business entities, sellers or buyers without objectively justified reasons;
• stipulating that in order to conclude an agreement a business entity should assume additional obligations, which by their nature or in terms of trade and other fair customs in entrepreneurial activities are not related to the subject of the agreement;
• restricting manufacturing, markets or technical development, which caused or may cause damage to other business entities, buyers or sellers;
• partial or complete refusal to purchase or sell goods with no alternative sources of their sale or purchase;
• substantial restriction of the competitiveness of other business entities on the market without objectively justified reasons; and
• creation of entry (exit) market barriers or removal from the market of sellers, buyers or other business entities.

27 When is a party likely to be considered dominant or jointly dominant?

As per part 1 of article 12 of the Law on Protection of Economic Competition, the business entity holds a dominant position on a relevant market if such business entity:

• has no competitors on this market; or
• faces insignificant competition due to restricted opportunities of other business entities for access to purchase raw materials, sale of commodities, or due to the market access barriers for other business entities, availability of privileges or other circumstances.

A business entity's position is regarded as a monopoly (dominant) if:

• its market share is 35 per cent or more and it cannot prove that it experiences significant competition; or
• its market share is 35 per cent or less, but it does not experience significant competition due to the comparatively low market shares of competitors.

It is considered that each of two or more business entities has monopoly (dominant) position if concerning certain types of commodity they do not compete between themselves or in the case of insignificant competition, and in respect of them, taken together, one of the above-mentioned conditions of part 1 of article 12 is fulfilled.

The position of each of several business entities is regarded as a monopoly (dominant) if:

• the aggregate share of no more than three business entities that have the largest shares of the relevant market exceeds 50 per cent; or
• the aggregate share of no more than five business entities that have the largest shares of the relevant market exceeds 70 per cent.

The AMCU by the Decree No. 49-r dated 5 March 2002 approved the Methodology of Determination of Business Entities' Monopoly (Dominant) Position on the Market, which establishes the procedure of determination of the monopoly (dominant) position of a business entity on the market and intended for the analysis of activities of business entities, groups of business entities and consumers as to the production, sale or purchase of goods, services or works at national and regional markets.

28 Can a patent holder be dominant simply on account of the patent that it holds?

The patent holder receives monopoly from the state for usage and protection of its intellectual property rights. However, such a monopoly characterises per se solely the position of the patent holder as to its invention, but the ownership of a patent does not automatically grant a monopoly (dominant) position to the patent holder in terms of the competition legislation. See also question 27.

29 To what extent can an application for the grant of a patent expose the patent owner to liability for an antitrust violation?

Basically, application for the grant of a patent does not create any risks with respect to competition and is not likely to expose the patent owner to liability for an antitrust violation. At the same time, the initiative to establish liability for unfair acts related to submission for registration of intellectual property which would deliberately violate completion rules is actively discussed (eg, procrastination of the generic's launch on the market by misuse of intellectual property rights). However, for the time being, there is no enforcement practice in this area.

30 To what extent can the enforcement of a patent expose the patent owner to liability for an antitrust violation?

Enforcement of a patent can expose the patent owner to liability for antitrust violation if the patent is of questionable legal force and its enforcement can have a negative effect on the market or competition on the market of relevant goods or if such enforcement leads to some anti-competitive practices or artificial distortion or restriction of competition on the relevant market. However, provided that the enforcement of patent does not exceed the scope of legitimate rights of a patent owner, such acts shall not be considered a violation of antitrust legislation.

31 To what extent can certain life-cycle management strategies expose the patent owner to liability for an antitrust violation?

A life-cycle management strategy which led or may lead to prevention, elimination or restriction of competition may expose the patent owner to liability for antitrust violation.

32 Do authorised generics raise issues under the competition law?

Authorised generics per se do not raise issues under the competition law. However, once generics are authorised and are marketed, their entry on the market as a rule leads to significant drop of prices for the products on the market concerned. Thus the right owners tend to procrastinate the period of their leading position on the market and move the moment of launch of the generics to the market. Thus, if there are some agreements related to marketing of the generics which affect the price regulation, such agreements are likely to raise competition issues.

33 To what extent can the specific features of the pharmaceutical sector provide an objective justification for conduct that would otherwise infringe antitrust rules?

The general rules of competition legislation are applied to the pharmaceutical sector.

See also question 11.

34 Has there been an increase in antitrust enforcement in the pharmaceutical sector in your jurisdiction? If so, please give an indication of the number of cases opened or pending and their subject matters.

Even though there is no official data on the number of antitrust enforcements in 2012, we assume that the number has increased in comparison with 2011 taking into account the attention of the AMCU on the pharmaceutical sector and the experience of previous years. In 2011 there was a significant increase in antitrust enforcement in the sector compared with the preceding year. Whereas in 2010 the number of enforcements on the pharmaceutical market was approximately 180, in 2011 the number has increased to 280.

As noted above, in 2012 the AMCU has conducted the investigation in the retail and wholesale trade in medicinal products. While there is data available on the number of cases initiated by the AMCU as regards the retail markets, there is no official data in relation to wholesale trade. Such data will be available in 2013.

As a result of the investigation of 138 retail regional markets, the AMCU has initiated 36 proceedings on violation of the competition legislation, among which:

• six cases have concerned abuse of dominance;
• three cases, the anti-competitive actions of local self-government authorities;
• one case, the anti-competitive concerted actions of business entities; and
• nine cases, the dissemination of misleading information.

As to price violations of the competition legislation, the most common violation on regional markets is abuse of dominant position by means of overpricing. Moreover, the following non-price violations have been identified: dissemination of untrue information about low prices, incomplete information about peculiarities of a product's sale and discounts thereto, etc.

At this time, the AMCU is strengthening its position as one of the key regulators of the pharmaceutical market. Therefore, in 2013 a substantial increase in investigations of the pharmaceutical market is expected.

35 Is follow-on litigation a feature of pharmaceutical antitrust enforcement in your jurisdiction? If so, please briefly explain the nature and frequency of such litigation.

While the violation of the Law on Protection of Economic Competition may be established exclusively by a decision of the AMCU, compensation for damages may be enforced in a follow-on litigation procedure. In addition, there is a tendency to appeal the decisions of the AMCU in the courts. However, as of this date, there is no official data on the frequency of such litigation.

Originally published by www.gettingthedealthrough.com/

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.