Russian Import Duties On Foreign Drugs

Russian drug industry specialists who oppose higher import duties onforeign drugs as a way of protecting domestic producers have outlined their case at a Moscow workshop. They said a 10% rise in duties leads inevitably to a virtual doubling of retail prices of the drugs affected, and so losses to the state drugs budget are that much greater.

Two more disadvantages in higher duties were cited. One is that doctors, conscious of the high cost, prescribe cheaper but often less effective drugs. The other is that in Russia any such move immediately activates the black market. The conference appeared generally agreed that the measure brought no real benefits and in no way improved the position for domestic drug firms.

The workshop noted that the Russian drug market is split into two hermetically-sealed sectors, one where drugs are paid for by the state and the other where they are paid for by patients. To streamline the state sector, it was argued that the problem of payment with the drugs order must be solved, because a one-month delay in payment by the state usually generates a 15%-20% rise in drug prices. It was argued that stability and order in this sector could only be achieved through a switch from the "present chaos of direct purchases" by health care organizations to a system of competition for the right to deliver state drug orders for those drugs listed for standard treatments and under proper tariff agreement with suppliers.