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. Last Updated: 07/27/2016

Medicine May Face Same Fate as Wines and Spirits

MTWorkers overseeing the production of pills at the Leovit pharmaceutical plant on Ulitsa Vyborgskaya in Moscow.
After the botched implementation of electronic tracking to eradicate bootleg liquor, the authorities are considering using a similar system to combat counterfeit medicines.

Yet, such a crackdown could be extremely dangerous if bungled, say experts in the country's $8 billion pharmaceutical industry. Counterfeit medicines are estimated to account for about 8 percent of the medicines in circulation.

The Federal Health and Social Development Inspection Service "is considering the idea of instituting a system, similar to the Unified State Automated Information System, on Russia's pharmaceuticals market," service chief Ramil Khabriyev said, Gazeta reported late last week.

The troubled implementation of the Unified State Automated Information System, or EGAIS, which was created to track every alcoholic product sold in the country, since July 1 has emptied many store shelves of imported alcoholic drinks, and threatens to create a shortage of products that use alcohol, such as cosmetics.

Industry experts warned that a similar shortage of prescription medicines could threaten countless lives. Instead, tougher penalties for counterfeiters and better enforcement of the law would be a more effective measure of combating fake medicines, they said.

Botched reforms have been responsible for at least two instances of dangerous shortages of prescription drugs in recent years. In January 2005, the poorly implemented cash-for-benefits reform left many Russians without vital prescription drugs for several weeks, due to supply holdups. In 1999 a change in the system for prescribing and distributing insulin, coupled with an effort to boost domestic production of the drug, affected millions of diabetes sufferers and left supplies dangerously low. Shortages lasted for months.

Khabriyev said EGAIS "would not be copied exactly."

On Friday, Sergei Osipov, a spokesman for the health service, declined to elaborate on Khabriyev's comments. The service would only answer questions in writing, he said.

State Duma Speaker Boris Gryzlov last month stressed the need to "ban the flow of medicines into retail without using technologies that protect medicines from counterfeiting," RIA-Novosti reported. Speaking during a meeting of United Russia Duma deputies and President Vladimir Putin, Gryzlov said legislators would clean up the pharmaceuticals market in the fall.

But counterfeit drugs should not be approached the same way as bootleg liquor, market watchers warned.

A system like EGAIS could have a "catastrophic effect" if applied to the pharmaceuticals market, said Vladimir Senatorov of Remedium, an industry consultant.

While alcohol shortages are a drain on the industry and a nuisance for consumers, shortages of vital medicines are potentially deadly.

Rooting out counterfeit medicines is "absolutely not a matter of technology,"said Veniamin Monblit, research director at Comcon, a research company.

"The equipment for manufacturing medicine is expensive and complex. It cannot be installed at a dacha or in some shed," Monblit said, referring to bootleg alcohol.

Counterfeit medicines are sometimes produced at the same plants that make legal medicines. "It's a matter of catching them and closing them down," Monblit said.

The inspection service is planning to complete large-scale checks of warehouses and pharmacies by November, Khabriyev said.

About 70 percent of uncovered counterfeit drugs are knock-offs of foreign medicines, Interfax reported, citing the inspection service's figures. Roughly 8 percent of medicines circulating in the country are counterfeit, according to consultancy Pharmexpert.

Khabriyev said the production of fake medicines would be considered a "heinous breach of licensing rules" by pharmacies and warehouses and would lead to their licenses being revoked.

"It's a good first step toward what needs to be done," said Sergei Boboshko, executive director of the Association of International Pharmaceutical Manufacturers. "Right now, counterfeiters get off with an administrative fine ... that is, if they are found out."

Making or selling counterfeit medicines is not currently considered a criminal offense under the law.

"The only sure way [to fight them] is with strong legislation and effective enforcement. Without that, we are whistling in the wind," Boboshko said.