Is it possible to scale the Moscow experience of offset contracts?

Pharmaceutical companies are ready to increase investments in the development of the industry, if the government guarantees the procurement of at least 30% of manufactured goods. This was discussed at the X Scientific and Practical Conference «Government Regulation and Russian Pharmaceutical Industry — 2018: Continuing the dialogue». Manufacturers consider the lack of guaranteed sales of their products as one of the limiting factors of growth.


Moscow, as the General Director of the ARPM, Viktor Dmitriev has noted, was able to create a model that satisfies all stakeholders. «The city was the first to implement the idea of ​​procurement by concluding contracts with mutual investment obligations».


The drug procurement cycle consists of several stages and takes about 4 months roughly now. Konstantin Kokushkin, a Director of the State Institution «Scientific production center of dermatovenerology and cosmetology of  Moscow Health Department», has noted in his report. «This is an impressive time, especially if it is referred to urgent patients. The essence of the experiment with a long-term contract is that it enables, on the one hand, to expand the geography of production of medicines on the territory of the Russian Federation, to introduce innovative products of the Russian pharmaceutical industry to the market, to stimulate the upgrading of production at the territorial entity of the Russian Federation and, on the other hand, to provide additional workplaces, which shortens the time of the procurement cycle».


In other words, in reality it looks like: the supplier invests in production, creates new workplaces, produces and delivers medicines, the city receives manufacturing on its territory, does not spend time on procurements and for a long time receives medicines for fixed prices, timely providing patients with a stable schedule of supplies.


In 2017 Moscow has already held a similar tender for the right to supply oncologycal medicines. The initial price of the contract was 29 billion Rubles. As a result, a contract of 14 billion Rubles was signed with the obligation to invest at least 3 billion Rubles in a full-cycle pharmaceutical plant. Now, within seven years Moscow will be able to purchase manufactured products at the plant for 2 billion Rubles annually. A few more applications are currently under consideration.


However, the meeting participants expressed skepticism about the possibilities of scaling the Moscow experience all over the country. «Firstly, the country has not regions with such number of population, and, accordingly, they are ready to purchase by these billions of Rubles. Close in a number equal to this number not more than 3-4 regions», — Viktor Dmitriev has noted.  «Secondly, with such offsets, we will unbalance the regional approach in industrial policy even more, when there will be a surplus of plants in the European part, and beyond the Urals, you will not find it in a month of Sundays».

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