Presence of Counterfeit Drugs in Russia Puts Off Potential Investors

Holding back the development of Russia's pharmaceutical industry remains the issue of patent protection. In the past few years, the country has made improvements, as exemplified by the passing of intellectual property protection legislation in June 2002, which was intended to prevent the illegal copying of pharmaceutical data.

However, criticism still continues, especially from the Office of the US Trade Representative (USTR) and PhRMA, the US research-based pharmaceutical trade association, with the former listing Russia as a "watch" country on its 2004 Special 301 Report on Intellectual Property Protection. In its submission, the USTR was particularly critical of existing patent law and counterfeiting.

Counterfeiting has become a sizeable problem in Russia, with the government failing to stem the expansion of the illegal drug sector. The abolition of the Department of Pharmaceutical Inspection as a result of the restructuring of the Ministry of Health in June 2004 does not provide grounds for optimism. Indeed, the new ministry has commented that no pharmaceutical inspection department is envisaged. This development comes as a major blow to industry progress as the department had spearheaded the fight against counterfeit drugs, being responsible for the capture and withdrawal of hundreds of batches of banned and fake drugs.

Such is the problem that local sources suggest the market for counterfeit drugs exceeds that of branded western products.