Clinical Trials Russia

©2006 RM Consulting

THE HEALTHCARE,

PHARMACEUTICAL & CLINICAL TRIAL ENVIRONMENT IN RUSSIA

THE HEALTHCARE, PHARMACEUTICAL AND CLINICAL TRIAL ENVIRONMENT IN RUSSIA

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CONTENTS 1.0 Politics and Economics .......................................................................................................... 5

1.01 Background ....................................................................................................................... 5

1.02 The Economic Situation ................................................................................................... 6

1.03 Risks................................................................................................................................... 9

1.03.1 Political....................................................................................................................... 10

1.03.2 Security ...................................................................................................................... 11

1.03.3 Legal .......................................................................................................................... 11

1.03.31 Intellectual Property Rights.................................................................................. 11

1.03.4 Foreign Direct Investments........................................................................................ 13

1.04 Demographics ................................................................................................................. 13

1.05 Infrastructure ................................................................................................................... 17

1.05.1 Transportation............................................................................................................ 17

1.05.2 Communication .......................................................................................................... 18

2.0 Pharmaceutical Market ......................................................................................................... 19

2.01 History .............................................................................................................................. 19

2.02 Pharmaceutical Expenditures........................................................................................ 21

2.03 VAT on Medicines ........................................................................................................... 22

2.04 Market Segmentation...................................................................................................... 23

2.05 Market Drivers & Restrainers......................................................................................... 25

2.06 Pharmaceutical Regulation ............................................................................................ 26

2.07 Drug Registration ............................................................................................................ 27

2.07.1 Documents Requirements for Registration of Foreign Drugs.................................... 28

2.08 Certification Requirements ............................................................................................ 30

2.09 Pharmaceutical Promotion and Advertising ................................................................ 31

2.10 GMP .................................................................................................................................. 31

3.0 Healthcare in Russia ............................................................................................................. 33

3.01 Healthcare Policy ............................................................................................................ 33

3.02 Healthcare Spending....................................................................................................... 35

3.03 Structure of the Healthcare System .............................................................................. 37

3.03.1 Provision of Primary Care .......................................................................................... 39


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3.03.11 Health Posts ........................................................................................................ 39

3.03.12 Health Centres..................................................................................................... 39

3.03.13 Polyclinics ............................................................................................................ 39

3.03.2 Hospitals .................................................................................................................... 40

3.03.3 Health Institutions ...................................................................................................... 40

3.03.4 Sanatoriums and Health Resorts............................................................................... 40

3.04 Health of the Nation ........................................................................................................ 41

3.04.1 Population Demographics.......................................................................................... 41

3.04.2 Life Expectancy and Causes of Death....................................................................... 42

3.05 Disease Prevalence......................................................................................................... 43

3.05.01 Cardiovascular Disease........................................................................................... 44

3.05.02 Cancer ..................................................................................................................... 45

3.05.03 Tuberculosis............................................................................................................. 46

3.05.04 Diabetes................................................................................................................... 46

3.05.05 Drug Addiction and Alcoholism................................................................................ 47

3.04.06 Mental Disorders...................................................................................................... 48

3.04.07 Sexually Transmitted Disease (STD)....................................................................... 48

3.04.08 HIV ........................................................................................................................... 49

3.04.09 Dermatologic Diseases............................................................................................ 50

3.04.10 Injuries, Poisoning and Other Accidents.................................................................. 50

3.04.11 Hepatitis ................................................................................................................... 50

4.0 Clinical Trials in Perspective................................................................................................ 52

4.01 History of Clinical Trials in Russia ................................................................................ 52

4.02 Growth in Trials ............................................................................................................... 54

4.03 The Russian CRO Industry............................................................................................. 55

4.04 Why Conduct Clinical Trials in Russia? ....................................................................... 56

4.04.01 Benefits of the Post-Soviet System ......................................................................... 57

4.04.02 Access to Investigators ............................................................................................ 58

4.04.03 Cost Saving Opportunities ....................................................................................... 59

4.04.04 Access to Patients ................................................................................................... 59

4.04.05 Fast Recruitment Rates ........................................................................................... 60

4.04.06 Patient Compliance.................................................................................................. 61

4.04.07 Quality of Work ........................................................................................................ 61

5.0 Clinical Trial Issues ............................................................................................................... 63

5.01 Study Costs ..................................................................................................................... 63

5.01.1 Investigator’s Fees..................................................................................................... 63

5.01.2 Equipment Expenses................................................................................................. 64


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5.01.3 Monitoring Expenses ................................................................................................. 64

5.02 Language ......................................................................................................................... 64

5.03 Logistics........................................................................................................................... 65

5.03.1 Travel ......................................................................................................................... 65

5.03.2 Mail and Courier Services.......................................................................................... 66

5.03.3 Communication .......................................................................................................... 67

5.04 Background Therapy ...................................................................................................... 67

5.05 Cultural Differences ........................................................................................................ 68

5.06 Recruitment Issues ......................................................................................................... 68

5.07 Logistics and Local Support.......................................................................................... 69

5.08 Monitoring........................................................................................................................ 69

5.09 Data Management............................................................................................................ 70

6.0 Study Set-Up .......................................................................................................................... 71

6.1 Regulatory Compliance - the Federal Drug Law ............................................................ 71

6.2 Selection of a CRO and External Vendors...................................................................... 72

6.3 Site Identification/ Investigator Selection....................................................................... 73

6.31 Medical Institutions ....................................................................................................... 75

6.4 Local IECs .......................................................................................................................... 76

6.5 Protocol and CRF Design................................................................................................ 76

6.51 Protocol ......................................................................................................................... 76

6.52 CRF............................................................................................................................... 77

6.6 Legal Issues, Insurance and Contracts .......................................................................... 77

6.61 Patient Information and Informed Consent Form ......................................................... 78

6.62 List of Documents to be Submitted to Local IRB/IEC or Regulatory Authority ............. 78

6.63 Local Insurance Policy .................................................................................................. 79

6.64Contracts with Investigators and Investigative Sites ..................................................... 80

6.7 Study Approval.................................................................................................................. 80

6.8 Patient Recruitment .......................................................................................................... 81

6.9 Site Training....................................................................................................................... 82

7.0 Importing Clinical Trial Materials ......................................................................................... 83

7.10 Importing the Study Drug............................................................................................... 83

7.10.1 A Centralised Approach............................................................................................. 84

7.20 Importing Other Materials .............................................................................................. 85

7.20.1 Study Documents....................................................................................................... 85

7.20.2 Devices ...................................................................................................................... 85

7.20.3 Laboratory Kits........................................................................................................... 85

7.20.4 Packing Materials....................................................................................................... 85


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7.30 Exportation of Biological Media .................................................................................... 86

7.40 Export of Other Clinical Trial Materials......................................................................... 86

7.50 Summary .......................................................................................................................... 87


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1.0 Politics and Economics

1.01 Background

By the 1980s, communism in the USSR was not working. In 1985, Mikhail Gorbachev came to

power and introduced many reforms in an attempt to modernize the economy and make the

Communist Party more democratic. These reforms ultimately led to the break up of the USSR

and the end of the one-party Communist rule.

Figure 1.01: Changes in the Macro-Environment

BP announces $6.75 billion investment for 50% of TNK.

BP at “war”; calling foul.FDI

Personal 13%; Corporate 24% and major simplification of tax codes.

Personal 30%; Corporate 35% and dozens of hidden taxes.

Taxes

Policy engaged to reduce corruption through restructuring, corporate governance and legal reform.

Pervasive. Corruption

Putin’s priority. Progress will be gradual but significant improvements have been made already.

Major abuses the norm.Corporate

Governance

More consistent, stable and reliable.Unstable, frequent changes.Policy

Continuity

New managers are installed and motivated to carry out real restructuring and value creation for shareholders.

Asset shifts with very little attention to value creation. Used to enrich a few at the expense of economic development.

Industry Restructuring

Smaller group with increasing economic power but decreasing power and influence in politics. Increasing importance of the new entrepreneurial class.

Small group with enormous economic power and political influence. Dominant in all important sectors.

Oligarchs

Centralisation and consolidation of power under Putin. Regional governors brought into check. Parliament aligned to Presidential Administration policies and priorities.

Continuing strong influence of the Communists in the Duma. Major conflicts within parliament and the Regions.Focus on (conflicting) personal agendas.

Government

Partner with the West in business, in supplies of oil and in the fight against terrorism.

Risky emerging market. Serious concerns about law, ownership and commercial contracts.

International Perception of

Russia

Improved relations, especially with the US but also with Western Europe and Japan. Discussions in place on closer relations with NATO and membership of the WTO.

Uncertain ‘engagement’ with US

and NATO, following Cold War.World Status

Vladimir Putin: fit, consistent, pragmatic, surrounded by technocrats from young professional elite.

Boris Yeltsin: ill, erratic, surrounded by corrupt oligarchs.

President

20031997

BP announces $6.75 billion investment for 50% of TNK.

BP at “war”; calling foul.FDI

Personal 13%; Corporate 24% and major simplification of tax codes.

Personal 30%; Corporate 35% and dozens of hidden taxes.

Taxes

Policy engaged to reduce corruption through restructuring, corporate governance and legal reform.

Pervasive. Corruption

Putin’s priority. Progress will be gradual but significant improvements have been made already.

Major abuses the norm.Corporate

Governance

More consistent, stable and reliable.Unstable, frequent changes.Policy

Continuity

New managers are installed and motivated to carry out real restructuring and value creation for shareholders.

Asset shifts with very little attention to value creation. Used to enrich a few at the expense of economic development.

Industry Restructuring

Smaller group with increasing economic power but decreasing power and influence in politics. Increasing importance of the new entrepreneurial class.

Small group with enormous economic power and political influence. Dominant in all important sectors.

Oligarchs

Centralisation and consolidation of power under Putin. Regional governors brought into check. Parliament aligned to Presidential Administration policies and priorities.

Continuing strong influence of the Communists in the Duma. Major conflicts within parliament and the Regions.Focus on (conflicting) personal agendas.

Government

Partner with the West in business, in supplies of oil and in the fight against terrorism.

Risky emerging market. Serious concerns about law, ownership and commercial contracts.

International Perception of

Russia

Improved relations, especially with the US but also with Western Europe and Japan. Discussions in place on closer relations with NATO and membership of the WTO.

Uncertain ‘engagement’ with US

and NATO, following Cold War.World Status

Vladimir Putin: fit, consistent, pragmatic, surrounded by technocrats from young professional elite.

Boris Yeltsin: ill, erratic, surrounded by corrupt oligarchs.

President

20031997


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With Boris Yeltsin came democracy. Many in the West saw him as a democrat and reformer. He

helped bring down the communist system; but, his biggest mistake, both for Russia and for

himself, was his failure to establish strong political institutions enforcing the economic and

financial stability of the country.

In August 1998 the Russian Financial crisis occurred causing a major downturn in worldwide

financial markets as the rouble was devalued. After this event, foreign investments in the country

were virtually non-existent negatively impacting not only on the economy but also on the

reputation of Russia itself.

Following the election of Vladimir Putin many reforms to the legal system and political

infrastructure have been implemented. The confidence of foreign investors has returned and the

overall picture has changed considerably since the 1980s - Russia has become more stable

politically, economically, socially and commercially and is now one of the fastest growing

economies in the world.

1.02 The Economic Situation

In recent years positive economic growth in Russia has attracted much attention form

international markets. Many multinational giants have expanded their operations into Russia

covering industries such as: energy and power, manufacturing, retail, healthcare and many

others.

Figure 1.02.1

Key Economic Performance Indicators

-5

0

5

10

15

20

25

30

35

40

45

2001 2002 2003 2004 2005p 2006e 2007e 2008ePers

enta

ge (unle

ss m

entioned)

GDP Growth % Consumer Spending % Change

Imports (G+S) % Change Exports (G+S) % Change

Inf lation (CPI) % Population Growth %

Local Currency to US$ Local Currency to Euro

p – preliminary results, e – estimates

Source: World Market Analysis: Global Insights – Russia, The Economist – Country Profile, Russia


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The gradual slow down in GDP growth is a natural result of the economy reaching maturity. GDP

per capita; however, shows no signs of slower growth suggesting a further increase in the

standards of living in Russia.

Figure 1.02.2

Source: DataStream

Slowing growth in imports is a direct result of current government policy and reform - the import

substitution program aims to start substituting imports with domestic production thus supporting

the domestic manufacturers and strengthening the economy. However, it must be noted that

growth is still positive thus encouraging foreign investments into the country.

Figure 1.02.3

Source: DataStream

In 2005, real disposable income was on the rise as were corporate profits fuelling an increase in

investments in fixed capital.


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Figure 1.02.4

Source: Bank of Russia, January 2006

As was the case in 2004, consumer spending grew faster than household income in 2005 while

the propensity for consumption increased and the share of household spending on savings

declined. Although, there are no clear signs of a deterioration in consumer spending, slower

growth is predicted - real consumer spending grew by 10.7% in 2005 (year on year) compared to

11.8% in 2004.

The increase in consumer spending was accompanied by rapid growth in bank lending to

individuals. The share of household money income spent on the purchase of goods and services

rose by 1.1 percentage points in 2005 (year on year) to 70.9%. 1

Figure 1.02.5


1 The Bank of Russia, January 2006 outlook


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At the same time consumer prices grew by 10.9% in 2005 compared to 11.7% in 2004, thus

supporting rising consumer confidence and affordability.

Figure 1.02.6


While the pace of economic growth has been enviable over the past several years, the signs are

now clear that record-high world market oil prices are not enough to maintain this momentum. Oil

prices have boosted export earnings, but this has been accompanied by an upward pressure on

the currency and domestic prices. With a dual focus on the exchange rate and inflation, the

Central Bank has been unable to rein in inflation effectively.

The enormous long-term potential for Russia, based on its abundant natural resources and

human capital, is not in doubt; but unlocking this potential will require dedicated, uninterrupted

structural economic reforms and astute macro-economic management.

1.03 Risks

The principal risks to a modestly optimistic medium-term forecast for Russian economic growth

are varied. They include an extended period of sharply lower world-market oil prices, which would

threaten investment growth as well as the country's fiscal situation.

Additional major concerns include the failure of the Russian government and Parliament to

manage key unfinished elements of structural reform effectively, or even an attempt to roll back

some elements of privatization in the interest of increasing the direct influence of the State over

strategic sectors of the economy.


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1.03.1 Political

During his first term, Putin worked hard at bolstering his authority and that of his presidential

administration in engineering a system that is regarded as a “managed democracy.” 2 The

strengthening of authoritarian tendencies has been accompanied by reinforcement in the

apparatus of repression. This includes promoting the role of special services, a general attack on

democratic and civil rights, and ever-more aggressive policy in favour of the wealthy. Three years

of Putin’s rule have achieved much in this direction:

− 13% income tax was introduced;

− aggregate social benefits tax was reduced by 5%;

− pension reform was initiated (aiming to turn all pensions over to privately held investment

funds);

− the diminution of already threadbare social programs and benefits continues;

− the long-planned reform of energy systems and of the provision of communal services and

utilities is beginning to be put into action.

Figure 1.03.1: Russian Political System

The Presidency

(Administration)

Higher Courts

(Judiciary)

Federal Assembly

(Legislature)

Prime Minister

Council of Ministers(Government)

Federal Council

State Duma

Supreme Arbitration Court

Constitutional Court

Supreme Court

The Presidency

(Administration)

Higher Courts

(Judiciary)

Federal Assembly

(Legislature)

Prime Minister

Council of Ministers(Government)

Federal Council

State Duma

Supreme Arbitration Court

Constitutional Court

Supreme Court

The State Duma is the lower house of the Russian parliament with United Russia (Edinaya

Rossiya) being the dominant party. The continued predominance of United Russia in the State

Duma and the positive public support of President Putin and his reforms gives the government

2 Managed democracy’ is a system, under which those problems that it is possible to solve democratically

are solved by democratic means. And those problems, not susceptible to democratic solutions are solved by authoritarian means. The decision is made by the President and administration. (World Socialist Web Site, V. Volkov, “Russian elections”, Dec 2003).


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the strength that it needs to bring stability to the country in the short-term, (until the 2008

Presidential elections at least). High oil prices have allowed the government to balance the

budget, but this has masked the fact that liberal economic reforms are needed to create long-term

stability. Nevertheless, despite the apparent dominance of Putin and his genuine desire to

implement these reforms, the inherent conservatism of the United Russia party has the potential

to become an obstacle to reform in the medium-term.

There is concern over whether or not the Duma elections in 2007 will allow liberal and reformist

politicians fair representation or sufficient power to act on their agenda. The election of a new

president in March 2008 will present the biggest opportunity for real change.

Government bureaucracy is at the moment one of the main issues for foreign investors as it

creates unofficial inter-regional trade barriers and the power of the regional authorities may get in

the way of business development. However, this situation is changing in a positive direction as

regional governors will now be appointed by the President instead of being elected as before.

1.03.2 Security

Organised crime is one of the main drawbacks of doing business in Russia. The post-1991 period

has witnessed a real explosion in organised criminal and semi-legal activity. In line with economic

development and growth there is still concern that around 45% of consumer goods and services

fall into the shadow economy. The problem is worsened by widespread corruption in the police

force. Today control over this activity is tightening as the government is constantly working

towards the elimination of organised crime.

1.03.3 Legal

There has been rapid legislative reform since the election of President Vladimir Putin and a more

compliant parliament, with overhauls of land, labour, tax and company law bringing much-needed

changes, at least on paper. Better intellectual property legislation was passed in 2002 as Russia

prepared its bid to join the WTO.

1.03.31 Intellectual Property Rights

Russia’s laws on the protection of intellectual property protection are well drafted and meet many

international standards. Russia also belongs to most of the international conventions on patents,

trademarks, copyrights and other intellectual property. Nevertheless, Russia’s record on the

actual protection of intellectual property has been inadequate at best in the past decade, and the


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country is on the 301 watch list for IPR infringements. Infringement of intellectual property rights

is a nationwide problem but the situation is especially poor in the Russian Far East.

The top 3 industry sectors to be affected by counterfeiting include: the music business (~ 75%),

video products (~ 85%), and computer software (~ 97%); nevertheless, practically all medicines

of commercial interest regardless of their brand names have been targeted at some point. It

should be mentioned that Russian pharmaceutical companies produce mostly low-cost/high

volume generic drugs and are therefore generally not targets for counterfeiters – it is the

imported, innovative product market (around 70% of market share in dollar terms), that is

affected. The Coalition for Intellectual Property Rights (TSIPR) estimates that counterfeit drugs

account for about 15% of total pharmaceutical market resulting in large amounts of lost profits for

legal companies. According to official reports, 63 counterfeit medicines were discovered in 2004.

Authorities have taken steps to strengthen relevant legislation, to allocate law enforcement

resources for combating IPR crime, and to conduct raids of pirate plants. In the pharmaceutical

industry - where counterfeit drugs can seriously harm their users - the government has worked

successfully with companies to counter this grave danger to public health.

In the event of an infringement of intellectual property rights, the IPR owners can apply to several

different agencies to enforce the protection of their rights. To stop illegal usage of a trademark, a

company should contact the Regional Department of the Ministry of Antimonopoly Policy and

Business Support (MAPBS). The MAPBS will send a written order instructing the infringing party

to stop illegal usage of a trademark, and may also impose a penalty. To reimburse lost profit and

restore the company’s reputation through the mass media, a company should apply to the local

Commercial (in Russia called Arbitration) Court.

In addition, Russian Customs can help trademark and brand name owners to combat counterfeit

goods coming into Russia from other countries. The trademark/brand name owner should file an

application with the State Customs Committee requesting assistance in protecting the owner’s

intellectual property rights. The applicant should also provide such documentation as

identification data for the goods to be protected, the main entrance points of the goods into

Russia, and a list of authorised dealers and distributors.

It is recommended that a wider description of the invention or product be used, omitting

insignificant details in the patent formula when patenting a product or invention in the Russian

Patent Department. It is also recommended that companies consult with patent agencies before

filing a patent application. If a company intends to patent a process, it should also patent the end

product of this process.


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1.03.4 Foreign Direct Investments

While the vast majority of FDI in Russia remains in the natural resource sector, there has been

much activity across all sectors; notably in the retail sector, the retail banking sector and in the

food and beverage sector which is set to expand from Moscow and St. Petersburg and into

Russia's regional centres.

A study conducted by the Association of International Pharmaceuticals Manufacturers (AIPM) and

PricewaterhouseCoopers released in August 2005, suggested that the more progressive reforms

in conjunction with improved economic, political and industrial development in Russia, is

attracting more FDI into the country. According to this study, over 50% of 23 major foreign

pharmaceutical companies (Pfizer, Sanofi-Aventis, Novartis, GlaxoSmithKline, to name a few)

operating through representative offices in Russia are planning to set up local production within

the next five years. Specifically, about 33 percent of these companies plan to bring their local

production subsidiaries on-stream in the next two-three years, while 19 percent plan to do so

within the next five years.

While the government continues to implement reforms and to encourage greater inflows of FDI,

fundamental outstanding issues continue to plague investment confidence. Highest on the list of

complaints by foreign businessmen is the pervasive influence of government bureaucracy in all

areas of business operations, as well as unofficial barriers imposed by regional authorities and

the arbitrary application of the rule of law. Bureaucratic barriers include:

− unexpected changes to tax laws;

− customs authorities;

− tax authorities;

− unexpected changes in trade policy;

− harassment by the authorities;

− inter-regional trade barriers.

1.04 Demographics

In 2005, the population in Russia was estimated at around 145 million. Roughly 75% of people

live in the European part of Russia (west of the Urals); in addition, most of the industrial cities with

over 1 million inhabitants are also located in the European part. This is mainly due to the high

level of trade and industry in the region leading to better work prospects and generally better

living conditions.


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The Russian population is in decline due to natural causes as well as migration form former

USSR; however, an influx from the Baltic countries has helped Russia to compensate for

population losses - for the period of 1989 - 2004, 5.7 million people left the country while around

10 million migrated into Russia.

Fig 1.04.1: Major Russian Cities

Fig 1.04.2: Summary of the 10 Major Russian Cities

Moscow

Population > 10

million

The largest city in Russia.

The Russian capital - its political, historical, architectural, scientific and business

centre.

Very good transportation and telecommunication infrastructure.

All global companies from all industries are represented here. Location of all

major research institutions and scientific centres.

High industrial and economic development.

www.mosreg.ru

St. Petersburg

Population ~ 5.1

million

The second largest city and the largest seaport in Russia.

A major rail junction and industrial, cultural and scientific centre.

Most global companies in most industries are represented here.

Very good healthcare infrastructure.


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Flight time to Moscow: 1h 30 mins

http://www.spb.ru/eng/

Nizhny Novgorod

Population > 1.5

million

A large Port on the Volga River with a developed transportation and

telecommunication infrastructure.

There are several affiliates of the Russian Academy of Science, and about 100

scientific research laboratories.

Well organised healthcare system.


Flight time to Moscow: around 1h

www.government.nnov.ru

Novosibirsk

Population > 1.4

million

A centre of scientific and technological progress.

An entire scientific region inside the city comprised of universities, large scientific

institutions and laboratories.

Good transportation and telecommunication infrastructure.

High industrial and economic infrastructure


www.adm.nso.ru

Yekaterinburg

Population ~ 1.3

million

The main industrial and cultural centre of the Ural region.

A highly industrial and resource rich city.

Healthcare system well structured and one of the most advanced in the country.

Good transportation and telecommunication systems.

High level of FDI. High industrial and economic development.

Flight time to Moscow: 2h 45 min

http://www.ekburg.ru/

Samara

Population > 1.2

million

A dynamic, industrial city with a healthy growing economy and relatively high

consumer income levels.

One of the main ports on the Volga river. Developed rail and air transport

systems.


Lack of research institutions and laboratories.


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10 pharmaceutical manufacturers.



www.adm.samara.ru

Volgograd

Population > 1

million

A significant Volga river port.

Well developed transportation and telecommunication sectors.

Well organised healthcare supported by local government.

A number of research institutions.

Good industrial and economic development.


www.volganet.ru

Chelyabinsk

Population > 1

million

One of the major industrial centres in Russia.

Developed transportation and telecommunication sectors.


Scientific research mainly done by the State Medical Academy.

Good industrial and economic development.


www.ural-chel.ru

Rostov – on –

Don

Population > 1

million

A city of commercial and cultural importance being located on the coast of the

Don river.

A major passenger-oriented and industrial shipping port.

Located in the heart of trade routes connecting 3 seas (Black, Azov and

Caspian).

The third largest city in imports/ exports turnover with good transportation and

telecommunication infrastructure.

High economic and industrial development


www.rostov-gorod.ru

Irkutsk

Population ~ 1

million

Industrial and scientific city in the heart of Siberia.

Well developed telecommunication structure and good transportation system.


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Local government supports and develops the healthcare system.

A number of scientific research centres.

Good industrial and economic infrastructure.


http://www1.irkutsk.ru/

1.05 Infrastructure

1.05.1 Transportation

Although Russia’s infrastructure is vast, the lack of investment in recent decades has had a

negative effect on its quality. The majority of Russian ports, airports, railways and power stations

are around 45-50 years old. Nevertheless, the transportation network has undergone significant

changes in the past ten years, transitioning from a centrally managed system with lack of private

initiative to a Western-type model. The transformation has led to a rapid increase in quality and a

more diversified infrastructure and service. Money is being spent on improving the quality of the

road network, while ports and railways are being reconstructed to attract more business and

investments.

Overall, the transportation system in Russia is good regardless of whether you are travelling

around the country or just within a city. The main problems are delays and relatively old technical

support systems.

The best and fastest way to travel around the country is by air - all cities in Russia and almost

every town can be reached by air. Air travel is most popular for long distances (for example to

Siberia or Asian Russia). A 2 hour flight would typically cost around 3000-5000 roubles (US$ 103-

173 economy class) depending on the airline; however, there are a variety of low-cost carriers

available that make air travel more affordable to the wider population.

The car is the second best mode of transport but traffic conditions can be notoriously bad. Trains

tend to be cheaper than air travel (depending on the “class” of travel) and relatively reliable;

however, the conditions and service are not perfect for long-distances. Moreover, trains take

much longer than air travel - for example, the flight from St. Petersburg to Moscow is just over 1

hour, whereas the fast train takes around 6-7 hours; the flight to Novosibirsk is around 3.5 hours

while the train takes 48 hours and will cost between US$400 (1st class) and US$70 (3

rd class).

Inner city travel is generally pretty good barring a few delays.


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1.05.2 Communication

The country’s telecommunication infrastructure is patchy in terms of both quality and

geographical coverage.

The IT market has grown by an average 30% per annum over the last few years, but is generally

confined to the main urban centres with Moscow making up as much as one-quarter of users, and

the citizens of St Petersburg coming in next.

Fixed line and mobile networks are present in every city speeding up business processes;

however, fax transmissions can be unreliable. Although long-distance and international calls are

quite expensive by Russian standards, there are prepaid calling cards that can help to make

these calls more affordable.

Internet providers exist in every Russian city. In the smaller cities, the internet is mostly dial-up

which is not very reliable; but in more developed areas, one can good quality dial-up and broad

band services. In the major cities, new wireless internet technology is slowly coming onto the

market.

Due to an undersupply and scarcity of electricity resources, as well as under-financing of this

sector by local government, electrical supply can be a problem. Consequently, in some areas the

electricity is turned off for a period of time in the day (“veer”); although, this is not common in the

major cities.

It should be noted that in the 10 aforementioned major cities the communications infrastructure is

very well developed and one would not experience any constraints in sending, receiving or

shipping parcels, in mobility, or in communication.

All major world couriers are present in Russia: DHL, TNT, Fed-Ex; providing a fast and reliable

way for companies to import goods and materials into the country.

DHL offices are located in almost every town and city; whereas Fed-Ex and TNT have more

limited coverage. Moreover, the Russian mail system can be used although it is generally not as

reliable as the courier system.


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2.0 Pharmaceutical Market

2.01 History

Prior to the financial crisis of 1998, the pharmaceutical market was viewed as being relatively

successful in Russian terms; however, by Western standards it was considered underdeveloped.

By 1997, consumption of pharmaceuticals had overtaken pre-reform levels and the market

reached $3.1billion in terms of ex-manufacturers prices.

The 1998 economic crash made a huge impact on the market. Consumer spending shrivelled,

along with federal and regional funding for healthcare, and the value of the market tumbled to an

estimated $2.4billion. Imports accounted for $1.3billion (55%) and Russian production was

$1.1bn (45%). Total imports during the first six months of 1999 amounted to $0.33billion,

equivalent to about 40% of the 1998 level for the corresponding period.

Fig: 2.01.1: Russian Pharmaceutical Sales

Source: US Census Bureau; Economist Intelligence Unit

Post-crisis, the Russian pharmaceutical market has witnessed a steady and fast recovery,

exhibiting 10 - 20% annual growth and reaching $7.4billion in retail price terms in 2005 – and it is

still growing. Growth can be attributed to both a rise in real production volume and an increase in

buying power. Stabilisation of the exchange rate against inflation means that people have more

cash available to spend on more effective and expensive drugs, which in turn has led to the

substitution of Russian produced medicines by foreign ones. Thus, by 2004 the market share of

imported pharmaceuticals reached 60% of the total market in dollar value.

Nowadays, the Russian Pharmaceutical market consists of two main segments: the retail

pharmacy sector (80%) where over 40% of pharmacies are privately owned and provide an

2330

1624

1713

2039

2297

3124

0 500 1000 1500 2000 2500 3000 3500

1998a

1999a

2000a

2001a

2002a

2003a

US$ million


20

excellent outlet for expensive, imported products; and the hospital segment (20%) which mainly

focuses on relatively inexpensive generic drugs.

Fig: 2.01.2: Russian Pharmaceutical Market

Source: Brunswick UBS Warburg, Boston Consulting Group, LCP

However, it must be noted that cheap, domestically produced drugs continue to dominate the

market in terms of volume of sales. This is due to the fact the majority of healthcare expenditure

is financed on an “out-of-the-pocket” basis and that the income of an average citizen (excluding

Moscow and St. Petersburg) precludes them from buying expensive imported pharmaceuticals.

Fig: 2.01.3: Market Share of Imported vs. Domestic Drugs

25 25 24

71 71 71

75 75

29 29 29

76

June July August June July August

Domestic Imported

Source: Retail Audit of Russian Pharmaceutical Market by DSM Group, 2005

0

2

4

6

8

2000 2001 2002 2003 2004 2005e

$bn

Ex-works prices Wholesale prices Retail prices Linear (Retail prices)

Share, $ Share, packs


21

Fig: 2.02.1: Drug consumption per capita (August ’00 – August ’01)

Source: World Health Organization: * GDP for Russia is estimated for 2001; ** Including hospitals

2.02 Pharmaceutical Expenditures

Russians spend very little on pharmaceuticals compared to Western populations and Central

Europeans - almost 5 times less compared to Poland and 47 less than in the US. In spite of this

fact, the per capita consumption of pharmaceuticals and healthcare products in Russia is

expected to increase in the long-term.

Fig: 2.02.2: Reimbursed vs. Privately Funded Pharmaceuticals

Source: Russian Ministry of Health

452

381

223

184 177160 152 138 127

8967 53

26 26

0

50

100

150

200

250

300

350

400

450

500

Unite

d Sta

tes

Japa

n**

France

Canad

a

Ger

man

yIta

ly

Unite

d Kin

gdom

Spai

n

Austral

ia/N

ew Z

eala

nd

Arg

entina

Poland

Mex

ico

Bra

zil

Russia*

$ p

er

cap

ita

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1995

1996

1997

1998

1999

2000

2001

2002E

2003E

2004E

2005E

2006E

Privately purchased drugs(Pharmacy)

Reimbursed drugs(Pharmacy)

Hospitals


22

2.03 VAT on Medicines

The levying of VAT on pharmaceuticals was seen as an important source of revenues in the

Russian government's efforts to render the major changes in Russia's new tax regime revenue

neutral. The compromise amendment to the Tax Code, passed by the Duma in December 2001,

introduced a reduced 10 percent rate on drugs (provided that the drug in question has a valid

registration certificate).

The introduction of the VAT was more or less conducted according to the original plan. The

Customs Committee issued instructions to all customs posts clarifying that the 10 percent VAT

rate should be levied on pharmaceuticals as of January 1, 2002.

Application of the new reduced rate of VAT on pharmaceuticals became the source of much

misunderstanding at customs posts. Some customs inspectors began to request registration

certificates for the drugs, issued by the MoH. Previously, import permits for the pharmaceuticals

were the only documents necessary for importation. In cases, where such registration certificates

are not provided, customs officials are charging a 20 percent VAT. This has caused problems for

pharmaceutical products undergoing periodic re-registration, since in the absence of a valid

registration certificate, they are subject to the 20 VAT percent rate.

The customs authorities' actions contradict the MoH position, which holds that an import license

and a letter indicating that a product is undergoing re-registration should be sufficient to qualify for

the reduced 10 percent rate. Such lack of consistency or coordination between the two

government agencies is causing substantial damage to importers.

Not surprisingly, the levying of VAT on pharmaceuticals is an unpopular measure among

consumers and manufacturers. Russian consumers have little disposable income, and have

difficulty meeting the increased price levels. Consequently the pharmaceutical companies will be

obliged to absorb some of the additional costs of VAT in order to maintain the market. Some

analysts worry that VAT on pharmaceuticals will harm Russia's numerous poor and pensioners,

many of whom will be forced to sacrifice on other basic necessities to buy medicines.

Russia is not unique in having a VAT on pharmaceuticals. Many Western countries levy 15-17

percent VAT on all goods and services, including pharmaceuticals. Such a policy has few

opponents in the West since medical insurance often covers the cost of prescribed drugs. Russia

does not have a developed system of government reimbursement for drugs, and the majority of

patients pay the full price for prescribed drugs. Those eligible for reimbursement include the

disabled, the war veterans, Chernobyl liquidators, and families with many children, people with

HIV, and cancer and diabetes patients.

Many pharmaceutical industry analysts believe that VAT on medicines is stimulating another

problem – because of the high price of all medicines, particularly imported ones, making copycat


23

drugs and selling them in Russia has become a highly profitable business for counterfeiters who

have already captured around 15% of the total market share.

2.04 Market Segmentation

Market segmentation in Russia is considerably different to Western Europe, with branded

generics the strongest growth segment.

A list of essential drugs was compiled by the MoH, containing 7,100 products. The prices for

these drugs must be registered with the State. Hospitals and polyclinics are encouraged to

restrict themselves to the administration of drugs on this essential list, but compliance is

incomplete. There have also been attempts to encourage the prescribing of “generic” generics,

but this has been problematic. Firstly because the supply of unbranded products is unreliable, but

secondly because a new wave of “more informed” patients with increasing amounts of disposable

income are emerging who want to use branded products.

Fig 2.04.1: Market Segmentation Comparisons, Western Europe vs. Russia

Segment Western Europe Russia Trend

OTC 35 – 40% 35 – 40% • Western goods substituted by low cost

providers after crash

• “Comfort” products unlikely to regain

position

• OTC segment growing in general

Innovative

Brands

50 – 55% 5 – 7% • Not affordable to wider population

• Stable, if small, consumer group with

modest growth prospects

Branded

Generics

5 – 10% 30 – 35% • High level of customer/patient loyalty

• Most promising segment

“Generic”

generics

5 – 10% 25 – 30% • Western products vulnerable to low cost

alternatives

• Will continue to be an unstable segment

There are about 800 companies who manufacture pharmaceutical products in Russia, and some

70,000 pharmacies. Of the 800 pharmaceutical producers, only 300 are domestically owned;

these mainly manufacture generics drugs, using imported APIs. Many also import bulk

tablets/capsules for blister packing.


24

Collectively, the top eight domestic producers account for around 60% of total domestic

pharmaceutical output (by volume) and for about 15% of the entire pharmaceutical market by

value.3

The State owns 35% of all pharmacies and around 100 domestic pharmacy chains operate in the

country – the pharmacy market is so fragmented that the top ten chains control a mere 10% of

market share. In Moscow, private pharmacies account for 59% of the market, and around half of

these are part of a chain. The company 36.6 is Russia’s largest domestic pharmaceutical retailer

by turnover.1

Fig 2.05.2: Top Russian Manufacturers and Top Foreign Importers

Top Russian Manufacturers Top Foreign Importers

Sales, $

(1Q 2005)

Sales, $

(3Q 2004)

Veropharm 28.3ml Sanofi-Aventis 42.5ml

Nizhpharm 21.2ml Berlin-Chemie 34ml

Moskhimpharmpreparaty 10.8ml Pharmastandard 27.1ml

Otechestvennye Lekarstva 10.8ml Gedeon Richter 26.7ml

Akrikhin 7.7ml Pfizer International Inc 26.5ml

Bryntsalov 6.3ml Novartis Pharma 21ml

Biokhimik 5.8ml Servier 19.7ml

Biosyntez 4.7ml KRKA 18.3ml

Dalhimpharm 3.9ml Nycomed 18ml

The wholesale sector is highly consolidated. The largest companies are Protek (2003 revenue of

US$900m, 26.6% market share) and SIA International (2003 revenue of US$755m, 22.3% market

share). Together, they supply around 16,000 pharmacies and hospitals.1

Local production cannot meet pharmaceutical demand - imports help to address this problem, but

there is still a large unsatisfied demand for many classes of medicine.

3 The Economist Intelligence Unit, Russia, 2005


25

Fig 2.05.3: The Best Selling Drug Classes in the Russian Pharmaceutical Market, 2003

Drug Class Percentage (%) of Total Demand

Cardiovascular 18.2

Analgesics, Antiseptics and Anti-Inflammatory

Drugs

16.7

Antibiotics 14.3

Vitamins 9.8

Tranquilizers, Psychotherapeutic and Central

Nervous System Stimulants

7.5

Antivirus 5.8

Antihistamine Preparations 4.2

Purgatives (Laxatives) 3.3

Digestive Aides 3.0

Other Pharmaceuticals 17

Source: http://www.hccp.ru/business/export/farma_market.htm

2.05 Market Drivers & Restrainers

Overall, the social and cultural factors which are driving the positive development of the Russian

economy are very favourable for the development of the pharmaceuticals market in general and

the pharmaceutical distribution market in particular:

− The population of the Russian Federation has been and remains an ageing population;

− The amount of disposable income and, therefore, the level of pharmaceutical spending, have

grown substantially since 1990;

− Lifestyle changes combined with positive attitudes towards new products and services have

led to alterations in consumer consumption;

− The level of consumerism has increased significantly.

The income per-capita is disproportionately distributed, with large cities boasting higher than

average income, with the wealthiest inhabitants (on average) residing in Moscow and St.

Petersburg.

Market restrainers can be generally attributed to the fact that healthcare is a low government

priority:


26

− There is a corresponding low level of healthcare financing;

− Far fewer than 50% of those entitled to reimbursed medicines can actually realise their right;

− Outside of the major centres exists a cash-strapped population with low purchasing power;

− A poor national insurance system with underdeveloped private health insurance and a crippled

obligatory State health system;

− VAT introduction on medicines introduced an added burden on price.

2.06 Pharmaceutical Regulation

Russia has developed a system of State control over the circulation of drug, narcotic and

psychotropic preparations which includes:

− Licensing of their production and imports;

− State registration and certification;

− State control over standards, quality, efficiency and safety;

− State regulation of pricing; and

− Organisation of manufacturing and wholesale trade.

Nevertheless, Russia still lacks a solid legislative base and regulation of the pharmaceutical

sector has suffered as a result of decentralisation and is no longer as coherent as it was in the

1980s.

The main government body involved in the regulation of the pharmaceutical industry is the

Ministry of Health (MoH). The MoH maintains control over practically every aspect of regulatory

activity and is supported by a number of other agencies involved in regulating specific areas of

the market – for example: the State Standards Committee; State Customs Committee; the

Ministry of Industry, Science and Technology; the Ministry of Economic Development and Trade;

the State Patent Office; and the Ministry of Antimonopoly Policy.

The MoH, supported by various regional and local certification committees, is responsible for:

− Registration of pharmaceutical products;

− Obligatory and voluntary certification of such products; and

− Issuing licenses for the wholesale trade of pharmaceutical products, narcotics and

psychotropic substances.

Certification standards have to be approved and coordinated by the State Standards Committee.

However, the MoH has the lead in developing actual certification standards.


27

The Ministry of Industry, Science and Technology is responsible for issuing licenses for drug

manufacture; however, these licenses have to be approved by the MoH in advance.

All imports of medicines must be accompanied by an import license issued by the Ministry of

Economic Development and Trade. The import license requires approval from the MoH.

2.07 Drug Registration

Generally, the Russian drug registration system is very different from the practices adopted in

major developed countries. It is a complicated process which includes a patent search and

potentially, further clinical trials to demonstrate safety and efficacy – although, drugs can be

registered without a trial having been conducted in the country.

The registration and clinical trial period for bringing a single product to the Russian market for the

first time can take anything up to two years or more.

There are many grey areas in registration procedures and the system continues to lack clarity

and transparency. In addition, cultural and language barriers often become a challenge to foreign

companies attempting to register pharmaceuticals by themselves without appropriate legal advice

or help from experienced distributors or consultants.

As the registration procedure is quite complicated and because the documents tend to change

due to constant changes in the regulatory requirements, the only way to accomplish registration

of a pharmaceutical product in Russia is through one of the following types of companies:

− a company incorporated in Russia and belonging to the foreign parent company;

− a Russian distributor/authorized agent or a consulting company.

The registration procedure begins with the signing of a contract and the submission of a number

of required documents to a special entity affiliated with the MoH - the Federal State Enterprise

"Scientific Centre for Expert Assessment of Medical Products". The "Centre" conducts reviews

and expert assessments of the registration documents and directs all required stages of the

registration process.

The "Centre" works in close cooperation with a number of expert committees, including the

Pharmacology and Pharmacopoeia Committees, and the Committee on Ethics, as well as

research institutes on conducting reviews of the documents, pre-clinical, clinical, toxicological,

laboratory and other tests required for registering a drug.

The cost of registering a single foreign drug is around $12,000 while the fee for a domestically

produced drug is $6,000. The registration is valid for 5 years. It should be noted that this fee does

not include any costs of trials which might be assigned to a drug.


28

The registration certificate is issued by the Department of State Control over Drugs and Medical

Equipment of the Ministry of Health. Registration cannot be conducted by phone, e-mail or any

type of correspondence and involves establishing direct contact and an ongoing working

relationship with an expert from the Centre. Foreign manufacturers should perform registration

either through an authorized agent or distributor, in-house Russian-speaking registration

personnel or via a regulatory contact permanently based in Russia.

Many foreign companies have established good working relations with the MoH and have

successfully overcome difficulties in registering or re-registering medical products in Russia. The

good thing about the system is that it is pretty centralised and the applicant needs only to deal

with a few departments within the MoH. Again, legal advice and assistance from the distributor is

strongly recommended.

2.07.1 Documents Requirements for Registration of Foreign Drugs

General:

i. Application for the State registration of a pharmaceutical including the name and contact

information of the manufacturer;

ii. The name of the pharmaceutical preparation, including international non-proprietary name,

scientific name in Latin, trade name and main synonyms;

iii. List of active ingredients and components;

iv. Recommended dosage, instructions for use;

v. Description of the drug and its packaging, shelf life and storage conditions;

vi. Power of Attorney issued by the manufacturer to the authorised company for carrying out

registration procedure (notarised original with apostil);

Certificates:

i. A copy of the Free Sales Certificate (must be notarised and apostilled);

ii. A copy of the license of pharmaceutical manufacture (must be notarised and apostilled);

iii. A copy of the GMP certificate (must be notarised and apostilled);

iv. A copy of the Certificate of manufacturer registration in their own country (must be notarised and

apostilled);

v. The original Certificate of analysis of the drug and its active substance (must be signed and

stamped by manufacturer);

vi. A copy of the Certificate of trade mark (must be signed and stamped by the manufacturer);

vii. Information of registration of the drug in the country of manufacture and other countries;


29

Information and test reports:

i. Summary of method of drug manufacture (must be signed and stamped by manufacturer);

ii. The complete description of the quantitative and qualitative control methods with references to the

pharmacopoeia and specification (must be signed and stamped by manufacturer);

iii. Stability data of three drug series - by date;

iv. Spectral and chromatogram data;

v. Report on the pharmacological (specific) activity study substantiating the indications for use which

are described in the instruction;

vi. Test report of the drug toxicity (acute, sub-acute, sub-chronic, chronic toxicity);

vii. Test report of specific influences (carcinogenicity, mutagenic and teratogenic effects, embryo-

toxicity, allergic and local-irritative effects);

viii. Trial report of the medicine usage in the clinic;

ix. Copies of publications of medicine usage after its registration in the country of origin;

x. Pharmacokinetics and bioequivalence data;

xi. Summary information on side effects, in comparison with other analogous medicines, used for the

same indications;

xii. Instruction for use (must be signed and stamped by the manufacturer);

Samples and packaging:

i. Information on packaging materials: Certificates of packaging materials (must be signed and

stamped by the manufacturer);

ii. The colour and design of internal and external packages (Original and Russian version);

iii. Samples of active substance for quality control;

iv. Standard and referenced samples of the drug for the binding examination of quality (must be in the

standard package).

The MoH, at its own discretion, determines whether existing regulatory approval documents are

sufficient for an exemption of the drug from clinical and other testing in Russia before issuing a

registration certificate. Officially Russia does not recognise FDA and EU certificates.

The registration procedure is not transparent. Lists of registered drugs are published (but often

incomplete); however, information on drugs under registration and on the status of the registration

are not available. Confidentiality of the files provided by the applicant cannot be guaranteed and

the registration system has been unable to prevent counterfeit drugs and low-quality (sometimes


30

dangerous) products entering the market. To combat these problems, a new certification system

was introduced which applies to all domestically produced and imported drugs.

2.08 Certification Requirements

In April, 2002, Government Resolution #287 added medicines to the List of Products subject to

mandatory conformity assessment (certification) in Russia. This new certification system was

intended as a tool to combat counterfeit drugs as well as a means of toughening control over

imported drugs. Previously the drugs were subject to selective, batch-based certification at each

stage of their circulation in the market. Certificates for foreign drugs were issued based on quality

certificates provided by the manufacturers. The new certification system which came into effect

on December 15, 2002, requires total control and inspection of locally made and imported

medicines.

The Ministry of Health together with the State Standards Committee accredited 8 regional

certification centres located in Moscow, St. Petersburg, Nizhny Novgorod, Novosibirsk,

Yekaterinburg, Khabarovsk and Rostov-on-Don. Well-established Russian and foreign drug

manufacturers may undergo simplified certification procedures. All other companies must

undergo full-scale quality and safety testing prior to customs clearance.

The certification, required now for each and every batch of medicines entering the market costs

2,000 roubles (US$ 69) for domestic companies and 3,000 (US$ 103) for foreign firms.

Certificates previously required at each stage of the sales chain were replaced by a single

certificate issued when the product enters the market.

This new certification system led to additional costs associated with the storage of products in

bonded warehouses while tests were carried out. Testing could take up to several months and

these increased costs led to an increase in retail drug prices. Both the Association of International

Pharmaceutical Manufacturers (AIPM) and the American Chamber of Commerce in Russia have

been actively working to eliminate this administrative barrier for foreign manufacturers.

To expedite the certification procedure for well-established pharmaceutical suppliers, the MoH

introduced a new decree into existing certification rules. According to MoH’s new legislation, in

certain cases the number of trials and tests for quality can be reduced if the producer has

extensive experience and there have been no concerns regarding its products over a given

period of time. The MOH publishes a list of qualifying companies - around 60% of which are

foreign.

Vitamins and biologically active additives in the majority of cases are registered and certified in

the same way as ordinary drugs. However, imports of these products should be accompanied by

a certificate of hygiene which is issued by the Institute of Nutrition of the Russian Academy of

Medical Sciences. The hygiene certificate is valid for three years.


31

The new Law on Technical Regulations, which came into effect in the summer of 2003 was aimed

at reforming the existing certification system and will bring the process into compliance with

international standards by making a shift from obligatory certification to technical regulations,

clear-cut standards and manufacturers certificates of conformity. However, a lot of issues still

remain unresolved. According to the law, the transition period to the new system will take seven

years. In addition, there is a lot of uncertainty about which international standards Russia will

accept, which standards should be obligatory and which voluntary, and what the role of the

government body should be in development and enforcement of the standards.

2.09 Pharmaceutical Promotion and Advertising

Appropriate promotion and advertising of pharmaceuticals is of critical importance to the

development of the Russian healthcare system. However, promoting and adhering to strict ethical

standards when marketing pharmaceutical products is essential.

Two pieces of legislations regulate the marketing and advertising of pharmaceutical products: the

Federal laws “About Advertising” and “About Pharmaceutical Products”. These Laws state:

i. Only pharmaceuticals that have the appropriate license and which are registered in Russia can be

advertised;

ii. Advertising of prescription drugs as well as the promotion of medical products and technology can

only be placed in specialised medical and pharmaceutical publications.

Advertising of non-prescription products is allowed provided that the manufacturer produces

registration and license documents and that the advert clearly states all side-effects and does not

give any medical guarantees.

Pharmaceutical advertising should not position products as unique, the most effective or the

safest. It is also forbidden to make comparisons between similar pharmaceutical products.

Because pharmaceutical companies are barred from selling directly to patients and doctors and

cannot advertise medicines on mainstream television, radio and print media; as in other major

pharmaceutical markets, the industry relies on medical representatives to network with medical

professionals and institutions to create demand.

2.10 GMP

Most Russian pharmaceutical companies do not operate in accordance with GMP standards, a

fact that has prevented them from competing in the international arena.


32

With Russia's move toward WTO accession, control over the manufacturing process in

compliance with GMP standards became an important issue; therefore, the MoH mandated that

all Russian manufacturers should switch to GMP standards by January 1, 2005 or their licenses

would be recalled, a mandate that was supported by President Putin.

This drive to bring Russian manufacturers up to international standards has been hampered by

delays in writing and implementing new legislation which remains ongoing; in the interim the MoH

has developed a voluntary system of manufacturing process certification as a means of effective

control over production.

GMP implementation is an expensive process (costing at least $5ml) and not all domestic

producers can afford to pursue this strategy – thus smaller firms have two options: either to

become part of larger entity or to exit the industry. Consolidation in the industry is expected to rise

with a corresponding increase in competitive intensity in the marketplace. On upside, poor quality

producers will be eliminated boosting consumer confidence in locally produced products. The

strengthening of domestic production has public health implications and is expected to improve

the overall health situation in Russia.

Some of the larger Russian manufacturers have grouped together to drive through change.

Veropharm, Pharmsynthez, Nizhpharm, Otechestveni Lekarstva, Ufa-Vita, and the chemical-

pharmaceutical factory Akrihin comprise the newly-formed Association of Russian

Pharmaceutical Manufacturers (ARPM) whose mission is to develop the Russian pharmaceutical

industry. The association's goals include: bringing Russian producers up to GMP and ISO

production standards, actively fighting counterfeits, developing staff, supporting research, and

lobbying for changes in legislation.

The National Pharmaceutical Inspection unit (NPI) has recently been established. Plans are to

recruit 60 inspectors during 2005 and 2006 for GMP, and eventually 200 to 300 inspectors for

GDP.


33

3.0 Healthcare in Russia

3.01 Healthcare Policy

Historically healthcare in Russia has been the responsibility of the Russian Ministry of Health

(MoH). The MoH oversees the healthcare system and is responsible for central policy formation.

It is also in charge of initiating federal health programs, the management of federal level health

facilities, the training of medical personnel, health monitoring and planning, and the regulation of

pharmaceuticals and medical devices.

In theory, the provision of care is uniform throughout the country. In practice, wide regional

differences in the provision and scope of care exist, largely due to the high degree of autonomy of

provincial and municipal governments.

Major capital investments within the health sector are funded at State level although decisions

regarding the setting of budgets for overall health spending have gradually shifted to the regions.

The MoH supervises the Federal Mandatory Health Insurance Fund (FMHIF), which in turn

regulates the Territorial Mandatory Health Insurance Funds (TMHIFs).

Under current legislation every Russian citizen is entitled free access to a basket of basic

healthcare services including:

− Primary healthcare;

− Emergency healthcare;

− Preventative healthcare;

− Hospital care (via referral); and

− Pharmaceuticals used in in-patient care.

More than 100 million Russians are covered by free, State-financed medical insurance policies –

with one-third of the 2,000 Russian insurance companies working with the State on the

mandatory medical insurance programs.

The newly restructured Russian Ministry of Health and Social Development has announced

modernisation of the Mandatory Medical Insurance system as one of its primary goals. The

current Mandatory Medical Insurance system is inadequate and unable to guarantee access for

the population not only to quality, but in some cases to basic healthcare treatment.

The government believes that sound GNP growth supported by tax reform will provide sufficient

revenues for the Mandatory Insurance Funds. However, analysts predict that the Government

won’t be able to significantly increase funds available to cover free medical treatment. In the best

case scenario the government will be able to bring more order into the system and to create a

clear-cut list of free services guaranteed by the government. This list should be complemented


34

by a list of fee-based services. The government has actually admitted that it will have to take

measures to legalise private healthcare services so that the payment for these services is based

on invoicing and carried out through a cashier versus unofficial payments directly to doctors, a

common current practice.

According to the Constitution of the Russian Federation, all citizens have the right to receive free

healthcare. However this right in the majority of case exists in name only. Public health

programs for health promotion, disease prevention and family planning remain low priorities. Low

wages and inadequate training for primary care physicians who do not have full access to the

latest medical technology, results in an underdeveloped national healthcare infrastructure.

Because preventive care has never been an objective, the population has to resort to hospital-

based care, which generally makes the Russian healthcare system inefficient and very

expensive, precluding investments in other segments of the system.

Because public financing of healthcare is insufficient and voluntary health insurance coverage is

very limited and does not include serious, life threatening diseases, the Russian population is

forced to pay out of pocket to cover a significant portion of the cost of drugs and healthcare

services. In addition, doctors are interested in unofficial payments as their wages are generally

very low (in the region of $100-200 a month).

According to research conducted by the Independent Institute for Social Policy, one-third of the

families which need out-patient treatment pay for it out-of-pocket. At the same time half of the

families which need in-patient treatment are also forced to pay out-of-pocket. Wealthy citizens

spend significantly more out-of-pocket on healthcare than the less wealthy. Despite the common

myth that the major part of out-of-pocket money is paid unofficially to doctors under the table, the

research showed that only one-third is really paid under the table while two-thirds are channelled

through cashiers.

Unofficial payments are more common in in-patient hospitals than in out-patient clinics.

Generally, the level of legalisation of private services in the system is quite high, and informal

payments usually complement formal ones. There are several major categories of informal

payments:

− to medium level personnel for conducting procedures such as injections and so on;

− to personnel conducting diagnostic tests;

− to attending physicians who are assigned to supervise the patient for in-patient care;

− to operating surgeons.

Other categories include payments for drugs, supplies and medical devices. There are also

several channels through which drugs, supplies and devices are sourced by the patients: they


35

can be purchased from doctors, in pharmacies, middlemen or informally from the clinics

themselves.

The existing insurance system is definitely inadequate and chances that coverage by the

Mandatory Insurance Funds will increase in the foreseeable future are low. The entire system

needs massive reforms, but taking into account the realities, reform will only be able to clarify the

existing system of guarantees, their provision procedures, lists of free services and standards of

free healthcare.

As voluntary medical insurance is underdeveloped, out-of-pocket coverage of services will remain

significantly high. The government will be forced to legalise increasing portions of the healthcare

treatment by enforcing the list of paid services. Because paying doctors directly, both under the

table and legal payments has deep roots in Russian culture, analysts predict that it will be an

inevitable trait of the Russian healthcare system in the future.

Russia is an ageing nation with a demographic structure mirroring much of Western Europe.

Namely, the country has a highly urbanised population and declining fertility. In addition, there is

a high mortality rate amongst the working-age population. Problems with the existing under-

funded, under-equipped and overstretched health system will be subject to even further funding

pressure in coming years as diminishing numbers of workers have to fund a growing class of

pensioners.

The need to increase the cost effectiveness of healthcare delivery is now the main driver behind

the current primary care restructuring program taking place throughout the country. The main aim

is to decrease the number of low-budget and poor performing polyclinics and hospitals. Since

2004 there has been a 2.2% decline in the number of district medical centres resulting from the

closure of under-performing, small, suburban hospitals and general clinics. The overall efficiency

of the remaining polyclinics has increased and the number of emergency services remains

unchanged.

Healthcare provision for the elderly and handicapped remains poor, but the situation is being

addressed with a focus on home healthcare and further restructuring of the system to increase

the bed count in specialised centres thus giving these patients better access to priority

treatments.

3.02 Healthcare Spending

It is difficult to estimate total healthcare expenditure in Russia. Central government health

budgets are usually very small and inefficiently administered and it is not unusual for actual

government expenditure to be lower than the budgeted figure.


36

The share of healthcare expenditure in the consolidated budget4 of the Russian Federation has

increased over the past years; however, Russia still spends less than 4% of GDP on healthcare,

well below the OECD average of more than 8%.

Public spending makes up about three-quarters of total health spending.

Fig 3.02.1

Source: US Census Bureau; Economist Intelligence Unit; a – actual

In December 2005, parliament approved the State healthcare budget for 2006 after a third and

final reading. Some 113.4 billion roubles (US$ 3.9bn) was set aside for the budget, of which 40.6

billion roubles (US$1.4bn) will be used specifically at the territorial (regional) level for much

awaited improvements. The president announced that healthcare spending will be increased by

60% in 2006. A planned increase in the rate of unified social tax from 0.8% to 1.1% will partly

fund the budget as well as profits from high oil prices.

The vast majority of health expenditure is funded through the public sector via the central budget

and a mandatory insurance system. The Federal Mandatory Health Insurance Fund (FMHIF)

oversees the insurance system and monitors the activities of the Territorial Mandatory Health

Insurance Funds (TMHIFs).

At a local level the TMHIFs were expected to appoint independent, private sector insurance

companies to purchase care and promote competition between third-party payers in a bid to

reduce the cost of healthcare. In cases where there are no private purchasing companies the

TMHIFs have the responsibility of establishing so-called branch funds (BMHIF) to act as short-

4 The consolidated budget consists of federal budget and regional budgets.

Trend in Healthcare Spending

490 160

3

6.1

17.5 16.4

122

112

4.2

1

10

100

1000

1998a 1999a 2000a 2001a 2002a 2003a 2004a

Value

Healthcare Spending (Rb bn) Healthcare Spending (% of GDP)

Healthcare Spending (US$bn) Healthcare Spending (US$ per head) Physicians (per 1000 population)


37

term insurers for the local population and make provision for those not covered under the

mandatory system.

Generally simple and primary medical services are the only ones provided free via the State

system, with public health policy of little help to those patients requiring a serious operation or for

those in receipt of long-term, expensive and/or sophisticated treatment.

The lack of coverage of the mandatory health insurance has resulted in the burden of healthcare

spending becoming increasingly the responsibility of employers or citizens themselves - with out-

of-pocket spending and private insurance driving growth in healthcare expenditure. Out-of-pocket

spending increased from 27.5bn (US$ 0.95bn) roubles in 2000 to 87bn (US$ 3bn) in 2004, and is

growing at a faster pace than total government spending. Moreover, the low income population

are becoming victims of this trend being forced to undergo longer, more painful and lower quality

treatments.

However, the situation is changing for those entitled to social benefits. At the beginning of 2005,

the government introduced a new system of drug reimbursement for these people called

Additional Pharmaceutical Provisions (DLO in Russian). Under the old system, people on benefits

were entitled to free healthcare and free medications; but due to a lack of financing, the system

did not work well especially on a regional basis. As a result, beneficiaries were unable to receive

medications and treatments in time or were finding hospitals and polyclinics being short of supply.

The new scheme - which provides compensation for medicines from a list of over 1,800 - has

seen cash payments to those on social benefits replaced via a discount-card system. These

patients can now receive timely medications by purchasing drugs in pharmacies and polyclinics at

discounted prices using the money equivalent of their benefits. The price differences are

reimbursed to the manufacturer by the government. A lot of pharmaceutical companies are now

fighting for the right to supply products under the DLO scheme.

3.03 Structure of the Healthcare System

In recent years, the healthcare system has gradually become more decentralised with more

responsibility afforded to the federal regions – although the MoH retains a considerable hold over

healthcare policy.

Russia has 89 federal units comprising republics, provinces and regions with smaller sub-

divisions at the local level. Federal health departments report to the MoH and are responsible for

funding over half of all healthcare expenditure. District Health Authorities (DHAs) play an

executive role at local level although, again, their remit varies greatly across the country.


38

The lack of the enthusiasm and motivation of many healthcare workers in Russia is noticeable

and can be attributed in the main to low levels of pay. The Ministry of Health estimated that the

average salary of a doctor in 2004 was 4730 roubles per month (approximately $169). There is of

course, much variation from region to region – for example doctors practicing in St. Petersburg

and Moscow receive around twice that amount, while doctors in smaller cities and rural areas

receive in the region of $100 - $135 per month. Salary also depends on the specialisation of the

doctor, experience and the institution in which he/she works.

Fig 3.03.1: Russian Healthcare System

There are rumours that low remuneration is leading to a decline in the number of doctors in

Russia. However, according to the Minister of Health - M. Zubarov - the actual number of doctors

Federal Mandatory Health Insurance Fund

(FMHIF)

The Ministry of Health of the

Russian Federation

Territorial Mandatory Health Insurance

Funds(TMHIF)

Local Insurance Funds

Federal Health Departments

District Health Authorities

Health Centres

PolyclinicsSanatoriums

& Health Centres

OtherHospitals

Health Posts

Federal Mandatory Health Insurance Fund

(FMHIF)

The Ministry of Health of the

Russian Federation

Territorial Mandatory Health Insurance

Funds(TMHIF)

Local Insurance Funds

Federal Health Departments

District Health Authorities

Health Centres


& Health Centres

OtherHospitals

Health Posts

Health Centres


& Health Centres

OtherHospitals

Health Posts


39

in the country has grown by 10% over the past 8 years (from 550,000 to 610,000) – hence today

there are around 6 doctors per 1000 citizens. Statistics indicate that around 60% of physicians

are specialists, 20% work in the primary care sector and a further 20% hold administrative and/or

research positions.5

3.03.1 Provision of Primary Care

The primary care network overlaps slightly with secondary and tertiary care. General practitioners

and other primary care personnel are employed by the facilities in which they work and

contracted indirectly to local government, which provides the core funding for primary care

services.

Some primary care facilities also secure contracts with local insurance funds in order to obtain

compensation for services provided to insured patients.

It should be noted that many patients in Russia have no primary care physician. Patients have the

right to visit any specialist (hospital or polyclinic) without any referral from a GP or nurse.

3.03.11 Health Posts

Often found in rural areas, health posts offer immunisation services, basic health examinations

and routine examinations. Health posts often treat minor injuries and make home visits or offer

emergency services.

3.03.12 Health Centres

Generally staffed by a general practitioner, a paediatrician and often a gynaecologist, health

centres offer a range of primary health services including the treatment of minor ailments and the

supervision of chronic conditions. Physicians at health centres, who are supported by nurses, are

permitted to prescribe pharmaceuticals.

Health centres offer a limited supply of beds, which can be used to carry out minor in-patient

procedures.

3.03.13 Polyclinics

Polyclinics offer first line treatment for acute and chronic conditions and longer term chronic care.

Staff at polyclinics comprise of a number of general physicians supported by auxiliary staff, as

well as other specialists in areas of cardiology, oncology and obstetrics/gynaecology. Patients are

assigned to polyclinics by postcode.

5 The World Market Analysis, Russia, Healthcare Infrastructure


40

3.03.2 Hospitals

According to the Russian statistics agency (Goskomstat), there are around 10,700 hospitals

throughout the country staffed with highly trained personnel. However, many hospitals and other

facilities would require heavy capital investment and increased funding for modern diagnostic and

medical equipment to bring them in-line with Western standards.

There are a few thousand private hospitals, clinics and other health facilities (around 3,000),

which are located in larger urban areas and offer Western standards of care. Many private clinics

and hospitals are costly facilities with high-quality equipment and personnel established by

Western firms. A large number were established to cater for diplomatic personnel, businessmen

and ex-patriots, although the number of Russian patients has increased gradually over the last

decade. Nevertheless, establishment of private health facilities remains complex due to

bureaucracy and licensing issues.

3.03.3 Health Institutions

A feature of the Russian healthcare system is the existence of huge specialised institutions

dedicated to a specific area of medicine, for example the Institute of Oncology, the Research

Institute of Cardiology, the Vivalov State Optical Institute, etc. These institutions are well

respected and are considered to provide the best of care; institutions also provide outpatient

facilities, conduct research and are usually involved in teaching.

3.03.4 Sanatoriums and Health Resorts

There are many sanatoriums and health centres in Russian that have few analogues in the rest of

the world (aside from Germany). Here patients are treated using only natural medicines and

therapies. Health centres and sanatoriums have become more popular over the last few years

due to the stabilisation of the economy and rising disposable income. These facilities are mostly

used for:

− prophylactic treatments;

− recovery support; and

− for those undergoing long-term treatment for chronic diseases.

There are more than 2.4 thousand sanatoriums spread around the country providing around 450

thousands beds – the majority being located in the wealthier, European part of the country.

According to a report issued by the MoH, the number of beds has been on the increase thus

suggesting growth and strengthening of this particular sector of the healthcare system. Statistics


41

shows that in 2004, over 5.7million patients received treatment at various health resorts

compared to around 5.3 million in 2003.

Because health resorts and sanatorium are so popular amongst the Russian population, there

has been much investment in constructing new centres and re-developing existing facilities – this

activity has also attracted much foreign investment. The number of private sanatoriums and

health resorts is also on the rise.

According to Rosstat (Russian Statistics database); in 2004, 38% of patients treated in these

centres and resorts were sponsored by government, 12% were sponsored by their employer and

22% of patients financed their stay as an out-of-pocket expense.

3.04 Health of the Nation

3.04.1 Population Demographics

For much of the last decade, the country has suffered a population decline unprecedented for an

industrialised state outside of wartime. Russia’s population declined from 149 million in 1992 to

143 million in 2003, and in the next 50 years it could fall by 30% to 100 million. With rapid ageing

of the population, this fall is increasing the dependency ratio (the ratio of the economically

dependent part of the population to the productive part) and producing an economic burden that

Russia may not be able to afford, given that its gross domestic product (GDP) is the lowest of all

the G8 countries (the eight most industrialised countries).

Fig 3.04.1

Source: EarthTrends 2004, Country Profile, Russia

There are many contributing factors to the population decline including: poor diet, high alcohol

consumption, and the general average-to-low standards of living and lack of government benefits

outside major cities. The latter being the major concern discouraging people from starting a


42

family. However, because the Russian economy is developing fast, small cities and towns are

becoming wealthier as more and more employment opportunities are created.

3.04.2 Life Expectancy and Causes of Death

Russia is one of the few developed countries where life expectancy has fallen in recent years.

Massive regional variations in life expectancy exist. The situation is at its worst in the Far North

and Far East, as well as in many rural areas due to both environmental conditions and low

incomes. Russia's total life expectancy of 66 years lags behind that of Japan by 16 years, the

European Union by 14 years, and the United States by 12 years. High mortality and morbidity

from non-communicable diseases, along with a low birth rate, mean that Russia’s overall

population is rapidly becoming smaller and sicker. The situation is compounded by the stresses

related to economic transition - collapse of the social safety net, lack of strict road safety measures,

poor diet, and sedentary lifestyles. Furthermore, when the burgeoning epidemics of HIV infection,

multiple drug resistant tuberculosis, intravenous drug use, sexually transmitted disease, and hepatitis

C are also taken into account, the severity of Russia's health crisis is magnified substantially.

Mortality for Russian men substantially exceeds that in countries with similar per capita income

levels. Within Russia, mortality varies fourfold between regions, and differences in life expectancy

can be as much as 18 years. The picture is different for women, who live about 14 years longer

than men – much greater than the average gender gap of eight years found in other G8 nations.

Morbidity and mortality from non-communicable diseases and injuries - the leading causes of

death - in Russia are three to five times higher than average rates in the European Union.

At 994 per 100 000, Russia has one of the highest death rates from cardiovascular disease in the

world, accounting for 52% of all deaths nationally each year. Similarly, the rate of traffic injuries,

at 20.6 per 100 000, is double that in EU and G8 countries, and the rates for cancer mortality,

homicide, and suicide far exceed EU levels.

Fig 3.04.2: Causes of Death in Russia

Per 100,000 citizens

Causes of Death

2001 2002 2003 2004

Total 1564.4 1627.9 1636.5 1596

Includes:

Circulatory diseases 869.4 913 927.5 895.4

Cancer and cancer related

problems

204 204.5 202.5 201.7


43

External causes 230.1 236.8 233.6 227.5

Out of which:

Alcohol poisoning 28.5 31.2 31.4 29.7

Road accidents 28.3 29.1 30.3 29.1

Suicide 39.7 38.6 36.1 34.3

Murder 29.8 30.9 29.1 27.3

Respiratory disease 65.9 70.5 70.5 64.6

Digestive disorders 482 52.7 56.8 59.3

Certain infections 24.5 25.8 25.9 25.7

Includes:

Tuberculosis 20 21.8 21.9 21.4

Source: World Market Analysis, Healthcare, Russia, 2004

In 2003, deaths from cardiovascular disease, cancer, and injuries accounted for 15.2 million lost

years of potential life. Around 75% of deaths and 46% of the disability adjusted life years (DALYs)

in Russia can be attributed to high blood pressure, high serum cholesterol, and tobacco use. Six

out of 20 men smoke, but alcohol is also a big killer, accounting alone for 16.5% of the total

DALYs lost in 2002.

3.05 Disease Prevalence

All patients with diagnosed pathologies are registered in regional databases - every year there

are around 200 million new disease registrations, the most frequent being:

− respiratory disease (26%),

− cardiovascular disease (11%), and

− digestive disorders (8%).

Moreover, every year around 1million people become registered as disabled. Lifestyle ailments

like heart diseases and diabetes are on the increase.

Fig 3.05: Number of Registered Patients, 2004

Disease Type Total Number of Registered

Patients

Cardiovascular (per 100,000 citizens) 21,840

Malignant tumour & other oncology (per 100,000

citizens)

326

Tuberculosis (per 100,000 citizens) 81.3


44

Diabetes 2.3ml

Drug Addiction 342,000

Alcoholism >3.5ml

Mental Disorders 7.7ml

Sexually Transmitted Diseases >730,000

HIV/AIDS (estimated) 860,000 (>1.3ml)

Hepatitis >5ml

Source: The Russian Ministry of Health statistics

3.05.01 Cardiovascular Disease

Over the last 40 years cardiovascular disease (CVD) and stroke mortality rates in Japan, Western

Europe and North America have fallen very sharply. In the US, for example, the age-adjusted

decline between 1965 and 2000 was over 56%. Russia, by contrast, suffered an explosion of

cardiovascular deaths over the same period. In 2004, 285,000 adults were newly registered

bringing the total number of patients registered with cardiovascular disease to 24.8 million in this

year.

The increase in cardiovascular mortality has been attributed to stress brought on by the social

and economic changes; alcoholism, which is on the rise in both men and women; tobacco

smoking and a more sedentary lifestyle with very little focus on any exercise other than walking.

Because many of the elements associated with the surging mortality rate are connected to social

behaviour and the need for education, there is little hope that the government, with its regionally

limited medical infrastructure, will be able to incorporate enough changes to slow or stop the

trend in the near future. However, improvements in the quality of diagnostic procedures have

resulted from the development and implementation of regional healthcare programs.

Fig 3.05.01: Number of Patients with Circulatory Diseases

Absolute Numbers Per 100,000 citizens Disease groups and other illnesses

2003 2004 2003 2004

Blood circulation disorders 22,671,358 24,754,099 20216.4 21 841.6

Hypertension 6,945,151 7,883,877 6,193.1 6,956.3

Ischemic heart disease 5,867,346 6,262,714 5,232 5,525.90

Out of which:

Stenocardia 2,429,577 2,639,814 2,166.50 2,329.20

Acute myocardial infarction 163,776 166,803 146 147.2


45

Repeated myocardial infarction 24,471 24,305 21.8 21.4

Complications following myocardial infarction 2,817 2,812 2.5 2.5

Other major ischemic conditions 45,321 50,201 40.4 44.3

Cerebro-vascular disease 5,603,262 6,169,500 4,996.50 5,443.60

Endarteritis, thromboangitis, obliterating

endarteritis

435,794 471,460 388.6 416

Other 3,819,805 3,966,548 3,406.20 3,499.8

Source: The Russian Ministry of Health statistics

3.05.02 Cancer

A major unmet need in Russian healthcare is the development of a system that allows for the

early detection and diagnosis of cancer. Currently, a large percentage of different cancers are

only detected at very late stages (III-IV):

− 69.5% of mouth and throat cancers;

− 57% of intestinal cancers;

− 39.5% of cervical cancers.

Patients themselves are partially to blame - around 30% of patients only present at late stages

(there exists a mentality of not wanting to “bother” the doctor).

Surgery is the most popular treatment for malignant tumour (44. 3% of cases). Around 18% of

malignant tumours are treated by radiotherapy. Drug treatment is quite rare and only used in

about 6% of cases - on average only around 2.6% of cases receive chemotherapy simply

because the money is not available to pay for it.

Fig 3.05.02: Number of First-Time Patients with Malignant Tumour (per 100,000 citizens)

Per 100,000 citizens Localisation

1999 2004

% Change*

Total malignant tumours 302.5 326.3 6,9

Oesophagus 5.4 5 -

Stomach 33.5 30.8 -8

Colon 17.4 20.3 16.5

Rectum 14.2 15.9 11.6

Pancreas 8.9 9.3 4

Trachea, bronchial, lungs 43.2 41.2 -6.1


46

Skin - malignant melanoma 4 5.1 24.2

Other malignant skin tumours 31.6 37.8 16.9

Kidney 8.8 10.7 21

Bladder 8.1 8.7 8

Thyroid gland 4.8 5.8 17.4

Lymphatic and haematopoietic tissue 13.3 15.2 13.9

* The percentage change has been adjusted for disease dynamics for the 5 year period

Source: The Russian Ministry of Health

3.05.03 Tuberculosis

Tuberculosis remains a problem in Russia; however, a new and more thorough system has been

put into place to control the spread of the disease through earlier diagnosis and more effective

treatments. As a result, there has been a significant reduction (8.4%) in the tuberculosis epidemic

over the past 4 years. Improvements in the standard of living in the poorer areas are needed to

offer the hope of further stabilisation of the tuberculosis situation in the country.

3.05.04 Diabetes

Russia occupies third place in the ‘top 10’ of countries with the highest number of people with

diabetes in the world – obesity is on the increase, unhealthy diets high in fatty foods and alcohol

over-consumption all contribute to health complications in the Russian population.

In 2004, there were 2.3 million patients registered with the diabetes, of which 260 thousands were

registered with type I diabetes; but according to the International Diabetes Federation (IDF), it is

currently estimated that diabetes is present in approximately 9.613 million people - 90% of which

have diabetes type II. Such a large number of unregistered cases can be attributed to a lack of

awareness on the part of people with diabetes and of healthcare professionals. In general, most

cases of diabetes are only detected by general practitioners when patients present with other

health concerns.


47

Fig 3.05.041: Prevalence of Diabetes Type I in Selected Russian Regions

Source: The Ministry of Health of Moscow region, Diabetes epidemiology report, 2004

Fig 3.05.042: Prevalence of Diabetes Type II in Selected Russian Regions

Source: The Ministry of Health of Moscow region, Diabetes epidemiology report, 2004

3.05.05 Drug Addiction and Alcoholism

Another burden on the health system is the spread of addictive disorders - around 2.4% of the

total Russian population are affected. Alcoholics account for the majority (over 84%) and in 2004,

it was estimated that about 70% of men and 47% of women were drinkers; with spirits comprising

three quarters of the total alcohol consumption. However, the alcohol addiction growth rate is

249.1

185.9

175.4

156.2

132.1

122.2

112.2

102.6

78

75.3

66.5

0 50 100 150 200 250 300

Saratov Region

Tver Region

Orlov Region

Komi Republic

Moscow Region

Perm Region

Nizhny Novgorod Region

Tambov Region

Kalmikija

Mari-El Republic

Bryansk Region

Number of patients with Diabetes Type I per 100 000 people

1744.7

1671.9

1345.1

1266.1

1242.9

839.5

817.8

714.9

685.4

579.5

112.1

0 200 400 600 800 1000 1200 1400 1600 1800 2000

Moscow Region

Nizhny Novgorod Region

Saratov Region

Komi Republic

Perm Region

Tambov Region

Mari-El Republic

Kalmikija

Orlov Region

Bryansk Region

Tver Region

Number of patients with Diabetes Type II per 100 000 people


48

reported to be slowing down – 8.4% in 2003 compared to 4.3% in 2004. Psychological diseases

caused by the alcoholism are also on the increase.

Drug addiction is also a growing concern – with the majority (88%) being addicted to opium.

The total number of hospitalisations due to addictive disorders has been on the increase and

amounted to 707 thousand in 2004.The increase was mainly driven by the rise in hospitalisations

due to alcoholic connected disorders (1% increase).

3.04.06 Mental Disorders

In 2004, there were over 7.7 million patients registered with mental disorders - most of those

being over 18 years of age, but a significant number of 0 -14 year olds (>800 thousand) also

suffer with some form of psychological disease. Overall, the mental health of Russia's population

has deteriorated considerably over the past decade and the number of newly registered patients

is on the increase (4.9% increase from 2003 to 2004).

Not all people have access to psychiatric assistance in Russia. The reason for that is the high

number of regions, low population density, and the low level of development of transport

networks. In addition, psychiatric clinics receive only about 50% of the funding to which they are

entitled. At the same time, the ongoing State program for the development of psychiatric services

is aimed at "making psychiatric assistance available to the wider population." To achieve this

goal, it is planned to open psychiatric rooms in polyclinics and psychotic sections in hospitals.

However, these plans are not being implemented as fast as wished to date.

3.04.07 Sexually Transmitted Disease (STD)

In the 1990s, Russia experienced a rapidly increasing incidence of syphilis and gonorrhoea -

sterility caused by STD is also the hidden factor behind the collapse of Russia's birth rate. But

STDs are now on the decline – the number of registered patients is almost 3 times less than in

2001, standing at around 730 thousand in 2004. However, experts do not believe that this reflects

reality. The trouble is that the official figures are based on records generated by the system of

state registration of diseases inherited from Soviet times. The recent rapid expansion of

commercial medical services offering anonymous treatment without registration removes an

increasing proportion of cases from the statistics. Moreover, even where registration does still

occur it tends to be at a later stage of the disease, as people delay seeking treatment for

economic reasons - in particular, out of fear of losing their job if their employer finds out that they

are syphilitic. This shift also biases the figures downward.


49

The number of people carrying and suffering from syphilis in Russia remains very high - more

than 10 times greater than in Europe – and the younger the age group, the faster the spread of

syphilis within it. Thus between 1992 and 1998 the prevalence of syphilis increased by 5.5 times

among adults, but by 17 times among children under 15. Unlike the figures for adult syphilis,

those for child syphilis have continued their upward trend in the last few years, presumably

because the economic motives for concealment do not apply to children. The incidence of

congenital syphilis, which is largely preventable, is high because many infected pregnant women

are treated inadequately or too late in their pregnancy.

There is also a developing concern in the country about treatment resistant Chlamydia

trachomatis and human papilloma virus (HPV). Alternative treatments to antibacterial drugs need

to be approved and included in treatment lists for Chlamydia and there is a growing need for the

early diagnosis and treatment of HPV.

3.04.08 HIV

Fig 3.04.08: HIV Registrations

Number of new HIV cases registered in Russia

33,00039,699

52,342

0

10

20

30

40

50

60

2002 2003 2004

Thousands

Source: UNAIDS

Russia has one of the fastest growing Aids epidemics in the world, with 100 new infections every

day and accounting for 70% of all cases in the Eastern Europe and Central Asia region. There

were an estimated 860,000 people living with HIV at the beginning of 2004, but it is widely

acknowledged that this figure is vastly underestimated and there could be closer to 1.3 million

HIV infected individuals in the country.

Many HIV/AIDS cases are among the young (18 – 29 years) and the problem is no longer limited

to injecting drug users. Increasingly, women and their infants are being affected (roughly 40% of

all new registered cases of HIV in 2004 were women, most of who are of childbearing age).


50

The number of new HIV cases being reported is falling however, with 88,577 new cases reported

in 2001, 52,349 new cases in 2002 and 39,699 cases in 2003. This reduction could be due to

fewer people being tested, or it could be that HIV prevalence rates have reached saturation point

amongst injecting drug users, or it could be that there is a real reduction in the growth rates of

HIV amongst adults resulting from heavy anti-AIDS campaigns.

3.04.09 Dermatologic Diseases

The prevalence of dermatologic disease is considered an epidemic. Over the past 10 years there

has been a 16% rise in dermatological disorders with almost 9 million dermatologic patients

registered in 2004 – this equates to 6% of the total population and around 7% of all diseases.

This figure continues to rise.

3.04.10 Injuries, Poisoning and Other Accidents

Over the last few years the number of injuries, poisoning and other accidents has been constantly

rising. In 2004, the absolute number of injuries was in excess of 13 million. Out of every 100

people, 9 -10 are receiving injuries that require medical help or even hospitalisation. The number

of injuries/poisoning amongst the teenaged population is the greatest being 6% more than that

amongst children and 12% more than that amongst adults.

3.04.11 Hepatitis

There is a high incidence of infectious disease in Russia, hepatitis in particular. In 2005, the

healthcare system was stretched by another hepatitis A outbreak. This event was associated with

the consumption of contaminated food and liquids; some even claim there to be terrorist links.

The rates of hepatitis A decreased during the 1990s thanks to improvements in water supply and

better quality food stuff; but the rates of hepatitis B and hepatitis C increased steadily. Reasons

may be a sharp increase in intravenous drug use, lack of hygiene, and high-risk sexual

behaviour. Half the patients with acute hepatitis B and hepatitis C are 11 to 30 years of age. Mass

vaccination of children against hepatitis B and support for the development of a vaccine for

hepatitis C are needed to control these diseases.

Yet the population does not participate in vaccination programs actively; the reason being that in

most cases they have to fund it at their own expense, and a vaccine against hepatitis costs about

$100 which not everyone can afford. Nevertheless, the fact that vaccinations will be funded by the

State from 2006 will help to improve the situation.


51

It is estimated that about 200 thousand carriers of the hepatitis virus and about 75 thousand

people with chronic hepatitis are identified in Russia every year. In 2004, in excess of 5 million

people were registered with hepatitis in Russia - with hepatitis B forming around 10% of cases,

and hepatitis C, 80% of cases. The numbers of newly registered cases and of chronic forms of

the disease are growing.

The incidence of all forms of hepatitis vary on a regional basis and depend largely on the

availability of emergency and hospitalisation services, as well as the underlying socio-economic

conditions.


52

4.0 Clinical Trials in Perspective

4.01 History of Clinical Trials in Russia

Large-scale clinical trials have been conducted in Russia since 1989. The major driver for the

increased interest by Western pharmaceutical companies to include Russian sites in multinational

projects has been the enormous enrolment potential which offers a solution to the competition for

patients among clinical trials in North America and Western Europe. There are a large number of

hospitals that are huge and highly specialised, as though they were specifically designed for

clinical research. These medical centres may have modest interiors but this does not preclude

their clinicians from doing quality work.

However, back in 1989 when interest in Russia first began, regulators and the medical research

community were largely unaware of good clinical practice (GCP) and clinical trials were not

governed by any regulations – anyone could do anything. There was the Constitution of the

USSR, which protected patients’ rights, but that was it, ethics committees had yet to be

established.

The Clinical Pharmacological Research Institute (CPR) carried out the first translation of the GCP

guidelines in 1989. A decade later in 1999, the official text of ICH GCP in Russian was published.

That same year the Russian language version of GCP - National Standard OST 42-511-99, a

close translation of ICH GCP - became a part of national regulations on clinical research. The

whole process took so long because domestic regulators did not want to accept international

rules; instead, they wanted to produce their own national GCP guidelines in support of Russian

drug companies who did not have the resources to conduct well-designed clinical studies. In the

interim, double standards operated – GCP for Western pharmaceutical companies, and Russian-

GCP for poor domestic drug manufacturers; until in 1999, when it was finally agreed by a new

generation of Russian officials that it was not wise to continue operating the double system.

At the same time, at the end of the 80’s, no customs regulations were in place – therefore, any

drug could be imported. It was up to each customs-house officer to decide what could cross the

border. The situation was even worse in the field of communications. Faxes and copy machines

were prohibited by law. There were no automatic phone connections, no private foreign economic

activity, no hard currency transfers from abroad, and no money exchange points. Foreign

pharmaceutical companies had no representative offices in Russia.

Things have changed drastically, and nowadays an established system of national regulations for

drug development and clinical research exists, with clinical trials being approved in a way similar

to that in the West.

More than a hundred foreign pharmaceutical companies are now accredited in Russia, mostly


53

located in Moscow. In addition, many international companies which do not have representation

in Russia still conduct clinical trials there. Many major CROs have opened representative offices

and in addition, there are several local CROs. Moreover, some federal medical and science

institutions, while undertaking scientific research projects and developing new technologies, also

engage in large programmes for helping practical healthcare – such as clinical research and drug

discovery.

Fig 4.01.01: Medical Institutions Involved in Clinical Trials in Russia, 2005

Educational

institutions, 29.20%

Clinical hospitals

and outpatient

clinics, 39.20%

Scientific

institutions, 31.60%

Source: www.regmed.ru

Companies involved in the organisation of clinical trials in Russia include: representative offices

of pharmaceutical companies; representative offices of the international CROs; and CROs of

Russian origin.

Fig 4.01.02: Companies Involved in Clinical Trials in Russia 2000-2005


The number of these companies has grown amazingly fast during the last few years, especially

the numbers of Russian CROs.

55%

37%

25%

35%

21%

29%

10%

42% 46%

2000-2003 2004 2005 (Q 1-3)

Local pharmaceutical and biotechnological companies

International pharmaceutical and biotechnological companies

Contract Research Organizations


54

4.02 Growth in Trials

The number of clinical trials conducted in the country has increased considerably over the past 10

years and this trend continues with on average close to 100 new trials being approved every

year. Interestingly, the number of trials outsourced to specialised CROs is also growing allowing

international companies to benefit from local recourses, intelligence and expertise.

Fig 4.02.01: International Clinical Trials Approved in Russia, 1992-2005

Source: www.regmed.ru/

The slight decline in the number of clinical trials approved between 2003 and 2004 can be

attributed to the increase in the number of mergers and acquisitions in the healthcare sector

worldwide at that time. Post-integration companies focus on internal reorganisation – thus we see

an increase of number of trials in 2005 as these new entities resume normal operations.

0

50

100

150

200

250

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 (Q1-3)


55

Fig 4.02.02: Multi-Centre Clinical Trials in Russia by Therapy Area, 2005


4.03 The Russian CRO Industry

When clinical trials first came to Russia, foreign pharmaceutical companies had no

representatives in the country. Thus, they started to work through local groups of researchers.

The first group was based in the Research Institute of Cardiology in St. Petersburg which later

became the CPR Institute.

The first CROs began to appear around 1990 - the first three were:

− The Clinical Pharmacological Research (CPR) Institute (St. Petersburg);

− PSI Pharma Support Inc. (St. Petersburg); and

− Innopharm (Smolensk).

The role that these first three played in shaping the clinical research market in Russia cannot be

underestimated. They translated GCP guidelines and introduced them to regulators, medical

professionals and the community; implemented the most reliable communication technologies;

established data management systems; and implemented modern methods of statistical analysis.

They created comprehensive standard operating procedures (SOPs) and invented effective

project management technology.

In the early days, there was no competition – each CRO worked in its own niche. The second half

of the 1990s was marked with rapid development of local CROs as well as an invasion of

international ones.

Oncology,

15.8%Pulmonology,

5.6%

Endocrinology,

9.9%

Other, 20.0%

Gastro-

enterology,

7.6%

Cardiology,

14.7%

Infectious

diseases,

10.6%

Rheumatology,

6.7%

Psychiatry,

9.1%


56

There are currently around 10 international and domestic CROs in Russia – the largest

domestically owned companies include: (for a more detailed profile see the Appendix)

− PSI Pharma Support - now the largest CRO in Russia and CIS running trials across 11

times zones, from Kaliningrad in the Far West to Yuzhno-Sakhalinsk in the Far East;

− CPR Institute, now called Evidence-CPR - the first CRO to conduct multinational clinical

trials in Russia and Eastern Europe. With offices in St. Pertersburg, Moscow, Siberia, the

Republic of Georgia, and Ukraine the company has moved its corporate headquarters to

California, USA in order to better serve study sponsors;

− Innopharm Ltd – founded by the faculty members of the Department of Clinical

Pharmacology of Smolensk Medical Institute, originally as an SMO. InnoPharm has since

expanded into an independent CRO offering a wide range of services across Russia and

Ukraine;

− Congenix – based in Moscow, this independent CRO operates in Russia and in the

countries of the former USSR;

− RCT Global - established by a group of research professionals in 2001, the company is

located in St. Petersburg and performs clinical research across the breadth of the

Russian Federation, in the former Soviet Republics and in Eastern Europe;

− OCT (Outsourcing Clinical Trials) - a CRO with head office in St. Petersburg, Russia. The

company was founded to provide services to Pharmaceutical companies interested in

conducting clinical trials in Russia, Ukraine, Baltic States, Bulgaria and Eastern Europe. At

the beginning of 2006, OCT expanded its operations into Latvia and Lithuania.

The main difference between Russian CROs (including the Russian offices of international

CROs) and CROs in other countries is that in Russia all clinical research associates (CRAs) are

medical doctors. The CRO is able to pay much higher wages than government owned medical

institutions, and can therefore select the best, most highly experienced professionals. Many

CRAs speak fluent English, which helps a great deal in communication between investigators and

sponsors, in monitoring, in reporting, and so on. Russian CRAs are trained in GCP, and many are

also members of international professional organisations such as DIA and ACRP.

Russian CROs provide the full spectrum of services including regulatory submissions, medical

monitoring, project management, handling clinical trial supplies, reporting, medical writing, and so

forth.

4.04 Why Conduct Clinical Trials in Russia?

Russia ranks highly among other Eastern European countries on the availability of basic medical

resources for conducting clinical trials.


57

Fig 4.04.01: Medical Resources in Selected Eastern European Countries

Country Major Cities Physicians per

1000 inhabitants

Medical

Universities

Hospital Beds per

1000 inhabitants

Czech Republic 1 3.4 5 8.6

Hungary 1 3.6 4 8.4

Latvia 0 3.2 2 8.7

Lithuania 0 3.8 2 9.2

Russia

(European part)

13

(9) 4.2 55 13.1

Slovak Republic 0 3.2 3 8

Ukraine 5 4.6 18 10.4

Source: the Imformer GmbH, Newsletter, June 2003

At present, most clinical trial work is conducted in Moscow and St. Petersburg (owing to better

infrastructure, higher population and the presence of major research centres); while the well-

equipped academic sites located to the east from the Ural Mountains in Siberia to the Far East

(rich regions due to their enormous natural gas and oil resources), remain largely underused.

Fig 4.04.02: Potential Russian Sites

4.04.01 Benefits of the Post-Soviet System

The ‘Soviet’ structured central healthcare system created large medical institutions specialising in

specific therapeutic areas. These institutions, both general and therapeutically aligned, have large

patient pools to draw from making enrolment in clinical trials very accessible to the patient and

rapid for the sponsor.


58

In addition, many of the medical practices in Russia call for hospitalisation, when in the West the

same treatment may be done in an outpatient setting. Hospital costs, as part of standard practice,

do not add to the trial expenses. The additional level of attention is helpful in informing the

patients of their obligations in the trial and providing the opportunity to more closely monitor and

instruct the patients early on, thus helping to facilitate compliance.

In summary benefits of post-Soviet system include:

− A centralized medical system with a chief specialist in each major area;

− Huge specialized research centres, for example:

� Cardiology

� Oncology

� Infectious disease

� Psychiatry

− Giant multipurpose hospitals in regional centres;

− Large number of hospitals in cities (> 50 in St. Petersburg alone).

4.04.02 Access to Investigators

Access to experienced, highly motivated and compliant investigators:

− Minimum of 6 years in medical school, 2 years in residency, 3 years of specialisation;

− Licensed every 5 years by the authorities;

− Certified in GCP and experienced in clinical trials;

− At least 40% are University professors, around 60% possess PhDs and at least 90% have

more than 10 years of professional experience;

− Many speak English fluently, attend international conferences, and are members of

European and American professional societies.

Investigators are highly motivated to participate in multinational clinical trials for several reasons.

First, taking part in a global project gives them an opportunity to interact, directly or indirectly, with

the international medical community from which they were almost entirely excluded during the

Soviet era.

Second, Russian clinicians are scientifically curious and the pioneering essence of a new drug

always presents an additional incentive for them.


59

Third, most investigators are very eager to get familiar with new quality standards and

methodological approaches. This is why the GCP concept is normally readily accepted by

clinicians who have had no prior practical experience with the guidelines.

Finally, the financial component of sponsored clinical trials is extremely important. It is no secret

that many physicians in Russia are grossly underpaid. Understandably, investigator fees

represent vital support to both investigators and ancillary personnel.

4.04.03 Cost Saving Opportunities

Man-hours are much less expensive in Russia than in the West, so labour can be found at

significantly reduced rates. Although some Russian CROs have begun to globalise, and are

realising the financial responsibilities of that growth, there are still many local CROs that can

provide significant savings in clinical fees. Experienced regional CROs can provide savings

upwards of 20 - 50%, compared with those in the West, while still providing experienced MDs as

project managers and monitors.

4.04.04 Access to Patients

The demographic setting in Russia can be termed as ‘fast recruitment-friendly’. Approximately

150 million people live in the Russian Federation and about one half of those live in town. There

are more than 10 cities in Russia with a population exceeding one million people. Almost all

patients with diagnosed pathologies are registered in databases managed by their regional

healthcare administrations; and data on newly diagnosed patients is collected within these

databases on a regular basis - at least annually.

Fig. 4.04.040: Patient Reservoirs, 2002 (millions)

Sour

ce:

EVI

DEN

CE

Clini

cal &

Phar

mac

eutic

al

Res

earc

h, 2003

European Union,

394

Candidates to EU,

168

Non-members, 34

European Newly

Independent

States, 80

Russia, 150


60

The region offers huge numbers of treatment naïve patients particularly in oncological,

cardiovascular, neurological, respiratory and infectious diseases. As a result, Russia often

participates in multi-national mega-trials contributing thousands of patients.

This huge and well-educated patient population participates in clinical trials because of a specific

medical need. These patients tend to make all the planned appointments and comply with

treatment as directed – they take all the required medication, they fill in the questionnaires and

diaries, and only very rarely do they withdraw their consent. Unlike Western patients, Russian

patients hardly ever move from place to place. They usually spend their whole lives in the place

they were born. That is good for research and follow-up purposes.

Fig. 4.04.041: Profile of Russian Patients

Source: S.Varshavsky et al., GCPJ 2002; 9 (11):11-14

4.04.05 Fast Recruitment Rates

The pace of patient enrolment is rapid, averaging between 2 – 4 months ahead of sites in more

developed areas. Patients in Russia are both eager to participate and extremely compliant. Given

the overall healthcare situation of Russia, it is not difficult to understand why patient enrolment

continues to be so strong. Typically, the treatment provided in clinical research is better than the

standard of care available through the national health services. The protocol requirements for

complete physicals and more personal interaction with the investigator may in itself offer incentive

enough to join a trial. Combined with the additional incentives of Western medicines and

therapies, it is easy to see why the prospective patients are excited to participate.

Secondary, 7%

High School, 50%

University, 38%

Academic Degree,

5%


61

Individual patient benefits combined with social factors (a centralised healthcare system, a lack of

competition due to the low number of clinical trials in Russia) makes for a fast recruitment

environment.

4.04.06 Patient Compliance

Many patients in Russia require specific treatments that are beyond their reach. Participation in

clinical trials is a good opportunity for them to get the appropriate long-term treatment because it

offers patients free access to:

− The best medical facilities

− The best diagnostic methods;

− The best physicians; and

− Potentially the best medications (if it is not a placebo).

Their only cost is to be compliant, which they consider more than acceptable. The high

educational level in general with no illiteracy means that there is a high level of understanding in

the nature of research and the need to follow treatment regimens. In addition, the combination of

a greater respect for authority compared with the West and a settled way of life provides an

explanation for a higher level of compliance among patients in Russia. Cultural differences

between East and West result in:

− Higher acceptance rates;

− More disciplined patients;

− Increased compliance with physician instructions;

− Low drop out and low lost to follow-up rate.

It is worth mentioning two other cultural differences: firstly Russian patients use alternative

medicine, particularly physical therapy, herbs, acupuncture, and massage far more frequently

than their Western counterparts; and Russian doctors use autopsy several times more frequently

than in the West.

4.04.07 Quality of Work

Despite rumours and existing prejudice, Russia remains a solid and reliable arena for conducting

clinical trials – cases of fraud in general, have been found to be much less frequent than in the

United States.


62

The European Forum for GCP (EFGCP) supports initiatives for developing better conditions for

clinical trials in and around Europe – since 2000 it has been supporting efforts in Russia to

conduct trials to world quality standards thus paving the way for today’s sponsors from the

research-based pharmaceutical industry to place their studies in the region with confidence.

FDA audit data suggests that data quality in Russia is at least as good as that from other regions

around the world.

Fig: 4.04.07: Summary of FDA inspections performed in Eastern European countries, January 1 1994

to March 31, 2002.

Observations Country Number of

Inspections NAI VAI OAI

Czech Republic 2 1 3 0

Croatia 2 0 4 0

Hungary 6 2 8 0

Poland 5 4 1 0

Romania 1 1 0 0

Russia 6 4 7 0

Slovenia 1 1 0 0

Total 23 13 23 0

NAI = no action indicated. VAI = voluntary action indicated (objectionable conditions found but justifying only local measures and not any further regulatory action). Any correction is left to the investigator to take voluntarily. OAI =official action indicated.

Source: http://www.fda.gov


63

5.0 Clinical Trial Issues

5.01 Study Costs

On average, investigator grants are tangibly smaller than in the West and this may represent a

substantial saving when a large number of patients are allocated to Russian sites. However, it

would be wrong to imply that the cost of clinical studies in Russia is lower than in the United

States or Western Europe. It is still possible to save on investigator’s fees, but local insurance

requirements, the imposition of customs duties (including 20% VAT), along with the higher cost of

courier services, telephone, and internet communications; will even out the differences.

Pharmaceutical sponsors should also be prepared to bear additional costs for miscellaneous

items such as installation of additional equipment at study sites. This might be a modern fax

machine, a laptop, a filing cabinet, biopsy needles, vacutainer tubes and the like. On the other

hand, clinicians taking part in large projects are now learning to reinvest a portion of their study-

derived income in computers, communication systems and new diagnostic equipment.

In some studies, it may be important to supply concomitant medication to the sites in order to

standardise therapy across participating centres. The cost of concomitant treatment in

combination with additional equipment may well push study costs over the level incurred in more

developed countries. Nevertheless, these added costs are outweighed by the speed of study

completion – often shaving weeks, if not months off overall study times in comparison to the

United States or Western Europe – and time costs more than money.

To minimize costs, it is advisable to do as much locally as possible, both in terms of basic

resourcing (e.g. CRAs) and management (such as negotiation with investigators and local

providers).

5.01.1 Investigator’s Fees

To date fees in Russia have not been higher than in the West - often they are much lower but the

amount paid will depend on a number of factors, aside from particular local circumstances.

Involvement of the sponsor's local affiliate in negotiations will, in general, tend to keep the price

down. On the other hand, sponsor or CRO head office's involvement will tend to raise the price

(although this is not often recognised), either due to a lack of local knowledge in negotiating, or

because of a perceived need to pay all investigators in a multi-country clinical trial the same (or

similar within a tight range). Sponsors are often uncomfortable that an investigator in the United

States may receive three times the pay per patient for the same work compared to those in

Russia.


64

Lastly, one must consider the investigator's expectations based on previous experience with

Western sponsors (which will again tend to inflate the price). As with so many issues, this is

always best handled by local agents, who will be able to negotiate a fair, low (compared to

Western investigators) but motivational price, without engendering any bad feeling.

5.01.2 Equipment Expenses

Instances may arise where investigators, whose medical qualification and access to adequate

patient population would make them perfect performers, but the lack of particular equipment or

means of communication (such as internet lines, fax machines, scanners etc.) could present an

obstacle. In addition the site may lack some diagnostic equipment that is absolutely necessary

for the conduct of the study, (e.g. a flow-cytometer, CAT-scan, computerised treadmill, etc).

A third party can always be hired to perform certain tests or else a possible solution is to supply

equipment to such high recruitment potential sites prior to the study, with arrangements for the

payment of the equipment from investigators’ grants. The equipment and experience then

qualifies the site for future trials, an approach which can be beneficial to both the sponsor and the

investigative site. Of course, considerable local expertise is required when choosing such an

approach, and it should be noted that most equipment costs (such as a laptop, fax machine,

modem) will follow international prices, and not be cheaper locally.

5.01.3 Monitoring Expenses

Monitoring expenses will be much lower for a local monitor, however a Western monitor travelling

on a co-monitoring visit may well experience prices similar to what they are used to in the West,

as they will tend to stay in international hotels at standard rates. As stated above, careful thought

must be given when considering sites away from principal cities. The monitoring travel time can

be considerable, as even local monitors can be reluctant to fly on some local airlines. Also, the

time cost involved for a Western monitor on a co-monitoring visit or QA auditor must be

considered.

5.02 Language

Usually the following documents must be translated into Russian:

i. Patient information and Informed Consent Form (ICF);

ii. Labels of the investigational product;

iii. Study protocol and investigators brochure; and


65

iv. Investigators’ and site contracts.

Although the vast majority of investigators are fluent in English, language skills among study staff

can be a problem:

− Good enough for reading, but not for listening or fluent verbal communication;

− CRFs can remain in English but templates in Russian are very helpful;

− Training in Russian is an important requirement for setting up studies;

− If investigators do not have a good command of English, then do not be ask them to make

free-text CRF entries in English. The results could be partially or totally incomprehensible

records, which in turn will impede in-house review and data entry;

− It may also be appropriate to offer translation assistance during investigator meetings –

even where individuals can read and comply with the protocol.

Among medical professions, knowledge of spoken language is usually weaker than written, be-

cause improvement of language skills is acquired mainly through reading of scientific papers and

not through personal contacts. Russian investigators may often hesitate to speak English

because they are afraid of misperceptions due to their accents, pronunciation, or poor

vocabulary, although their general knowledge of English is very good. It is important, therefore, to

encourage the investigators to speak out and to pose questions.

If you wish to attract the attention of Russian investigators, communicate in the local language,

particularly in the study newsletters. This will significantly increase interest in the study.

5.03 Logistics

Good communication is a key factor in the success of any clinical trial, and attention to

communications: written, telephonic, and travel, are important to success when operating in

Russia.

Working in large population centres will optimize logistical considerations in relation to travel (for

both subjects and the sponsor), communications (postage and telecoms), and any requirements

for more advanced IT services. Local-based support both for monitoring and other issues,

preferably within the population centre, will further expedite the processes.

5.03.1 Travel

Getting patients and CRAs to the right place at the right time is a fundamental concern in a study.

Travel arrangements in Russia, notably outside major cities, can be interesting and should be

reviewed carefully before committing to a particular site.


66

Throughout the world, rural populations have greater travel requirements than city dwellers, and

this is the same in Russia. It is therefore natural to focus on principal cities as the starting point

for site and patient recruitment, with their high-density populations.

Moscow and St. Petersburg enjoy the best infrastructure in the Russian Federation and also have

high populations (>10 million and >5 million, respectively); however, there are 8 further major

cities that have a highly developed communications infrastructure and populations in excess of 1

million.

Perhaps more important from a patient point of view is the practical organisation of the Russian

healthcare system - primary and specialist care is organized around very large hospitals serving

very large populations. Once diagnosed, patients are quickly referred to specialists for treatment,

or they can go directly to the specialist without a referral. The key point here is that study subjects

in Russia expect to travel to large specialist centres for treatment. This is of considerable

advantage for clinical trials.

CRAs undertaking their monitoring duties also benefit from these arrangements. Journeys are

shorter, time on site more productive, and several sites are often within easy reach within a single

day. The problem is often the number of study subjects to be reviewed.

In conclusion, the value of each site to the study needs to be considered carefully to ensure that

any travel difficulties or increased travel costs are compensated for by the contribution of the site

to the study, and plans are in place to respond to the requirements of unforeseen travel.

5.03.2 Mail and Courier Services

Careful consideration must be given to confirming how mail, packages, and other deliveries or

pickups will be made. While robust in general, the postal and delivery infrastructures may not

perform to service standards common elsewhere. Courier services may not be able to guarantee

delivery times, sometimes due to the courier's own organisational issues and sometimes due to

"paperwork," of which customs clearance is the most significant. Close local attention to this is

essential, even if a Western courier's headquarters have given assurances of support and service

levels. Familiarity with the specialist needs of clinical trials by Russian courier services is often

not as well developed, and may be completely lacking.

If courier times are long or unreliable, and critical samples have to be transported under particular

conditions back to a central lab, prior understanding of how this can be achieved is essential to

success. Contingency planning will help here to both respond to these issues should they arise,

and to offer study teams clear approaches to balancing scheduled with unscheduled work.


67

5.03.3 Communication

While considerable progress has been made over the past 10 years to improve the

communications infrastructure, it is still the case that large variations in equipment and service

levels occur. It is therefore essential to review the electronic communications requirements

against study requirements, especially when Internet (TCP/IP)-based services are required.

The general telephone (voice) infrastructure does not usually present an issue. Where the

telephone infrastructure has been upgraded, it is often as good as comparable Western systems.

In some instances there is limited access to long distance and international lines but a solution

here is to provide pre-paid calling cards. In private buildings (field CRA locations, private clinics)

or in more remote locations, older systems may still be present and need to be accommodated

(buildings where the exchange has been upgraded, say, but the distribution to individual locations

has not). Situations such as this may cause problems if, for example, an IVRS randomisation

system is to be used. If the telephone system itself is satisfactory, facsimile transmission will

usually be unproblematic. But if fax technologies are essential to the study, provision of dedicated

additional lines may result in a bureaucratic exercise with telecom providers. In the absence of

fax, sites rely on scanning and email.

Services for mobile phones are generally well supported in the principal cities. It should not be

expected that mobile phone services will be available in rural or even some urban areas. Mobile

phone services such as laptop connectivity should be checked if essential for supporting

monitoring visits, as the service levels provided can be mixed, and may not be usable in some

areas.

TCP/IP (Internet)-based services (email, Web browsing, etc.) using direct connections are widely

available and are now often based on the best available technologies. The types of coverage can

vary widely, however, and if the reliance required is high (for EDC tools, for example) checks on

speed, stability and configurations are essential prerequisites to initiating and training sites.

5.04 Background Therapy

Background therapy may not be marketed or not available:

− Check this well in advance;

− Discuss unification of background therapy with local partner;

− Involve local partner in protocol review.


68

5.05 Cultural Differences

Lack of familiarity with cultural differences may lead to poorer quality data being collected. For

example, Russian patients tend to have greater tolerance to pain. Certain side effects may thus

seem more apparent in Western European or US studies:

− Patients may not report ”minor” problems because they do not want to bother their doctors

with a complaint like a headache or dry mouth;

− Less AEs are reported by investigators;

− Investigators must be made aware of the problem.

It is also worth mentioning that Russian patients very often use alternative medicines - particularly

physical therapy, herbs, acupuncture, and massage. This has the potential to interfere with the

trial results and should be taken into consideration. The use of alcohol is also higher than in the

West and this factor along with dietary differences, should be taken into consideration.

In addition, the importance of relationships should not be underestimated:

− Investigators show hospitality and respect;

− It is very important to allocate more time for communication and socialisation in

comparison to Western investigators.

5.06 Recruitment Issues

Currently, the demand for clinical studies lags behind the potential supply. Therefore, the

competition between investigational sites for contract research projects and patients is not

particularly fierce, and the spirit of fellowship among physicians is very high.

However, the big trial sites in the major cities are beginning to get busy – notably in Moscow and

St. Petersburg. It is not uncommon for respectable clinicians to ask their colleagues from other

hospitals to refer patients with a certain diagnosis to them. The request is likely to be satisfied

simply due to goodwill shown by fellow physicians.

It should also be noted that there are no recruitment companies in the market (no SMOs and

advertising for patients is a new concept); however, this is not expected to hamper recruitment

rates in the short to mid-term.


69

5.07 Logistics and Local Support

It is often critical to develop an infrastructure to support multicentre studies. For large projects a

regulatory interface with healthcare authorities is recommended both to expedite regulatory

review and to facilitate importation of clinical supplies.

Some clinical centres are not equipped for long-term storage of large amounts of study drugs,

especially of biotech products that require very stringent storage conditions. To resolve this

problem a buffer storage for supplies and accompanying GMP-compatible paper work needs to

be set up. Sometimes a stand-by car is needed for transporting blood samples from hospitals to

contract labs.

5.08 Monitoring

It is critical for the monitor to establish a productive working rapport with the investigator. This

should be done from the very beginning of the investigator-monitor relationship. Failing to build

mutual respect at the outset often does not result in a second chance. That is why it is generally

advisable that a senior monitor or seasoned project manager should recruit investigators.

Sending an inadequately trained freelancer will not build respect - an experienced investigator will

sense this right away. As a result, instead of the fruitful peer relationship, the monitor will have to

withstand being “talked down to” by the investigator. For this same reason, Russia is not the

place where studies can be efficiently monitored by nurses - monitors need to be a physician,

preferably with a clinical background, in order to establish the right rapport with the investigator.

Most Russian investigators are also scientists and the monitor's ability to competently discuss pet

scientific ideas of the investigator is often the best way to win his/her respect. It is not enough for

monitors to just memorize the protocol; more importantly, they should be able to provide scientific

and methodological rationale for any feature of the study design.

Often, due to the large number of subjects per centre and the increased centre support required

(in areas such as ongoing investigator training), the monitoring frequency may need to be as

much as two to four times higher in Russia than in the West. A strategy of monitoring sites with

Western frequencies that have high patient recruitment rates is often a route cause of sponsor

dissatisfaction with Russian sites. The reasoning behind this is not just the necessity for recurrent

quality control. Most investigators who have little prior experience with international clinical

projects feel insecure about their performance in the beginning of the study and often need

reassurance and guidance from the monitor. In addition, more patients per week at each site will

take more time, and issues will accumulate more quickly. Longer visits at Western frequency will

not have the same efficiency as an increased numbers of visits. The consequence is that the


70

number of visits may need to increase – but it may be that during the study a judgement can be

made that the higher level of support can be reduced as confidence increases.

The importance of local expertise in setting up and conducting clinical studies has to be stressed.

For successful conduct of quality studies in Russia, a profound knowledge of the local medical

community, customs, practices, and the language is of paramount importance. There have been

clinical studies successfully or semi-successfully monitored from abroad, but those incidents are

infrequent. Russia is rapidly becoming more and more internationally minded but, in certain

respects, peculiarities remain therefore for the time being Russian sites should preferably be

monitored by Russian CRAs. CROs having Russian offices have a definite advantage in this

regard.

5.09 Data Management

CRF reviews should be conducted in Russia. Local CRAs are much more efficient in deciphering

obscure CRF records and facilitating query resolution. Coding of concomitant medications may

become a nightmare when not familiar with numerous combination products used in Russia,

which are not listed in international drug databases.


71

6.0 Study Set-Up

6.1 Regulatory Compliance - the Federal Drug Law

The Federal Drug Law, 1998, established a legal basis for drug development and clinical trials

and brought the Russian system closer to Western standards. It regulates all aspects of clinical

studies from ethics compliance to subject’s rights and reporting.

According to this law only the Department of Quality, Efficacy and

Safety of Medicinal Products and Medical Devices from the Russian

Ministry of Health (commonly known as the Russian Drug Agency

or the Federal Drug Agency) issues approvals for a clinical trial.

Within its structure, the agency has the State Pharmacological

Committee (SPC), which is responsible for the pharmacological

(scientific) content of the study, and the National Ethics Committee

(NEC), which provides ethical expertise. The NEC is constituted in strict accordance with ICH

guidelines.

It should be noted that regulatory requirements in Russia are subject to constant change and

require close examination in order to ensure compliance and smooth study conduct.

Implications of the Federal Drug Law include:

− Only one government body – the Federal Drug Agency of the Ministry of Health –

approves clinical trials.

− The Federal Drug Agency requires approval from the National Ethics Committee before a

trial can commence.

− Trial subjects must be covered by health insurance acquired locally – in addition to any

global insurance policies already held by the sponsor.

− Only medical institutions licensed and approved by the Federal Drug Agency may

participate in clinical trails - licenses are only issued to GCP- compliant establishments.

− The head of the medical institution must approve the study protocol and assign a

supervisor which must be a medical doctor with no less than 2 years experience in

medical research/clinical trials. The assigned supervisor must be familiar with the results

of pre-clinical trials of the study drug and has the right to ask for any additional information

regarding the same.

− The study plan/protocol must be developed in conjunction with the Ethics Committee of

the institution performing clinical trial – i.e. the local IEC.

Administration for State

Control of Drugs and

Medical Equipment

Vladkovshki per. 18/20

Moscow 101431

Tel: +7 095 973 1735


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− Non-registered drugs can be imported for clinical trails purposes; however, an individual

shipment license must be acquired for each specific shipment of the study drug from the

Federal Agency.

− Only drugs manufactured in Russia can be exported thus all unused clinical trial material

must be destroyed by Central Pharmacy or specially accredited local companies.

− Drugs for clinical trials must be clearly marked “For Clinical Trial.”

− No subject can be involved in a study without written informed consent.

− Clinical trails cannot be conducted on:

� Orphans,

� Under-aged children (under 18 years) - unless the drug under trial is being

developed especially for paediatrics; or when the aim of the trial is to collect

better data for this patient group. In the latter case, the trial has first to be

conducted in an adult population.

� Pregnant women - unless the drug is being developed for this patient population

and when there is absolutely no risk to the woman or the unborn child.

� Military personnel.

� Prisoners – unless they provide a written agreement and that the appropriate

authorities are notified.

− Any adverse events (AE) must be reported to the authorities; however, the obligations for

AE reporting are not transparent - i.e. it is not quite clear when, how and to who the report

should be made.

It is worth mentioning that according to current legislation, international agreements in which

Russia is participating take priority over and above Russian legislation for in-country projects.

This means that, firstly, with the absence of the appropriate norms in Russian legislation the

international legislation comes into power. Secondly, if any norm in Russian legislation disagrees

with the internationally accepted norm, then the trial should follow the latter.

6.2 Selection of a CRO and External Vendors

Selection of a CRO is an important part of the study set up process. Many large pharmaceutical

companies have established their own clinical research units in Russia due to the obvious benefit

of conducting clinical research in this region. However, there is still a need for reliable partners in

the management and monitoring of clinical trials in the country, especially for smaller

pharmaceutical and biotechnology companies.


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It is important to check whether a CRO has a physical presence in Russia – many Western CROs

still operate via partners. Knowledge of local specific regulations and language is a key success

factor and use of local expertise is essential in the smooth running of any study – there is great

value in familiarity with the capabilities of local sites and the frequently changing regulations.

Contract research organisations may represent a new phenomenon in Russia, but they provide

the full spectrum of services and many domestic CROs now operate across CEE/CIS borders.

To avoid long custom clearance procedures, it is recommended to set-up one central pharmacy

in Russia to distribute the study drug to the sites. There are many licensed pharmaceutical

warehouses in full compliance with GMP and GCP guidelines. Study drugs sent by courier

directly to the hospital (from abroad) must be cleared through customs by hospital administration,

a very inefficient and time-consuming process. Contracting a local/central pharmacy is a much

more effective drug shipment and distribution process.

When it comes to a central laboratory, sponsors usually contract a central laboratory based in a

Western European country. However, one may significantly decrease the study cost by

contracting a Russian laboratory as the central laboratory for the entire region. Such laboratories

have been found to meet the most advanced standards in laboratory procedures.

6.3 Site Identification/ Investigator Selection

More often than not, project managers first look for experienced investigators in Moscow and St.

Petersburg. However, when considering a drug trial in one of the most actively researched

indications, for example in oncology or cardiology, the most prominent investigators in these large

cities are often overloaded with protocols and the best hospitals are already busy beyond their

capacity.

In such situations, the sponsor should ensure that there will be a qualified physician capable of

investing the time necessary to secure smooth performance of the study and that study

documentation will be appropriately stored and kept out of other monitors' sight. Where this

cannot be ascertained it is strongly advised to explore other locations.

There are a large number of good clinical sites in other Russian cities. The cities themselves may

lack five-star hotels and have fewer cellular phones per capita, but they do have skilled

physicians and well-equipped facilities - in some instances, sponsors may have to invest extra

time in educating these investigators to GCP and training them in various clinical trial procedures

but the flipside of this is that these investigators will be less spoiled by the courtship of large

Pharmacos and more motivated to partake in clinical studies. Those far-sighted enough to do

some educational work in advance will be in a more advantageous position to recruit investigators

and provide for quality performance on a pan-Russian scale.


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There are a number of clinical centres in Russia that are so large and highly specialised that it

would be possible to open several study sites at one particular centre. In some respects, this

scenario presents organisational advantages, but in such a setup it is difficult to accurately

estimate the enrolment potential. Investigators would be competing for the same patients

resulting in fierce inter-departmental competition – the results could be poor recruitment rates.

When working with a clinical centre for the first time, it is very important to be aware of the

hierarchy - the complexity of which should not be underestimated. The general rule is "don't

bypass the boss", but there may be numerous nuances that cannot be fully appreciated as an

outsider. The investigator is likely to know very well how the local power structure works and

sponsors should allow their investigators to navigate them through this hierarchical maze.

Sponsors who are unobservant of, or insensitive to whatever subordinate relationships there

might be, will pay the price. For example, instead of providing much needed assistance when

needed, centre staff will club together to give a united front of carefully calculated inaction. In the

worst-case scenario, the study may experience a series of delays and never sail through at this

site. Study monitors would be wise to observe any "diplomatic" protocol and think ahead.

When selecting an investigator, there are generally two options available:

− The opinion leader - a well-known physician, a policy maker and often a full professor, a

head of the chair, or director of a hospital; or

− A less prominent but more enthusiastic individual, usually a departmental head or an

assistant professor.

Project managers often strive to recruit opinion leaders but this approach is more expensive

because the opinion leader or policy maker expects higher fees. Moreover, opinion leaders are

not necessarily good investigators. They may not be good practicing physicians either. They

probably will not do the work themselves, but will hire a couple of investigators who will also

require salaries. Another problem with the opinion leader or policy maker is that they conduct

multiple clinical trials simultaneously – sometimes competitive ones – so they have less time to

devote to each study and lower motivation. This option is generally employed when the sponsor’s

priority is marketing goals and the clinical trial would benefit by being associated with big names.

If the study is mostly about the drug's efficacy, reliable hard-working investigators capable of

doing a quality job and staying on schedule in terms of patient enrolment are needed. In this

instance sponsors often prefer a less prominent but more effective investigator who will seek

subjects personally, complete all forms on time, attend all meetings, promptly answer phone calls

and work closely with the study monitor.


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Individual projects will require a trade-off between the advantages of the two approaches to

decide which one to implement. Feedback suggests that a mixture of both approaches is the

most effective way to conduct a study in Russia.

6.31 Medical Institutions

As already discussed, the medical system in the country is highly centralised – a heritage of the

Soviet past. Each area of medicine has a “chief specialist” and this is also true for geographical

areas – e.g. chief cardiologist of Moscow, chief oncologist of North West Russia, etc. However,

this system is still very Moscow-centric.

There are in general, two categories of medical institutions of interest for conducting clinical

studies:

− Huge specialised institutions in each field of medicine – e.g. Institute of Oncology, Centre

for Cardiology. Normally, each will also be a teaching and research hospital with

outpatient facilities.

− Huge multi-purpose regional hospitals covering almost all medical specialities in a certain

geographic area and each with an outpatient facility. Such hospitals will be named after a

Saint or by number – e.g. Saint Elizabeth Hospital, Hospital # 32.

Both types of institution have in general between 500 and 1500 beds and process tens of

thousands of inpatients and hundreds of thousands of outpatients annually. The hospitals are well

equipped, have more-or-less modern diagnostic and treatment capabilities, and are staffed with

highly trained personnel.

When it comes to conducting clinical trials, there are a few major differences in the Russian

compared to the Western model:

− Nurses are much less involved in the process of medical care and are hardly ever

involved in clinical trials – they may perform study procedures, such as injections or

taking blood samples, but they neither deal with subject consent or complete study forms.

− In most cases, the study drug is kept at the investigator’s office – not in the hospital

pharmacy – and pharmacists are usually not involved in the clinical trial at all.

− The hospital administration should not only be notified about the clinical trial, but also be

a contractual party in the study agreement.


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6.4 Local IECs

Although not every hospital, out-patient clinic or medical university has its own institutional review

board or ethics committee, the situation has changed remarkably since the early 1990s when

there were no institutional review boards (IRBs) or IECs at all.

Usually, today, there are one or more IECs in every region of Russia. They are usually located at

medical universities or at the largest hospitals of the region. The members of these IECs are

entitled to review and approve clinical trials in the regions where they work. The number of these

committees is on the rise constantly, and the professionalism and skills of their members are

improving continuously.

6.5 Protocol and CRF Design

6.51 Protocol

The study protocol must be developed in conjunction with the Ethics Committee of the institution

performing clinical trial – i.e. the local IEC – and approved by the head of the medical institution.

This is the case for all sites involved in the clinical trial and this function must be co-ordinated

when dealing with multiple sites.

It is generally advisable, unless dealing with truly experienced investigators, that the protocol

should be somewhat more detailed than an ordinary protocol for a purely Western study.

Experienced investigators often accept an outline protocol that leaves a lot of details to their own

discretion; but the less seasoned investigator is much more comfortable with a protocol that is

explicit rather then implicit about almost every element of the study. However, prior to the

commencement of the study, the monitor should emphatically explain that although the protocol

as such should be meticulously adhered to, when it comes to purely clinical decisions the

investigator should apply his/her best medical judgement rather than anything else.

A Russian version of the study protocol must be submitted as part of the “clinical trial package” to

the Federal Drug Agency for review and approval. Some pharmaceutical sponsors also choose to

provide investigators with a Russian translation of the protocol. When preparing a Russian-

language version of the protocol, sponsors should be aware of the potential disastrous

consequences of hiring a translation bureau. Translation by a non-medic may quite literally ruin

the protocol. This may seem a trivial issue, but, regrettably, this is not a hypothetical situation –

many sponsors have fallen foul of this process and ended up with protocols that are not only

unintelligible and laughable due to faulty translation but also full of statements that are entirely

wrong and may be detrimental, if observed, to the study as a whole. Ideally the study protocol

should preferably be translated by a physician and in addition, it is strongly advised to provide the


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investigator with the original English-language protocol. If, in the investigator's view, some

statement in the translated version does not make much sense, then he/she can always look it up

in the original text.

6.52 CRF

Although the vast majority of investigators and CRAs are fluent in English, many may still get lost

in an English-language CRF. One possible solution is to prepare an entirely bilingual

English/Russian CRF. This would make the CRF substantially bulkier, but would probably be

worth it if the study covers a large number of sites in Russia.

An alternative solution could be to have a Russian-language template that could be

superimposed on the original form prior to making entries. Finally, an additional solution that has

worked well in Western Europe would be to have the white CRF page in Russian and the other

pages in English.

In situations where the investigator does not have a very good command of English, then he/she

should not be asked to make free-text CRF entries in English as the result could be partially or

totally incomprehensible records, which in turn will impede in-house review and data entry.

Unless the CRF is entirely self-explanatory, which is rare, it should contain various tips prompting

the correct completion of a particular form. This is not to say that the CRF should be

overcrowded, which would both confuse the investigator and complicate subsequent in-house

review and data entry. If the CRF cannot be sufficiently instructional by itself, then a CRF

instruction manual would be a good idea. Especially in the beginning of the study, the investigator

would feel much more confident about filling out the CRF, if he/she had a clear supplementary

document to consult.

6.6 Legal Issues, Insurance and Contracts

This is often the most important factor, frequently overlooked by Western sponsors, which

impacts the whole process and can significantly delay completion of a project. There are many

local regulations and it is sometimes difficult for a central Project Manager based in the U.S. or in

the Europe to follow all of them - this is another good reason to rely on local staff based in the

country.

Local regulations impact mainly four areas of a clinical study:

i. Patient information and informed consent form;

ii. List of documents to be submitted to the IRB/IEC or to the Regulatory Authorities;


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iii. Insurance policy (need for a local insurance policy), indemnity issues; and

iv. Contracts with investigators and their institutions.

6.61 Patient Information and Informed Consent Form

The master informed consent form (ICF) should not be translated word-for-word, but Russian

specifics and laws should be observed and incorporated into the translated ICF. One cannot

assume that the ICF master text is perfect if it contains all GCP-required elements. This is the

worst strategy, which significantly delays the study start through double submission. Moreover,

such approach discredits the sponsor in the eyes of the local IRB/IEC or Regulatory Authority.

Instead, despite including all GCP-required elements, one should review the local regulations,

producing a Russia-specific ICF. The internal (sponsor’s) approval process of the country-specific

version should follow applicable standard operating procedures (SOPs). There are two elements

in the patient information document that frequently cause problems. One is the indemnity

statement. Some sponsors transfer a statement directly prepared by a U.S. lawyer to the ICF text.

Such a statement, usually favourable to the sponsor, often does not fulfil expectations of the local

IRB/IECs and does not usually comply with ethical principles. It is more reasonable to refer in the

ICF text to the insurance policy or outline the insurance/indemnity situation. The second

misunderstanding is specifying the jurisdiction, where a claim can be submitted outside the

patient’s country of residency. This is unacceptable for high-standard clinical research.

When hiring a third party to translate the informed consent form it should be noted that as with the

study protocol poor, commodity translation often carried out by translation bureaus can be

disastrous - the translation should be scrutinised by native Russian speakers to ensure that

nothing has been missed or inverted.

6.62 List of Documents to be Submitted to Local IRB/IEC or Regulatory Authority

A Good Manufacturing Practice (GMP) certificate for the product manufacturer (drug or placebo)

is required, but it needs to be prepared for submission of a sample of the investigational product.

To gain study approval, the sponsor is required to submit a clinical trial regulatory package to the

Department of State Control of Quality, Efficacy, and Safety of Drugs at the Ministry of Health of

the Russian Federation (Federal Drug Agency).

The clinical trial package should contain the following core documents:

− study protocol and amendments;


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− investigator’s brochure – containing data on pharmacology, toxicity, pharmacokinetics,

and previous clinical trials;

− case report form and other data collection forms;

− information for patients and consent form;

− data collection forms for patients (diaries, questionnaires);

− insurance policy from a Russian insurance company;

− list of investigative sites; and

− curriculum vitae of the principal investigator.

The documents should be translated into Russian in full (i.e. the protocol, patient information and

informed consent forms) or partly (i.e. the investigator’s brochure).

6.63 Local Insurance Policy

Many study sponsors have global product liability insurance in place issued by an international

insurance company; however, no trial can be approved without an additional insurance policy

issued by a local insurance company and should include civil and product liability. Usually there is

no indemnity limit, but there is a requirement for a full insurance policy to be submitted (an

insurance certificate is not enough).

Sponsor representatives and researchers must be insured in addition to patients. This insurance

is the full responsibility of the sponsor and the sponsor is fully liable for all adverse patient

reactions to the study drug(s) regardless of the fact that patients are made fully aware of the trial

specifications and risks.

The local insurance policy should be the first document to be arranged while approaching the

study set-up phase. No IEC will accept any submission or start to review the planned study if a

local insurance policy does not accompany the study protocol.

Many international insurance brokers, although very familiar with the legal aspects, may not

appreciate the specifics of the clinical research process. Problems may arise in cases of

termination of some sites during the study and the recruitment of additional sites which requires

the need for a new policy – this generates additional costs, delays progress and increases the

complexity of documentation. This is a situation where local representation is highly

recommended.

The cost of such insurance will vary depending on the phase of the study: the earlier the phase

the higher the price. For Phase I studies, the cost may reach $80 per patient; whereas in Phase

IV, it may be around $40 per patient. All consented patients must be insured, even if they have


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not been randomised (i.e. all patients who have signed the consent form). Cost also varies from

company to company.

6.64Contracts with Investigators and Investigative Sites

Even with the best local team, the contract negotiation is usually a time-consuming process and

requires a lot of effort, if not well prepared. Ideally, the sponsor should mail the master contract

template to the local staff, asking them to customise it to meet local standards. Then, after such

customisation, the country-specific template should be reviewed by the sponsor’s legal adviser

and submitted to the investigators and their institutions. Following such process, additional cus-

tomisation is minor and can be changed without further delay.

The signed contract must be in Russian. This presents another challenge for legal advisers based

outside the country. Below are two possible solutions to this problem:

i. Prepare a bilingual contract template. Every paragraph (or sentence) in English should be

followed by identical text in Russian, often in a different font style. Or:

ii. Prepare a local language version and obtain an official certificate from a CRO or other

institution in charge of customisation, stating that both versions are identical.

6.7 Study Approval

Approvals for clinical trials are based on the Federal Drug Law and issued by the Federal Drug

Agency. The submission process usually does not exceed two to four months and the process

flow (Ethics Committee vs. Regulatory Authority) is sequential. As already discussed, the sponsor

is required to submit a clinical trial regulatory package to the Federal Drug Agency who then

forwards the package to the Federal Scientific Centre for Evaluation of Medicinal Products (the

Centre).

To process the documents the Agreement should be signed by the study site(s) and the

organisation which submits the package (CRO or pharmaceutical company). If it is a CRO, there

should be a notarised ‘delegation of authority letter’ from the sponsor pharmaceutical company

(manufacturer of the study drug) in place before the Centre signs an agreement. Both the letter

and agreement should be in Russian. A fee of about $1,000 is charged for processing the

documents.

When the agreement is signed by the Centre, copies of the clinical trial package are

simultaneously sent from the site to the State Pharmacological Committee (SPC) and to the

National Ethics Committee (NEC). In the case of a vaccine study, the Immunology Committee

may also become involved.


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The SPC provides scientific expertise on the study, after approval from the Safety and Efficacy

Committees is obtained. The SPC usually has its meetings every two weeks, except in summer

months when most members are on vacation. It should therefore be noted, that there are no

meetings from mid-June until mid-September. At all other times of the year, SPC approval is

normally issued within approximately two months.

The National Ethics Committee is established in strict accordance with the ICH GCP. It works

effectively and the review procedure does not exceed more than one month in most cases. The

most common issue with the NEC is the wording of the ‘informed consent form’. If the study has

already been approved for US or Western European sites, no issues usually occur during the

NEC review.

When both the SPC and NEC approve the study, the Russian Drug Agency issues a general

approval for the clinical trial. The Agency lists the investigation sites and the total number of

patients to be consented (patients who must sign the consent form). Hence, if there is any

change or addition to the sites during the study, or if the number of enrolled patients increases, a

new approval should be obtained – this is something to bear in mind.

Although in theory it is possible to apply to the Regulatory Authorities without involvement of the

local staff operating in these countries, it is not recommended. Local representatives can

communicate with authorities in the native language, which facilitates a more effective dialogue

and helps to prevent delays from miscommunication. Such individuals usually are more familiar

with the procedures of the regulatory authorities, guaranteeing a more effective follow-up of the

regulatory review. Many local CROs offer regulatory and clinical trial approval services - this

greatly facilitates the process for international companies planning on conducting trials in the

country.

6.8 Patient Recruitment

Russia, with a population totalling approximately 145 million, is the most advanced CIS country

having been active in international clinical trials since the late 1980s, yet its huge human

resources are still underutilised. Most clinical trial work is conducted in Moscow and St.

Petersburg and some sites are getting very busy while well-equipped sites in the rest of the

country remain underused.

It is a well known fact that Russian study sites recruit patients quickly as Russian patients are

less reluctant to take part in high-standard clinical trials as patients in Western Europe. For many

of them, international clinical projects sponsored by Western companies, are synonymous with

state-of-the-art medical technology. They expect more advanced diagnostic procedures,


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immediate access to modern medical equipment, and supervision and/or monitoring of the

process by international professionals.

Regardless of the type of study, no subject can be involved without written informed consent. All

patients must be fully informed on the reasons, aims, methods, and possible results of the trial as

well as to the possible risks and disadvantages of participation. Participants must be informed on

their right to decline and/or abrogate the contract at any time. For all trial patients, the physician in

charge must provide a written agreement stating the candidate has been fully informed and

accepted all the terms and conditions of the trial.

For trial subjects unable to give informed legal consent, the informed consent of a legal

representative must be obtained and the interests of the patient must prevail over those of

science and society. Administration of the medicinal product must be expected to produce a

benefit to the patient.

In addition to gaining ethical approval prior to the commencement of a study, sites are also

inspected for ethical compliance while studies are ongoing. Ethical monitoring teams examine

compliance with GCP, as well as with local and international rules. Audit checks usually only

occur once during a trial and the length of the audit process depends on the complexity of the

study but usually lasts several days.

6.9 Site Training

As already mentioned, language skills among study staff can be a problem; therefore, training in

Russian is a must.

Particular effort should be made to educate investigators and to monitor clinical sites – this is

particularly important for sites new to clinical research. Local CROs working in the region often

spend substantial time counselling investigators about site management to ensure that work is

done properly and that investigator grants are fairly distributed among the team members to

maintain efficient site performance.


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7.0 Importing Clinical Trial Materials

When the study has been approved by the authorities, it is necessary to obtain approval for the

importation of the clinical trial materials (CTM) from the Ministry of Health – it should be noted

that study approval does not include an import license.

This approval is specific for each shipment and should be obtained every time the study drug is

shipped to Russia. The process normally takes between two and three weeks in total but

complications can arise.

7.10 Importing the Study Drug

According to the Federal Drug Law, which regulates imports of the study drug to the Russian

Federation, it is necessary to get Ministry of Health import approval for each shipment.

Gaining such approval is a multi-step process. First, a detailed pro-forma invoice should be

submitted to the Russian Drug Agency along with the petition to approve importation. The Drug

Agency issues an import approval letter, which then should be signed by the Deputy Minister of

Health and sealed by the Permanent Committee on Narcotic Drugs.

In the worst case scenario, collection of the signatures and seals may take weeks. Thus, it is

strongly recommended that a shipment begins only when the letter with all the signatures and

seals is ready. Otherwise the study drug may be embargoed at the Russian customs, waiting for

the completion of the paperwork. It is also recommended that a dry run test is performed prior to

the shipment of a real drug.

A pro-forma invoice needs to be prepared for each shipment of clinical supplies, including the

study drug. It should match exactly the shipment content and must be identical to the pro-forma

invoice submitted to the MoH for drug shipment approval. It should be noted that specific pro-

forma invoice requirements can vary according to the courier employed.

The next step for study drug importation is customs clearance. The selection of a courier is

important: the shipping company chosen to deliver the drug to Russia should have strong local

representation. Once all the papers are ready, two things should be done: completion of the

customs declaration and processing the payment of fees. Customs fees depend on the declared

value for customs and the shipping cost. A fee of 20% VAT and the cost of a customs broker

must also be added on. As a result, one should expect to spend about 35 - 40% of the declared

value.

Customs clearance usually takes between two and five days. If a temperature-sensitive drug is to

be imported, it should be stored at a certain temperature (typically +40C), and a special


84

agreement with the customs office should be prepared at the entry point, which will allow one to

deliver drugs to the storage, satisfying the required conditions before clearance is completed. The

drug is then sealed in a quarantine area until the clearance paperwork is done.

There is one very important issue relating to the importation of the study drug and other materials

into Russia: it is strongly recommended that materials are not shipped directly to the study sites

but via a central depot in charge of importation, accountability, inventory and distribution. Sponsor

companies are not legally obliged to use this approach; but, it is important to bear in mind that if

materials are sent direct to the sites, each site will be obliged to do all customs clearance by

itself. A centralised method of importation avoids the difficulties arising from this position.

7.10.1 A Centralised Approach

There are two ways of dealing with the importation of the study materials: centralised methods

and decentralised methods.

The centralised approach utilised in Russia involves the use of a Central Pharmacy and

dramatically cuts down the time and costs associated with the importation. With the centralised

approach only one drug shipment needs to be made to the Central Pharmacy with one pro-forma

invoice being completed, one time customs clearance and so on. The study materials are sent to

the sites from the Central Pharmacy based on the needs of the sites and patient recruitment. The

following procedures can be performed at Central Pharmacy: storage, packing, labelling,

retention, destruction and accountability of the study drug.

Central Pharmacy should guarantee limited access, security, temperature control, alarm systems,

and an uninterruptible power supply. There are obvious advantages of using a centralised

approach rather than a decentralised one, where multiple shipments of the study materials to the

sites are associated with time-consuming multiple pro-forma invoices, multiple customs

clearances and so on. A centralised approach allows for some flexibility if the study materials

cannot be stored at customs due to the special requirements for the study drug storage. In this

case it is possible to receive permission from customs to store the study drug in the Central

Pharmacy sealed, while waiting for customs clearance. As soon as the paper work is done, the

study drug can be shipped to the sites.

Most major courier companies such as DHL, Fed-Ex and TNT, offer their services in Russia. It is

helpful to know the specifics of each courier operation in Russia in order to be able to deliver the

study materials to the sites within 24 hours.


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7.20 Importing Other Materials

7.20.1 Study Documents

This process is much easier than the importation of the study drug. There are neither specific

conditions, nor any need for importation approval. Customs clearance is simple and the customs

fee depends mainly on the weight of delivery and the shipping cost.

7.20.2 Devices

Regulations for the importation of the investigational devices are not clearly defined. If the device

is not registered in the country, it requires approval from the National Bureau of Standardisation,

which may take months or even years to obtain. Temporary importation might be a solution.

Unregistered clinical trial materials included in the laboratory kits (such as glass tubes and

needles) can be imported into Russia, but nevertheless, the National Bureau of Standardisation

will still have to issue an approval letter in this case.

7.20.3 Laboratory Kits

The situation with laboratory kits is similar to that of devices in that there are no regulations for

unregistered materials, but the importation rules depend on the content of the kit. Additional

approval from the National Bureau of Standardisation may be required.

All these material types are subject to customs fees. A good solution for the importation of

devices and laboratory kits can be temporary importation, but in this case you would pay for every

month the goods are in Russia.

7.20.4 Packing Materials

There are no specific regulations for the importation of packing materials. There may be a

requirement for an import license and a certificate of safety has to be obtained in most cases.

Customs fees vary for different kinds of packing materials and depend on the weight and content

of the package. If possible, some packing materials should be purchased in Russia – this saves

both time and money as it is generally much cheaper to purchase these materials locally than to

import them. This general approach can be used for packing materials (such as cooler boxes and

coolers), general study equipment (ECG machines, treadmills and so on) and concomitant

medications as well.


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7.30 Exportation of Biological Media

In most international clinical trials there is a need for exportation of blood samples and other

biological materials to the central laboratories in Western Europe or in the US. In order to do this,

Ministry of Health export approval for the entire study is required. It is important to get this

approval before the study commences, otherwise samples can be spoiled or lost. The petition for

this approval consists of the detailed description of material including size and/or volume,

information on whether the materials are contaminated or not, and the total quantity of samples

for the entire study. Sudden changes in regulations may put the entire study at risk. Thus, the

selection of a good courier service and intensive everyday monitoring of the regulations is the

only way to avoid serious problems. The Ministry of Health will issue one approval (export

license) for the specified number of samples per study.

It takes 24 hours to deliver biological samples from St. Petersburg and Moscow to central labs

located in Europe or the US, and 36 to 72 hours from the other cities. Some sponsors consider

using Russian central laboratories to cut down the time and cost associated with the exportation

of biological samples.

7.40 Export of Other Clinical Trial Materials

There are no obstacles to exporting study documents or CRFs. However, the export of

information on videotapes, diskettes, CDs and so on is regulated. This media may be monitored

by customs to confirm that it does not contain information or materials prohibited for export (such

as classified information), and such control may cause delays in delivery. It is important to know

that only developed film can be exported.

According to the Russian Federal Drug Law, only drugs manufactured in Russia can be exported.

Therefore, the unused study drug cannot be returned to the sponsor and must be destroyed by

the Central Pharmacy or local companies with special accreditation. There are several companies

available who can conduct study drug destruction in accordance with the local regulations, GCP

and sponsors requirements.

Drugs for clinical trials must be clearly marked; for example, labelled ‘For Clinical Trial’.

Investigational drugs for in-hospital use may be labelled in English, but study drugs for outpatient

use should have instructions for the patients in Russian.


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7.50 Summary

Useful tips to successful importation of CTM:

− All approvals should be prepared in advance, prior to shipment of clinical trial materials – a dry

run test prior to real shipment is recommended

− If a sponsor has no local affiliate, it is of crucial importance to employ a reliable CRO with

strong experience in Russia and an excellent record of conducting successful clinical trials in

Russia – knowledge of local requirements is a must

− For importation of CTM, it is better to use a ‘centralised’ approach

− Wise selection of courier service is very important – one with strong local presence in Russia is

recommended

− It is recommended not to export the unused study drug and to avoid circulation of the study

materials among different countries

Clinical Trials Russia

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Transcript of Clinical Trials Russia