Ukraine has taken the first step towards public procurement of certain pharmaceuticals and medical products involving specialized organizations

Baker&McKenzie, Kyiv, Ukraine
Mon, April 27, 2015

The Amendments establish a legalbasis for introduction in Ukraine of a temporary (until 31 March 2019) publicprocurement procedure in respect of certain pharmaceuticals and medicalproducts involving the following specialized organizations: specialized funds,organizations and mechanisms of the United Nations Organization, IDA Foundation(the Netherlands), Crown Agents (UK), Global Drug Facility (Switzerland) andPartnership for Supply Chain Management (USA). Such public procurements willonly be carried out on the basis of an agreement between a specialized organizationand the Ministry of Healthcare of Ukraine, in accordance with the internalpolicies and procedures of such organizations. The Law of Ukraine On PublicProcurement does not apply to the public procurement procedure established bythe Amendments.

This procurement procedure, inparticular the list of pharmaceuticals and medical products allowed to bepurchased under the procedure, the specifics of the specialized organizations'selection process, signing of procurement agreements, publishing of procurementinformation shall be established in accordance with a Resolution of the Cabinetof Ministers of Ukraine to be adopted within one month from the effective dateof the Amendments, i.e., by no later than 25 May 2015. Based on the publicdiscussions of the draft Amendments, it is expected that the new procedure willapply to the procurement of vaccines and pharmaceuticals for treatment oftuberculosis, hepatitis, HIV/AIDS, etc.

In addition to the above, theAmendments simplify, to some extent, the registration procedure, the labellingrequirements and the procedure for importation into Ukraine of pharmaceuticalsthat are subject to procurement pursuant to the procurement procedures carriedout by a specialized organization.

In addition to the Amendments, on 9 April 2015, the Verkhovna Rada of Ukraineadopted the Law of Ukraine On Amendments to the Tax Code of Ukraine regardingTax Exemption for Certain Pharmaceuticals and Medical Products (Draft Law No.2151, the "Law"). The Law provides for a temporary (until 31 March2019) exemption from the value added tax (7%) of the import and first supply onthe territory of Ukraine of pharmaceuticals and medical products procured bythe above specialized organizations. Further, such pharmaceuticals and medicalproducts shall be exempt from the import surcharge (5%). The Law becomeseffective the day after its publishing date, and shall continue in effectduring the effective period of the Amendments. As of today, the Law wassubmitted to the President for signing, but has not yet been signed.

Conclusion

The Amendments are the basis for introduction in Ukraine of a new temporaryprocedure for public procurement of certain pharmaceuticals and medicalproducts assisted by specialized procurement organizations. However,introduction of this procedure depends on adoption of Resolutions of theCabinet of Ministers of Ukraine, as provided for in the Amendments, and otherregulations.

The Amendments aim at eliminating corruption risks during publicly-fundedprocurement of pharmaceuticals and medical products. Introduction of theAmendments is expected to reduce the delivery time and the costs and to improvethe quality of procured pharmaceuticals and medical products.

Additional notes

ThisLEGAL ALERT is issued to inform Baker & McKenzie clients and otherinterested parties of legal developments that may affect or otherwise be ofinterest to them. The comments above do not constitute legal or other adviceand should not be regarded as a substitute for specific advice in individualcases.