¶ … pharmaceuticals in Russia. The writer provides an overview of the history of the topic as well as the current concerns in the field. There were five sources used to complete this paper. When the Soviet Union dismantled its communist regime and began to rebuild its entire political and economic structure the world cheered and offered its support. It has been more than a decade and while several areas have been enjoying marked success the pharmaceutical field has been fraught with problems. The pharmaceutical industry in Russia has dealt with many problems including fraud, counterfeit and fake products. It is an industry that by its very nature mandates the strict compliance with purity both in manufacturing as well as cost. Russia works towards that compliance while trying to rid itself of the problems that have come with it.

The Russian pharmaceutical market is filled with problems and one of the biggest problems is the fact that people are buying medications they believe will help them, and the medications are counterfeit (Startseva, 2002). This not only places the patient at risk because these counterfeit medications are not regulated, but the counterfeit medication business is costing the legitimate medication business millions of dollars. This is during an era where Russia is attempting to rebuild itself through the use of private business and legitimacy within those businesses. "More than one in every 10 pharmaceutical products sold in Russia is counterfeit, costing legitimate manufacturers at least $250 million a year in lost sales." This large industry needs to be able to count on its revenue for the purpose of building on itself and becoming stronger and bigger as time goes on (Startseva, 2002).

A recent study concluded "counterfeits accounted for 12% of the market for prescription drugs, over-the-counter medicines, vitamins and other pharmaceutical products and that the share could leap to 25% within two years. "The problem has every potential to become a crisis in the country, " said Robert Rosen, executive director of the Association of International Pharmaceutical Manufacturers (Startseva, 2002). "Putin should recognize this problem at last. Without strong political will, we can not resist it effectively." AIPM and the Coalition of Intellectual Property Rights released a survey of leading foreign and domestic pharmaceutical companies Thursday that put $250 million as the conservative estimate of how much was being lost to counterfeits every year. At the rate counterfeits are flooding the market, that amount could double within two years, the survey found (Startseva, 2002)."

The four most often counterfeit drugs in Russia today are:

fake drugs

Inferior quality

Different active ingredients

Misleading packaging

The fake medications are medications that claim to have certain ingredients but in fact have something else all together. In addition to the consumer paying for something they are not getting when this happens, it has the potential to be dangerous to the consumer as well. Medications are carefully developed for the purpose of handling specific medical needs. When the consumer takes the medication they trust that the medication is the one that has been developed for their specific medical condition (Startseva, 2002). This can lead to the deterioration of the problem because the medication is not addressing the problem. In addition, the consumer may inadvertently take a medication that contains a component that they are allergic to.

A medication of inferior quality also presents a problem for the Russian consumer. The ingredients that are supposed to be in the prescription medication may be of inferior quality than those that are supposed to be there. These sub-standard ingredients are not working as well as the true ingredients would, and therefore the consumer often has to return to the doctor, or their medical condition can become worse than it was before as their body builds a resistance to the drug (Startseva, 2002).

Different active ingredients are another problem in the fake medication business in Russia. The active ingredients that are supposed to interact with the other ingredients work together to produce a desired and total result. If there are different active ingredients than advertised the total interaction may be different (Startseva, 2002). In addition the consumer may be allergic to whatever ingredient was used in place of the advertised active ingredient.

The final most common type of counterfeit drug involves the packaging. The consumer comes to rely on a particular brand, and the brand they buy is not really the brand that the package claims that it is. This is unfair not only to the consumer who counts on the brand...

"The bottom line is a single bad counterfeit or 'look-alike' medicine can result in a very bad outcome for a Russian family, child or senior, " Rosen said. "And that's simply one too many for an industry dedicated to saving lives, eradicating disease and lessening the pain and suffering of the sick." The sale of counterfeits -- from medicines and films to music and software -- has flourished in Russia over the past decade. Intellectual property rights experts have put the cost of fakes to copyright owners at more than $1 billion a year (Startseva, 2002)."
While the nation has been trying to address the pharmaceutical problems in the last few years it has recently stepped up the effort in its desire to become a member of the World Trade Organization. In a recent survey of companies polled about Russia's most pressing problems they ranked the pharmaceutical troubles as the number four challenge to doing any business in or with the nation of Russia. The industry worldwide has called for the mass overhaul of the Russian industry of pharmaceuticals and demanded it be addressed before the nation be allowed to join the WTO. "The industry's message is loud and clear," Rosen said. "The Russian government must pass and enforce laws where the penalties for counterfeit medicine equal the seriousness of this insidious crime (Startseva, 2002)." Yevgeny Myazin, co-chairman of the Union for the Protection of Consumers' Rights, said that amendments have been drawn up to counter fakes but they have been waiting in the State Duma for approval since last year. The survey asked executives to rate several government agencies and authorities on their effectiveness. None were viewed as being effective. The Health Ministry's department for control of pharmaceuticals and medical equipment received the highest ranking, while the Duma received the lowest. "At the same time, the survey found that most pharmaceutical companies are doing too little to protect their own intellectual property rights," Necarsulmer said (Startseva, 2002). What's needed, he said, is consumer education. Consumers should be allowed to compare the legitimate product with the fake. "Why are foreign producers raising this problem only now when the problem has grown to such proportions?" Myazin said. "The reason is many producers didn't want to frighten consumers away from buying legitimate products (Startseva, 2002)."

History

When the Soviet Union first disbanded over a decade ago the pharmaceutical system was severely disrupted. The industry has begun to repair itself but is still filled with troubles (Privin, 1998). "Currently, there are more than 9,000 drug products registered in Russia - a substantial increase over the number available under Soviet rule (Privin, 1998). " The growth potential of the market is large. Part of the growth potential of the pharmaceutical market is the fact that the nation has a population of almost 150 million people. The country's national health care budget totals three percent of the total financial budget which is small compared to the United States budget which comprises of 13% of total available funds. "The Health Ministry is currently drawing up comprehensive policies for developing the domestic pharmaceutical industry, and some companies already enjoy various benefits such as tax exemptions, reduced energy tariffs, and elimination of export tariffs. The ministry aims to promote projects that will support development of modern pharmaceutical production that complies with current good manufacturing practice (cGMP) requirements (Privin, 1998). "

There are differences in the estimates of the Russian pharmaceutical sector. The estimates depend largely on the source of the information. The nation's ministry of health places the industry's size and wroth at $3.6 billion while the industry experts who are outside of Russia lower that estimate to $1.6 billion. A third party, the government, places the industry's worth at about $5 billion. One of the leading causes of the counterfeit market as well as the demand for the industry to be purified is the growth of the consumer demand (Privin, 1998). "From 1992 to 1995, the demand for OTC drugs in Russia increased 21%. Among the most popular nonprescription drugs were gastric medicines, painkillers, and cough and cold remedies. Some forecasts suggest that vitamin sales will grow by 80%, sales of cough and cold medicines by 60%, painkillers by 25%, and gastric medicines by 20% by 2000(Privin, 1998). "

Under the former Soviet Union the system was controlled by a centralized system, which included the planning, distribution and supply to the industry. Independent republics today…