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In the over-regulated system there are many tools for earning money from officials


22.04.2020 (№ LDaily #3)

In the over-regulated system there are many tools for earning money from officials

How the Producers of Medical Equipment and Medical Devices Committee of the American Chamber of Commerce protects the interests of foreign business in Ukraine tells Mykola Romaniok, Head of the Chamber Working Group, in an interview with LDaily.

Early in the morning and during the lunch break; at any free time, and even before bedtime, he studies the specialized legislation, conducts business meetings, arrange teleconferences, structures the business process, basically works. This is the usual day of Mykola Romaniok, Head of the Working Group of the Committee of Producers of Medical Equipment and Medical Devices of the American Chamber of Commerce in Ukraine (hereinafter – ACC). The main task of the Committee is to improve the conditions in order to conduct medical business in Ukraine, which, in turn, will increase the investment attractiveness of the country. Indeed, much effort has to be made to achieve this goal. And, frankly speaking, Mykola does it with enthusiasm, which can do only those people, who truly believe in the future of the country and see a huge potential in it. Mykola Romaniok, as the Head of the Working Group of the Committee, is convinced that a favorable business climate is possible in our country, and the state will eventually begin to work professionally.

During the conversation with Mykola spoke about the mission and goals of the Committee, as well as who might benefit from a slowdown of market development, and who, in turn, could rectify the situation.

: Mykola, being the Head of the Working Group of the Committee of Producers of Medical Equipment and Medical Devices of the American Chamber of Commerce in Ukraine, which purpose do you pursue?

M. Romaniok: The Committee works in several directions. To be short, we create a platform for building effective business, being a platform for communication between both competing industry companies, business and government, consolidating the problem aspects of legislation, developing an algorithm of decision, and also preparing a regulatory structure for its implementation. Subsequently, each document must «go through» the officials and deputies. At each stage it is necessary to prove the consistency and expediency of the proposals.

: Everyone is familiar with medicine market, while the market of medical products remains outside the public’s attention. Tell us about it, please.

M. Romaniok: Yes, you are right. This is due to the fact that medical products are mainly used by doctors. The patient uses only a small part of them, the so-called pharmacy segment: bandage, cotton wool, plaster, glucose meter, etc. Medical products accompany the process of treatment. As an example it can be a dental filling, or MRI, ultrasound investigation machine or laboratory diagnostic equipment, etc.

Precisely as the main consumer is a doctor, this topic is not highly discussed. Another thing is the medicine, which is mainly negotiated. Taking into consideration the monetary equivalent, the market of medical products has about 30% of the total capacity of the medicine market, and, consequently, deserves attention. The main attention of the professional community is focused on the process of public procurement of medical equipment. It is the area of big money. But it’s not that interesting to be discussed by the wide audience, that`s why the press is silent.

: Which government`s mistakes do you consider as the most obvious?

M. Romaniok: The legislative policy of our country is aimed at harmonizing the legislation with the European one. In Ukraine those laws and norms that have been working in the European Union for many years are getting passed, and they are also necessary to prepare our country for EU membership. But in practice there are too many national peculiarities that create formal technical barriers for international business. An example is the issue of product labeling. Ukrainian legislation requires transliteration of the address of each medical product`s producer. This norm defies any logic. In practice, we all understand that such a letter from the consumer will never come. Such information should be indicated as it is written in the original version or in the language of international postal correspondence – in English. The whole world does it. And especially deeply this issue affects when it comes to medical products, which have to be sterile. The fact is that the application of a simple information sticker can disrupt the sterility of the package, and as a result the patient can be infected. But the norm of the law must be fulfilled. In my opinion, such standards should not be realized when it comes to health risks.

Another example:

«There are directives in Europe, regulating the circulation of medical products. In Ukraine there is a translated analogue – “technical regulations”. These regulations attempt to regulate the circulation of medical products in Ukraine, as well as in Europe. But Ukraine is not Europe, unfortunately. And until we become a full member of the European Union, there will be a double regulation»

So, the producer undergoes the entire compliance assessment procedure in order to implement a new product on the EU market and is obliged to undergo again a completely similar procedure for the Ukrainian market. This leads to an increase the product`s cost for the Ukrainian consumer. We have already discussed that the purchase of the most expensive equipment is carried out by the state. Accordingly, the state increases the cost by itself. Taking about the private medicine or a pharmacy segment of products, the patient will simply be forced to cover all the costs of regulatory procedures undergoing of the importer by himself.

: Can this double regulation be called reinsurance? Does it not have any additional advantages?

M. Romaniok: There are really some advantages for national producers. Ukraine, giving an obligation to a national producer to comply with European requirements, created the foundation, increasing the chances of entering the markets of developed countries of the world. This is about positive effects.

There is a completely different situation with western companies, which do the same procedure twice. Do not forget that European requirements to product safety are much higher.

: Is it possible to influence this process and simplify the regulatory procedure for foreign producers?

M. Romaniok: Yes, we have recently initiated the signing of the ACA agreement, which would definitely be equal to the quality of European products in Ukraine.

«If a medical product has undergone a compliance assessment procedure in the EU, it can automatically enter the Ukrainian market without any additional regulatory procedures. An exception to this can be only the basic conditions of the market, such as the Ukrainian-language instruction or interface language for the management software»

Any foreign company that represents products on the Ukrainian market must have one active authorized representative here. The development of the institution of the authorized representative will solve the language and geographical problems in consumer`s and producer`s communication. An authorized representative in the country allows you to directly determine the safety responsibility of the products. We all know that responsibility cannot be shared, so there should be just one authorized representative.

: Which results has the Committee already achieved in its work?

M.Romaniok: Answering this question, I want to emphasize that I am a partner of a large consulting company, and work in the Committee for me is a personal initiative and desire to bring discipline in the medical products sector. The Committee has already achieved a lot during this year. It is not easy to get the results, as it’s a long and complex process that requires simultaneous involvement of a large number of participants, including those, who have the highest political level. For example, in the case of ACA, which should be signed in the form of a protocol to the Association Agreement between Ukraine and the EU, four institutions of power should be simultaneously involved in the process, including the President as the signatory. This is both the Ministry of Health as a profile ministry and the Ministry of Economic Development and Trade, as a technical regulator, and the Ministry of Foreign Affairs, which is responsible for positioning Ukraine in front of the international community.

If we talk about the processes, which are completed within this short period of time, then it is a decision of the Ministry of Economic Development and Trade on the exclusion of medical equipment from the technical regulation of legally regulated measuring instruments, which created an additional regulatory barrier. It is also the approval of the order of opening a register of authorized representatives by the Ministry of Health, getting a large number of clarifications from profile agencies, which allow us to synchronize market participants on those issues, which cannot be answered by law. We can say, we have just started; so many results are still ahead.

: How difficult is it to get to the authorities?

M. Romaniok: Well, even after getting an answer “yes” to some initiatives, officials are in not in a hurry to implement those decisions. We can persuade, get agreement, approve the plan of action, but then it is very difficult to overcome the bureaucratic swamp, which slows all down. It is a pleasure that the state apparatus has become easier to communicate with. It is one of the greatest achievements of reforms in the country.

We have recently had a meeting with Prime Minister Volodymyr Groisman; he supported the initiative to remove technical trade barriers, emphasizing that the ACA agreement would allow the country to gain many benefits. But it did not last long. As soon as we started to talk to the representatives of the ministries, we received a whole list of arguments, why this process requires 5-10 years.

: In your opinion, what is the reason of such overregulation?

M. Romaniok: The basis of any reform process is people. Some of them are accustomed to living in the Soviet system and they often just do not see the alternatives. It is also not a secret that populism is “our everything” – talking, talking, and then let it be somehow (smiles). You cannot omit the fact that there are still people in state authorities, who get the advantages from the bureaucracy. Such system has many tools for earning money. Today I would like to avoid the noisy word “corruption”. For them it is kind of business.

: Do you think that measures should be taken to simplify the medical business in Ukraine for foreign companies?

M. Romanyok: We are doing that. We are in the process of developing a reform program of this sector now. We are planning to: develop the Law of Ukraine “On medical products”, prepare amendments to the Tax Code in order to establish a general VAT rate for all medical products, exemption domestic producers from VAT at initial stages of development, assist in preparing the platform for signing the ACA for the medical products sector, initiate a creation of a specialized department in the Ministry of Health, the development of a legislative foundation for the bio-transplants trade, initiate a creation of an inter-sectoral working group of compliance assistant and much more.

If the government supports our initiatives, these are the actions that the market needs.

Despite all the difficulties, we want to get the deal in a short time. This is the main goal for us. Therefore, we will not give the officials, who are involved in it, time to relax. And we will have the finger on the pulse all the time.

: How do the ministries evaluate your initiatives?

M. Romaniok: We are maintaining our position, but at the same time, they are very positive and do not confront with anyone. Moreover, we come to the “fish” from its head, keeping the right vertical. First, we get political agreement, and after it we go to the performers, already having an approved step-by-step instruction in our hands. And, then the “millstone”, which we have already mentioned.

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