Over March 2017, Ukrainian Government and Ministry of Health (“MOH”) approved a number of regulations to finalize the framework for reimbursement of several groups of medicinal products. “Available Medicines” pharmacy reimbursement program (the “Program”) is scheduled to be launched from 1 April 2017, with its cornerstones being as follows:

*           Coverage: INN and dosage form based list of medicinal products for outpatient treatment of cardiovascular diseases, type 2 diabetes and asthma (21 INNs in total). From 27 March through 3 April 2017, the MOH is accepting applications from pharmaceutical companies to form the initial version of the Register of Reimbursable Medicines based on trade names (the “Reimbursement Register”).

*           Pharmacy participation: open for any licensed Ukrainian pharmacy pursuant to a participation agreement to be entered into with local authorities. A prescription for INN and its dosage form covered by the Program shall be required for the patient to get reimbursable medicines from such pharmacies.

*           Source of funding: targeted transfers from the State budget of Ukraine to local budgets.

*           Price thresholds for reimbursable medicines: in order to qualify for the Program, a medicinal product must be priced (ex-factory in Ukraine / import to Ukraine) within the median of external reference prices registered in the following countries: Poland, Slovakia, Check Republic, Latvia and Hungary. Calculations shall be made in UAH on DDD (defined daily dose) basis. Ukrainian register of threshold prices (the “Threshold Price Register”) has been approved by the MOH and is publicly available. Medicinal products priced above the established thresholds shall not be eligible for reimbursement or purchase for public funds, but can still be sold through Ukrainian pharmacies on general terms.

*           Guaranteed reimbursement amount: shall be linked to the lowest DDD price (ex-factory in Ukraine / import to Ukraine) of relevant dosage form quoted to the MOH for the Program within the same INN, topped up by taxes and maximum permitted price mark-ups. Thus, medicinal product with the lowest DDD price shall be fully reimbursable. Products within the same INN and dosage form that are priced above this minimum, but below the applicable price thresholds, shall be subject to partial reimbursement, i.e. the patient will be co-paying the price difference with the lowest-priced product. The guaranteed reimbursement amount shall be shown on the Reimbursement Register for all trade names covered by the Program.

*           Mark-up limitations: pricing of medicinal products falling under the INNs eligible for the Program shall be additionally subject to mark-up limitations. Applicable maximum permitted wholesale and retail mark-ups shall be 10% and 15%, respectively, while the regular retail mark-up for other essential medicines is 25%. Conservative reading of relevant regulations suggests that such tightened mark-up limitations shall apply on INN basis, irrespective of whether the specific product is reimbursable (included into the Reimbursement Register) or sold on general terms.

The Reimbursement Register shall be updated on biannual basis (other than in case of significant foreign exchange rate changes that may require its extraordinary review). It is, therefore, advisable for all interested pharmaceutical companies to apply for participation in