An unprecedented agreement signed last week between theFDA and health authorities of the Russian Federation willstreamline approval in Russia of U.S.-manufactured drugs andbiologicals already approved by the FDA. Although theagreement was lauded by officials in the U.S. and Russia andindustry trade organizations, its real impact on sales of drugs inRussia remains unclear.

Even more unclear is the agreement's potential impact on thebiotechnology industry, which to date has produced relativelyexpensive and sophisticated treatments. Most biotechnologycompanies with FDA-approved products said they have noimmediate plans to file for drug approval in Russia.

The "memorandum of understanding" (MOU), finalized on Feb.15, will transform the process by which U.S.-manufactureddrugs are registered for sale and distribution in Russia. In thepast, U.S. drug companies had to provide Russian translations ofthousands of pages of scientific information about theirproducts. Frequently they also had to conduct additionalclinical trials as well as laboratory and animal tests in Russia.The registration procedure had no time limit.

Under the terms of the pact, U.S. companies seekingregistration of an FDA-approved drug will be guaranteed areview in 90 days. Only basic information about the companies,including their U.S. manufacture of the product, the FDAapproval letter for the product, the FDA-approved labeling forthe product, a statement of the company's compliance withgood manufacturing practices and a copy of the company'smost recent FDA inspection report, will now be required.

As FDA special programs officer Phil Budashewitz toldBioWorld, "Why kill Russian rats if we've already killed themhere? This agreement will allow the Russians to direct theirpublic health resources away from a duplication of effort andonto more important public health issues."

According to a White House press release, the pact virtuallyguarantees "a nearly automatic entry into the RussianFederation" for FDA-approved medications. It is the only suchagreement between the U.S. and another industrialized nation.

The MOU could be a boon for U.S. pharmaceutical companies,but serious questions about the use and reimbursement ofexpensive and sophisticated biological products may delay thedebut of biotechnology companies in the Russian marketplace.

According to Peter Teeley, Amgen Inc.'s vice president ofgovernment and public relations, the Thousand Oaks, Calif.,company currently does not sell either of its blockbusterproducts -- Epogen, which is used in kidney dialysis, orNeupogen, which is used for neutropenia associated withchemotherapy -- in Russia or any other former republic of theSoviet Union, and has no plans to do so in the near future.

"I don't even know what the size of the kidney dialysis marketor the chemotherapy market is in Russia," said Teeley. He saidhe believes the MOU will benefit pharmaceutical companieswho manufacture "entry-level" products such as aspirin andvitamins.

Jim Weiss, a spokesman for Genentech Inc. of South SanFrancisco, Calif., told BioWorld neither the company nor any ofits international marketing partners has immediate plans toapply for Russian drug approval. Genentech has received FDAapproval for five drugs, including two human growth hormoneproducts (Protropin and Nutropin), Pulmozyme for cysticfibrosis, Activase for heart attacks and Actimmune for a rareimmune disorder.

"At this point, not a lot of thought has been given to it," saidWeiss. "Genentech has no marketing apparatus in Russia."

Genzyme Corp. of Cambridge, Mass., generated $125 million in1993 in worldwide sales ($93 million in the U.S.) of its drugCeredase for Gaucher's disease. According to the company's vicepresident of corporate communications, Steve Push, Russianreimbursement procedures will be the limiting factor forCeredase, which costs about $150,000 per year for the averagepatient.

Push added that Russia and some of the other newlyindependent countries in Eastern Europe may have a sizableneed for Ceredase since Gaucher's disease is the most commongenetic disorder among Ashkenazi Jews (those of EasternEuropean descent).

But ICN Pharmaceuticals Inc. of Costa Mesa, Calif., on Tuesdayapplauded the streamlined drug registration agreement. Itsanti-viral drug, Virazole, is already marketed in Russia fortreating hospitalized infants suffering from respiratorysyncytial virus (RSV) infection. The company plans to build a$40 million pharmaceutical-grade manufacturing plant in St.Petersburg through a joint venture of one of its operating units,SPI Pharmaceuticals, and Oktyabr, one of the largestpharmaceutical companies in Russia.

"We see Russia and Eastern Europe as one of the last untappedmajor pharmaceutical markets in the world," ICN's senior vicepresident of public relations, Jack Sholl, told BioWorld. "We'rewilling to take studied risks now to gain a significant footholdin this market in the future."

The Russian Federation, with a population of about 145 millionpeople, consumed only $8.5 million worth of U.S.-manufactureddrugs last year, according to the U.S. Department of Commerce.In contrast, drug sales in the U.S., which has a population of258 million, totaled $52 billion. Experts said that Russia -- farand away the largest of the 15 republics that comprised theformer Soviet Union -- suffers from a critical shortage of basicmedicines such as penicillin, antibiotics and birth control pills.

Obstacles to penetrating the Russian market have not beenpurely regulatory. The Upjohn Co. of Kalamazoo, Mich., has beenselling pharmaceuticals in Russia since 1989. According toJoseph Heywood, Upjohn's executive director of publicrelations, a weak infrastructure and the relatively low level ofsophistication in medical care have seriously hampered salesand distribution of drugs.

"In terms of people, it's a huge potential market. In terms ofthe available infrastructure and distribution mechanisms, it's asmall market," Heywood told BioWorld. Upjohn, which has anoffice in Moscow and sales representatives in the Ukraine andBelarus, views the region as a major market of the future. ButHeywood cautioned that drug companies will need a lot ofpatience and perseverance to succeed.

-- Lisa Piercey Washington Editor

(c) 1997 American Health Consultants. All rights reserved.