Contract Manufacturing in Pharma

In this topic, I would like to draw attention to the changes relating to the SK-Pharmacy LLP long-term purchases of medicines and medical products purchased as part of the guaranteed volume of free medical care and medical care in the compulsory social health insurance system.

I am referring to paragraph 18-1, clause 1, article 1 Of the Code on “People's health and health care system”, which defines a long-term contract for the supply of medicines and medical products.

This provision of the Code has undergone significant changes, which can be divided into clarifying changes and changes with significant consequences.

Below is a brief analysis of the changes.

Clarifying changes

In particular, the new version of the definition clarifies, in accordance with which international standard of the quality management system the purchased medical products should be produced (ISO 13485), and also indicates exceptions, medical products to which this international standard does not apply (medical products of the safety class of potential use risk 1 and 2a (except sterile ones)). These changes can also include the clarification that now the person who has the intention to design production of medicines and medical products may not be just a legal entity, but individuals or legal entities carrying out pharmaceutical activities.

Changes with significant consequences

There are also changes that may have a significant effect on the development of pharmaceutical industry in Kazakhstan.

Firstly, at the Code level (not only at the level of the Government Decree of the Republic of Kazakhstan as early), the maximum term of long-term contracts for supply of medicines and medical products concluded with SK-Pharmacy LLP is determined – up to 10 years.

Secondly, the scope of persons with whom such supply contracts can be concluded is outlined. Now such supply contracts can be concluded not just with resident legal entities, but also:

  • with manufacturers of medicines, medical products of the Republic of Kazakhstan;
  • with customer of contract manufacturing, i.e. persons who do not produce medicines and medical products on the territory of the Republic of Kazakhstan, but place orders for their production at manufacturing sites located in the Republic of Kazakhstan;

Thirdly, they have expanded the number of cases in which a long-term contract for the supply of medicines and medical products can be concluded. Now to those may refer not only the new production design, but also the modernization of an existing production or both of these processes together. Therewith now not only the manufacturer who plans production design and/or modernization has the right to conclude a long-term contract for supply, but the customer of contract manufacturing who intends to design and/or modernize the production of medicines and medical products with a manufacturer located on the territory of the Republic of Kazakhstan.

We suppose that these changes were made to the Code on “People’s health and health care system” with intent to develop “contract manufacturing” in order to get international pharmaceutical companies interested in placing orders for manufacture of their products at the factories located in the Republic of Kazakhstan.