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TERMS AND DEFINITIONS

Competition Law means the Federal Law “On Protection of Competition” dated 26 July 2006 No. 135-FZ (as amended).

EDL means the List of Vital and Essential Medicines approved by the Russian Government.

FAS means the Federal Antimonopoly Service.

Federal Law “On Drug Circulation” means the Federal Law dated 12 April 2010, No. 61-FZ “On Drug Circulation” (as amended).

Federal Law “On Health Protection” means the Federal Law dated 21 November 2011, No. 323-FZ “On Protection of Health of Citizens in Russia” (as amended).

Federal Law “On Contractual System for State Procurement” means the Federal Law dated 5 April 2013, No. 44-FZ "On Contractual System for State and Municipal Procurement of Goods, Works and Services" (as amended).

FST means the Russian Federal Service on Tariffs.

GLP means Good Laboratory Practice.

GCP means Good Clinical Practice.

MoH means the Russian Ministry of Health.

REGULATORY CHANGES 
Sale and purchase of medicines included into the EDL, with no sale price registered, is prohibited starting on 1 March 2015

According to MoH, starting on 1 March 2015, it is prohibited to sell medicines included into the EDL for 2015, if the drug manufacturers fail to register the maximum sale prices for such medicines. Further to the Federal Law “On Drug Circulation”, this prohibition applies to drug manufacturers, wholesalers and pharmacies. It also means, that such essential drugs (with no price registered) will not be admitted to state tenders subject to the direct provisions of the Federal Law “On Contractual System for State Procurement”.

For that reason, the MoH had asked the pharmaceutical manufacturers to apply, in a timely manner, for state registration of the maximum sale prices for medicines included into the EDL. The list of documents and procedure for such registration are established by the Rules on State Registration of Maximum Sale Prices of Manufacturers of Vital and Essential Medicines, approved by the Resolution of the Russian Government No. 865 dated 29 October 2010 “On State Regulation of Prices for Drugs Included into the List of Vital and Essential Medicines”.

Re-authorization period for medicines within EEU will exceed 10 years

The issuance of unified market authorization for medicines, required for drug circulation within the Eurasian Economic Union (EEU), will start in 2016. This was announced by Vasily Boitsov, Head of the Technical Regulation and Accreditation Department of the Eurasian Economic Commission, at a conference on drug circulation within the Customs Union and the EEU.

He pointed out that all requirements, established by the Eurasian Economic Commission for integration purposes, are subject to transition periods, and are quite comfortable for businesses. The time limit for going through the re-authorization procedures will exceed 10 years. Therefore, it is expected that the pharmaceutical sector will completely adapt to the new requirements by 2025.

Russian procedure for pre-registration clinical trials within the Customs Union will remain unchanged

Member states of the Customs Union currently have no clear understanding of the unified requirements for clinical trials, as was reported by Marat Sakaev, Assistant to the Chairman of the Board of the Eurasian Economic Commission, at a conference on drug circulation within the Customs Union and the EEU on 10 February 2015.

The common pharmaceutical market within the EEU is expected to start functioning in 2016. However, drug manufacturers are already concerned about the harmonized regulatory framework for the member states. Unlike other countries, in Russia, it is still required to perform pre-registration clinical trials for all original and generic drugs.

According to Marat Sakaev, this system will obviously be retained for some period of time. However, this issue will be discussed in more detail when elaborating the rules for drug authorization.

Please note, however, that the Federal Law dated 22 December 2014 No. 429-FZ, amending the Federal Law “On Drug Circulation”, recognized the possibility of using the results of international clinical trials, conducted in accordance with GLP and GCP, for the purposes of orphan drugs registration. The relevant law has also separated the clinical trials and drug registration procedure, which should speed up the process of drug registration in Russia.

The MoH elaborated the procedure for interchangeability determination

The MoH set the Draft Resolution of the Russian Government “On approval of procedure for interchangeability determination of drugs for medicinal use” out for public discussion, which will take place fr om 12 February to 13 April 2015.

All drugs for medicinal use, newly registered in Russia or registered in Russia up to 1 July 2015, shall be subject to the interchangeability determination, with the following exclusions:

(i)         reference medicinal products;

(ii)        herbal medicinal products;

(iii)        homeopathic medicinal products;

(iv)       medicinal products, with medicinal use permitted in Russia for over 20 years, where it is impossible to study their bioequivalence.

Interchangeability of a generic of biosimilar medicine with a reference drug, shall be determined in the course of state registration of the product in Russia, or when amending the documents of the registration dossier. Such application can be filed by the marketing authorization holder or owner of the drug registration certificate.

Interchangeability of medicinal products will be determined upon MoH assignment, by an expert commission fr om the MoH state-financed institution for evaluation of medicinal products.

DRAFT REGULATIONS AND LEGISLATIVE INITIATIVES 
The MoH is elaborating the pharmacovigilance procedure

The MoH announced that it is elaborating an institutional order “On approval of the Pharmacovigilance Procedure”. This is expected to be enacted in the third quarter of 2015, and is aimed at the implementation of amendments provided by the Federal Law dated 22 December 2014 No. 429-FZ, amending the Federal Law “On Drug Circulation”. This law is introducing a new procedure for monitoring the efficacy and safety of pharmaceutical products circulated in Russia (including specific pharmacovigilance requirements, in relation to biologic drugs).

Monitoring will be focused on the detection, assessment and prevention of adverse effects of a drug’s use. If any adverse event is reported during the use of the drug (also by foreign pharmacovigilance regulatory authorities), it may be decided to suspend the drug’s use.

The Federation Council approved the draft law amending article 61 of the Federal Law “On Drug Circulation”

On 25 February 2015, the Federation Council approved draft law No. 719054-6 amending article 61 of the Federal Law “On Drug Circulation” (further the Draft Law). The main aim of the Draft Law is to change the deadline for entry into force of amendments that enable the Russian Government to alter drug-pricing regulations.

The relevant power of the Russian Government was introduced by the Federal Law dated 22 December 2014 No. 429-FZ, amending the Federal Law “On Drug Circulation”, and should have entered into force starting on 1 July 2015. However, the Draft Law changes this deadline in order to enable the Russian Government to alter the pricing regulations from 16 March 2015, in order to make drug-pricing indexation possible. Earlier the MoH announced the government’s intention to authorize one-time price indexing for low-cost medicines, in order to retain these drugs on the market.

Parallel imports of drugs can be permitted into Russia

Drugs and medical devices will possibly become the first goods allowed for parallel imports into Russia, subject to sample checks at designated customs points, Kommersant reported, with reference to the conference in which participated the First Vice-Prime Minister Igor Shuvalov.

The FAS was assigned with the task to hold a meeting during February involving drug and medical devices manufacturers, importers and experts, with a view to elaborate a pilot project involving parallel imports authorization. This project of the utmost social importance may become another crisis response measure, enabling the avoidance of price discrimination and reducing prices for vital and essential drugs, which are not produced in Russia. This project is expected to be implemented within a year or two, after which, it may be extended to other commodities.

The idea to implement the medicine imports pilot project is presumed to have been initiated by the Head of the FST Andrey Belyaninov. Just before the meeting, he sent a letter to the FAS, announcing the readiness of the FST to participate in the pilot project’s implementation, and offering to elaborate the investigation procedure in order to stop abuse of exclusive rights to trademarks.

On 20 February 2015, the FAS held an expert meeting on parallel imports, wh ere drug manufacturers and professional pharmaceutical associations were able to share their opinions and concerns in relation to possible authorization of parallel drug imports into Russia. Today, such parallel imports are prohibited by article 1487 of the Russian Civil Code (which sets forth the national principle of exhaustion of rights to the trade mark in Russia) and clause 16 section V Appendix 26 to the EEU Treaty, signed on 29 May 2014 (which sets forth the “national” principle of exhaustion of rights to the trade mark, in relation to all EEU member countries).

The MoH is elaborating pricing regulations for drugs included into the EDL

The MoH announced that it is elaborating the Draft Resolution of the Russian Government “On State Regulation of Prices for Drugs Included into the List of Vital and Essential Medicines” (further the Draft Resolution). The resolution is planned to be enacted on 1 July 2015, and is aimed at implementing the amendments provided by the Federal Law dated 22 December 2014 No. 429-FZ, amending the Federal Law “On Drug Circulation”.

The scope of the Draft Resolution includes, inter alia:

(a)           rules for state registration and re-registration by pharmaceutical manufacturers of maximum sale prices for medicines included into the EDL;

(b)           procedure for maintaining of the state register of maximum sale prices for medicines included into the EDL;

(c)           rules for determining the regional maximum wholesale and retail mark-ups, over the actual sale prices for medicines included into the EDL; and

(d)           method for fixing the maximum sale prices for medicines included into the EDL by the pharmaceutical manufacturers.

REGULATORY PRACTICE 
Appeal court sustained the FAS reasoning in case involving the abuse of dominance by a Russian subsidiary of a foreign pharmaceutical manufacturer

On 17 February 2015, the 9th Arbitration Appeal Court confirmed the legitimacy of the decision issued by the FAS against a Russian subsidiary of a foreign pharmaceutical manufacturer for violating antimonopoly law, and committing an administrative offense. The company unreasonably refused to enter into an agreement, for supply of a unique medicine for the treatment of renal deficiency by peritoneal dialysis, with a local distributor.

In March 2014, the FAS Commission found that the relevant pharmaceutical company violated the Federal Law “On Protection of Competition”, when it refused to supply the vital medicines to a local distributor providing integrated medical services for organizing and rendering outpatient peritoneal dialysis in the Samara Region. The FAS also issued a warning to the company, and instructed it to eliminate such antimonopoly violations. The antimonopoly proceedings against the company were initiated upon its failure to comply with the warning issued by the FAS.

Based on the analysis of the medicines market, the FAS has included this Russian subsidiary of a foreign pharmaceutical manufacturer into the Register of Dominant Entities. The company disagreed and turned to the court. However, both the court of first instance, and the appeal court, dismissed its claims and found the decision of the FAS to be legal.

According to the Head of the FAS Legal Department, Sergey Puzyrevskiy, “the company’s argument – that its refusal to enter into the agreement for supply of medicine was due to FCPA compliance – was not confirmed during these antimonopoly proceedings and was deemed unreasonable”.

Please note, therefore, that this case illustrates the FAS’ position in relation to FCPA compliance procedures. In those cases wh ere FCPA requirements contradict Russian antimonopoly regulations, the FAS applies imperative rules of Russian law, and may hold a pharmaceutical manufacturer liable for breach of the Federal Law “On Protection of Competition”, even if such company is following its international compliance procedures.