Russian Federation: Life Sciences. Major Russian Legislation Changes For 2016

Last Updated: 15 February 2017
Article by Anna McDonald

We would like to present the overview of the most important legislation changes in life sciences for 2016.

Changes to the procedure for applying the "third one is out" rule with respect to medical devices and pharmaceuticals

RF Government Resolution No. 102 of February 5, 2015 ("Resolution 102") restricted admission to procurement for medical devices that are on the list of devices approved by that Resolution ("Devices") and originating from countries that are not members of the EAEU, namely: if at least two bids are received in a public procurement tender to supply Devices originating from EAEU member states, Devices originating from non-EAEU member states are not admitted for procurement at all (the "third one is out" rule).

The details of how to apply this rule were clarified in April 2016.1 The following, inter alia, were provided for:

  1. in order to apply the restriction it is necessary that at least two bids filed to supply Devices from the EAEU do not contain an offer to supply Devices from the same manufacturer or manufacturers in the same group according to the criteria of Federal Law No. 135-FZ on Protection of Competition of July 26, 2006;
  2. bids containing offers to supply foreign Devices and that are not rejected according to the "third one is out" rule must otherwise meet the conditions of admitting bids for procurement of foreign products established by the Ministry of Economic Development of the Russian Federation2;
  3. for the purposes of restricting admission of Devices originating from foreign states, it is not permitted to simultaneously include in the same contract (the same lot) both Devices on the List and those not on the List;
  4. if when the contract was executed the foreign manufacturer's bids were rejected in accordance with the "third one is out" rule, then it is not permitted to substitute a Device for a Device whose country of origin is not an EAEU member state, nor is it permitted to substitute the manufacturer of such Device.

The list of Devices falling under the above-mentioned restriction was later considerably expanded on November 30, 2016 by including a number of additional items on the list, including defibrillators, crutches, etc.

We remind readers that the period in which the restriction on foreign drugs packaged in the EAEU does not apply for a similar restriction on procurement of medicines (RF Government Resolution No. 1289 on Restrictions for Admission of Foreign Pharmaceuticals in Public Procurement of November 30, 2011) expires on January 1, 2017. This means that as of January 1, 2017, medicines that are merely packaged in EAEU member countries are not considered as originating from EAEU member countries for the purposes of public procurement in Russia.

RF Government Resolution No. 744 on Amendments to the Annex to Russian Federation Government Resolution No. 719 of July 17, 2015 dated August 2, 2016 set criteria applicable to medical devices and pharmaceutical products in order to treat them as products manufactured in the Russian Federation. The criteria include observing the percentage of foreign products used in manufacturing, that the legal entity EAEU-state tax resident hold the rights to the technical and design documentation, that the manufacturer have confirmation that the development results have been put into production and/or of a service center in the RF, that certain stages of manufacturing are in the RF, and that it holds the exclusive right to specialized software components.

Regulation in the pricing of vital and essential medicines ("Essential Medicines")

After the RF Federal Tariff Service ("FTS") was dissolved, the powers to regulate prices for Essential Medicines passed to the RF Federal Antimonopoly Service ("FAS"). The changes to RF Government Resolution No. 865 on the State Regulation of Prices for Pharmaceutical Drugs Included on the Essential Medicines List of October 29, 2010, which are effective as from March 1, 2016,3 set forth how those powers are exercised. For example, the executive authorities of RF constituent entities adopt decisions on setting the maximum markups on the actual manufacturer's prices set by the Essential Medicines manufacturers, following the approval of the draft versions of the respective decisions by FAS, and the resolution now stipulates the procedure for such approval.

In its letter No. AK/9664/16 of February 17, 2016, FAS stated that upon a change of the information on a specific pharmaceutical, the price for which is already registered and is in the state register of maximum manufacturers' prices for pharmaceutical drugs (the "Price Register"), changes must be made to the register by the Ministry of Health without conducting an economic analysis of the price and without FAS' involvement.

FAS also issued a number of other clarifications over the course of 2016. For example, the first time it cancelled an FTS decision approving maximum manufacturer's prices FAS clarified4 that in cases where the registered price is cancelled the remaining drugs acquired by wholesale and retail entities before the prices were removed from the Price Register can be sold at prices calculated based on the actual purchase prices. A drug purchased after the new prices were removed from the Register must be sold taking the old prices into account. This issue may be of interest to manufacturers, considering that on more than one occasion FAS has expressed its readiness to cancel prices if it finds them to be inflated.

Also in its letters5 FAS explained some issues of re-registration of prices for drugs manufactured by EAEU member states as part of the possibility of such re-registration provided for when certain conditions of Clause 19 of the Rules for the State Registration and Re-registration of Maximum Manufacturer's Prices for Drugs on the List of Essential Medicines6 are met.

The Essential Medicines list itself was last expanded on March 1, 2016. It is worth noting that according to media publications, there are no plans to add to the Essential Medicines list in 2017.7

Substantial changes to the pharmaceutical use of alcohol-containing products

Amendments to Federal Law No. 171-FZ on State Regulation of the Production and Circulation of Ethyl Alcohol and Alcoholic Products and Limitation on Consuming (Drinking) Alcohol of November 22, 1995, inter alia, introduced new developments to the regulation of use of alcohol-containing products for manufacturing medicines and medicinal products. Most of the amendments become effective in January / March 2017.

Among other things:

  1. The term "ethyl alcohol according to pharmacopeial monographs" is being replaced with the term "pharmaceutical substance of ethyl alcohol (ethanol)" (in effect to bring it into conformity with use of the term pharmaceutical substance in the legislation on the circulation of medicines); in addition, the terms "alcohol-containing drugs" and "alcohol-containing medicinal products" are also being added to the term "alcohol-containing product."
  2. The hardware and software of entities manufacturing a pharmaceutical substance of ethyl alcohol (ethanol) ("alcohol-containing substance"), alcohol-containing drugs and alcohol-containing medicinal products must support the receiving and transmission of information received using automated devices to measure and track the concentration and volume of anhydrous alcohol in the alcohol-containing substance, the volume of alcohol-containing substance, the amount manufactured, supplied and/or used for the entity's own use.
  3. The requirements to license activities for manufacturing and trading in ethyl alcohol do not apply to the manufacturing of an alcohol-containing substance or alcohol-containing drugs for medical use, alcohol-containing drugs for veterinary use and/or alcohol-containing medicinal products.
  4. In addition, the following do not apply to the manufacture of an alcohol-containing substance (such exceptions already apply in part to the manufacture of ethyl alcohol according to pharmacopeial monographs):
    - requirements that distillery waste from the manufacture of ethyl alcohol must be completely processed and disposed of at treatment facilities;
    - restrictions entitling only state-run enterprises and other entities having paid-in share capital of at least RUB 10 million to manufacture ethyl alcohol;
    - a notification requirement upon the purchase of more than 200 decaliters of ethyl alcohol per year to manufacture alcoholic and alcohol-containing products and/or use for the entity's own needs.
  5. When an alcohol-containing substance is traded, supporting documents certifying that the manufacture and trade are legal are not required, other than a consignment note.

Adoption of a law on biomedical cell products

Federal Law No. 180-FZ on Biomedical Cell Products of June 23, 2016 (the "BCP Law") entered into force on January 1, 2017 (except for certain provisions). A biomedical cell product ("BCP") is defined as a complex comprised of a cell line(s) and excipients or of a cell line(s) and excipients in combination with registered pharmaceutical drugs and/or medical devices.

The rules of the BCP Law apply to relations arising in connection with the development, pre-clinical trials, clinical trials, expert review, state registration, manufacturing, quality control, sale, application, storage, transportation, import and export, and destruction of BCPs intended for the prevention, diagnosis and treatment of patient illnesses or conditions, maintenance of pregnancy and medical rehabilitation of a patient, and to relations connected with the donation of biomedical cell products. However, the BCP Law does not apply to relations arising in connection with the development and manufacturing of medicines and medical devices, donation of human organs and tissues for transplant purposes, donation of blood and its components, the use of human reproductive cells for the application of assisted reproductive technologies, or the circulation of human cells and tissues for scientific and educational purposes.

Other changes in medicine and pharmaceutical legislation

A number of other legislative changes in 2016 must be mentioned. The most remarkable are:

Changes to the Law on the Circulation of Medicines:

  1. The procedure for determining interchangeability of pharmaceuticals for medical use is followed by comparing the registered drug with a reference drug. If there is no reference drug in circulation whose quality, efficacy and safety have been proven according to the procedure provided, drugs registered in the RF on the basis of in-house pre-clinical trials and in-house clinical trials of the drugs and that are circulating in the RF are considered equivalent to reference drugs.
  2. Individuals arriving in the RF may import drugs containing highly potent or toxic substances that are not narcotics, psychotropics, their precursors or analogs, provided they have documents confirming the individual was prescribed those drugs (other than over-the-counter drugs registered in the RF).

(We remind readers that a set of changes to the Law on the Circulation of Medicines contemplated by Federal Law No. 429-FZ on the Circulation of Medicines of December 22, 2014 and mainly concerning registration procedures will enter into force as of January 1, 2017. The deadline set by that same amendment law (by December 31, 2016) for an application to determine the interchangeability of pharmaceuticals for medical use has also expired).

Federal Law No. 323-FZ on the Fundamental Principles of Public Health Protection in the Russian Federation of November 21, 2011 (the "Public Health Law"):

The federal authorities will continue to have the authority to provide pharmaceuticals to individuals suffering from certain rare diseases and individuals who have received transplants (it had been intended to transfer this authority to RF constituent entity authorities). There are also plans to keep a Federal Registry of individuals suffering from such rare diseases and individuals who have received organ or tissue transplants. Finally, the law expressly provides that such individuals will be supplied with the relevant pharmaceutical drugs from federal budgetary appropriations.

Federal Law on Compulsory Health Insurance in the Russian Federation

High-tech medical care (according to the list of types of high-tech medical care approved by RF Government Resolution No. 1382 of December 19, 2015) not covered by the basic compulsory medical insurance plan ("High-Tech Care") will be financed from budgetary appropriations to the Federal Compulsory Health Insurance Fund with respect to:

  1. the financing of High-Tech Care provided to RF citizens by federal government institutions for which the federal executive authorities perform the functions and authority of founder;
  2. the co-financing of expenses of RF constituent entities arising when providing High-Tech Care to RF citizens;
  3. (starting January 1, 2019) the financing of High-Tech Care provided to RF citizens by medical organizations of the private healthcare system.

Narcotic drugs and psychotropic substances used in veterinary medicine

According to the amendments to Federal Law No. 3-FZ on Narcotic Drugs and Psychotropic Substances of January 8, 1998 (the "Narcotics Law") made by Federal Law No. 90-FZ of April 5, 2016, narcotics and psychotropic substances included on schedules II and III of the List of Narcotic Drugs, Psychotropic Substances, and their Precursors and which have been registered as required by the laws governing the circulation of medicines can be used in veterinary medicine. Currently, such List as approved by RF Government Resolution No. 681 of June 30, 1998, is in effect.

The amendments stipulate that narcotics and psychotropic substances permitted for use in veterinary medicine are subject to the laws governing the circulation of medicines to the extent not contradicting the Narcotics Law.8 The requirements for the development and state registration of new narcotics, psychotropic substances, and their precursors, and for the packaging and labeling thereof, provided by the Narcotics Law equally apply to the respective drugs and substances intended for veterinary use.

Extension of the maximum period of validity of ST-1 certificates

Order No. 110 of the RF Chamber of Commerce and Industry (the "CCI") of September 19, 2016 amended CCI Order No. 93 Regulation on the Procedure for the Issuance of Certificates of Origin of Goods on Form ST-1 for the Purposes of Procurement for State and Municipal Needs (for Pharmaceutical Drugs included on the List of Vital and Essential Medicines) of December 21, 2015.

The main change was the extension of the period of validity of the ST-1 certificate confirming the Russian origin of drugs from six months to one year.

Confirmation of conformity to good manufacturing practice ("GMP")

New rules for the state registration and confirmation of registration of medicines set forth in Federal Law No. 61-FZ on the Circulation of Medicines of April 12, 2010 ("Law on the Circulation of Medicines") entered into force as of January 1, 2016. For the initial state registration it has become necessary to present a statement of the manufacturer's conformity to the requirements of GMP issued in the Russian Federation. In 2016 a more relaxed rule was in effect for the registration confirmation procedure; that rule made it possible to present a translated document of conformity to GMP standards in the country of origin issued by the competent foreign authority. However, as of January 1, 2017 in order to confirm the registration of foreign medicines statements that their manufacturing conforms to Russian GMP standards issued by a competent Russian authority (the RF Ministry of Industry and Trade or "Minpromtorg") will also be required.

Although the rules for inspection for conformity to GMP requirements have been adopted9 and the process of inspecting facilities located outside of Russia has started,10 the existence of such requirements and, moreover, their impending stiffening is raising concerns on the Russian pharmaceuticals market. Minpromtorg prepared a draft law11 offering foreign manufacturers the opportunity:

  1. to file a Minpromtorg decision scheduling an inspection for registration of a pharmaceutical (although the decision to register the pharmaceutical will be adopted after the statement has been received);
  2. to confirm the registration and make changes to the registration dossier that require the conduct of an expert review of medicines to verify the quality and/or risk to benefit ratio of the pharmaceutical in connection with a change in the manufacturing site, to file a statement issued in the manufacturer's country accompanied by a letter confirming the obligation to undergo inspection and obtain a Russian statement of conformity within three years of filing the application for confirmation of registration.

However, the draft law has not yet been put before the RF State Duma.

We note that as from January 1, 2017, statements from the competent Russian authority (the Federal Service for Veterinary and Phytosanitary Supervision, "Rosselkhoznadzor") will also be required to register drugs for veterinary use.

It is worth noting that, in accordance with the Treaty on the Common Principles and Rules of Circulation of Medicines in the Eurasian Economic Union of December 23, 2014, EAEU members on a reciprocal basis recognize the results of research for conformity to the requirements of good pharmaceutical practices. According to Decision No. 93 of the Council of the Eurasian Economic Commission of November 3, 2016, until December 31, 2020, in the state registration (re-registration, confirmation of registration, amendment) of medicines EAEU members will, on a reciprocal basis, recognize documents issued by the authorities of other EAEU members confirming the conformity of manufacturing of medicines manufactured in EAEU member states with GMP requirements.

EAEU news

The EAEU supranational pharmaceuticals and medical devices market is regulated by the Treaty on the Common Principles and Rules of Circulation of Medicines in the Eurasian Economic Union and the Treaty on the Common Principles and Rules of Circulation of Medical Devices (Medical Devices and Medical Equipment) in the EAEU (dated December 23, 2014, ratified in Russia on January 31, 2016, together the "Treaties").

The Treaties govern the basic rules for the functioning of the EAEU pharmaceuticals and medical devices market, in particular, issues of registration, expert review, manufacturing and sale of medicines and medical devices, harmonization the state pharmacopeias of EAEU members, labeling issues, etc.

A number of regulatory acts were adopted in accordance with the Treaties at the EAEU level in 2016, including:

  1. Decision No. 78 of the Council of the Eurasian Economic Commission on the Rules for the Registration and Expert Review of Pharmaceuticals for Medical Use of November 3, 2016;
  2. Decision No. 46 of the Council of the Eurasian Economic Commission on the Rules for the Registration and Expert Review of the Safety, Quality and Efficacy of Medical Devices of February 12, 2016;
  3. Decision No. 38 of the Council of the Eurasian Economic Commission on Approval of the Rules for Conducting Studies (Testing) to Assess the Biological Effect of Medical Devices of May 16, 2016;
  4. Decision No. 77 of the Council of the Eurasian Economic Commission on Approval of the Rules of Good Manufacturing Practice of the Eurasian Economic Union of November 3, 2016;
  5. Decision No. 89 of the Council of the Eurasian Economic Commission on Approval of the Rules for the Conduct of Studies of Biological Medicinal Products of the Eurasian Economic Union of November 3, 2016;
  6. Decision No. 88 of the Council of the Eurasian Economic Commission on Approval of the Requirements to the Instruction on Medical Use of Medicines and General Description of Pharmaceuticals for Medical Use of November 3, 2016;
  7. Decision No. 83 of the Council of the Eurasian Economic Commission on Approval of the Rules for Conducting Pharmaceutical Inspections of November 3, 2016;
  8. Decision No. 76 of the Council of the Eurasian Economic Commission on Approval of the Requirements to Labeling Pharmaceuticals for Medical Use and Veterinary Medicines of November 3, 2016.

However, most of these acts, including all of the ones listed above, have not yet entered into force. This will happen after the Protocol on the Accession of the Republic of Armenia to the Treaty on the Common Principles and Rules of Circulation of Medicines in the Eurasian Economic Union of December 23, 2014 becomes effective.

A little more about the regulators

According to RF Government Resolution No. 8 on Amendments to the Rules for Destroying Poor-Quality Medicines, Falsified and Counterfeit Drugs of January 16, 2016, authority to oversee the confiscation and destruction of poor-quality and/or falsified medicines for veterinary medicines was transferred to Rosselkhoznadzor. Until then the Federal Service for Healthcare Supervision ("Roszdravnadzor") had such powers for medicines of all purposes.

RF Presidential Decree No. 156 on Improving State Management in the Area of the Control of Narcotic Drugs, Psychotropic Substances, and their Precursors and in the Area of Migration of April 5, 2016 dissolved the RF Federal Drug Control Service (FDCS). Its powers were assigned to the Interior Ministry of Russia.

According to the amendments to the Public Health Law that became effective on October 3, 2016, Roszdravnadzor received various powers with respect to licensing supervision, the suspension, renewal, and cancellation of licenses, and monitoring the effectiveness of the licensing of activities falling under the Law on Fundamental Principles of Public Health Protection (including pharmaceutical and medical activities).

Footnotes

1. RF Government Resolution No. 337 of April 22, 2016 on Amendments to Russian Federation Government Resolution No. 102 of February 5, 2015.

2. Ministry of Economic Development of Russia Order No. 155 on the Conditions for Admission of Goods Originating from Foreign States, for the Purposes of Procurement of Goods, Work and Services for State and Municipal Needs of March 25, 2014.

3. Introduced by RF Government Resolution No. 58 on Amendments to Russian Federation Government Resolution No. 865 of October 29, 2010 and Repeal of Certain Provisions of Acts of the Russian Federation Government of February 3, 2016.

4. http://solutions.fas.gov.ru/ca/upravlenie-kontrolya-sotsialnoy-sfery-i-torgovli/ak-46957-16

5. FAS Russia Letter No. AK/27823/16 of April 25, 2016 and No. AK/25025/16 of April 14, 2016.

6. Approved by RF Government Resolution No. 865 of October 29, 2010.

7. http://www.rbc.ru/politics/17/11/2016/582d95fd9a794751012c0b50

8. Federal Law No. 3-FZ on Narcotic Drugs and Psychotropic Substances of January 8, 1998.

9. RF Government Resolution No. 1314 on Determining Compliance of Pharmaceutical Manufacturers with the Requirements of Good Manufacturing Practice of December 3, 2015, etc.

10. According to the statistics on the Kommersant website, as at November 21, 2016, Minpromtorg had received 519 applications from foreign manufacturers. One hundred forty-five inspections were conducted. Forty statements of conformity to good manufacturing practice standards were issued, and 22 companies were refused issuance of GMP certificates. There were plans to conduct about 40 inspections by the end of the year.

11. http://regulation.gov.ru/projects#npa=59225

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