Legislative frameworks to combat illicit trade in medical products in Ukraine

The Ukrainian legal framework aimed at combating illicit trading and other illegal activities in counterfeited/falsified/diverted medicines consists of the following elements:

• The general provisions of the Law of Ukraine “On Medicines” and subordinate regulations. These regulations mainly cover quality control requirements and powers of the Ukrainian Pharmaceutical inspectorate in this sphere.
• The provisions of the Criminal Code of Ukraine (the “Criminal Code”) establishing criminal liability for certain activities with falsified medicines (addressed in more detail in answer to Q.3 below).
• The Medicrime convention, ratified by the Ukrainian parliament and part of Ukrainian legislation, although still to this date not properly implemented.
• The Concept of the implementation of the state policy on the prevention of counterfeiting medicines, adopted by the Cabinet of Ministers of Ukraine in April 2019.

The above legislative framework only covers medicines, except for Art. 229 of the Criminal Code, which applies to all trademark-protected goods.

The need to establish criminal liability for falsification and other related illegal activities with medical devices, veterinary medicines and medical cosmetics is now actively discussed by Ukrainian lawmakers, and there are legislative initiatives in this field. These initiatives are addressed in detail in answer to Q11.

The Criminal Code contains a specific section devoted to crimes related to medicines: “Criminal offences in the field of trafficking narcotic drugs, psychotropic substances, their analogues or precursors and other crimes against public health”. This section contains the following articles that establish criminal liability for certain activities with falsified medicines:

• Art. 305 of the Criminal Code (smuggling narcotic drugs, psychotropic substances, their analogues or precursors or falsified medicines);
• Art. 321 of the Criminal Code (illegal manufacture, acquisition, transportation, shipment, storage for the purpose of sale or sale of toxic or potent substances or toxic or potent medicines);
• Art. 321¹ of the Criminal Code (falsification of medicines or trafficking falsified medicines).

Crimes related to the infringement of pharmaceutical companies’ intellectual property rights are prosecuted based on a general article criminalising the illegal use of trademarks: Art. 229 of the Criminal Code.

In practice, the activities of counterfeiters are often qualified by law-enforcement authorities both as a crime against public health and as a breach of pharmaceutical companies’ intellectual property rights.

Ukraine became one of the first countries to sign and ratify the Medicrime convention in 2012.

Even though the provisions of the convention are binding on Ukraine, it has not been fully implemented locally. The Medicrime convention has been partially implemented in several provisions of the Law of Ukraine “On Medicines” and the Criminal Code.

This partial implementation makes effective anti-counterfeiting activities in Ukraine very challenging, for the following reasons:

• the local definition of “falsified medicines” in the Law of Ukraine “On Medicines” is incoherent and not in line with the Medicrime convention and European Falsified Medicines Directive (e.g. it is worded in a very narrow way and covers only medicines authorised in Ukraine, so the prevailing approach of the law-enforcement authorities is that medicines that are not authorised in Ukraine, cannot be regarded as falsified);
• no criminal liability is established for imports (other than smuggling), exports and trade intermediation in counterfeit medicines;
• no liability is established for the falsification and trafficking of medical products other than medicines, such as medical devices, veterinary products, excipients and APIs;
• there is no specific liability for the falsification of medical documentation;
• there is no liability for illicit trade in genuine medical products, including unauthorised medicines and illegally commercialised medical devices;
• there is no liability for commercial use of original documents for sale of medical products outside their intended use in the legal supply chain;
• there is no liability for legal entities for falsification offences, when committed for their benefit.

Ukrainian legislation establishes criminal liability for the counterfeiting/falsification of medicines. The criminally punishable offences are listed in the answer to the Q.3 above. The sanctions for the mentioned crimes range from monetary fines for the infringement of trademark rights to imprisonment (from three years to life) for smuggling counterfeits, falsification and the commercialisation of counterfeits.

Additionally, if counterfeiters infringe intellectual property rights (e.g. a company’s trademark protected under the  Madrid protocol or registered locally in Ukraine is illegally used in falsified packaging), the Civil Code of Ukraine gives trademark rights holders the possibility to file a civil lawsuit against these infringers.

According to Ukrainian legislation, biologics are regarded as medicines, so there is no separate liability for the falsification of biologics and such activities are prosecuted as the falsification of a medicine.

The National Police of Ukraine has the authority to investigate criminal offences related to the counterfeiting of medicines. The Security Service of Ukraine has powers to investigate the counterfeiting of toxic and potent medicines and smuggling of counterfeits. Procedural supervision in all cases is carried out by prosecutors’ offices of different levels depending on the location of the investigation and scale of counterfeiting (in large-scale investigations, very often the Prosecutor General’s Office is directly involved).

In addition, in cases where suspects smuggle counterfeited medicines in Ukraine via international channels, the State Border Guard Service of Ukraine and State Customs Service of Ukraine may also be involved.

The Ukrainian Pharmaceutical Inspectorate (State Service of Ukraine on Medicines and Drug Control) is the main body responsible for overseeing the quality of medicines present on the Ukrainian market.

The powers of the Pharmaceutical inspectorate in the field of anti-counterfeiting are very limited. On receiving a notification on suspicious medicines available for sale in the legitimate supply chain (e.g. authorised pharmacies, importers, distributors hospitals), the Pharmaceutical inspectorate can:

• inspect authorised pharmacies for the presence of falsified medicines;
• temporarily and in certain cases fully ban the circulation of medicines if there is a grounded suspicion that such medicines are falsified and can harm patients’ health.

In general, the grey market is out of the control of Ukrainian authorities, except for smuggling, which is anyway regarded as a tax crime but not as a public health issue. In addition, in most cases counterfeits are commercialised outside the legitimate supply chain. Instead, counterfeiters use internet forums, various online messengers and other means (such as word of mouth), and the Pharmaceutical inspectorate, as well as any other local authority, has no power to control this activity.

The MAHs or IP rights holders can join or be engaged in investigations regarding illicit trade/counterfeiting/falsification as criminal complainants. In practice, this can happened in two possible ways:

• an MAH or IP rights holder submits a statement on the commission of a crime to the law-enforcement authority and asks to recognise it as a criminal complainant;
• if criminal proceedings have already been initiated, the MAH or IP rights holder submits a motion to the investigating law-enforcement authority asking to recognise it as a criminal complainant; or
• the law-enforcement authorities assign the MAH or IP rights holder as a victim of the crime on its own (in this case a formal consent to this status is needed from the MAH or IP rights holder).

The role and the rights of a criminal complainant in Ukrainian procedural legislation are very limited. According to the Criminal Procedure Code of Ukraine, the criminal complainant has the following rights in terms of the investigation:

• to be notified of the completion of the pre-trial investigation;
• to submit motions to investigators and prosecutors;
• to testify in court;
• to access the case materials concerning the affected criminal complainant;
• to initiate procedural actions, such as dawn raids, access to documents and testing of seized medicines, through an investigator/prosecutor;
• to collect evidence on its own and provide such evidence to an investigator/prosecutor;
• to appeal against the decisions, actions or omissions of the investigator, prosecutor, investigating judge or court;
• to recover damages caused by a criminal offence through a civil claim.

Yes, there is a possibility to file a civil claim in terms of the criminal proceedings or a separate civil claim after the criminal proceedings are finished.

Only parties assigned with criminal complainant status are allowed to file a civil claim for the recovery of damages in criminal proceedings.

In 2020, the Ukrainian parliament introduced new law changing the rules of the retail sale of medicines, which formally enabled the online sale of medicines by authorised pharmacies. The precondition allowing medicines to be sold online is a special licence for electronic retail trade. Under the new rules, Rx medicines can be sold online only with electronic prescriptions, while the sale of toxic and potent medicines online is prohibited.

Implementing these changes requires the introduction of amendments to several bylaws, which are still pending as of May 2021, thus although allowed under law, in practice the online retail sale of medicines in Ukraine is not yet legally possible.

The online sale of medical devices and veterinary medicines is allowed.

Despite repeated attempts to introduce the verification of medicines in Ukraine and other safety features, as for now this has not yet happened.

At the same time, in August 2020 the working group on the introduction of the labelling of medicines packaging with a special 2D-code was established by the Ministry of Health of Ukraine.

In addition, in April 2019 the Cabinet of Ministers of Ukraine adopted the concept of the implementation of the state policy on the prevention of the counterfeiting of medicines. The implementation of medicine labelling with protective measures is one of the primary means to combat the counterfeiting of medicines.  

In December 2020, Daft Law #4491 on Amendments to the Criminal Code of Ukraine on Liability for the Counterfeiting of Medical Products (including medicines) and Similar Crimes Threatening Health Care was submitted Ukrainian parliament. The draft introduced some crucial amendments to the Criminal Code of Ukraine and the Law of Ukraine “On Medicines”, namely:

• extending criminal liability to the counterfeiting of various medicinal products, not only medicines as earlier, but also to counterfeiting medical devices, veterinary medicines, medical cosmetics, medical food and some other food products;
• changing the outdated and irrelevant existing definition of falsified medicine and introducing a much more relevant definition, fully aligned with the Medicrime convention.

The draft is currently being considered and refined by the Ukrainian parliament, and it is expected that is may be adopted by the end of 2021.