On 9 December 2014 a law substantially amending Federal Law No. 61-FZ “On Circulation of Medicines” dated 12 April 2010 (the “Law”) was adopted, in its third reading, by the State Duma of the Russian Federation.
These new amendments made to the Law (the “Amendments”) are the most significant amendments since the Law first came into force in 2010. They not only have the purpose of clarifying the Law’s conceptual framework by eliminating some of its shortcomings and improving the rules for the registration, manufacture and quality control of medicines, but also, to some extent, they aim to harmonise Russian laws on the circulation of medicines with international standards.
The Amendments (which must be approved by both the Federation Council and the President in the coming weeks) will come into force on 1 July 2015. The key changes and innovations that will result from the Amendments coming into force are described below (please click on each link to be taken to the relevant paragraph):
- Approval of the legal status of a ‘marketing authorisation holder’ in Russia
- Issuing of GMP certificates in Russia
- New timeframes and rules for the state registration of medicines
- Changes to the timeframes for the state registration of medicines
- Possibility of registering generics upon the expiry of the six-year protection period for clinical test results
- Limitation of expedited registration to no more than three generics
- New format of a registration dossier
- New rules for the calculation and registration of the maximum retail prices of vital and essential medicines
- Improved legal regulation of biological, orphan and veterinary drugs
- Biological drugs
- Orphan drugs
- Veterinary drugs
- Drug interchangeability
- Additional grounds for the cancellation of the state registration of a medicine
- Good practices
- State supervision and audits
Approval of the legal status of a ‘marketing authorisation holder’ in Russia
Unlike the vast majority of developed countries, Russia did not, until recently, recognise the special legal status of a marketing authorisation holder. A marketing authorisation merely confirmed that the circulation of a medicine was allowed in Russia, and its issue to a company did not create any significant legal consequences.
From 1 July 2015 however, a marketing authorisation holder will be recognised as the person responsible for the quality, safety and efficiency of a medicine. The Amendments state that a marketing authorisation holder will be responsible for monitoring the efficiency and safety of a medicine and will be required to submit reports on such monitoring to the competent state authority as often as prescribed by law (once in every six months for the first two years after state registration of the medicine in Russia, once a year for the subsequent three years, and then once every five years after that). Failure to take measures that ensure the safety of medicines may result in the Ministry of Public Health passing a resolution cancelling the state registration of the medicine. A marketing authorisation holder will also be entitled to submit an application for the cancellation of a medicine’s registration (previously, only the formulator of the medicine held this right).
The legal status of a marketing authorisation holder will therefore become extremely significant. As a result of the Amendments, the transfer of marketing authorisations from one company to another will be one of the most important aspects of M&A transactions related to the acquisition of Russian pharmaceutical businesses.
Issuing of GMP certificates in Russia
Despite the fact that the need to conform the manufacturing of medicines to the GMP (Good Manufacturing Practices) standards has been a mandatory licensing requirement in Russia since as early as 1 January 2014, in reality this requirement has not worked properly. This is due to the fact that there is still neither a formal procedure in Russia to confirm whether the manufacturing of medicines conforms to the GMP standards or not, nor a document evidencing such conformity (the so-called ‘GMP certificate’).
After 1 July 2015, the situation will change as the Russian Ministry of Public Health will be authorised to issue written certificates confirming that a medicine manufacturer meets the GMP requirements. A certificate will be issued based on the results of a manufacturing inspection by authorised experts in accordance with the procedure to be established by the Russian Government. A copy of the certificate will have to be kept in the registration dossier of every medicine.
The documentary proof that a medicine was manufactured in conformity with the GMP standards should increase the attractiveness of Russian-made medicines abroad and raise the commercial potential for exporting them.
New timeframes and rules for the state registration of medicines
Changes to the timeframes for the state registration of medicines
The maximum timeframe for the registration of an original medicine has been reduced from 210 to 160 business days, which are counted from the day when the competent authority accepts the applicant’s application.
The maximum expedited registration timeframe (which after 1 July 2015 will be allowed for orphan medicines, for the first three generics of an original (reference) medicine, and for medicines which are intended solely for minors) will increase from 60 to 80 days.
Possibility of registering generics upon the expiry of the six-year protection period for clinical test results
Under the Amendments, the period during which clinical tests results on original medicines are protected from being commercialised by other companies (‘data exclusivity’) will remains as six years. However, the Amendments will also allow the manufacturers of generics to apply for their registration as early as four years from the registration date of the original medicine (three years in the case of a biosimilar drug registration), i.e. as early as two years before the expiry of data exclusivity period.
Previously, a generic product manufacturer could initiate the registration of its medicine only after the expiry of the six-year data exclusivity period. Following that, the registration process itself would then require several additional months to complete.
Under the Amendments, a generic product manufacturer will have the last two years of the original medicine’s protection period in order to not only prepare all the documents required for the registration of the generic, but also to conduct the necessary bioequivalence studies and complete any formalities. This will enable it to launch its medicine on the market right after the expiry of the six-year protection period of the original medicine.
This rule will, to some extent, reduce the time available to the original medicine manufacturers for realising the commercial potential of their innovative products. It is a rule that is clearly more advantageous for producers of generics, as it enables them to launch their products on the market more expediently than under the previous system.
Limitation of expedited registration to no more than three generics
Generics may still be registered under the expedited registration procedure. However, the Amendments will limit the number of generics that may be so registered to only three for each original medicine. Any subsequent generics will have to undergo the regular (non-expedited) registration procedure.
Theoretically, this limitation should reasonably restrict the number of generics of every original medicine. It should also enhance competition among generics manufacturers as only the first three will be able to benefit from the expedited registration of their medicines.
New format of a registration dossier
The Amendments amend the format of a medicine registration dossier. The dossier will consist of a single technical document divided into sections which will cover administrative, chemical, pharmaceutical and biological documentation. Specific and detailed requirements are now in place for the contents of each of the sections referred to above, including the contents of the instructions for use, research reports, all the information on a pharmaceutical substance’s manufacturing and quality control, and so on. These new requirements will have to be taken into account when submitting an application for the registration of medicines from July 2015.
New rules for the calculation and registration of the maximum retail prices of vital and essential medicines
After 1 July 2015, foreign manufacturers of the medicines included into the Essential Drug List will also have the right, once a year, to adjust (reregister) the maximum retail price of a medicine included in the list. At the moment only Russian manufacturers enjoy this right. The date by which a medicine manufacturer must file its relevant application with the Russian Ministry of Public Health will not change. It will remain 1 October of the current calendar year.
In addition, the calculation procedure for the maximum retail price should become slightly more flexible once the Amendments enter into force. At present, it is based on four basic parameters: a medicine’s cost price, its retail price in other (reference) countries, the retail prices of similar medicines in Russia, and the forecast rate of inflation (in the case of reregistration).
With effect from 1 July 2015, the calculation procedure should include another parameter called ‘balancing the interests of consumers and producers’. It is unclear as of the time of writing how this parameter will be applied and how the ‘balancing of interests’ exercise can be transformed into a mathematical coefficient to be applied to the retail price. It would however be reasonable to assume that this measure is meant to prevent the occurrence of a demotivating situation for the manufacturer, where the maximum retail price which results from the application of the previous formula is so low that the manufacturer's commercial interest in selling such a medicine in Russia is severely lowered.
Improved legal regulation of biological, orphan and veterinary drugs
The Amendments introduce a legal definition for a ‘biological medicinal product’. This term will mean an active substance that is manufactured or extracted from biological sources, and for which, in order to determine its properties and qualities, a combination of biological and physico-chemical methods is required. Such products include immunobiological drugs, drugs derived from blood, human and animal blood plasma (whole blood is not included), and biotechnological and gene-therapy drugs. A biological drug generic will be called a biosimilar drug or a biosimilar. In accordance with international practice, no expedited registration procedure will apply to biosimilars.
The Amendments define an orphan drug as a drug designed exclusively for the diagnosis or pathogenic treatment of rare (orphan) diseases.
The main advantage introduced by the Amendments for orphan drug manufacturers is the creation of an opportunity to not conduct local clinical trials in Russia. In order to state register an orphan drug, the applicant will only have to submit a report on the clinical trials for the drug that have been carried out outside of Russia, which will make the registration procedure much faster and cheaper.
The Russian Ministry of Public Health will decide on whether to recognise a drug as an ‘orphan’ based on the opinion of an expert committee.
The Amendments introduce a separate article regulating the registration procedure for veterinary pharmaceuticals. There is now an updated list of documents required for the registration of a drug, the details of the information to be disclosed about its constituent pharmaceutical substances, and the content of instructions for use. Veterinary drug registration will be carried out by the Federal Service for Veterinary and Phytosanitary Supervision (“Rosselkhoznadzor”) as is currently the case. The applicant will be required to conduct clinical trials on each animal species listed in the instructions for veterinary use.
The Amendments give a statutory grounding to the concept of drug interchangeability. This concept is defined as “a proven therapeutic equivalence or bioequivalence with respect to a reference drug, including an equivalent qualitative and quantitative composition of the active substances, the composition of excipients, the pharmaceutical form and the mode of administration”. The Federal Antimonopoly Service was the main promoter of this amendment. It believes that the ‘interchangeability’ concept should increase competition during the public procurement process between the manufacturers of different drugs that are identical as to their therapeutic action.
From 1 January 2018, medicine interchangeability information will be included in the State Register of Medicines.
Additional grounds for the cancellation of the state registration of a medicine
The Amendments add three more statutory grounds on which the state registration of a medicine in Russia will be cancelled:
- the medicine has not been marketed in Russia for three or more years;
- there has been a failure by the marketing authorisation holder or its authorised representative to take measures to ensure the safety of medicines;
- a refusal by the marketing authorisation holder or its authorised representative to edit the medicine information leaflet so as to reflect new confirmed data that the risks of adverse effects of the medicine are higher than its efficacy.
In all cases the decision to cancel the state registration of a medicine in Russia is within the jurisdiction of the Russian Ministry of Public Health.
Pursuant to the Amendments, public health authorities will be responsible for developing and adopting a number of so-called ‘good practices’ regarding the circulation of medicines. Such practices should include not only the GMP and GCP already applied in Russia, but also good pharmacy practices, good distribution practices and certain other practices that are new for Russia.
This is a clear attempt to make Russian law consistent with the laws of European and North American countries where such good practices serve as one of the key regulatory bases for many business sectors.
On the one hand, this initiative may be considered a favourable one, as the ‘good practices’ model fits perfectly with the systematisation of different sector-related rules set out by various subordinate legislative acts.
On the other hand, the fact that Russian law does not provide for the legal concept of a ‘distributor’ may result in a serious legal obstacle to the development of ‘good distribution practices’ in Russia. Technically, both pre- and post-Amendments Russian civil law does not take into account the specifics of distribution activity, does not recognise ‘distribution agreements’ as a specific type of civil-law contract and, technically, does not even distinguish between a ‘distributor’ and a ‘wholesaler’. Therefore, the prospects for the development of good distribution practices are vague, as the subordinate legislative acts of the Russian Ministry of Public Health cannot fill the gap in the civil-law rules and cannot officially grant a new legal status to a pharmaceutical company in its civil-law relations.
State supervision and audits
Regarding state supervision of compliance with the Law, this function will substantially remain with the Russian Ministry of Public Health and the Federal Service for Surveillance in Healthcare (“Roszdravnadzor”). Pursuant to Article 9 of the Law, as amended, these authorities may conduct unscheduled audits of medicine market players without having to first obtain the approval of the Prosecutor’s Office.
So far it is unclear whether it will become a regular practice for the Russian Ministry of Public Health to conduct so-called ‘dawn raids’ of pharmaceutical companies. Companies should, however, prepare themselves for such a possibility and take it into account when developing internal measures to deal with unscheduled audits by the state authorities.