KPMG Pharma Bulletin Issue #4, 2018 (April)

KPMG Pharma Bulletin Issue #4, 2018 (April)

Victoria Samsonova

Director, Head of Healthcare & Pharmaceuticals

KPMG in the CIS



EAEU legislative developments: GDP and ATC Classifier of pharmaceuticals

• Good Distribution Practice (GDP) standards, approved by the Resolution of the EEC Council dd. 03.11.2016 # 80, entered into legal force on 27.04.2018. GDP rules are an essential component of the pharmaceuticals quality assurance system in the EAEU market and apply to all parties involved in drugs distribution, including manufacturers and distributors.

• GDP rules are based on the World Health Organization’s guidelines; they regulate all stages of the pharmaceuticals circulation, enhance the ability to track their transfer and ensure the continuity of a distributor's liability to maintain the due quality of pharmaceuticals. In this regard, the GDP rules introduce the mandatory requirement for metrological control of the temperature regime for various circulation stages, define the "responsible person" held liable for development and maintenance of the distributor’s quality control system, claims processing and product recall. Such a person shall also be responsible for decisions on vendor selection and shall perform a number of other functions. Moreover, a system of bilateral audits is introduced: a distributor shall be subject to an audit by the manufacturer and vice versa.

• In addition, on 10.04.2018 the EEC Collegium has approved the Passport of an Anatomical-Therapeutic Chemical Classifier of Pharmaceuticals. The Classifier being a part of the EAEU unified information system, shall be obligatorily applied while performing common EAEU processes in area of pharmaceuticals circulation.


Ministry for Industry and Trade published the draft law on sale of drugs in retail chains

The Russian Ministry for Industry and Trade has published the new version of the draft law which allows retailers sell non-Rx pharmaceuticals without a license. In addition to the amendments to the Federal Laws dd. 12.04.2010 # 61 "On Circulation of Pharmaceuticals" and the Federal Law dd. 21.11.2011 # 323 "On Basics of Public Healthcare Protection in the Russian Federation”, changes are proposed to other laws, in particular, to the sub-clause 47 of clause 1 of the Article 12 of the Federal law dd. 04.05.2011 # 99 “On Licensing of Certain Activities”.

The draft proposes that retail food market players carrying out storage, transportation, retail trade and delivery of non-prescription drugs in line with the legislation on the drugs circulation, are exempt from mandatory licensing of pharmaceutical activities.

The draft has caused controversial reaction of the regulators and the business community. According to its developers, the main goal of the new law is raising availability of OTC medicines, including for patients in remote and rural areas. The Federal Antimonopoly Service and the Ministry for Economic Development have already supported the initiative, assuming the need for certain amendments.

However, the "The National Pharmaceutical Chamber" (NPC) Union has contested the draft, stating that it creates discriminatory conditions for pharmacies and individual entrepreneurs in terms of pharmaceutical licensing. Moreover, the number of pharmacies operating in large cities and towns is already excessive, which precludes the payback of many pharmacies and results in non-compliance with the rules for storage and distribution of drugs. The NPC’s President sent a letter to the President of Russia demanding to ban the sale of pharmaceuticals in non-specialized stores.


New regulations approved on issuing permits for clinical trials

The Ministry of Healthcare has approved the Administrative regulation for the public service on issuing permissions for the drugs clinical trials (the Order of the Ministry of Healthcare of the Russian Federation dd. 19.01.2018 # 20н was registered by the Ministry of Justice on 09.04.2018).

According to the Order, the following parties may acts as applicants for the mentioned permission:

- drug producers or the correspondingly authorized persons;
- institutions for higher professional or additional professional education;
- research and development institutions.

Moreover, the Order defines the terms and sequence of the administrative procedures, the responsible officials, required documents, indicators of availability and quality of the public service and the procedure for appealing against actions (inactions) and the decisions made (executed) during the public service rendering.

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Ministry of Healthcare suggests amending the template contract for public procurement of pharmaceuticals

The Ministry of Healthcare has conducted the public debates on the draft Order "On Amendments to the Template Contract for Supply of Pharmaceuticals for Medical Use, Approved by the Order of the Ministry of Healthcare of the Russian Federation # 870н dd. 26.10.2017", aimed at unifying the information on state procurements.

The amendments propose a new template of the Annex # 1 to the Order ("the Specification") which contains detailed information about the product supplied; in particular, the following columns are added:

- trade name, including the dosage form as per the registration certificate,
- pharmaceutical dosage form as per the Unified Directory-Catalog for Pharmaceuticals (UDCP),
- unit of measure’s code as per the All-Russia Classifier of Measurement Units (CMU),
- quantity (volume) of the purchased goods in units of measure.

The columns "Price per Unit of Measure" and "Value" are detailed and supposed to present separately:

- the price, exclusive of the VAT and of the wholesale markup;
- the VAT;
- the wholesale markup ;
- the total amount.

Development of the draft was driven by the law-enforcement practice.


Deputies propose further restrictions to TV advertising of drugs

Deputies submitted to the State Duma the draft law “On Amendments to the Article 24 of the Federal Law “On Advertising”, proposing to prohibit advertising of pharmaceuticals in TV programs and TV broadcasting.

The current legislation restricts advertising of Rx medicines and pharmaceuticals containing narcotic or psychotropic substances permitted for medical purposes. Advertising of these products may be placed only in locations of medical or pharmaceutical exhibitions, seminars, conferences and other similar events and in specialized printed media intended for medical and pharmaceutical professionals. The parliamentarians conclude, though, that the existing restrictions are not sufficient, as long as advertising could be placed in TV programs attracting the attention of a broad audience.


Ministry of Healthcare developed changes to regulations on drugs equivalence

The Russian Ministry of Healthcare conducted public debates of the draft law "On Amendments to the Federal Law dd. 12.04.2010 # 61 "On Circulation of Pharmaceuticals".

The draft is aimed at enabling the Federal Law dd. 31.01.2016 # 5-FZ "On Ratifying the Agreement on Uniform Principles and Rules for Circulation of Pharmaceuticals within the EAEU" and the Resolution of the Council of the Eurasian Economic Commission dd. 03.11.2016 # 92 " On Circulation of Pharmaceuticals".

In particular, the draft law:

- introduces the procedure for developing standardized instructions for the medical use of equivalent medicines and the formation and maintenance of their register. The procedure is to be established by the federal executive body responsible for forming the equivalent medicines list and placing it on its official website;
- specifies the parameters to be used to determine the equivalence of pharmaceuticals;
- sets out the procedure of submitting necessary materials by the owner of the registration certificate of a pharmaceutical, if the expert commission finds the already submitted materials insufficient for concluding on the equivalence of pharmaceuticals.


Procedure approved for selective quality control of BMCP

The Ministry of Healthcare approved the procedure for selective quality control of biomedical cell products (BMCP). The Order of the Ministry of Healthcare of the Russian Federation dd. 27.03.2018 # 127н was approved by the Ministry of Justice on 05.04.2018.

The selective quality control procedures, to be carried out by the Federal Service on Surveillance in Healthcare, include:

- processing of information submitted by the participants of BMCP circulation on the series and batches of BMCP entered into circulation in Russia;
- sample taking of BMCP from the participants of their circulation;
- making decisions on further circulation of the BMCP based on the results of the testing and control;
- making decisions on applying serial selective quality control of BMCP in case of repeated detection of non-compliance of their quality with the applicable standards and, if required, decisions on auditing the participant of BMCP circulation.
The cost of conducting the serial selective quality control are to be absorbed by the BMCP manufacturer or the registration certificate owner.

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Ministry for Education and Science proposes the mandatory licensing of production of pharmaceuticals for export to be stated in the Civil Code

The Ministry of Education and Science developed draft amendments to the Article 1362 of the Civil Code.

The explanatory note to the document posted at the federal web portal for draft legislative acts states that the proposed amendments are aimed at implementing into the Russian legislation the international treaty principles and at preserving the existing licensing model.

The suggested concept is supposed to align the law-enforcement practice with the Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS) concluded between WTO member states and defining the principles of mandatory licensing with respect to the pharmaceuticals produced for export.

As the Russian laws do not contain provisions regulating mandatory licensing, in order to make the aforementioned TRIPS article viable, courts should be empowered for defining the fair level of the remuneration for using an invention, in each particular case. The remuneration should account for the cost of the use of a license, permitted by exporting party to the importing one.

Medical devices

EAEU Passport of medical devices nomenclature approved

On 03.04.2018 the EEC Collegium approved the Passport of Medical Devices Nomenclature of the Eurasian Economic Union (EAEU), being a part of the EAEU unified information system. Use of the nomenclature codes shall be obligatorily while performing common EAEU processes in area of medical devices circulation.

The corresponding EEC Resolution enters into force upon 30 calendar days after its official publication date which was 06.04.2018.

Besides, the EEC Collegium also released the following documents in area of medical devices circulation:

- Resolution #47 dd. 03.04.2018 “On Classification of Types of Adverse Events Associated with the Use of Medical Devices”;
- Resolution #48 dd. 03.04.2018 “On Classification of Types of Documents of Registration Dossier for Medical Devices”.


Template contract updated for supply of medical devices

The Order of the Russian Ministry of Healthcare dd. 21.12.2017 # 1038н "On Amendments to Appendices # 1 and # 2 to the Order # 724н of the Russian Ministry of Healthcare dd. 15.10.2015 "On Approval of a Template Contract for Supply of Medical Devices, Putting Medical Devices into Operation, Training of Professionals Using Medical Devices and Performing Technical Maintenance of Medical Devices":

- amends the rules governing engagement of co-contractors operating as small business entities, socially-oriented non-profit organizations;
- sets out that execution of a contract can be warranted by a bank guarantee or by placing a cash deposit in the customer’s bank account accumulating payments collected by the customer from transactions;
- clarifies clauses on liabilities of the contract parties;
- aligns the data card of the template contract for supply of medical devices (putting medical devices into operation, training of professionals using medical devices and performing technical maintenance) with the OKPD2 and RSIC2 Classifiers.


The principles approved for interaction between state and non-state healthcare information systems

The Russian Government approved the rules for interaction of state and non-state healthcare information systems. The Prime Minister signed the corresponding Resolution # 447 dd. 12.04.2018.

The Resolution prescribes technical requirements to information systems of non-governmental organizations that provide services to patients and medical organizations, including in areas of:

- arranging an appointment to a doctor,
- arranging delivery of telemedicine consultations and rendering medical care using telemedicine technologies,
- informing patients on medical care delivery issues and providing recommendations on healthy lifestyle.

The Resolution sets out the procedure of connection and terms of interaction of such non-public data systems with the Unified State Information System for Healthcare (EGISZ), with information systems maintained by regional healthcare bodies, the systems maintained by territorial OMI funds and healthcare providers. It also defines terms and procedures of connecting to the information systems of the "electronic government".

Connecting to the EGISZ is supposed to be provided in a declarative order. The essential requirement is due level of data protection in accordance with the Russian legislation, including protection of personal data and the information constituting medical secrecy.

Bill on applying clinical recommendations while providing medical care submitted to the Duma

The Russian Government submitted to the State Duma the draft law # 449180-7 "On Amendments to the Federal Law" On the Basics of Public Healthсare Protection in the Russian Federation", governing the use of clinical recommendations.

The document proposes introducing the concepts of "clinical recommendations" and "protocol of treatment (patient management protocol)", which have been used in the text of the Federal Law but were not expressly defined.

The draft regulates the procedures for development, approval and application of clinical recommendations and treatment protocols. It also sets out the basic list of documents necessary for organizing and rendering medical care:

- regulations on organizing and rendering medical care,
- clinical recommendations and protocols of treatment,
- health care standards (to be developed based on the clinical recommendations in the order established by the Russian Ministry of Healthcare).

The bill also suggests introducing the duty of medical institutions to develop treatment protocols as per the standard form based on the relevant clinical recommendations.

Resolution on Unified state healthcare information system approved

The Prime Minister signed the Resolution of the Government of the Russian Federation dd. 05.05.2018 # 555 "On the Unified State Information System on Healthcare”. The Resolution legalizes functioning of the Unified state healthcare information system (EGISZ), its technological architecture, basic functions and the list of sub-systems (including the federal register of medical professionals, the federal register of medical institutions, the federal electronic registry, the federal register of electronic medical documents, the sub-system of monitoring and control over procurement of pharmaceuticals, the geo-information sub-system and others).

The Resolution also determines the procedure and deadlines for data submitting to the EGISZ by providers, the procedure of data access and the procedure of data exchange through the EGISZ, with the aim to create a unified digital framework in the healthcare area.

The measures for computerization of healthcare announced for implementation under the Resolution are provided for by the Federal Law dd. 29.07.2017 # 242-FZ "On Amendments to Certain Legislative Acts of the Russian Federation on the Application of Information Technologies in Area of Healthcare".

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Roszdravnadzor enhanced the list of regulations for compliance assessment during audits

The Federal Service for Surveillance in Healthcare (Roszdravnadzor) supplemented the annex to its departmental Order # 4043 dd. 27.04.2017 "On Approval of the List of Legislative Acts and Their Separate Provisions Containing Mandatory Requirements Observance of which is Assessed while Control Measures under Particular Types of State Control (Supervision)".

The document contains lists of federal laws, President’s decrees, Governmental resolutions and orders, legislative acts of federal executive authorities of the Russian Federation applied for the purposes of state control over pharmaceutical and medical activities, pharmaceuticals circulation, cultivation of narcotic plants, etc.


Ministry of Healthcare suggests changing the procedure of setting initial (maximum) price of a state procurement contract with a sole supplier

The Ministry of Healthcare has drafted changes to the Procedure of determining the initial (maximum) price under a state procurement contract concluded with the sole supplier (contractor, executor) (IMPC) to be applied for purchases of pharmaceuticals, as approved by the Order of the Russian Ministry of Healthcare # 871н dd. 26.10.2017.

The amendments clear the contradiction related to the application of the wholesale markup when calculating prices and the risks of overestimating the price per unit. In particular, the amendments clarify that a wholesale markup shall be used when calculating IMPC in case of procuring EDL products and when the IMPC does not exceed 10 million rubles (or less, if set by the regional executive authorities).

Application of certain orders of the Ministry of Healthcare, governing the pharmaceuticals purchase (including the said Order # 871n dd. 26.10.2017), has been raising many questions and concerns among the pharmaceutical market players. Therefore, the Ministry had to come up with clarifications on the IMPC calculation procedure.

The public debates on the draft order were completed on 02.05.2018.

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