KPMG Pharma Bulletin Issue #6, 2018 (June)

KPMG Pharma Bulletin Issue #6, 2018 (June)

Victoria Samsonova

Director, Head of Healthcare & Pharmaceuticals

KPMG in the CIS



Draft law simplifying foreign pharmaceuticals registration is withdrawn

The draft Federal Law # 309487-7 “On Amendments to the Federal Law “On Circulation of Pharmaceuticals” (simplifying confirmation of state registration confirmation of foreign-made drugs) was withdrawn from consideration by the State Duma due to revoking by its initiator.

The Duma’s Legal Department believes that introduction of the proposed amendments requires additional justification.

“State registration of a pharmaceutical has to be confirmed when an unlimited registration certificate is issued to replace the expired initial 5-years registration certificate for a pharmaceutical registered in Russia for the first time. Hence, the procedure stipulated by Article 29 of the above Federal Law is aimed at full-scale verification of newly registered drugs for further issuance of an unlimited registration certificate and admission of such drugs to the Russian market. Excluding from the procedure the step of submitting an incomplete set of documents for a foreign-made pharmaceutical along with their Russian translation requires additional justification”, – the Legal Department concludes.


Definition of drugs equivalence to be expanded

The Russian Ministry of Healthcare and the Federal Antimonopoly Service have prepared a draft law expanding the definition of drugs equivalence.

In particular, the draft provides for a possibility to determine equivalence based on, inter alia, comparability of the antigenic composition of vaccines.

In addition, therapeutic equivalence is added as a criterion for biologic drugs.

The Ministry plans to introduce the new rule starting from 2019. According to the ministers’, this should allow further reduce prices for and variety of pharmaceuticals.

The Ministry was already proposing this change in April 2018. The draft law “On Amendments to the Federal Law “On Circulation of Pharmaceuticals” was made available for public discussion. The said Federal Law does not provide for a possibility of and procedure for keeping the register (list) of equivalent drugs traded in an EAEU member state by using data from the unified register of drugs registered in the EAEU. That was the reason for developing the amendments.

Harmonization of drugs circulation in Russia

Applicants for pharmaceuticals registration will shortly be obliged to submit a written confirmation asserting that:

- all data in the registration dossier for a pharmaceutical is received according to the established procedure, and
- no IP rights of third parties have been breached.

These amendments to the Federal Law # 61-FZ "On Circulation of Pharmaceuticals" were developed by the Russian Ministry of Healthcare in order to harmonize the Russian legislation on drugs circulation with the EEC regulations (the EEC Collegium Decision dd. 03.11.2016 # 78).

Harmonization measures are aimed at:

- clarifying the currently effective provisions of the Russian law regarding information on API in context of the EEC legislation;
- eliminating ambiguous wording regarding the information on contained in the Russian state register of pharmaceuticals on API imported into Russian and used for pharmaceuticals production (Clause 4 of Article 45 and Article 47 of the Federal Law # 61-FZ);
- aligning the requirement on professional attestation of pharmaceuticals producers’ authorized representatives with the provisions of the EEC Collegium Decision dd. 03.11.2016 # 73.

The amendments are to come into force on January 01, 2019.

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Rules changed for vaccines registration and GMP certificates use in EAEU

The Council of the Eurasian Economic Commission (EEC) has updated the rules for registration and examination of pharmaceuticals in the EAEU.

In particular, unified approaches were adopted in area of a simplified procedure of amending registration documents for flue prevention vaccines.

“This is a special category of drugs, list of which varies annually due to the virus volatility. Now, unified requirements are established to the structure, content, format and scope of the registration dossier, procedures for its amending, its expert evaluation, as well as the timeframes for processing registration applications. The currently effective requirements to production of vaccines and preventive vaccination of the population do not allow apply the standard 210-days procedure to registration and amending registration of such pharmaceuticals. Therefore, the procedure was shortened for evaluating this category of vaccines when introducing changes to a registration dossier driven by the flue strain composition. The new procedure should not take more than 40 calendar days. This will allow timely perform annual vaccination and to preserve the health of millions of people”, – the EEC has noted.

Furthermore, the deadline for submitting documents confirming the manufacturer’s GMP compliance issued by an authorized EAEU regulator is extended until December 31, 2020.


FAS clarifies the EDL pricing approach

The Federal Antitrust Service highlighted that, if a pharmaceutical falling within EDL in 2018 was purchased prior to its inclusion into the EDL (i.e. before January 01, 2018) at a price exceeding the maximum ex-factory price registered by manufacturer, then one has to adjust the cost/price of such a pharmaceutical when selling, with account to the applicable law provisions.

Wholesale trade of EDL pharmaceuticals by legal entities, individual entrepreneurs, pharmacies and healthcare providers is to be supported by the EDL pricing protocol. Exception are those drugs which were not included into the EDL at the moment of their purchase by the seller.

Wholesale or retail trade companies which purchased drugs before their inclusion into the 2018 EDL, have to complete the EDL pricing protocol while distributing such drugs.

Should the drug have been purchased from the manufacturer, one must indicate the manufacturer’s actual sales price not exceeding the registered maximum ex-factory price in the column “Manufacturer’s actual sales price, net of VAT (Rubles)”. In the column “Registered maximum ex-factory price of the manufacturer (Rubles)” the registered maximum ex-factory price shall be stated.

Should the drug have been purchased from another wholesale entity, in the column “Manufacturer’s actual sales price, net of VAT (Rubles)” the actual purchase price not exceeding the manufacturer’s registered maximum ex-factory price shall be stated.

According to the FAS, in such circumstances the selling price of the wholesaler or retailer must be set based on the price indicated in the column “Manufacturer’s actual sales price, net of VAT (Rubles)", in accordance with Clause 2, Article 63 of the Federal Law “On Circulation of Pharmaceuticals”.


Clarifications on VAT recovery when importing veterinary pharmaceuticals

Before 2016, the Russian customs authorities imposed 18% VAT to veterinary pharmaceuticals imported into Russia. After this date, the reduced VAT rate of 10% has applied to such goods.

The Ministry of Finance informs (the Letter # 03-07-07/34009 dd. 21.05.2018) that the conditions for recovering the VAT paid on import of goods are stipulated by Clause 2 of Article 171 and Clause 1 of Article 172 of the Russian Tax Code, particularly:

- the imported goods must be used for VAT-able transactions,
- the imported goods are duly posted in accounting books, and
- the fact of VAT payment is duly documented.

Pursuant to the above, the Ministry states that, if the above conditions are met, 18% VAT amounts paid before 2016 while importing veterinary drugs are recoverable in full, despite the fact that 10% VAT rate was applied on their sales in Russia.

The Ministry of Finance has earlier expressed the same position was with respect to medical devices (the Letter # 03-07-07/26854 dd. 03.04.2018).


First Russian compulsory license for an analogue of a US drug

On June 01, 2018, the Moscow Arbitration Court supported the claim of Nativa LLC requesting a compulsory license for the use of Celgene’s patent for a drug with INN lenelidomide (the Resolution of the Moscow Arbitration Court dd. 08.06.2018 on case # A40-71471/17-110-675).

Celgene, in its turn, has reported that the compulsory license was granted to an individual (Nativa’s co-owner until October 2017). Celgene’s patent was necessary for using the US-originating invention in the pharmaceutical developed locally.

The lawsuit of the mentioned individual was accepted for processing on April 24, 2017, while Nativa was the second claimant. Under Article 1362 of the Russian Civil Code, a court may grant a compulsory license in two cases:

- if the patent holder does not use or does not appropriately use its invention, or
- if there is a so-called dependent patent that cannot be used without the permission of the primary patent holder.

The law provides that a license is issued if the applicant (the dependent invention owner) successfully proves that his invention is a significant technical achievement and has significant economic advantages as compared to the primary patent holder’s invention.

In the case discussed, the court supported both of the above statement in favor of Nativa; in particular, it was outlined that production of the drugs by the claimant is cheaper as compared to the manufacturing by the patent holder. Royalties are to be paid for the use of the patent.

Earlier, Nativa has already filed a counter-claim to court in course of a patent dispute with Bayer. It asked the court to acknowledge existence of an invention dependent on two Bayer’s patents and to grant compulsory licenses for both patents.

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Medical devices

Government simplifies medical devices registration

Timeframes of the state registration procedure for medical devices were shortened under the Governmental Resolution dd. 31.05.2018 # 633, signed by the Prime Minister.

In particular, the duration of the state registration of medical devices for in vitro diagnostics and medical devices of the 1st class of potential risk of use (low risk) is reduced by 20 business days. The acceleration became possible due to performing the expert assessment of quality, efficiency and safety as one stage, without obtaining a clinical trials permission.

The changes are expected to allow:

- align the requirements to documents confirming the quality of drugs and APIs contained in a medical device with the EAEU standards,
- align the procedure for amending a registration certificate and a registration dossier for a medical device with the EAEU standards;
- issue a registration certificate in the name of an individual entrepreneur as the holder (and enable an individual entrepreneur to act as a manufacturer’s authorized representative).

Should the state control over medical devices circulation reveal a mismatch between the actual efficiency and the safety of a medical device and the corresponding data reported in the registration application and d the registration dossier, the registrar may decline the medical device registration.

Also, the possibility of litigating against the expert assessment results is enabled.

The changes were enacted starting from June 13, 2018.


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Bill on clinical guidelines approved in first reading

On June 07, 2018 the State Duma approved the draft Federal Law # 449180-7 “On Amendments to the Federal Law “On Fundamentals of Public Healthcare in the Russian Federation” Regarding Clinical Guidelines”.

To clarify the matters related to the procedure of clinical guidelines development and approval, their application in course of medical aid delivery, as well as to developing health care standards, the draft law proposes to:

- introduce new concepts of “clinical guidelines” and “treatment guidelines” (“patient management guidelines”),
- define the list of key documents necessary for organizing and delivering medical care,
- empower the Russian Ministry of Health to approve documentation necessary for clinical guidelines development and to provide clarifications on specifics of applying medical aid procedures,
- disable formation of healthcare quality criteria on the basis of standards,
- introduce the mandatory unscheduled accreditation of a healthcare specialist who failed to ensure due quality of medical aid, assessed per quality criteria for groups of diseases/conditions,
- introduce audits of medical care delivered by healthcare professionals based on quality criteria, instead of the audits of healthcare organizations compliance with standards.

Further, the draft law sets out the list of key documents necessary for organizing and delivering medical care and obliges healthcare providers to develop clinical protocols under a standard template, based on the relevant clinical guidelines and measures of response to case of unsatisfactory medical aid delivery, by means of organizing unscheduled professional accreditation of non-compliant physicians.

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New application template for registration dossier amendment

The Ministry of Health notifies on preparation of the draft regulation “On Amendments to the Template for Application Form on Amendments to Documents Contained in the Registration Dossier for a Registered Pharmaceutical for Medical Use, Approved by the Order of the Russian Ministry of Healthcare dd. 21.09.2016 # 727n”.

The template will be supplemented by new slots, pursuant to provisions of the Federal Law # 425-FZ “On Amendments to the Federal Law “On Circulation of Pharmaceuticals” regarding indicating the tax registration data of the registration certificate holder/owner and the pharmaceutical’s manufacturer in the country of its incorporation.

The document is supposed to come into force in October 2018.


Procedure clarified for confirming the country of origin for coronary arterial stents and catheters

The Resolution of the Russian Government dd. 20.06.2018 # 701 “On Amendments to the Resolution of the Russian Government dd. 04.12.2017 # 1469” amends the list of documents based on which the country of origin is confirmed for stents and catheters.

This applies to the confirmation on the industrial production in the Russian Federation, issued by the Ministry for Industry and Trade in order as per the procedure set out by the Governmental Resolution dd. 17.07.2015 # 719 “On Confirmation of Industrial Production in the Territory of the Russian Federation”.

Previously, the conclusion issued under the Governmental Resolution dd. 10.05.2017 # 550 served as such a confirmation.

In addition, the amendments prolong the till December 15, 2019 the effect of the Resolution of the Government dd. 04.12.2017 # 1469 “On Restrictions and Terms for Admission to Procurement for State and Municipal Needs of Metallic Uncovered Stents for Coronary Arteries, Stents for Coronary Arteries Evolving Pharmaceuticals (Including Those with Non-Absorbable Polymer Coating and Absorbable Polymer Coating), Standard Balloon Catheters for Coronary Angioplasty, Aspiration Catheters for Embolectomy (Thrombectomy) of Foreign Origin" (previously this Resolution was valid till July 01, 2018).

The above changes came into force from June 30, 2018.


Procedure approved for suspension of biomedical cell products use

On June 06, the Russian Ministry of Justice signed the Order of the Russian Ministry of Healthcare dd. 27.03.2018 # 120n “On Approval of the Procedure for Suspending Biomedical Cell Products Use”.

The document sets out rules for the Federal Service for Surveillance in Healthcare (Roszdravnadzor) to suspend use (application) of BMCP already traded in Russia. In particular, the regulator is empowered to make the decision on suspension within 5 business days from the date of receiving information about:

- adverse reactions not addressed in the BMCP’s leaflet,
- significant adverse reactions and unexpected adverse reactions,
- specifics of the BMCP’s interaction with pharmaceuticals, medical devices, nutrition products, other BMCP that can entail threats to life or health,
- mismatch of the data on the BMCP’s actual efficiency and safety with the data provided in the leaflet.


International medical cluster regime could become available to the Russky Island

It is expected that, by the dates of the Eastern Economic Forum (to be held in Vladivostok on September 11-13, 2018), the effect of the law on the international medical cluster will be expanded to the Russky Island in Primorsky Krai. This was announced by the CEO of the Far East Investment and Export Agency during the Russian-Korean Business Forum on June 22, 2018.

Previously, the Ministry for Development of the Russian Far East reported on development of a bill expanding the international medical cluster regime to the Free port of Vladivostok. Thus, the standards, management and regulation principles and procedures of interaction with the project participants currently applied in the Skolkovo Innovation Centre would be enacted the territory of the Russky Island. In particular, healthcare providers residing in the Cluster would be able to deliver medical care, apply medical equipment and pharmaceuticals in the Cluster without additional certification in the Russian Federation, provided they have obtained all the permission documentation in their states of incorporation.


On using doctors’ images for advertising

The Federal Antitrust Service stated in its Letter dd. 14.06.2018 # АК/43550/18 that advertising of any goods using images of healthcare and pharmaceutical professionals is allowed only for advertising which is distributed/placed:

- at medical or pharmaceutical exhibitions, seminars, conferences and other similar events, and
- in specialized printed media for healthcare professionals.

It is highlighted that in case if an educational institution training healthcare professionals advertises its educational activity, using HCP images is allowed only if the advertisement is distributed/placed at the aforementioned professional exhibitions, seminars, conferences and other similar events or in specialized printed media.

The restriction applies not only to visual images of healthcare/pharmaceutical professionals, but to any other visual, sound or other tools/media content creating an image of an HCP in the mind of the persons perceiving the advertising.

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