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From October 1, 2014 amendments to the Civil Code of Russia, introduced by Federal Law # 35-FZ dd. March 12, 2014, came into force. According to the amendments, neither license agreements nor franchise agreements, but the transfer of the right for using an intellectual property object is subject to registration with the Federal Service for Intellectual Property (RosPatent).
According to Federal Service on Surveillance in Healthcare and Social Development (Roszdravnadzor), Rospatent has clarified in its Letter № 02/21-14928/08 of October 31, 2014 the documentary support for validating an applicant’s rights to use the intellectual property objects in course of medical devices’ state registration.
Pursuant to Rospatent’s clarifications, a person is entitled to use a trademark, a service mark, appellation of origin, utility invention, utility model, industrial model provided that it possesses exclusive rights for such IP objects, or the right to use such IP objects is granted by the exclusive right owner, unless otherwise provided for by the Russian Civil Code.
Existence of an exclusive rights for trademark (a service mark), usage of appellation of origin shall be attested by the certificate of trademark (service mark) and the certificate of the exclusive right for appellation of origin accordingly. Exclusive rights for utility invention, utility model and industrial model are certified by the respective patents.
The rights to use the said IP objects may be granted under a license or a franchise agreement subject to obligatory state registration with Rospatent.
The license agreement or a franchise agreement with a note of registration with Rospatent, or a certified copy of the corresponding state register record may serve as a confirmation of the exclusive right owner’s consent for using this IP object by the applicant.
Deputy Minister of Industry and Trade of Russia Sergey Tsyb has pointed out in his speech that key goals of the Russian industrial policy are to solve the import dependence problem, to reduce the healthcare sector dependence on primary industries and to support local producers. One of the key indicators to be achieved under the Federal Program for development of pharmaceutical and medical industry is achievement of 40% share of Russia-made medical devices in total domestic consumption by 2020.
The Deputy Minister has commented on three methods of stimulating the Russian medical industry development:
As for the scale of additional benefits, Mr. Tsyb noted that this would be “unprecedented measures for new manufacturing projects”.
Press Services of the Ministry of Healthcare has reported on the ongoing discussion of the regulatory aspects of formation of the pharmaceuticals’ lists and the organizational procedures of the planned revision in 2014 of the Essential Drugs, Essential Drugs Coverage, 7 Nosologies and Minimal Drugs Assortment Lists. Moreover, the pool of data which includes 191 applications for including or excluding the drugs from the above Lists according to their international non-proprietary names was submitted for consideration to the authorized expert bodies.
The Essential Drugs List elaborated by the Committee and approved by the federal executive bodies is scheduled for submission to the Russian Government by December 10, 2014.
All the pharmaceuticals proposed for consideration by the Committee are grouped as per the clinical areas and pharmaco-therapeutic groups.
The expert assessment of pharmaceuticals shall be performed by specialists based on ranking scores for certain sections. In particular, there are certain criteria presuming priority for domestic pharmaceuticals when included into the Essential Drugs List.
The existing Essential Drugs List has been established in compliance with the international Anatomical, Therapeutic, Chemical Classification (ATC) recommended by the WHO, and has a shaped-out structure.
Upon amending of the List the comparison is made against the pharmaceuticals included into the List earlier. The system of pharmaceuticals evaluation is focused on the long-term effect; hence, upon the annual revision of the Essential Drugs List, certain ratings of pharmaceuticals would be accumulated.
In particular, the Law will stipulate:
A number of disputable questions were submitted for consideration by the Russian Government. These include, in particular, issued of pharmaceuticals pricing regulation; industry control matters, such as GMP compliance assessment, rules and procedures for determining the pharmaceuticals interchangeability.
The expected enactment date of entering for the majority of the new Law provisions (upon the approval by the Federation Council and signing by the President) is July 1, 2015.
According to the Ministry’s estimations, by the beginning of November 2014, only 80% of pharmaceuticals in value terms and 67% in natural terms are produced in compliance with GMP. The most common GMP violations are absence of an authorized person who certified by the Ministry of Healthcare and lack of documentation maintained in line with the GMP standards.
Should Russian manufacturers not be able to clear the identified non-compliance (90 days are allowed for clearing two breach notifications), the Ministry for Industry and Trade will initial the license withdrawal by means of court procedure. By the year 2020, GMP compliance assessment is supposed to be extended to importers of pharmaceuticals as well. Should a foreign manufacturer be not able to confirm its GMP compliance, it will be prohibited from importing its products into Russia.
According to the Government Resolution # 1165 of November 6, 2014 signed by the Prime Minister Dmitry Medvedev, funding for the Federal Program “Development of pharmaceutical and medical industry of the Russian Federation for the period of up to 2020 and further” (“Pharma-2020”) was reduced by 7,8% – down to RUB 172,986 billion.
The Program “Pharma-2020” aimed at adapting the Russian pharmaceutical and medical industry to an innovative development model, was approved on February 17, 2011. According to the Program, it is planned, in particular, to re-equip the pharmaceutical and medical industry to achieve the level ensuring the due competitiveness of the goods exported from Russia. Moreover, it is planned to boost the production in Russia of strategically important and vital and essential drugs, as well as medical equipment and medical devices for the purposes of import substitution, and ensure the market entry of innovative pharmaceutical and medical goods of domestic origin.
On November 4, 2014 the Russian President Vladimir Putin signed the Federal Law drafted by Federal Antimonopoly Service of Russia “On Amendments to the Federal Law “On Procedure for Foreign Investment into Commercial Companies which are of Strategic Importance for National Defense and State Security” (# 343-FZ).
The objective of the amendments is to remove the excessive state regulation, as well as to ensure the uniformity of the law interpretation.
For example, the Law №57-FZ will no longer apply to inter-group transactions performed by foreign investors controlled by one person, transactions of foreign investors owning 75% or more in the authorized capital of mineral resource users, as well as transactions of the companies controlled by the constituent entity of the Russian Federation.
In addition, foreign investors will be able to extend the previously issued resolution on preliminary approval of a transaction.
Another novelty is the extension of the Law #57-FZ to transactions involving assets of strategic business entities with the estimated value of 25% or more of the book value of their assets as per the accounting statements as at the latest reporting date.
According to the Federal Antimonopoly Service, transparency and easiness of reconciliation procedures of transactions are confirmed by the statistical data. Throughout the 6 years while the Law #57-FZ regulating the procedure for foreign investment into strategic businesses has been in effect, 169 out of 177 applications considered by the Government Commission were approved.
The Federal law comes into force within 30 days upon its official publication.
The draft law envisages supplementing the Russian Criminal Code with an Article 238.1 toughening the criminal liability for the production, manufacturing, storage, transportation in purpose of the sale or sale of counterfeit pharmaceuticals and medical devices. According to the amendments, the said actions, if they caused death of two or more persons, shall entail imprisonment for a term from 7 to 10 years with a fine from hundred thousand to one million rubles.
Additionally, the draft Law envisages liability for falsifying documents for pharmaceuticals and medical devices, as well as liability for deliberate use of false documents.
The previous Pharma Bulletin issues are accessible our site.
Prepared for you by KPMG in Russia and the CIS, Healthcare & Pharmaceuticals Sector.
© 2017 KPMG Audit LLC, the Mongolian member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.