Inspections of Pharmaceutical Companies in Russia: Legal Overview

Anna Ivanova, Associate at BRACE Law Firm ©

March 15, 2023

Pharmaceutical companies (organizations) must comply with numerous statutory requirements in their operations. Authorized government bodies control compliance with these requirements by conducting inspections within the framework of state control (supervision).

In practice, a wide range of entities may inspect pharmaceutical organizations. Examples include prosecutorial inspections, tax control, consumer protection compliance inspections, licensing control, labor inspectorate inspections, and many others.

Inspections often become a kind of "force majeure" for pharmaceutical companies, whereas the organization's efficiency depends on readiness for an inspection and timely legal support during inspections.

This article analyzes the main features of conducting inspections of pharmaceutical companies.

Legal Basis for Organizing and Conducting State Control (Supervision) of Pharmaceutical Organizations

The organization and implementation of federal state control (supervision) in the sphere of circulation of medicinal products are regulated by Federal Law No. 248-FZ dated July 31, 2020, On State Control (Supervision) and Municipal Control in the Russian Federation (the "Law on State Control (Supervision)" or "Law No. 248-FZ"). The control procedure is also defined by Decree of the Government of Russia No. 1049 dated June 29, 2021, On Federal State Control (Supervision) in the Sphere of Circulation of Medicinal Products (the "Decree No. 1049"), which establishes the specifics of conducting inspections of pharmaceutical market participants.

Licensing control regarding the production of medicinal products is carried out based on the Regulation on Federal State Licensing Control of Activity on Production of Medicinal Products, contained in Appendix No. 2 to the Regulation on Licensing the Production of Medicinal Products, approved by Decree of the Government of the Russian Federation No. 686 dated July 6, 2012.

Regarding licensing control over compliance with licensing requirements within other types of pharmaceutical activity (wholesale and/or retail trade in medicinal products, storage, transportation, dispensing of medicinal products), Clause 25 of the Regulation on Licensing Pharmaceutical Activity, approved by Decree of the Government of the Russian Federation No. 547 dated March 31, 2022, establishes that the assessment of licensees' compliance with licensing requirements during pharmaceutical activity is carried out within the framework of federal state control (supervision) in the sphere of circulation of medicinal products (i.e., in accordance with Decree No. 1049).

Federal Law No. 294-FZ dated December 26, 2008, On the Protection of Rights of Legal Entities and Individual Entrepreneurs in the Exercise of State Control (Supervision) and Municipal Control (the "Law No. 294-FZ") also establishes measures to protect the rights of legal entities and individual entrepreneurs during state control (supervision) and municipal control [1]. Furthermore, several moratoriums were introduced regarding inspections in 2022–2023 to stimulate market development considering the current economic situation.

Thus, inspection issues are regulated by various legal acts. Below, we examine the legal regulation of exemption from inspections in more detail.

Moratorium on Inspections in 2023

Decree of the Government of Russia No. 336 dated March 10, 2022, introduced a moratorium on scheduled inspections in 2022, as well as restrictions on unscheduled inspections.

Decree of the Government of Russia No. 1743 dated October 1, 2022, amended said document. Specifically, the moratorium on scheduled inspections extends to 2023, while unscheduled inspections are subject to a number of conditions.

Scheduled inspections may be conducted regarding extremely high and high-risk facilities, as well as in the field of industrial safety regarding hazardous production facilities (children's public catering, educational facilities, maternity hospitals, etc.), and within the framework of federal state supervision in the field of industrial safety regarding hazardous production facilities classified as hazard class II.

Unscheduled inspections are conducted exclusively on the following grounds:

1. Subject to agreement with the prosecutor's office:

• immediate threat of harm to life and grievous harm to health of citizens, facts of harm to life and grievous harm to health of citizens;
• immediate threat to the country's defense and state security, facts of harm to the country's defense and state security;
• immediate threat of natural and (or) man-made emergencies, facts of natural and (or) man-made emergencies;
• upon detection of risk indicators of mandatory requirement violations;
• necessity to conduct an unscheduled on-site inspection or unscheduled inspection visit due to the expiration of the deadline for executing an order to take measures aimed at eliminating violations entailing an immediate threat of harm to life and grievous harm to health of citizens, the country's defense and state security, or the occurrence of natural and (or) man-made emergencies. These are conducted exclusively in cases where it is impossible to assess the execution of the order based on documents or other information available to the control (supervisory) body;
• by decision of the Head or Deputy Head of the Federal Tax Service within the framework of federal state control (supervision) over compliance with the legislation of the Russian Federation on the use of cash register equipment;
• by decision of the Head (Deputy Head) of Rostrud or its territorial bodies within the framework of federal state control (supervision) over compliance with labor legislation in the event of receipt of complaints (information) from employees containing data on mass (more than 10% of the average headcount or more than 10 people) violations by employers of their labor rights related to total or partial non-payment of wages for over one month;
• by decision of the Head or Deputy Head of Roskomnadzor within the framework of federal state control (supervision) over personal data processing regarding operators, if the fact of dissemination (provision) of databases (or parts thereof) containing personal data on the Internet is established.

2. Without agreement with the prosecutor's office:

• on instructions of the President of the RF;
• on instructions of the Prime Minister, adopted after the entry into force of this decree;
• on instructions of the Deputy Prime Minister, adopted after the entry into force of this decree and agreed with the Deputy Prime Minister – Chief of Staff of the Government;
• upon the demand of a prosecutor within the framework of supervision over the execution of laws, observance of human and civil rights and freedoms based on materials and appeals received by the prosecutor's office;
• upon the occurrence of an event specified in the inspection program (during state construction supervision, federal state environmental control (supervision), state control (supervision) over the condition, maintenance, preservation, use, popularization, and state protection of cultural heritage sites);
• upon the presentation by the controlled person of documents and (or) information on the execution of an order or other decision of the control (supervisory) body in order to obtain or renew a previously suspended license, accreditation, or other document of a permissive nature;
• unscheduled inspections in connection with the receipt by the state control (supervision) body of an application from a legal entity or individual entrepreneur regarding the granting of a legal status, special permit (license) for the right to carry out certain types of activities, or permission (approval) for other legally significant actions, if conducting such an inspection is provided for by the rules for granting the legal status or special permit (license);
• unscheduled documentary inspections upon receipt by the control (supervisory) body in the field of production and turnover of ethyl alcohol, alcoholic and spirit-containing products from an inquirer, inquiry body, or investigator of materials regarding the seizure of ethyl alcohol, alcoholic and spirit-containing products, or equipment for their production, not being physical evidence in a criminal case, carried out during the verification of a crime report or during operational-search activities.

Decree of the Government of the Russian Federation No. 2516 dated December 29, 2022, extended the moratorium on unscheduled control (supervisory) measures regarding compliance with legislation on the use of cash register equipment (KKT), including revenue accounting completeness, for 2023. Unscheduled control (supervisory) measures are conducted exclusively upon the detection of risk indicators of mandatory requirement violations, by decision of the Head or Deputy Head of the Federal Tax Service of Russia. In case of detection of facts confirming the risks of violations of the current legislation on the use of KKT, tax authorities prioritize preventive measures aimed at minimizing risks and ensuring compliance by economic entities with current norms and rules [2].

Thus, in addition to the general inspection rules, a number of restrictions are introduced for the period until the end of 2023 aimed at avoiding the negative impact of sanctions imposed based on inspection results.

Inspections in the Sphere of Circulation of Medicinal Products

According to Art. 9 of Federal Law No. 61-FZ dated April 12, 2010, On Circulation of Medicinal Products (the "Law on Circulation of Medicinal Products"), state control (supervision) in the sphere of circulation of medicinal products is carried out via:

• federal state control (supervision) in the sphere of circulation of medicinal products;
• federal state licensing control of activity on the production of medicinal products.

The subject of federal state control (supervision) in the sphere of circulation of medicinal products includes:

1. Compliance with mandatory requirements in the sphere of circulation of medicinal products, including:

• requirements for preclinical studies of medicinal products, clinical studies of medicinal products, manufacture, storage, transportation, import into Russia, dispensing, sale, transfer, retail of medicinal products, use, and destruction of medicinal products, and the setting of prices by manufacturers of medicinal products for medicinal products included in the VED List;
• requirements for the compliance of medicinal products in circulation with quality, efficacy, and safety indicators;
• requirements for compliance by medicinal product circulation entities specified in Part 1 Article 67.1 of the Law on Circulation of Medicinal Products with restrictions imposed by Articles 67.1 and 67.2 of the Law on Circulation of Medicinal Products. Specifically, this refers to restrictions for pharmaceutical organizations when interacting with medical workers and conducting scientific and other events, as well as the obligation to report side effects, adverse reactions, serious adverse reactions, and unexpected adverse reactions during the use of drugs.

2. Compliance with licensing requirements for carrying out pharmaceutical activity.
3. Compliance with requirements for the provision by medicinal product circulation entities of information on medicinal products and (or) medicinal preparations provided for by Articles 9.1, 52.1, and 64 of the Law on Circulation of Medicinal Products. This refers to the manufacturer's obligation to provide Roszdravnadzor with a manufacturer's document confirming the quality of the medicinal product before release into civil circulation, and confirmation by the authorized person of the manufacturer of medicinal products of the compliance of the medicinal product with requirements established during its state registration/
4. Compliance with requirements provided by Article 55.1 of the Law on Circulation of Medicinal Products for conducting an experiment on the retail trade of medicinal products for medical use dispensed by prescription via remote means. Recall that in the period from March 1, 2023, to March 1, 2026, in the city of Moscow, and the Belgorod and Moscow regions, an experiment is envisaged for the retail trade of medicinal products for medical use dispensed by prescription via remote means.

Pursuant to Clause 2 Part 2 Art. 3 of Law No. 248-FZ, Government Decree No. 1049 dated June 29, 2021, On Federal State Control (Supervision) in the Sphere of Circulation of Medicinal Products was adopted, according to which supervision in the sphere of circulation of medicinal products is carried out by Roszdravnadzor.

This legal act implements a risk-based approach regarding supervision of pharmaceutical companies' activities. Specifically, when carrying out federal state control (supervision) in the sphere of circulation of medicinal products, objects of state control are assigned to one of the following risk categories of harm (damage):

• significant risk;
• medium risk;
• moderate risk;
• low risk.

The assignment of objects of state control to a certain risk category is carried out based on a number of criteria, taking into account information contained in the registries of licenses for pharmaceutical activity, medical activity, and activity involving the turnover of narcotic drugs, psychotropic substances and their precursors, cultivation of narcotic plants (maintained by the Federal Service for Surveillance in Healthcare), in the state register of medicinal products for medical use and the register of issued permits for conducting clinical studies of medicinal products for medical use (maintained by the Ministry of Health of Russia), as well as the register of licenses for the production of medicinal products for medical use (maintained by the Ministry of Industry and Trade of Russia).

Such criteria include the following:

1. Criteria for the severity of potential negative consequences of possible non-compliance with mandatory requirements are applied by separately assigning the object of state control to a risk category for each of the following types of activity:

• wholesale trade in medicinal products;
• preclinical studies of medicinal products, clinical studies of medicinal products, retail trade in medicinal products, and destruction of medicinal products.

2. Criteria for the probability of non-compliance with mandatory requirements. Specifically, objects of state control subject to assignment to medium, moderate, and low risk categories shall be assigned to significant, medium, and moderate risk categories respectively given the existence of two or more rulings on imposing administrative liability on the legal entity, its officials, or individual entrepreneur that entered into legal force within 2 years preceding the date of the decision on risk categorization, imposing administrative punishment in the form of an administrative fine or administrative suspension of activity for committing administrative offenses provided for by:

• Article 6.33 of the CAO RF regarding the sale or import into the Russian Federation of falsified medicinal products for medical use, sale or import into the Russian Federation of counterfeit medicinal products for medical use, sale or import into the Russian Federation of substandard medicinal products for medical use, as well as the illegal sale or import into the Russian Federation of unregistered medicinal products for medical use;
• Article 14.4.2 of the CAO RF (violation of legislation on the circulation of medicines);
• Part 21 Article 19.5 of the CAO RF for failure to execute within the established period a lawful order of the federal executive body exercising functions of control and supervision in the sphere of healthcare or its territorial body to eliminate detected violations of mandatory requirements in the sphere of circulation of medicinal products for medical use concerning manufacture, transportation, sale, and storage of medicinal products for medical use;
• Article 19.7.8 of the CAO RF for failure to provide or untimely provision of information to the federal executive body exercising functions of control and supervision in the sphere of healthcare or its territorial body, if the provision of such information is mandatory in accordance with legislation in the sphere of health protection.

Scheduled control (supervisory) measures regarding objects of state control in the sphere of circulation of medicinal products for medical use are conducted with the following frequency depending on the assigned risk category:

1) for the significant risk category, one of the indicated control (supervisory) measures:

• inspection visit – once every 3 years;
• on-site inspection – once every 3 years;
• documentary inspection – once every 3 years;

2) for the medium risk category, one of the indicated control (supervisory) measures:

• inspection visit – once every 5 years;
• on-site inspection – once every 5 years;
• documentary inspection – once every 5 years;

3) for the moderate risk category, one of the indicated control (supervisory) measures:

• inspection visit – once every 6 years;
• on-site inspection – once every 6 years;
• documentary inspection – once every 6 years.

Regarding objects of state control assigned to the low risk category, scheduled inspections are not conducted.

Decree No. 1049 also contains provisions similar to Law No. 248-FZ regarding on-site and documentary inspections, as well as preventive measures. However, such a preventive measure as "measures to stimulate good faith," which is specified in the federal law, is absent. We believe this exception was made due to the specifics of Roszdravnadzor's work, as well as the relatively recent introduction of said measure.

Regarding licensing control over drug production, the procedure for such control is established by a separate Regulation on Federal State Licensing Control of Activity on Production of Medicinal Products in Appendix No. 2 to the Regulation on Licensing the Production of Medicinal Products, approved by Decree of the Government of the Russian Federation No. 686 dated July 6, 2012. According to this legal act, licensing control over drug production is carried out by the Ministry of Industry and Trade of Russia.

Informing controlled persons and other interested persons on issues of compliance with mandatory requirements regarding activity on the production of medicinal products is carried out by the Ministry of Industry and Trade by posting relevant information on its website, in the media, and via personal accounts of controlled persons in state information systems (if available) within 5 working days from the date of approval of the regulatory legal act containing mandatory requirements.

It is also established that licensing control is carried out by conducting unscheduled control measures.

Unscheduled control measures involving interaction with the inspected controlled persons are carried out in the form of the following control measures: documentary inspection; on-site inspection. During a documentary inspection, control actions in the form of obtaining written explanations and demanding documents may be carried out. During an on-site inspection, in addition to the specified actions, the following may be carried out: inspection; interview; sampling; testing; expertise. Thus, compared to Law No. 248-FZ, the list of control measures in Decree No. 686 is less structured. In fact, such types of control measures as monitoring purchase, selective control, inspection visit, and raid inspection are not specified. We believe that in the future, the norms of Decree No. 686 may be brought into conformity with Law No. 248-FZ if the Ministry of Industry and Trade considers it possible to introduce additional control measures when exercising licensing control.

Said legal act specifies that for the purpose of conducting testing and expertise of medicinal products for compliance with the requirements of regulatory documentation (quality regulatory document), the licensing authority attracts a specialist and (or) an expert organization accredited in accordance with the legislation of the Russian Federation on accreditation in the national accreditation system, or federal state budget institutions subordinate to the licensing authority.

Samples of medicinal products are sent by the licensing authority (territorial body) to the expert organization with copies of the sampling protocol attached.

Expertise is carried out by an expert or expert organization on the instruction of the licensing authority (territorial body) based on an expert assignment, which may include one or several of the following expertise tasks: establishing facts and circumstances; establishing identity or difference; establishing objective properties and states of available medicinal product samples; conducting an assessment of a medicinal product sample for compliance with specified criteria; establishing the compliance of a medicinal product sample with the requirements of regulatory documentation (regulatory document).

Photography, audio, and video recording are carried out in the following order:

• orienting, overview, nodal, and detailed photography and video recording are carried out to fix the course and results of the control measure;
• photo, audio, and video fixation are conducted by an official authorized to exercise licensing control during the control measure using cameras, voice recorders, video cameras, as well as mobile devices (phones, smartphones, tablets);
• equipment used for photo and video fixation must have the technical capability to display the current date and time on photographs and video recordings, as well as save data on the shooting location (coordinates);
• audio recording is conducted by an official authorized to exercise licensing control during the control measure;
• during photo and video fixation, it is necessary to use fixation techniques that exclude the possibility of distorting the properties of the object of control, and conditions of fixation must be ensured under which the obtained photographs and video recording maximally accurately and fully display the properties of the objects of control;
• information on conducting photography, audio, and video recording is reflected in the act of the control measure indicating the type and brand of equipment used for fixation;
• photo, audio, and video materials are an appendix to the act of the control measure.

Thus, control in the sphere of circulation of medicines is carried out both in the form of state control (supervision) and in the form of licensing control. Moreover, the special Decree No. 1049 does not actually contradict the provisions of Law No. 248-FZ, while the legal act on licensing control of drug production establishes the specific provisions cited above.

General Procedure for Conducting Inspections of Pharmaceutical Organizations

Under Art. 2 of Law No. 294-FZ, an inspection is a set of measures conducted by a state control (supervision) body or municipal control body regarding a legal entity or individual entrepreneur for control to assess the compliance of the activities or actions (inaction) carried out by them, goods produced and sold by them (work performed, services provided) with mandatory requirements and requirements established by municipal legal acts.

A control measure involves actions by an official or officials of the state control (supervision) body or municipal control body and experts/expert organizations attracted if necessary, to examine documents of the legal entity or individual entrepreneur and other information on their activities, inspect and survey production facilities used by said persons, transported cargoes, sample products, as well as conduct expertise and investigations aimed at establishing the causal link of the detected violation with facts of causing harm.

Conducting inspections is regulated by the general norms of Law No. 248-FZ. However, the actual division of inspections into scheduled and unscheduled is most fully disclosed in Law No. 294-FZ. Thus, scheduled inspections are conducted based on annual plans developed and approved by state control (supervision) bodies and municipal control bodies in accordance with their powers. According to the Rules for Preparation by State Control (Supervision) Bodies and Municipal Control Bodies of Annual Plans for Conducting Scheduled Inspections of Legal Entities and Individual Entrepreneurs, approved by Decree of the Government of Russia No. 489 dated June 30, 2010, when compiling the inspection plan, the determination of legal entities and individual entrepreneurs whose scheduled inspections are included in the draft annual plan is carried out taking into account the assessment of the results of unscheduled inspections of said persons conducted over the last 3 years.

Also, the basis for including a scheduled inspection in the annual plan for conducting scheduled inspections is the expiration of 3 years from the day of:

• state registration of the legal entity or individual entrepreneur;
• completion of the last scheduled inspection of the legal entity or individual entrepreneur;
• commencement of entrepreneurial activity by the legal entity or individual entrepreneur in accordance with a notification submitted to the authorized state control (supervision) body on the commencement of separate types of entrepreneurial activity in the case of performing work or providing services requiring the submission of such notification.

The basis for conducting an unscheduled inspection is:

• expiration of the deadline for executing a previously issued order to eliminate a detected violation of mandatory requirements;
• receipt by the state control (supervision) body or municipal control body of an application from a legal entity or individual entrepreneur regarding the granting of a legal status or special permit (license) for the right to carry out separate types of activities;
• a motivated submission by an official of the state control (supervision) body or municipal control body based on the analysis of results of control measures without interaction with legal entities/individual entrepreneurs, consideration or preliminary verification of received complaints and statements from citizens, or information from state authorities or mass media regarding the following facts:
• emergence of a threat of harm to life, health of citizens, harm to animals, plants, the environment, cultural heritage sites, state security, as well as a threat of natural and man-made emergencies;
• causing of harm to life, health of citizens, harm to animals, plants, the environment, cultural heritage sites, state security, as well as the occurrence of natural and man-made emergencies;
• violation of consumer rights;
• violation of requirements for labeling of goods;
• detection, during control measures without interaction with legal entities/individual entrepreneurs, of parameters of the activity of a legal entity/individual entrepreneur, compliance with which or deviation from which corresponds to risk indicators of mandatory requirement violations;
• an order (instruction) of the head of the state control (supervision) body issued in accordance with instructions of the President of the Russian Federation, the Government of the Russian Federation, and based on the demand of a prosecutor to conduct an unscheduled inspection within the framework of supervision over the execution of laws based on materials and appeals received by the prosecutor's office.

It is important to note that Law No. 248-FZ entered into force on July 1, 2021. A significant aspect is the abandonment of the "inspection" as the sole control measure. It introduces 9 types of control (supervisory) measures, divided into measures conducted without interaction with legal entities (observation of compliance with mandatory requirements, outbound survey) and measures involving interaction with the legal entity. Such measures include: control purchase, monitoring purchase, selective control, inspection visit, raid inspection, documentary inspection, and on-site inspection [3].

Let us examine briefly what control measures related to state/municipal control/supervision represent, with a more detailed examination of the features of conducting inspections.

Control purchase means a control (supervisory) measure during which the inspector performs actions to create a situation for a transaction in order to assess compliance with mandatory requirements when selling products (goods), performing work, or providing services to consumers. This control measure is most common regarding pharmacy organizations.

Within the framework of a monitoring purchase, the inspector performs actions to create a situation for a transaction for the purpose of subsequently sending the products (goods), results of performed work, or provided services for testing or expertise, as well as conducting a study of the products (goods), results of performed work, or provided services regarding their compliance with mandatory requirements for safety and (or) quality. Such a measure may be conducted regarding both wholesale and retail participants of the pharmaceutical market.

Selective control means a control (supervisory) measure conducted at the place of storage, use (operation), and (or) sale of products (goods), representing an instrumental assessment and (or) sampling of products (goods) to confirm their compliance with mandatory requirements for safety and (or) quality. Selective control may be conducted with the participation of experts and specialists attracted to the measure.

Inspection visit means a control (supervisory) measure conducted by interacting with a specific controlled person and (or) owner (user) of a production facility. An inspection visit is conducted without prior notification of the controlled person and the owner of the production facility. The duration of an inspection visit at one place of activity or one production facility (territory) cannot exceed 1 working day.

Raid inspection is a measure conducted to assess compliance with mandatory requirements for the use (operation) of production facilities owned, used, or managed by several persons located in a territory where several controlled persons are located. A raid inspection may be conducted in the form of a joint (interdepartmental) measure.

Observation of compliance with mandatory requirements (safety monitoring) means the collection and analysis of data on control objects available to the control (supervisory) body, including data received during interdepartmental information interaction provided by controlled persons as part of fulfilling mandatory requirements, as well as data contained in state and municipal information systems, data from the Internet, other publicly available data, as well as data obtained using technical means of fixing offenses working in automatic mode having photo, filming, and video recording functions.

Outbound survey is conducted to assess compliance by controlled persons with mandatory requirements. An outbound survey may be conducted at the location (place of activity) of the organization (its branches, representative offices, separate structural subdivisions), the place of activity of a citizen, or the location of a control object, provided that no interaction with the controlled person occurs. An outbound survey is conducted without informing the controlled person and may include such measures as: visual inspection, sampling, instrumental assessment, testing, and expertise.

Let us turn to the inspection procedure. Law No. 248-FZ distinguishes between on-site and documentary inspections.

Documentary inspection means a control (supervisory) measure conducted at the location of the control (supervisory) body, the subject of which is exclusively information contained in the documents of controlled persons establishing their organizational and legal form, rights and obligations, as well as documents used in carrying out their activities and related to their fulfillment of mandatory requirements and decisions of the control (supervisory) body.

During a documentary inspection, the documents of controlled persons available to the control body, results of previous measures, materials of consideration of administrative offense cases, and other documents on the results of previously exercised state control (supervision) or municipal control are examined.

The following control (supervisory) actions may be performed during a documentary inspection:

• obtaining written explanations;
• demanding documents;

Obtaining written explanations implies a request by the inspector for written evidence relevant to assessing compliance with mandatory requirements from the controlled person or their representative, or witnesses possessing such information. Explanations are formalized by drawing up a written document in free form. Also, the inspector has the right to personally compose explanations based on the words of officials or employees of the organization, citizens who are controlled persons, their representatives, or witnesses. In this case, the specified persons read the explanations, supplement the text if necessary, make a note that the inspector recorded their words correctly, and sign the document indicating the date and place of its composition [4].

Demanding documents means the presentation (sending) by the inspector to the controlled person of a demand to submit documents and (or) their copies necessary and (or) relevant for assessing compliance with mandatory requirements, including photo, audio, and video recording materials, information bases, databanks, and storage media. When submitting certified copies of requested documents, the inspector has the right to examine the original documents. Documents requested during a control (supervisory) measure must be submitted within the period specified in the demand. If the controlled person cannot submit documents within the established period, they must immediately notify the inspector in writing indicating the reasons and the timeframe within which they can submit the documents. Previously submitted documents need not be resubmitted provided the control (supervisory) body is notified that they were submitted earlier.

Expertise means a control (supervisory) action consisting of conducting research on issues requiring special knowledge in various fields of science, technology, art, or craft, posed to an expert or expert organization by the inspector within the framework of a control (supervisory) measure to assess the controlled person's compliance with mandatory requirements.

If the reliability of information contained in submitted documents causes reasonable doubts or if this information does not allow assessing compliance with mandatory requirements, the control (supervisory) body sends a demand to submit other necessary documents. The controlled person sends such documents within 10 working days from the receipt of the demand. A similar period is established for submitting explanations regarding errors and (or) contradictions detected by the control (supervisory) body in these documents.

During a documentary inspection, it is prohibited to demand information and documents not related to the subject of the inspection, or documents that can be obtained by this body from other bodies.

The duration of a documentary inspection cannot exceed 10 working days. This period does not include the time from the moment the control (supervisory) body sends a demand to submit necessary documents until the moment of their submission. An unscheduled documentary inspection is conducted without agreement with the prosecutor's office.

On-site inspection is conducted via interaction with a specific controlled person owning and (or) using production facilities to assess such person's compliance with mandatory requirements, as well as assess the execution of decisions of the control (supervisory) body.

Part 3 Art. 73 of Law No. 248-FZ emphasizes that an on-site inspection is conducted only when it is impossible to:

• verify the completeness and reliability of information contained in documents and explanations available to the control body or requested by it;
• assess the compliance of the controlled person's activity and (or) control objects belonging to/used by them with mandatory requirements without visiting the inspection site.

Thus, the legislator orients law enforcement agencies to conduct an on-site inspection only when other, more "lenient" control measures cannot achieve the goal of state control [5].

Regarding an on-site inspection, the controlled person is notified by sending a copy of the decision to conduct an on-site inspection no later than 24 hours before its start.

The duration of an on-site inspection cannot exceed 10 working days. Regarding one small business entity, the total duration of interaction during an on-site inspection cannot exceed 50 hours for a small enterprise and 15 hours for a micro-enterprise.

On-site inspection implies a wider range of control (supervisory) measures, including, in addition to expertise, obtaining written explanations, and demanding documents, such measures as: inspection; search; interview; sampling; instrumental assessment; testing; experiment. Below, we briefly examine these measures not mentioned earlier in the context of documentary inspection.

Inspection (visual) consists of visual examination of territories, premises (compartments), production and other facilities, products (goods), and other items without opening premises (compartments), vehicles, packaging of products (goods), without dismantling, disassembly, or violating the integrity of examined objects and their parts in other ways. Inspection is carried out using video recording and is not conducted in a residential premise. An inspection protocol is drawn up listing inspected territories/premises and identification signs of objects relevant to the measure.

Search implies conducting a visual examination of premises (compartments), vehicles, products (goods), and other items involving the opening of premises (compartments), vehicles, packaging of products (goods), including removing seals or other identification means applied to them, with disassembly, dismantling, or violating the integrity of examined objects and their parts in other ways. Like visual inspection, it is conducted using video recording and a protocol, with a prohibition on conducting it in a residential premise.

Interview means the inspector obtaining oral information relevant to assessing compliance with mandatory requirements from the controlled person or their representative and other persons possessing such information. Results are recorded in an interview protocol signed by the interviewed person confirming the accuracy of the information, as well as in the act of the control (supervisory) measure if the information is relevant.

Sampling means a control (supervisory) action performed by an inspector, expert, or specialist involving the removal (selection) of samples of water, soil, air, wastewater, emissions, waste, products (goods), and other items/materials in accordance with approved standardization documents and sampling rules for sending said samples for testing and (or) expertise. It is carried out using video recording in a quantity necessary and sufficient for instrumental assessment, testing, and expertise. A protocol is maintained. Importantly, sampling of products (goods), results of performed work, or provided services during an on-site inspection may be carried out exclusively in the absence of the possibility to assess compliance with mandatory requirements by other means without sampling.

Instrumental assessment is an action performed by an inspector or specialist at the location of the controlled person or production facility using special equipment and (or) technical instruments to determine actual values, indicators, and actions (events) relevant for assessing compliance. Special equipment includes measuring, testing instruments, mini-labs, etc., approved and certified. It is carried out by an inspector or specialist permitted to work on the equipment. A protocol is drawn up.

Testing means a control (supervisory) action performed at the location of the control (supervisory) body or its structural subdivision using special equipment to research samples of water, soil, air, wastewater, emissions, waste, products (goods), etc. Like instrumental assessment, testing is conducted by a qualified person. A protocol is maintained.

Experiment consists of using test items (items simulating weapons, explosives, etc.) and (or) test subjects (persons simulating violators), test tasks, and test situations. It is conducted only by an inspector at the location of the controlled person directly during the control measure.

Upon completion of any of the above measures involving interaction with the controlled person, an act of the control (supervisory) measure is drawn up at the venue on the day the measure ends.

Law No. 248-FZ provides limits to legal regulation. Its provisions do not apply to verifying crime reports, operational-search activities, inquiry and preliminary investigation, proceedings on administrative offenses, advertising law violations, checking the elimination of circumstances serving as grounds for administrative suspension of activity, court and prosecutor activities, etc.

Furthermore, Law No. 248-FZ does not regulate the procedure for certain types of state control, such as tax, currency, customs control, federal state control (supervision) over weapon turnover, antitrust control, and some others (Art. 2 of Law No. 248-FZ).

Notably, this legal act establishes the priority of preventive measures over control-supervisory ones.

Preventive measures include informing, prophylactic visits, issuing warnings, generalizing law enforcement practice, etc.

Along with previously applied measures, a number of new ones are established:

• measures to stimulate good faith – non-material encouragement of compliant persons (procedure established by the regulation on the type of control);
• self-assessment – independent automated assessment of compliance using methods on the regulator's website. High scores may allow adopting a declaration of compliance;
• prophylactic visit – a conversation at the place of activity. Detection of violations during the visit is not grounds for issuing an order to eliminate them [6].

If during preventive measures it is established that control objects represent a clear immediate threat of harm (damage) to legally protected values or such harm has been caused, the inspector immediately informs the head to decide on conducting control (supervisory) measures.

These general inspection norms extend to pharmaceutical companies with more detailed definitions.

Most Typical Violations in the Activities of Pharmaceutical Organizations, Including Pharmacies

When determining the most typical violations detected during inspections of pharmaceutical companies, it should be noted that pharmacies are most frequently inspected regarding control (supervision) of the sale and storage of medicinal products.

For example, pharmacy actions related to violating storage conditions of medicinal preparations and requirements for the minimum assortment of medicinal preparations are gross violations of licensing requirements and constitute the administrative offense provided for by Part 4 Article 14.1 of the CAO RF [7].

Also, as a rule, courts support Roszdravnadzor when imposing liability for selling prescription medicinal products without a prescription [8].

Another most frequent violation of licensing requirements is improper storage of medicinal products. For example, without observing the temperature regime, or storing expired drugs without separating them from unexpired ones in accordance with storage rules [9].

Violations of legislation on the circulation of medicines (Art. 14.4.2 CAO RF) are detected regarding violation of retail trade rules. For example, during a scheduled on-site inspection by a territorial body of Roszdravnadzor, it was revealed that a pharmacy violated the procedure for retail trade in medicinal preparations. Specifically, the state register of maximum selling prices for medicinal preparations included in the VED List, and information on the limits of wholesale/retail markups established in the constituent entity of the RF were absent, and information on this register was not available to customers. In some cases, courts replace the administrative fine with a warning [10].

Also, Part 21 Art. 19.5 of the CAO RF provides for liability for failure to execute lawful orders of Roszdravnadzor within established deadlines. In one case, a fine was deemed lawful as a partially unexecuted order was revealed. Specifically: "there are no records confirming the receipt and expenditure of medicinal preparations (Tropicamide, Lyrica, Cyclomed) subject to subject-quantitative accounting in special operation logbooks." Also, "a contract with an organization licensed for collection, transportation, processing, utilization, neutralization, and disposal of hazard class I-IV waste has not been concluded." The argument about the impossibility of executing the order due to the absence of an organization providing such services was rightfully rejected by the court [11].

Another serious violation is the production of falsified medicines. According to Art. 6.33 of the CAO RF, production, sale, or import of falsified medicinal products/medical devices/supplements (unless criminal) entails fines: citizens 70k-100k rubles; officials 100k-600k rubles; individual entrepreneurs 100k-600k rubles or suspension up to 90 days; legal entities 1-5 million rubles or suspension up to 90 days. In one case, an individual sold a counterfeit medicinal preparation without a license or documents confirming legality/quality. A fine of 70,000 rubles was imposed [12].

It should also be noted that Article 238.1 of the Criminal Code of the RF provides for criminal liability for the illegal production, sale, or import of falsified, substandard, and unregistered medicinal products/medical devices/supplements in a large amount (value exceeding 100,000 rubles).

The above examines the main violations detected after inspections of pharmaceutical companies. In addition to these, inspections regarding fire safety, antitrust legislation, advertising legislation, tax legislation, etc., may be conducted. The spectrum of possible violations is very wide, and therefore, pharmaceutical organizations are recommended to take preventive measures in advance.

Protection of Pharmaceutical Organizations and Appealing Inspections

Currently, appealing illegally adopted decisions of control bodies is one of the primary methods of defense.

According to Art. 39 of Law No. 248-FZ, judicial appeal of decisions of a control (supervisory) body or actions (inaction) of its officials by individual entrepreneurs and legal entities is possible only after their pre-trial appeal.

The complaint is submitted to the authorized body electronically using the unified portal of state and municipal services (Gosuslugi). When submitted by a citizen, it must be signed with a simple electronic signature or enhanced qualified electronic signature. When submitted by an organization, it must be signed with an enhanced qualified electronic signature.

As a general rule, a complaint against a decision of a territorial body of a control (supervisory) body or actions of its officials is considered by the head (deputy head) of said territorial body or by the higher body. If the complaint is filed against the actions (inaction) of the head (deputy head) of the territorial body, it is considered by the higher body. In case of appealing decisions taken by the central apparatus, the complaint is considered by its head.

A complaint against a decision/action is submitted within 30 calendar days from the day the applicant knew or should have known about the violation of rights.

A complaint against an order (predpisaniye) may be filed within 10 working days from the moment of receipt.

The complaint may include a petition to suspend the execution of the appealed decision. Such a petition is considered no later than 2 working days from registration.

The complaint must contain:

• name of the control body, name of the official whose decision/action is appealed;
• name/details of the applicant (citizen or organization), or representative details;
• information on the appealed decision/action leading to rights violation;
• grounds and arguments for disagreement (supporting documents may be attached);
• demands of the complainant;
• ID number of the control measure in the unified registry.

Refusal to review the complaint is possible if:

• missed deadline without petition to restore;
• petition to restore deadline denied;
• complaint withdrawn;
• court decision exists on the same issue;
• duplicate complaint submitted previously;
• offensive language/threats;
• previous refusal on same subject without new arguments;
• submitted to wrong body;
• law provides only for judicial appeal.

Upon review, the authorized body takes one of the following decisions:

• leaves complaint unsatisfied;
• cancels decision fully or partially;
• cancels decision fully and adopts a new one;
• recognizes actions illegal and rules on the merits.
• Similar norms are contained in Decree No. 1049.

Furthermore, Clause 2 Art. 18 of Law No. 294-FZ establishes that officials conducting an inspection must conduct it based on an order of the head/deputy head of the control body and only upon presentation of service identification. In this regard, the representative of the pharmaceutical organization has the right to verify the authority of the inspecting officials. The controlled person also has the right to review all inspection materials and be present.

It is desirable that the inspection be accompanied by legal support for the pharmaceutical company.

Additionally, according to Art. 10 of Federal Law No. 2202-1 dated January 17, 1992, On the Prosecutor's Office of the Russian Federation, prosecution bodies resolve statements and complaints containing information on law violations. A decision by a prosecutor does not impede seeking judicial protection. Thus, upon detecting possible violations during inspections, controlled persons have the right to appeal to the prosecutor's office.

Another option is appealing to the Commissioner for the Protection of the Rights of Entrepreneurs under the President of the RF (Ombudsman). According to Art. 1 of Federal Law No. 78-FZ dated May 7, 2013, the Ombudsman ensures guarantees of state protection of rights and legitimate interests of business entities.

This article examined the main features of conducting inspections of pharmaceutical companies. Besides the indicated methods of protection, one should not underestimate taking preventive measures, including conducting compliance audits to identify risks of possible violations.

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References

[1] Recall that Law No. 294-FZ applies until December 31, 2024, inclusive, in accordance with the specifics established by Article 26.3 of said law.

[2] Moratorium on conducting inspections for compliance with legislation of the Russian Federation on the use of KKT extended. Federal Tax Service of Russia.

[3] Types of control (supervisory) measures during state control (supervision), municipal control. Prosecutor's Office of the Komi Republic. 21.10.2021.

[4] Reform of control and supervisory activity ("regulatory guillotine") in the field of industrial safety. Tikhomirova L.A. // SPS ConsultantPlus. 2021.

[5] Protection of rights of entrepreneurs during state control (supervision) and municipal control taking into account new provisions of federal legislation. Voshchinsky M.V. // SPS ConsultantPlus. 2021.

[6] On novels of legal regulation of control and supervisory activity. Prosecutor's Office of the Voronezh Region. March 30, 2021.

[7] Review of judicial practice "On certain issues arising during the consideration by arbitration courts of cases on administrative offenses provided for by Chapter 14 of the Code of the Russian Federation on Administrative Offenses", approved by the Presidium of the Supreme Court of the RF on 06.12.2017.

[8] Ruling of the Supreme Court of the RF dated 03.11.2022 No. 308-ES22-20148 in case No. A53-44967/2021.

[9] Ruling of the Supreme Court of the RF dated 22.09.2022 No. 301-ES22-16377 in case No. A31-13004/2021.

[10] Decision of the Ivanovo Regional Court dated 10.08.2017 No. 21-212/17.

[11] Resolution of the Fourteenth Arbitration Appeal Court dated 17.02.2021 in case No. A10-1749/2020.

[12] Resolution of the Supreme Court of the RF dated 05.09.2022 No. 49-AD22-11-K6.