Licensing of Pharmaceutical Manufacturing

Anna Ivanova, Lawyer at BRACE Law Firm October 3, 2022

BRACE Law Firm ©

Manufacturing medicinal products is a complex process that requires production safety control, quality assurance of the manufactured drugs, and subsequent tracking of application results to avoid side effects and negative impacts on patient health.

Pursuant to Article 8 of Federal Law No. 61-FZ dated April 12, 2010, On the Circulation of Medicinal Products (the "Law No. 61-FZ", the "Law on Circulation of Medicinal Products"), a mandatory condition for granting a license for the manufacturing of medicines is the attachment of a list of dosage forms and (or) types of active pharmaceutical substances that the manufacturer intends to produce to the license application. As a general rule, if it is necessary to expand the manufacturing of medicinal products with new dosage forms and types of active pharmaceutical substances, the manufacturer must submit an application to the licensing authority to amend the register of licenses for the manufacturing of medicinal products.

General Provisions on the Licensing of Pharmaceutical Manufacturing

The Ministry of Industry and Trade of Russia is the authority authorized to license the manufacturing of medicines. Government Decree No. 686 dated July 6, 2012, approved the Regulation on Licensing the Manufacturing of Medicinal Products (the "Licensing Regulation").

According to the Licensing Regulation, the licensing requirements for an applicant for a license to manufacture medicinal products (the "license", the "pharmaceutical manufacturing license") include:

• The applicant’s possession of premises, buildings, structures and other facilities, technical means, equipment, and technical documentation, held by right of ownership or on another legal basis, necessary for performing the declared activities and meeting the established requirements;
• Compliance of medicine manufacturing with the Good Manufacturing Practice of the Eurasian Economic Union;
• The availability, in accordance with Article 45 of Law No. 61-FZ, of industrial regulations approved by the head of the manufacturer (license applicant), which include a list of active pharmaceutical substances and excipients used, indicating the quantity of each, data on the equipment used, and a description of the technological process and control methods at all stages of medicinal product manufacturing;
• The presence of a Qualified Person (the "QP") (or Qualified Persons) of the manufacturer, who is an employee and who, upon the release of medicinal products into civil circulation, confirms the compliance of the medicinal products with the requirements established during their state registration and guarantees that the medicinal products are manufactured in accordance with the requirements of the Good Manufacturing Practice of the Eurasian Economic Union, and who is certified and included in the register of Qualified Persons of medicinal product manufacturers of the Eurasian Economic Union in accordance with the law of the Eurasian Economic Union;
• The presence of employees who have concluded labor contracts and have, respectively, a higher or secondary vocational pharmaceutical, chemical, chemical-technological, biological, biotechnological, medical, or veterinary education, responsible for the manufacturing, labeling, and quality control of medicinal products.

In addition to the requirements for the license applicant listed above, the licensing requirements for a licensee when manufacturing medicinal products include:

• Compliance with the requirements of industrial regulations approved by the head of the manufacturer (licensee) in accordance with Article 45 of Law No. 61-FZ, which include a list of active pharmaceutical substances and excipients used, indicating the quantity of each, data on the equipment used, and a description of the technological process and control methods at all stages of medicinal product manufacturing;
• Compliance by the licensee with the requirements of Article 45 of the Law on Circulation of Medicinal Products regarding the prohibition of manufacturing medicinal products not included in the State Register of Medicinal Products, except for medicinal products manufactured for clinical trials and export, as well as the prohibition of manufacturing falsified medicinal products, medicinal products for veterinary use in violation of Good Manufacturing Practice rules, and medicinal products for medical use in violation of the Good Manufacturing Practice of the Eurasian Economic Union;
• Compliance by the licensee with the requirements of Article 57 of Law No. 61-FZ regarding the prohibition of the sale of substandard medicinal products, falsified medicinal products, and counterfeit medicinal products;
• Compliance with the rules for the storage of medicinal products in accordance with Article 58 of the Law on Circulation of Medicinal Products;
• Compliance with the Rules for the Destruction of Substandard Medicinal Products, Falsified Medicinal Products, and Counterfeit Medicinal Products;
• Compliance with the rules for registering operations related to the circulation of medicinal products for medical use included in the list of medicinal products for medical use subject to subject-quantitative accounting in special logs for recording operations related to the circulation of medicinal products for medical use, as well as the rules for maintaining and storing such special logs;
• Advanced training for Qualified Persons at least once every 5 years;
• Registration in the MDLP System;
• Compliance with the requirements of Article 67 of Law No. 61-FZ regarding the entry of information on medicinal products for medical use into the MDLP System in the manner and composition established by the Government of the Russian Federation, and also regarding the application of identification means to the packaging of medicinal products.

Thus, both the license applicant and the licensee must comply with a wide range of legal norms. In effect, the licensee must fully comply with all requirements for the manufacturing, storage, and destruction of medicinal products.

The following sections provide a more detailed look at the legal regulation of the main requirements listed above.

Legal Regulation of Key Requirements for License Applicants and/or Licensees

In practice, the requirements for premises are established by the mandatory GMP EAEU Rules approved by Decision of the Council of the Eurasian Economic Commission No. 77 dated November 3, 2016 (the "GMP EAEU Rules").

According to the GMP EAEU Rules:

• Lighting, temperature, humidity, and ventilation must be appropriate and must not adversely affect the medicinal products during their manufacturing and storage, nor the proper functioning of the equipment.
• Measures must be taken to prevent the entry of unauthorized persons into the premises.
• Premises are divided into manufacturing zones, storage zones, quality control zones, and auxiliary zones.
• Cross-contamination for medicinal products must be prevented during the design and operation of manufacturing premises. Pipelines, lighting fixtures, ventilation units, and other service systems must be designed and located so as to avoid recesses that make cleaning difficult.
• In-process control may be carried out within the manufacturing zone, provided it does not pose a risk to the technological process.
• Storage zones must be of sufficient capacity to ensure the orderly storage of various categories of materials and products: raw materials and packaging materials, intermediate, bulk, and finished products, as well as products in quarantine, products released for distribution, rejected, returned, or recalled products.
• As a rule, quality control laboratories should be separate from manufacturing zones. This is particularly important for laboratories controlling biological and microbiological medicinal products and radioisotopes, which must also be separate from each other. Break rooms and eating areas must be separate from other zones.

In addition to the specified requirements for premises, the Good Manufacturing Practice rules establish other requirements mandatory for licensees and license applicants.

In particular, quality reviews of all registered manufactured medicinal products must be conducted. The enterprise must have a sufficient number of qualified personnel to perform all tasks within the manufacturer's scope of responsibility. Each employee must understand their individual responsibility, which must be documented. The manufacturer must provide personnel training and implement a quality control system. For each manufactured medicinal product and each batch size, there must be approved written manufacturing formulas and technological instructions.

The issuance of certificates of compliance for a medicinal product manufacturer with the requirements of Good Manufacturing Practice rules is based on the results of pharmaceutical inspections, in accordance with the procedure established by the Government of the Russian Federation. The procedure for organizing and conducting inspections of medicinal product manufacturers for compliance with Good Manufacturing Practice requirements is established by the Government of the Russian Federation.

According to Government Decree No. 1314 dated December 3, 2015, On Determining the Compliance of Medicinal Product Manufacturers with the Requirements of Good Manufacturing Practice Rules, inspections are conducted by the Ministry of Industry and Trade of Russia. It is important to note that if medicinal product manufacturing is carried out at manufacturing sites located at different addresses, applications for inspection are submitted for each manufacturing site. A certificate is issued for each manufacturing site. The certificate is valid for 3 years from the date the inspection is completed.

In addition to these requirements, a medicinal product manufacturer must have industrial regulations approved by the head of the manufacturer, which include a list of active pharmaceutical substances and excipients used, indicating the quantity of each, data on the equipment used, and a description of the technological process and control methods at all stages of medicinal product manufacturing.

Another important requirement is the mandatory certification of the manufacturer's employees authorized to confirm the compliance of medicines with registration requirements. The procedure for the certification of Qualified Persons of medicinal product manufacturers was approved by Decision of the Council of the Eurasian Economic Commission No. 73 dated November 3, 2016. The person being certified must have:

• At least 3 years of work experience in the field of manufacturing, quality assurance, or quality control of medicinal products;
• A completed higher education in one of the following fields: chemical, chemical-technological, chemical-pharmaceutical, biological, biotechnological, microbiological, pharmaceutical, or medical.

The manufacturer must also have employees responsible for the manufacturing, labeling, and quality control of medicinal products, whose relationship with the manufacturer is based on labor contracts. Such employees must have a higher or secondary vocational pharmaceutical, chemical, chemical-technological, biological, biotechnological, or medical education.

Both license applicants and licensees must comply with the requirements listed above.

A license holder also complies with prohibitions on manufacturing medicinal products not included in the State Register of Medicinal Products; falsified and substandard medicines; and medicinal products in violation of the rules for organizing manufacturing and quality control.

Rules for storage have been established for manufacturers of medicinal products, approved by Order of the Ministry of Health and Social Development of Russia No. 706n dated August 23, 2010, and the Rules for Good Practice for the Storage of Medicinal Products, approved by Order of the Ministry of Health of Russia No. 646n dated August 31, 2016. According to these documents:

• Shelves (cabinets) for storing medicinal products in storage premises must be installed in such a way as to ensure access to medicinal products, free passage for personnel and, if necessary, loading devices, as well as the accessibility of shelves, walls, and floors for cleaning.
• Stored medicinal products must also be identified using a rack card containing information on the name, dosage form and strength, batch number, expiration date, and manufacturer data. Medicines stored in warehouse premises must be placed on shelves or on pallets.
• Furthermore, a security system must be provided to prevent unauthorized entry into any premises (zones) for storing medicinal products.

Equipment used in the process of storing and (or) transporting medicinal products includes, among others:

• Air conditioning systems;
• Refrigeration rooms and (or) refrigerators;
• Security and fire alarms; access control systems;
• Ventilation systems;
• Thermohygrometers (psychrometers) or other equipment used for recording temperature and humidity.

In addition to storage rules, rules for the destruction of medicinal products must also be observed. According to the Rules for the Destruction of Seized Falsified Medicinal Products, Substandard Medicinal Products, and Counterfeit Medicinal Products, approved by Government Decree No. 1447 dated September 15, 2020, the owner may independently decide to destroy falsified and substandard medicines. In this case, the manufacturer transfers the specified medicinal products to an organization that performs their destruction. An act of destruction is drawn up on the day of the destruction of the falsified medicinal products, and (or) substandard medicines, and (or) counterfeit medicinal products. The number of copies of the act is determined by the number of parties involved in the destruction.

If a manufacturer is engaged in the manufacturing of medicines subject to subject-quantitative accounting (the list is approved by Order of the Ministry of Health of Russia No. 183n dated April 22, 2014), it is mandatory to register all operations conducted with these medicines. Such rules were approved by Order of the Ministry of Health of Russia No. 378n dated June 17, 2013, which also approved the list of such medicinal products.

According to the Regulation on the Monitoring System for the Movement of Medicinal Products for Medical Use, approved by Government Decree No. 1556 dated December 14, 2018, to register in the monitoring system for the movement of medicinal products, entities involved in the circulation of medicinal products enter the following information in electronic form into the registration form of the monitoring system, located on the official website of the monitoring system operator on the Internet: INN; information on the presence or absence of a license to manufacture medicinal products; surname, first name, patronymic (if any), and telephone number of the contact person; and an email address.

In addition to the need to register in the monitoring system for the movement of medicinal products, mandatory labeling is required. Thus, in accordance with the aforementioned Government Decree, the identification means, when applied to the secondary (consumer) packaging of a medicinal product (or to the primary packaging if the secondary is absent), must contain a two-dimensional barcode applied in dot symbols.

Thus, compliance with licensing requirements for the manufacturing of medicines requires adherence to a significant number of legal norms.

Furthermore, during licensing, to establish the compliance of a license applicant or licensee with the specified requirements, an assessment of the compliance of the license applicant or licensee is conducted in the form of a documentary and (or) on-site assessment, including with the use of remote interaction tools.

An on-site assessment is conducted for a license applicant upon granting a license and for a licensee when making changes to the register of licenses if the licensee intends to manufacture medicinal products at a new address not provided for in the register of licenses, and when making changes to the register of licenses if the licensee intends to perform new activities constituting the manufacturing of medicinal products that were not previously provided for in the register of licenses. Additionally, an on-site assessment is conducted to evaluate the compliance with licensing requirements of the state of manufacturing facilities, technical means, equipment, and other objects intended for use by the license applicant or licensee in the manufacturing of medicinal products and necessary for the manufacturing activities.

In accordance with the Rules for Conducting Pharmaceutical Inspections, approved by Decision of the Council of the Eurasian Economic Commission No. 83 dated November 3, 2016, an on-site assessment using remote interaction tools is conducted in the following cases:

• The threat of occurrence, the occurrence, and the elimination of an emergency situation and (or) the occurrence of a threat of the spread of epidemic diseases that pose a danger to others, diseases, and injuries resulting from exposure to adverse chemical, biological, or radiation factors;
• The occurrence of force majeure circumstances or circumstances beyond the control of the parties that pose a threat of harm to the life and health of inspectors (for example, for political, medical, or other reasons).

Additionally, when conducting an assessment of compliance of the license applicant and licensee with licensing requirements, the Federal Budgetary Institution "State Institute of Drugs and Good Practices", subordinated to the Ministry of Industry and Trade of Russia, may be involved.

Medicinal product manufacturing activities are subject to inspection for compliance with licensing requirements within the framework of federal state licensing control. Licensing control is carried out through unplanned control activities, both on-site and documentary. During a documentary inspection, the following control actions may be performed:

• Obtaining written explanations;
• Requesting documents.

During an on-site inspection, the following may be performed:

• Inspection;
• Interviewing;
• Obtaining written explanations;
• Requesting documents;
• Sampling and specimen collection;
• Testing; 

Thus, special attention is paid to compliance with licensing requirements, and their violation leads to the liability of licensees.

The following sections discuss the most common violations of licensing requirements for the manufacturing of medicinal products and the liability measures for such violations.

Liability for Violation of Licensing Requirements

Liability for the violation of licensing requirements is provided for by Article 14.1 of the CAO RF, according to which the manufacturing of medicines without a license entails an administrative fine for individuals in the amount of 2,000 to 2,500 rubles; for officials – 4,000 to 5,000 rubles; for legal entities – 40,000 to 50,000 rubles, with or without confiscation of manufactured products, tools of production, and raw materials.

Violation of licensing requirements by a licensee entails a warning or an administrative fine for individuals in the amount of 1,500 to 2,000 rubles; for officials – 3,000 to 4,000 rubles; for legal entities – 30,000 to 40,000 rubles.

A gross violation of licensing requirements entails an administrative fine for persons engaged in entrepreneurial activities without forming a legal entity in the amount of 4,000 to 8,000 rubles or administrative suspension of activities for up to 90 days; for officials – 5,000 to 10,000 rubles; for legal entities – 100,000 to 200,000 rubles or administrative suspension of activities for up to 90 days.

A gross violation of licensing requirements for the manufacturing of medicinal products is defined as the licensee's failure to comply with the following requirements:

• The licensee's possession of premises, buildings, structures and other facilities, technical means, equipment, and technical documentation, held by right of ownership or on another legal basis, necessary for performing the declared activities and meeting the established requirements;
• Compliance with the requirements of industrial regulations approved by the head of the manufacturer (licensee), which include a list of active pharmaceutical substances and excipients used, indicating the quantity of each, data on the equipment used, and a description of the technological process and control methods at all stages of medicinal product manufacturing;
• Compliance with the GMP EAEU Rules;
• The presence of a Qualified Person (or Qualified Persons) of the manufacturer of medicinal products for medical use, who is an employee and who, upon the release of medicinal products into civil circulation, confirms the compliance of medicinal products with the requirements established during their state registration;
• The presence of employees who have concluded labor contracts and have a higher or secondary vocational pharmaceutical, chemical, chemical-technological, biological, biotechnological, medical, or veterinary education, responsible for the manufacturing, labeling, and quality control of medicinal products;
• Compliance by the licensee with the requirements for the prohibition of manufacturing medicinal products not included in the State Register of Medicinal Products, except for medicinal products manufactured for clinical trials and export, as well as the prohibition of manufacturing falsified medicinal products and medicinal products in violation of the Good Manufacturing Practice of the Eurasian Economic Union;
• Compliance with the requirements for the prohibition of the sale of substandard medicinal products, falsified medicinal products, and counterfeit medicinal products;
• Compliance with the Rules for the Storage of Medicinal Products;
• Compliance with the Rules for the Destruction of Substandard, Falsified, and Counterfeit Medicinal Products;
• Compliance with the rules for registering operations related to the circulation of medicinal products included in the list of medicinal products for medical use subject to subject-quantitative accounting;
• Registration in the monitoring system for the movement of medicinal products;
• Compliance with the requirements of Article 67 of the Law on Circulation of Medicinal Products.

The most common among these violations is the violation of the rules for the storage of medicines. For example, in July 2022, Roszdravnadzor issued an information letter requesting pharmaceutical manufacturers to pay special attention to the temperature regime for storing medicines.[1]

Another common violation is the manufacturing of medicinal products at an address not specified in the pharmaceutical manufacturing license. Courts conclude that such a violation should be classified as a violation of licensing requirements rather than as carrying out activities without a license.[2]

In fact, judicial practice in such cases is limited. We believe this is because most possible violations can only be identified through on-site inspections. At the same time, one cannot ignore the particular importance of complying with all requirements of the Licensing Regulation due to the very large fines.

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References

[1] Letter of Roszdravnadzor No. 01i-809/22 dated July 25, 2022.

[2] Information Bulletin of Appellate, Cassation, and Supervisory Practice in Criminal, Civil, and Administrative Cases, and Cases of Administrative Offenses of the Court of the Nenets Autonomous Okrug for the First Quarter of 2018.