07 July 2019

Mandatory Labeling of Medicinal Products: Key Stages and Implementation Specifics

July 7, 2019

BRACE Law Firm ©

For the purposes of identifying packaging of medicinal products for medical use, protecting the pharmaceutical market against falsified medicinal products, accounting for the circulation of medicinal products, and other purposes,[1] Federal Law No. 425-FZ dated December 28, 2017, On Amending the Federal Law On Circulation of Medicinal Products (the "Law No. 425-FZ"), introduced the concept of the "System for Monitoring the Movement of Medicinal Products for Medical Use". This represents a federal state information system for monitoring the movement of medicinal products for medical use from the manufacturer to the final consumer using identification means for such medicinal products.

Legal entities and individual entrepreneurs engaged in the manufacture, storage, import into the Russian Federation, dispensing, sale, transfer, use, and destruction of medicinal products for medical use must enter information into the specified system. The Law No. 425-FZ established a general duty for manufacturers of medicinal products[2] to apply identification means to the primary packaging (if no secondary packaging is provided for such medicines) and to the secondary (consumer) packaging. Such labeling will not require amendments to the registration dossier.

The specified changes enter into full force on January 1, 2020.

Nevertheless, Decree of the Government of the Russian Federation No. 62 dated January 24, 2017, On Conducting an Experiment on Labeling with Control (Identification) Marks and Monitoring the Circulation of Certain Types of Medicinal Products for Medical Use, provided for an experiment on labeling certain types of medicinal products between February 1, 2017, and December 31, 2019. It established that manufacturers perform labeling using a two-dimensional barcode (the "QR code").

Earlier, on February 28, 2018, the Ministry of Health of Russia approved Methodological Recommendations for conducting an experiment on labeling with control (identification) marks and monitoring the circulation of certain types of medicinal products for medical use in civil circulation within the Russian Federation. According to these recommendations, medicinal product circulation entities (the "LP") include: Russian LP manufacturers performing the "filling/packaging of LP into secondary and/or tertiary packaging" stages; Russian LP manufacturers performing "releasing quality control" stages; foreign marketing authorization holders; representative offices of foreign marketing authorization holders; wholesale and/or retail LP trade organizations; and medical organizations. These recommendations established that participants submit applications to participate in the experiment on a voluntary basis in electronic form within the information system.

It was previously assumed that the experiment would be conducted on a voluntary basis based on applications from medicinal product circulation entities. Priority medicinal products for participation in the experiment included those intended for the treatment of persons suffering from hemophilia, cystic fibrosis, pituitary dwarfism, Gaucher disease, malignant neoplasms of lymphoid, hematopoietic and related tissues, multiple sclerosis, and persons after organ and/or tissue transplantation.

However, in view of the gradual introduction of medicinal product labeling, Decree of the Government No. 1557 dated December 14, 2018, On the Specifics of Implementing the System for Monitoring the Movement of Medicinal Products for Medical Use, established that entities circulating LP intended for the treatment of persons suffering from hemophilia, cystic fibrosis, pituitary dwarfism, Gaucher disease, malignant neoplasms of lymphoid, hematopoietic and related tissues, multiple sclerosis, and persons after organ and/or tissue transplantation (per the list of medicinal products for medical use approved by Order of the Government of the Russian Federation No. 2738-р dated December 10, 2018) must register in the MDLP System starting July 1, 2019. Mandatory labeling for such medicines is introduced starting October 1, 2019.

From November 1, 2018, Decree of the Government of Russia No. 1018 dated August 28, 2018, selected "Operator-CRPT" as the operator of the corresponding information system within which QR codes may be assigned.

The Methodological Recommendations for participants in the experiment on labeling with identification means and monitoring the circulation of certain types of medicinal products for medical use (the "Methodological Recommendations"), approved by the Ministry of Health of Russia on April 23, 2018, to replace the Methodological Recommendations of February 28, 2018, established that LP circulation entities include individual entrepreneurs and legal entities engaged in activities during the circulation of LP, as well as marketing authorization holders (the "MAH") and/or their representative offices in the Russian Federation. The list of LP circulation entities remained unchanged compared to the previously effective Methodological Recommendations.

Decree of the Government No. 1556 dated December 14, 2018, approved the Regulation on the MDLP System, according to which medicinal product circulation entities are legal entities and individual entrepreneurs engaged in the manufacture, storage, import into the Russian Federation, dispensing, sale, transfer, use, and destruction of medicinal products. At the same time, it introduces the concept of an "identification means issuer", defined as a manufacturer of medicinal products performing the manufacturing stage of LP filling (packaging) by applying identification means to the secondary (consumer) LP packaging (or, in its absence, the primary LP packaging) during LP manufacture in the Russian Federation; or the holder or owner of an LP marketing authorization—for LP manufacture outside the Russian Federation; or a representative office of a foreign organization in the Russian Federation that is the holder or owner of the marketing authorization—for LP manufacture outside the Russian Federation.

The regulations establish a procedure for identification means issuers to obtain QR codes (verification codes). Under this procedure, an identification means issuer registered in the monitoring system submits an application for verification codes to the monitoring system operator. The issuer sends the application using emission registration devices. To submit such an application, one must register in the system. To register in the monitoring system, medicinal product circulation entities that are residents of the Russian Federation or representative offices of foreign organizations in the Russian Federation, as well as those that are holders or owners of a marketing authorization, must enter the following information into the special registration form on the official website of the system operator: INN; information on the presence or absence of a license to manufacture medicinal products, a license for pharmaceutical activity, and a license for medical activity; the last name, first name, middle name (if any), and telephone number of a contact person; and an email address. Foreign organizations without representative offices in Russia submit the following information: the name of the marketing authorization holder or owner; the taxpayer code in the country of registration; the country of registration code; the last name, first name, middle name (if any), and telephone number of a contact person; and an email address.

The regulations also establish a procedure for obtaining group codes (codes applied to tertiary packaging, which is defined as packaging for transporting medicinal products between LP circulation entities). To perform any actions in the monitoring system, one must possess an enhanced qualified electronic signature. The monitoring system operator reviews the submitted application within two hours of receipt. Based on the review results, the monitoring system operator provides the issuer with emission registration devices (a software and hardware cryptographic complex that allows for obtaining QR codes) free of charge. The issuer applies the QR code as a two-dimensional barcode on the production line by printing it on the packaging or by affixing a label (or sticker) to the packaging that will be inseparable from the packaging.

According to industry representatives, the mandatory labeling requirement should not apply to two types of medicines: drugs in the lower price category (less than 50 rubles per pack) and vital and essential drugs. Experts estimate that the cost price of the former will increase by 1 ruble per pack upon the introduction of mandatory labeling, which may lead to the cessation of their production due to unprofitability. Production volumes of drugs on the VED List are already decreasing due to state price regulation for such drugs; an increase in the cost of drugs from the VED List—without including the costs of purchasing labeling equipment in the methodology for establishing maximum prices—will seriously aggravate the situation and could cause a shortage of these drugs.

Decree of the Government of the Russian Federation No. 577 dated May 8, 2019, introduced fees for services to provide labeling codes in the amount of 50 kopecks per labeling code, excluding VAT. No fee is charged for providing labeling codes for medicinal products for medical use included in the VED List if the manufacturer's maximum selling price does not exceed 20 rubles. Payment must be made before entering information on the application of the labeling code into the monitoring system.

These actions to assign QR codes are necessary for the subsequent tracking of any operations related to LP circulation.

According to the Law No. 425-FZ, public information contained in the MDLP System is posted on the Internet (including in the form of open data) in the manner established by the Government of the Russian Federation. Manufacturers of medicinal products receive information contained in the MDLP System regarding the series and batches of medicinal products they manufacture that are in civil circulation free of charge.

The monitoring system interacts with the following information systems:

a) the unified register of licenses for the manufacture of medicinal products;

b) the unified register of licenses, including licenses issued by state authorities of the constituent entities of the Russian Federation in accordance with delegated powers for licensing certain types of activities in the field of health protection;

c) the unified state health information system in the sphere of healthcare;

d) the Unified State Register of Legal Entities;

e) the Unified State Register of Individual Entrepreneurs;

f) the state register of accredited branches and representative offices of foreign legal entities;

g) the automated information system of the Federal Service for Surveillance in Healthcare;

h) the Unified Automated Information System of the customs authorities;

i) information systems of medicinal product circulation entities.

The Regulation on the monitoring system for medicinal products establishes certain obligations for each medicinal product circulation entity to enter information about medicinal products into the system, with specific deadlines. Since the Regulation on the monitoring system for medicinal products defines a wide range of persons performing registration in this system (the circle of LP circulation entities), the distribution of duties among medicinal product circulation entities for entering corresponding information into the monitoring system depends on factors such as: the origin of the LP; the type of operations conducted with the LP (import into the Russian Federation, manufacture in the Russian Federation, etc.); and the conditions under which the LP is accepted/transferred between medicinal product circulation entities (who performs the LP import, which customs procedures the LP falls under, whether it is imported from EAEU member states, etc.). In view of the above, to avoid potential violations of the procedure for interacting with the MDLP System, it is recommended to pay attention to the terms and location of medicinal product acceptance and transfer when concluding contracts with counterparties. At the same time, the labeling of medicinal products is performed specifically by persons recognized by this Regulation as identification means issuers (Russian manufacturers of medicinal products performing the manufacturing stage of LP filling (packaging), or, if the LP is manufactured outside Russia, holders or owners of LP marketing authorizations or representative offices of foreign organizations in the Russian Federation).

The table below provides basic information regarding such obligations.

Appendix

LP Circulation Entity	Deadline for Performing the Duty to Enter Information into the Monitoring System	Information Provided to the Monitoring System
Medicinal products manufactured in the Russian Federation
Medicinal product circulation entity performing the LP filling (packaging)	Within 5 business days from the date of completion of the manufacturing stage of LP filling (packaging), but before submitting information on further operations with such medicinal products	a) date of the operation; b) INN of the LP circulation entity performing the LP filling (packaging) into the secondary (consumer) LP packaging (or the primary LP packaging in its absence); c) address of the location of activity where the stage of medicinal product filling (packaging) into the secondary (consumer) medicinal product packaging (or the primary medicinal product packaging in its absence) was completed; d) type of manufacturing order (contract or own manufacture); e) INN of the medicinal product circulation entity acting as the customer for contract (subcontract) manufacture (in the case of information submission by the medicinal product circulation entity performing contract (subcontract) manufacture); f) Global Trade Item Number of the medicinal product; g) manufacturing series number of the medicinal product; h) expiration date of the medicinal product; i) Serial Global Trade Item Number assigned to the secondary (consumer) medicinal product packaging (or the primary medicinal product packaging in its absence).
Medicinal product circulation entity performing the manufacturing stage of LP filling (packaging)	Within 5 business days from the date of completion of the manufacturing stage of releasing quality control before submitting information on further operations with the medicinal products released into circulation	a) date of the operation; b) INN of the LP circulation entity registering information on the release of finished products; c) address of the location of activity of the LP circulation entity registering information on the release of finished products; d) type of conformity assessment document—certificate of conformity or declaration of conformity; e) details of the conformity assessment document (date and number); f) Serial Global Tr¹ade Item Number or the group packaging code of the packaging containing the medicinal product released into circulation (if the group packaging is released as a whole).
Medicinal products manufactured outside the Russian Federation
Medicinal product circulation entity that is the holder or owner of a marketing authorization, or a representative office of a foreign organization in the Russian Federation that is the holder or owner of a marketing authorization	Within 20 business days from the date of completion of the manufacturing stage of releasing quality control before submitting information on further operations with such LP	a) date of the operation; b) taxpayer code of the LP marketing authorization holder or owner in the country of registration or INN (for an LP circulation entity that is an organization recognized as a tax resident of the Russian Federation or an individual entrepreneur, or for a representative office of a foreign organization registered in the Russian Federation); c) country of registration code of the LP marketing authorization holder or owner; d) taxpayer code of the medicinal product circulation entity performing the filling (packaging) of medicinal products into the secondary (consumer) LP packaging (or the primary medicinal product packaging in its absence) in the country of registration; e) country of registration code of the medicinal product circulation entity performing the LP filling (packaging) into the secondary (consumer) medicinal product packaging (or the primary LP packaging in its absence); f) name of the medicinal product circulation entity performing the LP filling (packaging) into the secondary (consumer) medicinal product packaging (or the primary medicinal product packaging in its absence); g) taxpayer code of the medicinal product circulation entity performing the manufacturing stage of releasing quality control in the country of registration; h) country of registration code of the medicinal product circulation entity performing the manufacturing stage of releasing quality control; i) name of the medicinal product circulation entity performing releasing quality control; j) Global Trade Item Number; k) LP manufacturing series number; l) LP expiration date; m) Serial Global Trade Item Number assigned to the secondary (consumer) LP packaging (or the primary LP packaging in its absence).
Medicinal products imported into the Russian Federation
Medicinal product circulation entity that is the holder or owner of a marketing authorization, or a representative office of a foreign organization in the Russian Federation that is the holder or owner of a marketing authorization	Within 45 business days from the date of LP shipment to the Russian Federation before the LP delivery to the place of arrival in the Russian Federation and the submission of information on further operations with such LP	a) date of the operation; b) taxpayer code of the medicinal product marketing authorization holder or owner in the country of registration or INN (for a medicinal product circulation entity that is an organization recognized as a tax resident of the Russian Federation or an individual entrepreneur, or for a representative office of a medicinal product circulation entity in the Russian Federation); c) country of registration code of the medicinal product marketing authorization holder or owner (for a medicinal product circulation entity that is a foreign organization not recognized as a tax resident of the Russian Federation and having no representative offices in the Russian Federation); d) taxpayer code of the seller of the medicinal products in the country of registration; e) country of registration code of the seller of the medicinal products; f) INN of the medicinal product circulation entity acting as the buyer of the medicinal products in the Russian Federation; g) details of the primary document serving as the basis for the medicinal product shipment to the Russian Federation; h) Serial Global Trade Item Number or the group code of the group packaging containing this medicinal product (if the group packaging is shipped as a whole).
Medicinal product circulation entity performing LP import into the Russian Federation for internal consumption	Within 5 business days from the date of medicinal product delivery to the place of arrival in the Russian Federation before submitting information on the customs authorities' decision to release medicinal products for internal consumption	a) date of the operation; b) taxpayer code in the country of registration or INN of the LP circulation entity performing the LP import into the Russian Federation (for a medicinal product circulation entity that is an organization recognized as a tax resident of the Russian Federation or an individual entrepreneur, or for a representative office of a medicinal product circulation entity in the Russian Federation); c) country of registration code of the medicinal product circulation entity performing the LP import into the Russian Federation (for a medicinal product circulation entity that is a foreign organization not recognized as a tax resident of the Russian Federation and having no representative offices in the Russian Federation); d) customs authority code and warehouse registration number (address of the goods' location according to the goods declaration); e) taxpayer code of the seller of the medicinal products in the country of registration; f) country of registration code of the seller of the medicinal products; g) contract type; h) details of the primary document serving as the basis for the LP import into the Russian Federation (date and number); i) Serial Global Trade Item Number or the group code of the group packaging containing this LP (if the group packaging is imported as a whole).
Medicinal products imported into the Russian Federation upon transfer of ownership rights in the customs control zone, placed under the customs warehouse procedure
Medicinal product circulation entity performing LP import into the Russian Federation	Within 5 business days from the date of execution of the relevant documents on the transfer of LP ownership rights before submitting information on further operations with the LP	a) date of the operation; b) taxpayer code in the country of registration or INN of the medicinal product circulation entity performing the LP transfer (for a medicinal product circulation entity that is an organization recognized as a tax resident of the Russian Federation or an individual entrepreneur, or for a representative office of a medicinal product circulation entity in the Russian Federation); c) country of registration code of the medicinal product circulation entity performing the transfer of medicinal products (for a medicinal product circulation entity that is a foreign organization not recognized as a tax resident of the Russian Federation and having no representative offices in the Russian Federation); d) INN of the LP circulation entity performing the acceptance of medicinal products; e) details of the primary document serving as the basis for the LP transfer (date and number); f) Serial Global Trade Item Number or the group code of the group packaging containing this LP (if the group packaging is transferred as a whole).
Medicinal product circulation entity to which ownership rights to the medicinal product have been transferred	Within 5 business days from the date of execution of the relevant documents on the transfer of ownership rights to the medicinal product and registration of information on the transferred medicinal products in the monitoring system before submitting information on further operations with the LP	a) date of the operation; b) INN of the LP circulation entity performing the acceptance of medicinal products; c) taxpayer code in the country of registration or INN of the medicinal product circulation entity performing the transfer of medicinal products (for a medicinal product circulation entity that is an organization recognized as a tax resident of the Russian Federation or an individual entrepreneur, or for a representative office of a medicinal product circulation entity in the Russian Federation); d) country of registration code of the medicinal product circulation entity performing the transfer of medicinal products (for a medicinal product circulation entity that is a foreign organization not recognized as a tax resident of the Russian Federation and having no representative offices in the Russian Federation); e) Serial Global Trade Item Number or the group code of the group packaging containing this medicinal product (if the group packaging is transferred as a whole).
Medicinal products imported into the Russian Federation, moved between customs control zones
Medicinal product circulation entity performing the import of LP for medical use into the Russian Federation, or the medicinal product circulation entity to which LP ownership rights have been transferred, placed under the customs warehouse procedure	Within 5 business days from the date of movement between customs control zones before submitting information on further operations with the LP	a) date of the operation; b) taxpayer code in the country of registration or INN of the medicinal product circulation entity performing the movement of medicinal products (for a medicinal product circulation entity that is an organization recognized as a tax resident of the Russian Federation or an individual entrepreneur, or for a representative office of a medicinal product circulation entity in the Russian Federation); c) country of registration code of the medicinal product circulation entity performing the movement (for a medicinal product circulation entity that is a foreign organization not recognized as a tax resident of the Russian Federation and having no representative offices in the Russian Federation); d) customs authority code and registration number of the shipping warehouse (address of the goods' location according to the goods declaration from which the movement is performed); e) customs authority code and registration number of the receiving warehouse (address of the goods' location to which the movement is performed); f) Serial Global Trade Item Number or the group code of the group packaging containing this medicinal product (if the group packaging is moved as a whole).
Medicinal product circulation entity performing LP import for internal consumption into the Russian Federation	Within 5 business days from the date of the decision to release medicinal products for internal consumption made by the customs authorities before submitting information on further operations with the LP	a) date of the operation; b) INN of the medicinal product circulation entity performing the declaration of the LP in the Russian Federation; c) customs procedure code; d) customs authority code; e) details of the customs declaration for the medicinal product; f) customs value of the medicinal product according to the declaration for the medicinal product; g) Serial Global Trade Item Number or the group code of the group packaging containing this LP (if the group packaging is placed under the customs procedure as a whole); h) type of conformity assessment document—certificate of conformity or declaration of conformity; i) details of the conformity assessment document (date and number).
Medicinal product circulation entity upon movement of medicinal products from the customs control zone to a pharmaceutical warehouse	Within 5 business days from the date of LP acceptance at the pharmaceutical warehouse and completion of the customs procedure for release of goods for internal consumption (or from the date of the decision to release the LP for internal consumption made by the customs authorities, when applying the conditional release procedure) before submitting information on further operations with the LP	a) date of the operation; b) INN of the medicinal product circulation entity performing the import of medicinal products into the Russian Federation; c) address of the location of activity of the medicinal product circulation entity performing the import of medicinal products into the Russian Federation; d) customs authority code and registration number of the shipping customs warehouse; e) details of the primary document serving as the basis for the acceptance of the medicinal product at the pharmaceutical warehouse (date and number); f) value specified in the accompanying documentation for the goods on the basis of which the customs declaration is executed, taking into account customs duties and fees for customs clearance; g) Serial Global Trade Item Number or the group code of the group packaging containing this medicinal product (if the group packaging is accepted at the pharmaceutical warehouse as a whole).
Medicinal products imported from Eurasian Economic Union member states
Medicinal product circulation entity performing LP import into the Russian Federation from EAEU member states (that is a marketing authorization holder or owner, or a representative office of a foreign organization in the Russian Federation that is a marketing authorization holder or owner)	Within 5 business days from the date of medicinal product shipment to the Russian Federation before submitting information on further operations with such LP	a) date of the operation; b) taxpayer code of the medicinal product marketing authorization holder or owner in the country of registration or INN (for a medicinal product circulation entity that is an organization recognized as a tax resident of the Russian Federation or an individual entrepreneur, or for a representative office of a medicinal product circulation entity in the Russian Federation); c) country of registration code of the medicinal product marketing authorization holder or owner (for a medicinal product circulation entity that is a foreign organization not recognized as a tax resident of the Russian Federation and having no representative offices in the Russian Federation); d) taxpayer code of the seller of the medicinal products in the country of registration; e) country of registration code of the seller of the medicinal products; f) INN of the medicinal product circulation entity acting as the buyer of the medicinal products in the Russian Federation; g) address of the location of activity of the medicinal product circulation entity acting as the buyer of the medicinal products in the Russian Federation; h) details of the primary document serving as the basis for the medicinal product shipment to the Russian Federation (date and number); i) Serial Global Trade Item Number or the group code of the group packaging containing this medicinal product (if the group packaging is shipped as a whole).
Medicinal product circulation entity performing acceptance at a pharmaceutical warehouse of LP during import into the Russian Federation from EAEU member states	Within 5 business days from the date of medicinal product acceptance before submitting information on further operations with such LP	a) date of the operation; b) INN of the medicinal product circulation entity performing the import of medicinal products into the Russian Federation; c) address of the location of activity of the medicinal product circulation entity performing the import of medicinal products into the Russian Federation; d) taxpayer code of the seller of the medicinal products in the country of registration; e) country of registration code of the seller of the medicinal products; f) details of the primary document serving as the basis for the import of the medicinal product into the Russian Federation (date and number); g) value of the medicinal product (including value added tax) according to the primary documents; h) amount of value added tax (if the transaction is subject to such tax); i) Serial Global Trade Item Number or the group code of the group packaging containing this medicinal product (if the group packaging is imported as a whole).
Medicinal product circulation entity performing the release into circulation of LP as part of import into the Russian Federation from EAEU member states, performing the acceptance of medicinal products at a pharmaceutical warehouse	Within 5 business days from the date of receipt of product conformity assessment documents before submitting information on further operations with such products	a) date of the operation; b) INN of the medicinal product circulation entity performing the import of medicinal products into the Russian Federation; c) address of the location of activity of the medicinal product circulation entity performing the import of medicinal products into the Russian Federation; d) type of conformity assessment document—certificate of conformity or declaration of conformity; e) details of the conformity assessment document (date and number); f) Serial Global Trade Item Number or the group code of the group packaging containing this medicinal product (if the group packaging is imported as a whole).

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References

[1] According to the Regulation on Conducting an Experiment on Labeling with Control (Identification) Marks and Monitoring the Circulation of Certain Types of Medicinal Products for Medical Use, approved by Decree of the Government of the Russian Federation No. 62 dated January 24, 2017, the purposes of implementing medicinal product labeling with control (identification) marks are:

a) counteracting the illegal manufacture of medicinal products in the Russian Federation;

b) counteracting the illegal import of medicinal products into the Russian Federation;

c) counteracting the illegal circulation of medicinal products in the Russian Federation;

d) counteracting unfair competition in the sphere of medicinal product circulation;

e) standardizing and unifying procedures for accounting for the supply and distribution of medicinal products, including those purchased for state needs.

[2] Furthermore, holders or owners of medicinal product marketing authorizations and manufacturers of medicinal products for medical use registered before the date the Law No. 425-FZ enters into force must submit information on registration as a taxpayer in the country of registration (for Russian legal entities—the tax identification number (INN); for foreign legal entities—the country of registration, name of the registering authority, registration number, taxpayer code in the country of registration (incorporation) or its equivalent) to the authorized federal executive body by January 1, 2019.

Manufacturers of pharmaceutical substances included in the state register of medicinal products for medical use before the date the Law No. 425-FZ enters into force must submit information on registration as a taxpayer in the country of registration (for Russian legal entities—the tax identification number (INN); for foreign legal entities—the country of registration, name of the registering authority, registration number, taxpayer code in the country of registration (incorporation) or its equivalent) to the authorized federal executive body by January 1, 2019.

Anna Ivanova

Attorney at BRACE Law Firm

July 7, 2019

Mandatory Labeling of Medicinal Products: Key Stages and Implementation Specifics

Appendix

Clients & Partners