The MDLP System (Monitoring of Medicinal Product Movement for Medical Use)

 

March 14, 2024

BRACE©

 

According to data from the Ministry of Industry and Trade of Russia, a significant number of counterfeit and falsified goods are detected annually in the domestic market. This causes substantial damage to the country's economy and intellectual property rights holders, and negatively impacts the state's investment attractiveness. Regarding medicinal products, such goods can harm the life and health of consumers [1].

To combat these phenomena, in 2015, the President of Russia instructed the Ministry of Health to ensure the development and implementation of an information system providing for the tracking of medicinal products for medical use from the manufacturer to the end consumer (hereinafter, "MDLP" or "The MDLP System"). Another objective of implementing the tracking system, though not explicitly stated, was to organize inventory and fiscal control over the actions of market participants. In pursuance of this instruction, the Concept for the Creation of the MDLP was approved in November 2015, and its phased implementation was carried out from 2016 to 2020 [2].

This article examines the capabilities offered by the MDLP, the obligations it imposes on pharmaceutical market participants, the legal and other issues arising in practice, and the liability for violations.

What is the MDLP?

According to Article 4 of Federal Law No. 61-FZ dated April 12, 2010, "On the Circulation of Medicinal Products" (hereinafter, the "Law on Circulation of Medicinal Products" or "Law No. 61-FZ"), the medicinal product movement monitoring system is a federal state information system for monitoring the movement of medicinal products for medical use from the manufacturer to the end consumer using identification means.

Effectively, the MDLP is a subsystem of the "Chestny ZNAK" national product labeling and tracking system. It tracks the movement of various food and industrial goods, from tobacco products and dairy to fur goods and photographic equipment. The Russian Government annually supplements the list of products subject to mandatory labeling and tracking. The tracking of medicinal products was one of the first to launch and has specific features discussed below.

The main objectives of the MDLP are:

• Improving drug safety and reducing threats to public life and health caused by the entry of falsified, counterfeit, and substandard medicinal products into circulation;
• Forming a system for tracking medicinal products at all stages of movement and creating mechanisms for constant operational monitoring of the medicinal product market and its individual segments (volume, sales, stocks, etc.);
• Monitoring the availability and movement of medicinal product stocks in medical organizations, including those purchased at the expense of the federal budget of the Russian Federation;
• Providing information support to the executive authorities of the Russian Federation in their activities to counter the circulation of falsified, unregistered, and substandard medicinal products;
• Increasing the efficiency of federal state supervision in the sphere of medicinal product circulation.

Since January 1, 2019, pursuant to Decree of the Government of Russia No. 2828-r dated December 18, 2018, the powers of the MDLP operator are exercised by Operator-CRPT LLC, which ensures:

• Operation and technical maintenance of the system;
• Consulting and technical support for MDLP participants;
• Provision of MDLP participants with special equipment and marking codes.

In simplified terms, working with the MDLP includes the following stages:

• Labeling the medicinal product before its release into civil circulation;
• Entering information into the MDLP regarding operations with the medicinal product at all stages of circulation;
• Entering information into the MDLP regarding the withdrawal of the medicinal product from circulation (sale to the end consumer, dispensing to a patient via a preferential prescription, or dispensing to the departments of a medical organization for use in medical activities).

The procedure for working in the MDLP is defined by the Regulation on the System for Monitoring the Movement of Medicinal Products for Medical Use, approved by Decree of the Government of Russia No. 1556 dated December 14, 2018 (hereinafter, "Decree No. 1556"). Below we examine in detail who must submit information to the MDLP and in what order.

Participants of the MDLP System

In accordance with Part 7 of Article 67 of the Law on Circulation of Medicinal Products, legal entities and individual entrepreneurs engaged in the production, storage, importation into the Russian Federation, dispensing, sale, transfer, use, and destruction of medicinal products for medical use ensure the entry of information regarding medicinal products for medical use into the MDLP.

Thus, all entities involved in the circulation of medicinal products (hereinafter, "Medicinal Product Circulation Entities") are information providers to the MDLP:

• Manufacturers of medicinal products, authorized representatives of foreign manufacturers in Russia, importers of medicinal products;
• Wholesale trade organizations;
• Retail trade organizations (pharmacy organizations);
• Medical organizations;
• Organizations engaged in the destruction of medicinal products.

It should be noted that the requirements of Part 7 of Article 67 of the Law on Circulation of Medicinal Products are classified as licensing requirements for carrying out medical and pharmaceutical activities.

To commence work in the MDLP, a Medicinal Product Circulation Entity must:

1. Register in the MDLP System and obtain access to a personal account.

For registration, Medicinal Product Circulation Entities fill out the MDLP registration form electronically and sign it with an Enhanced Qualified Electronic Signature (UK(E)P). After confirmation of registration by the MDLP Operator, sent to the specified email address, the entity enters into the MDLP the list of addresses of places where activities are carried out. For foreign-made medicinal products, information must be entered regarding production sites carrying out the stage of filling (packaging) into secondary (consumer) packaging and the stage of final quality control release.

The registration procedure, including diagrams, is detailed in the Instruction on the Submission of Information by Medicinal Product Circulation Entities to the System for Monitoring the Movement of Medicinal Products for Medical Use (Process Passports) (Version 1.38), approved by Roszdravnadzor.

2. Equip workplaces with special equipment and software. The list varies depending on the functions performed:

• Manufacturers and importers will require equipment for generating and applying special markings (emission registration devices) and marking reading devices (data collection terminals or barcode scanners reading "DataMatrix" codes);
• Wholesale trade organizations require marking reading devices;
• Retail trade organizations require marking reading devices, an online cash register with a Fiscal Data Operator (OFD), and devices for registering withdrawal (withdrawal registrars);
• Medical organizations require marking reading devices and devices for registering withdrawal.

The provision of emission registration devices and withdrawal registrars is carried out by the MDLP operator free of charge upon the application of the MDLP participant.

Additionally, to register in the MDLP system and certify electronic documents, all participants require an Enhanced Qualified Electronic Signature (UK(E)P) and connection to an Electronic Document Management (EDM) system.

MDLP and Labeling of Medicinal Products

According to Part 4 of Article 67 of Law No. 61-FZ, for the purpose of identifying medicinal product packages, manufacturers of medicinal products apply identification means to the secondary (consumer) packaging of medicinal products, or to the primary packaging if secondary packaging is not provided. The process of applying identification means is also referred to as labeling.

Mandatory labeling was introduced:

• From October 1, 2019, for medicinal products from the list of High-Cost Nosologies (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);
• From July 1, 2020, for all other medicinal products (Part 7.1 of Article 67 of Law No. 61-FZ).

From the date mandatory labeling was introduced, the circulation of unmarked medicines is prohibited. The circulation of unmarked medicinal products produced before July 1, 2020 (for High-Cost Nosology drugs—before December 31, 2019) was permitted until their expiration date.

The following are not subject to labeling:

• Medicinal products produced for clinical trials or export;
• Medicinal products not subject to state registration in accordance with Parts 5 and 8 of Article 13 of Law No. 61-FZ;
• Radiopharmaceutical medicinal products;
• Advanced therapy medicinal products produced in small batches, consisting of one or several doses, intended for a specific patient, having a short shelf life (up to ninety calendar days) and/or a storage and transportation temperature regime of minus 60 degrees Celsius or lower;
• Medicinal leeches;
• Medical gases.

The identification means represents a unique two-dimensional "Data Matrix code" (a unique sequence of characters) containing information about the drug, manufacturer, and expiration date. It remains unique throughout the entire operation period of the MDLP. The application of identification means is carried out by the medicinal product manufacturer performing the packaging stage. For medicinal products produced in foreign countries (except EAEU countries), this is done by representatives of foreign manufacturers and medicine importers (hereinafter, the "Issuer").

To obtain marking codes, the Issuer submits an application to the MDLP operator using emission registration devices. No later than 2 hours from receipt of the application, the MDLP operator sends the Issuer a list of generated marking codes.

The fee for providing marking codes is determined by a Decree of the Government of the Russian Federation [3]. Currently, it is 50 kopecks per 1 marking code, excluding VAT. No fee is charged for providing codes for medicinal products included in the List of Vital and Essential Drugs (VED List) if the manufacturer's maximum selling price does not exceed 20 rubles.

After receiving the marking codes, the Issuer applies them to the packaging by printing on the packaging or on a label that cannot be detached without damage. Upon completion of packaging or completion of package labeling at a customs warehouse, information regarding each trade item is entered into the MDLP. The list of transmitted information is defined in Appendix No. 3 to Decree No. 1556.

Procedure for Entering Information into the MDLP During Medicinal Product Turnover

Any operation involving medicinal products—such as shipment to a counterparty, acceptance at the recipient's warehouse, or transfer between activity or storage locations—requires entering relevant information into the MDLP. Confirmation of the operation must be performed by both parties.

Information transfer to the MDLP can be carried out using one of two schemes: (a) direct order or (b)reverse order.

When applying the direct order, the consignor enters information about the shipped goods into the MDLP. The recipient then receives a shipment notification. After verifying the arrived goods, the consignee scans the medicinal product package codes and confirms acceptance or, in case of discrepancies, initiates a return.

When applying the reverse order, the consignor may ship medicinal products with only a consignment note, without entering information into the MDLP. Upon receipt of the goods, the consignee enters information about the acceptance of goods at the warehouse into the MDLP. After receiving this information, the consignor confirms the acceptance in the MDLP.

The decision on the choice of order is made by the Medicinal Product Circulation Entities independently. We recommend regulating the choice of order in agreements (contracts). Exceptions include medicinal products with the INN "Ethanol" and drugs containing Narcotic Drugs and Psychotropic Substances and their precursors. Since September 1, 2023, due to amendments to Decree No. 1556, their shipment can only be carried out using direct information transfer to the MDLP [4].

The list of information entered by each party is defined in Appendix No. 6 to Decree No. 1556. The deadline for entering information is 1 business day from the actual date of shipment/acceptance of medicinal products.

It should also be noted that the notification mode ceased to operate on September 1, 2023. Introduced during the COVID-19 pandemic in 2022, it allowed subsequent operations with medicinal products without waiting for MDLP confirmation that the drug was taken onto the balance sheet. It is now necessary to accept drugs onto the balance sheet and wait for confirmation in the MDLP system personal account.

Pursuant to Clause 43 of Decree No. 1556, when a Medicinal Product Circulation Entity moves medicinal products between addresses of its activity locations or from an activity location to a secure storage location and back, information must also be submitted to the MDLP within 5 business days from the actual date of movement and prior to submitting information on subsequent operations.

Procedure for Entering Information into the MDLP Regarding Withdrawal from Circulation

Withdrawal of a medicinal product from circulation can occur in several ways:

• Sale to the end consumer, as well as dispensing via a free or preferential prescription with partial payment;
• Dispensing for medical use;
• Destruction of the medicinal product (upon detection of falsified, substandard, or counterfeit goods);
• For other reasons (sampling for selective control, gratuitous transfer, shortage, etc.).

Each of these paths has specific features for reflecting movement in the MDLP.

According to Clause 51 of Decree No. 1556, Medicinal Product Circulation Entities engaged in retail trade of medicinal products and preferential dispensing of medicinal products with a discount submit information on withdrawal from circulation using cash register equipment. To do this, the pharmacy employee scans the marking code on the package of the dispensed item, and the Fiscal Data Operator sends the information to the MDLP and the receipt to the tax service. The marking code is thereby withdrawn from circulation.

Medical organizations using medicinal products in medical activities, as well as pharmacies dispensing medicinal products free of charge via prescription, submit information to the MDLP regarding withdrawal from circulation using withdrawal registrars. The information is generated and sent to the MDLP by the device itself. No additional data transmission is required.

In the event of medicinal product destruction, information is transmitted to the MDLP system twice:

• Upon transfer of drugs for destruction: within 5 business days from the date of transfer;
• After receiving the destruction act: within 5 business days from the date of its receipt.

How to Make Corrections in the MDLP?

In accordance with Clause 52 of Decree No. 1556, Medicinal Product Circulation Entities submit information necessary to correct errors to the MDLP upon detecting errors in previously submitted information.

Corrections may be made until notification is received regarding the appointment of a Roszdravnadzor inspection concerning the entity based on the submission of erroneous (unreliable) information.

If other Medicinal Product Circulation Entities participated in the submission of information containing errors, corrections are considered accepted after confirmation of the accuracy of corrections by all participants in the information submission.

It should be noted that the format of this article does not allow for a detailed examination of all nuances regarding the registration of medicinal product movement in the MDLP. Detailed procedures for information transmission can be found in the Instruction on the Submission of Information by Medicinal Product Circulation Entities to the System for Monitoring the Movement of Medicinal Products for Medical Use (Process Passports), approved by Roszdravnadzor and posted on its official website.

What Legal and Other Problems Arise in Practice with MDLP?

According to open sources, suppliers and manufacturers of medicinal products, as well as pharmacy and medical organizations, faced difficulties when working with the MDLP system, especially during the initial implementation stages [5].

Among the main problems, market participants cited:

• Technical failures in the MDLP operation;
• Unexpected technical maintenance in the MDLP;
• Long response times from Operator technical support;
• Software freezing;
• And others.

Furthermore, errors were also observed on the part of market participants when working in the MDLP: errors in formatting details, violation of timings or transmission sequence, warehouse errors, etc. While some problems have been resolved and pharmaceutical business personnel have been trained and adapted to working with the MDLP, it can be stated that the MDLP is currently still far from ideal.

What Liability is Established for Violation of MDLP Rules?

Violating MDLP rules can result in administrative or criminal liability.

Administrative liability is provided for:

• Under Part 1 of Article 6.34 of the Code of Administrative Offenses of the Russian Federation: "Production or sale of medicinal products for medical use without applying identification means, or with violation of the application procedure, if such actions (inaction) do not contain signs of a criminally punishable act." This entails a fine for officials from 5,000 to 10,000 rubles with confiscation of the subjects of the administrative offense, and for legal entities from 50,000 to 100,000 rubles with confiscation of the subjects of the administrative offense.
• Under Part 2 of Article 6.34 of the Code of Administrative Offenses of the Russian Federation: "Untimely entry of data into the system for monitoring the movement of medicinal products for medical use or entry of unreliable data into it." This establishes an administrative fine for officials from 5,000 to 10,000 rubles, and for legal entities from 50,000 to 100,000 rubles.

Let us illustrate with examples from judicial practice. During an unscheduled on-site inspection of a business entity, Roszdravnadzor revealed that the MDLP lacked information regarding acceptance, as well as dispensing (sale) of medicinal products received, withdrawn, and in circulation by the business entity. The entity was held administratively liable under Part 2 of Article 6.34 of the Code of Administrative Offenses of the Russian Federation, and a fine of 50,000 rubles was imposed. The entity failed to challenge the fine in court [6].

In another case, during a Roszdravnadzor inspection, it was revealed that a legal entity stored certain medicinal products at one address, while information regarding the acceptance of these medicinal products at a different activity address was entered into the MDLP. Based on the identified violations, a resolution was issued to hold the legal entity administratively liable under Part 2 of Article 6.34 of the Code of Administrative Offenses of the Russian Federation, and a warning was issued. The company applied to the arbitration court to challenge the resolution, arguing that the supplier who shipped the goods and entered erroneous data into the MDLP should be liable for entering unreliable information. The court decided that by confirming data on the acceptance of medicinal products at a specific address different from the actual storage address, the Company carried out the entry of unreliable data into the MDLP, which constitutes an administrative offense defined by Part 2 of Article 6.34 of the Code of Administrative Offenses of the Russian Federation. The court refused to satisfy the application [7].

We note that, in our opinion, the Medicinal Product Circulation Entity is not always at fault for the violation. For example, in 2023, pharmacies and medical organizations faced a wave of inquiries from the Prosecutor's Office. The Prosecutor's Office compared drug balances on the organizations' books with a table generated based on MDLP data. It listed drugs for which no movement had been recorded in the MDLP for a long time. Medicinal Product Circulation Entities were required to provide data on the reasons for not entering information into the MDLP. At the same time, as indicated by entities, the balance data in the MDLP was often incorrect. For instance, the books showed drugs that had long been dispensed, but entering data into the MDLP was impossible due to technical reasons. Meanwhile, the MDLP Operator (Operator-CRPT LLC) explained that "data in the system cannot be incorrect because the participant in the turnover enters it themselves" [8].

Unfortunately, control and judicial bodies often do not take these circumstances into account. Here is an example from judicial practice. The Prosecutor's Office conducted an on-site inspection of a clinic regarding compliance with legislation on the circulation of medicinal products. During the inspection, it was established that, in violation of Part 7 of Article 67 of the Law on Circulation of Medicinal Products, the clinic failed to provide information to the MDLP regarding the withdrawal of a medicinal product from circulation. The head of the clinic's pharmacy was held administratively liable by Roszdravnadzor under Part 2 of Article 6.34 of the Code of Administrative Offenses of the Russian Federation. However, the case was terminated due to the expiration of the statute of limitations for administrative liability. The Prosecutor's Office challenged Roszdravnadzor's resolution in court.

Upon reviewing the case, the court established that the medicinal product had been issued to a department for medical use. Information about the corresponding operation was timely reflected in the operation history column in the MDLP. However, in the clinic's personal account, in the "Goods Showcase" column, information about the medicinal product was presented with the status "not withdrawn from circulation". The court agreed with the Prosecutor's Office that the official did not take sufficient measures to exclude from the MDLP information about the circulation of a drug that had actually been withdrawn from circulation. The pharmacy manager's reference to Decree No. 1556, according to which the monitoring system operator is responsible for the integrity, safety, and consistency of information in the MDLP, was deemed unfounded, as the violation identified by the Prosecutor's Office was subsequently eliminated. However, the decision to terminate the case due to the expiration of the statute of limitations was upheld [9].

Violation of legal requirements can also result in criminal liability under Article 171.1 of the Criminal Code of the Russian Federation "Production, acquisition, storage, transportation for the purpose of sale, and sale of goods with counterfeit marking codes". The objective side of the crime is expressed in the production, acquisition, storage, transportation for the purpose of sale, or sale of unmarked goods or goods using knowingly counterfeit identification means for labeling.

A mandatory sign of this crime is the large scale of the committed act. Large scale is recognized as the value of goods exceeding 2,500,000 rubles. The punishment is a fine of up to 300,000 rubles or the amount of the wage or other income of the convicted person for a period of up to 2 years, or forced labor for a term of up to 3 years, or imprisonment for a term of up to 3 years with a fine of up to 80,000 rubles or the amount of the wage or other income of the convicted person for a period of up to 6 months.

Committing a crime with aggravating circumstances (by a group of persons by prior conspiracy, by an organized group, or in an especially large scale) entails more serious liability. Especially large scale is recognized as 9,000,000 rubles.

We were unable to find cases of criminal proceedings initiated for violation of medicinal product labeling rules. Nevertheless, it must be remembered that any individual who has reached the age of 16 can be held criminally liable under this provision.

Summarizing, it should be noted that the implementation of the MDLP system for medicinal circulation entities initially required additional financial investments and changes to personnel work regulations. Furthermore, the MDLP system itself did not always work correctly. However, the main and undeniable benefit of implementing the traceability system is confidence in the legality and safety of medicinal products. Additionally, market participants gained the opportunity to systematize document flow, rationally plan supplies, and exercise control over warehouse stocks.

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References

[1] News. October 6, 2023. The Ministry of Industry and Trade announced the expansion of industrial product labeling. Roscongress.

[2] Order of the Ministry of Health of Russia No. 866 dated November 30, 2015 "On approval of the Concept for creating the Federal State Information System for Monitoring the Movement of Medicinal Products from the manufacturer to the end consumer using labeling".

[3] Decree of the Government of the Russian Federation No. 577 dated May 8, 2019 "On approval of the fee amount for providing services for the provision of marking codes necessary for the formation of identification means and ensuring the monitoring of the movement of goods subject to mandatory labeling with identification means, as well as on the procedure for its collection".

[4] Decree of the Government of the Russian Federation No. 468 dated March 24, 2023 "On amendments to the Decree of the Government of the Russian Federation No. 1556 dated December 14, 2018 and recognizing as invalid certain provisions of some acts of the Government of the Russian Federation".

[5] R. Mavlikhanov. Distributors asked the government to exclude them from the labeling system. October 14, 2020 // Pharmaceutical Bulletin.

[6] Resolution of the Ninth Arbitration Court of Appeal dated June 22, 2023 No. 09AP-19684/2023 in case No. A40-281382/2022.

[7] Resolution of the Arbitration Court of the Volga District dated November 16, 2022 No. F06-25305/2022 in case No. A12-8913/2022.

[8] O. Kobernik. Pharma retail awaits on-site prosecutor inspections on drug balances and expired items. January 23, 2024 // Pharmaceutical Bulletin.

[9] Decision of the Zheleznodorozhny District Court of Samara dated October 25, 2023 No. 12-1028/2023.