Remote Sale of Medicinal Products

 

June 3, 2021

Anna Ivanova, Lawyer at BRACE Law Firm

BRACE Law Firm ©

 

With the development of information technology and delivery services, the remote sale of medicinal products is becoming increasingly popular. The significant demand for remotely purchased medicinal products is driven by time savings for buyers and the presence of consumer groups who, for various reasons, cannot visit a pharmacy. While such sales are convenient for consumers, the specific nature of the goods makes it essential to ensure safety during purchase, regardless of the method of sale.

Presidential Decree No. 187 dated March 17, 2020, On the Retail Trade of Medicinal Products for Medical Use, launched the regulatory framework for retail trade and provided that such trade shall be conducted by pharmacy organizations holding a pharmaceutical activity license and a corresponding permit from Roszdravnadzor.

Due to the need for specific regulation of remote sales, Federal Law No. 105-FZ dated April 3, 2020, added clause 1.1 to Article 55 of the Federal Law On the Circulation of Medicinal Products, which allows pharmacy organizations to conduct the retail trade of medicinal products for medical use via remote sale.

However, remote sale is prohibited for:

• prescription drugs;
• narcotic and psychotropic drugs;
• alcohol-containing products with an ethyl alcohol content exceeding 25%.

The pharmacy organization enters information about paid (dispensed) and received medicinal products into the system for monitoring the movement of medicinal products for medical use.

Additionally, in December 2020, Decree of the Government of the Russian Federation No. 2463 approved the Rules for the Sale of Goods under a Retail Purchase and Sale Agreement, which include provisions on the remote sale of medicinal products, stating that:

• the sale of medicinal products is not permitted via trade at the consumer's location outside of retail facilities by direct familiarization of the consumer with the goods (at home, at the place of work or study, on transport, in the street, or in other places);
• used medicinal products are not subject to sale, and commission trade of medicinal products is prohibited.

Requirements for Pharmacies Conducting Remote Sale of Medicinal Products

The rules for issuing permits to conduct the retail trade of medicinal products via remote sale were approved by Decree of the Government of the Russian Federation No. 697 dated May 16, 2020, On Approval of the Rules for Issuing Permits to Conduct the Retail Trade of Medicinal Products for Medical Use via Remote Sale, Conducting Such Trade and Delivery of Said Medicinal Products to Citizens, and Amending Certain Acts of the Government of the Russian Federation on the Issue of Retail Trade of Medicinal Products for Medical Use via Remote Sale.

Under this legal act, remote sale includes:

• acceptance;
• assembly;
• storage;
• delivery of orders for medicinal products;
• dispensing of medicinal products.

Settlements for medicinal products and delivery services are carried out at the buyer's choice in cash or non-cash form via prepayment of the order or payment at the place of receipt.

It is important to note that Decree of the Government of the Russian Federation No. 827 dated May 31, 2021, On Amending the Rules for Issuing Permits to Conduct the Retail Trade of Medicinal Products for Medical Use via Remote Sale, Conducting Such Trade and Delivery of Said Medicinal Products to Citizens, introduced significant changes to the aforementioned permit rules. Previously, to obtain a license, pharmacy organizations had to confirm the existence of at least 10 pharmaceutical activity locations within the Russian Federation. However, this provision caused significant controversy within the pharmaceutical community. For instance, the following opinion was expressed: "Our association includes pharmacies operating, for example, in the Far North. They have 7–8 points, but they are scattered across a vast territory with sparsely populated areas where access to medical and pharmaceutical assistance is extremely insufficient. They are exactly the ones ready to take on the remote service of this population. Moreover, many have already mastered it and are working this way. During the pandemic, if necessary, delivery of pharmacy goods besides medicines was also carried out. But it turns out that exactly those pharmacies closest to consumers in remote regions were cut off from them".[1] There were attempts to challenge this provision in court, but the Supreme Court of the Russian Federation refused to recognize it as invalid.[2]

Consequently, this requirement was repealed effective September 1, 2021 (the date the Decree entered into force). Starting from that date, it is also possible to conclude agreements with aggregator owners to list offers and conduct trade through their websites. Such an agreement must allow the buyer to review the pharmacy's offer to conclude a retail purchase and sale agreement for medicinal products on a website or mobile application belonging to the aggregator owner. It must also allow the aggregator owner to accept the order for the pharmacy organization and conclude the relevant retail purchase and sale agreement on behalf of and at the expense of the pharmacy, with the possibility of prepayment.[3] When concluding, amending, or terminating an agreement with an aggregator, the pharmacy organization must, within 3 business days from the date of the transaction, submit an application to Roszdravnadzor to re-issue its permit, specifying the relevant information and attaching supporting documents (the agreement, termination agreement, or addendum).

Furthermore, the changes will enable small pharmaceutical retailers to increase their client base. Last year, Roszdravnadzor issued 267 permits for the online sale of medicines. In the first five months of 2021, an additional 94 permits were issued. In 2020, Roszdravnadzor denied permits to 196 applicants, and in 2021, to 47. Roszdravnadzor cited the provision of incorrect or incomplete information as the reason for denial.[4]

Additionally, the rules are supplemented with a price regulation provision. In remote sales, prices for medicines must not exceed those established in the pharmacy itself. Another critical point is that pharmacy organizations bear responsibility for storage conditions and the quality of medicines, even if the medications were purchased on a partner's website and delivered by courier companies.[5]

Thus, pharmacy organizations conducting remote sale of medicines must have:

• equipped premises (locations) for storing assembled orders in accordance with the Rules of Good Practice for the Storage and Transportation of Medicinal Products;
• a website; a mobile application is also permitted, and from September 1, 2021, an agreement with an aggregator owner for listing product information may be submitted;
• their own courier service with equipment ensuring the necessary temperature regime for the delivery of thermolabile medicinal products, or an agreement with a courier delivery service that has such equipment; from September 1, 2021, agreements with other parties performing delivery using such equipment are also permitted;
• an electronic payment system and (or) mobile payment terminals.[6]

Until September 1, 2021, pharmacy organizations will still be required to provide information on the existence of at least 10 pharmaceutical activity locations within the Russian Federation to obtain a remote sale permit.

The list of documents confirming compliance with these requirements, the form of the permit for remote sale, and the application form for issuing such a permit were approved by Order of Roszdravnadzor No. 4394 dated May 28, 2020.[7]

Documents required to obtain a permit include those (information) confirming the existence of equipped premises for storing assembled orders, including documents confirming the existence of equipment used in the storage process (balance sheets, invoices, sales receipts, inventory lists, cards, etc.), namely:

• air conditioning systems;
• refrigeration chambers and (or) refrigerators;
• ventilation systems;
• thermo-hygrometers (psychrometers) or other equipment used for recording temperature and humidity in the premises.

To confirm the existence of a website, it is sufficient to provide a link to the site or an agreement with an aggregator (from September 1, 2021), as well as information on the mobile application in the form of a download link.

Confirmation of the existence of a courier service and its equipment may include documents showing the availability of equipment (thermal containers, thermal boxes, cooler bags, loggers, temperature sensors, etc.), such as balance sheets, invoices, sales receipts, inventory lists, cards, etc., as well as an agreement (information about the agreement) with a courier delivery service that has such equipment.

Furthermore, to receive a remote sale permit, the pharmacy organization must provide the registration numbers of cash register equipment intended for electronic payments and data on the registration of such equipment.

Website Requirements

It is important to note that the website (regardless of whether it is the pharmacy's own site or the information is provided under an agreement with an aggregator owner) must contain:

• the name of the pharmacy organization, OGRN, INN, and the address of the pharmacy organization and its structural units;
• a graphic image of the pharmaceutical activity license for the retail trade of medicines;
• a graphic image of the remote sale permit;
• the pharmacy's operating hours;
• information about the order acceptance service;
• information about medicinal products in stock and information about medicinal products available for order in accordance with the State Register of Medicinal Products (GRMS);
• manufacturers of the medicinal products, their shelf lives, quantities, retail prices, and storage conditions;
• instructions for medical use.

The pharmacy organization is also mandatory required to provide website visitors with access to the following information:

• the terms of remote sale;
• delivery and payment conditions;
• the procedure for concluding and the term of the retail purchase and sale agreement with a delivery condition;
• ongoing promotions and discounts on the medicinal products being sold;
• the buyer's obligations.
• The website should also provide the following information:
• regulatory acts governing the possibility for the buyer to return medicinal products of substandard quality;
• the authorized federal executive bodies monitoring the remote retail sale of medicinal products (name, mailing address, telephone, fax, email address).

It is important to note that the pharmacy organization ensures the confidentiality of the buyer's personal data in accordance with the requirements of Russian legislation. Therefore, it is recommended to provide for obtaining the buyer's consent to the processing of personal data on the website when placing an order.

Furthermore, when accepting orders for remote retail sale, an authorized employee of the pharmacy organization must inform the buyer of:

• the indications for use of the medicinal product being purchased;
• its retail price;
• its shelf life;
• the dispensing conditions;
• storage rules;
• interactions with other medicinal products;
• and conclude a retail purchase and sale agreement with a delivery condition, specifying the assembly time and cost of the order, the delivery service cost, the possibility of receipt at the pharmacy's location or delivery to the buyer's place of residence (stay, actual location), or another agreed address, and the method and place of payment.

The pharmacy employee must also agree with the buyer on the need to provide documents confirming the quality of the medicinal products during delivery outside the pharmacy's location.

These requirements raise questions about exactly how the buyer should be informed and how the agreement should be concluded. We believe that the website used for the sale should include terms stating that by ordering medicinal products, the buyer consents to concluding the purchase and sale agreement and to receiving the required information.

Retail Purchase and Sale Agreement for Remote Sale of Medicinal Products

A purchase and sale agreement for medicinal products via remote sale is deemed concluded:

• from the moment the pharmacy organization issues the buyer a cash or sales receipt or another document confirming payment; or
• from the moment the pharmacy organization receives a message from the buyer expressing intent to purchase the medicinal products.

We believe that the condition specifying when the agreement is deemed concluded should be defined in the retail purchase and sale agreement posted on the website.

It is important to remember that when the buyer pays in non-cash form (excluding payment via bank card), the seller must confirm the transfer of the goods by drawing up an invoice or a certificate of acceptance and transfer.

The pharmacy organization must maintain a register of orders and deliveries, specifying:

• the date, time, and order number;
• the names of the medicines, their manufacturers, dosage forms, and release forms;
• information on the time, date, and delivery address to the buyer.

Furthermore, the organization enters information about paid (dispensed) and received medicines into the system for monitoring the movement of medicinal products for medical use.[8]

The dispensing of medicinal products delivered to the buyer is carried out in accordance with the Rules for the Dispensing of Medicinal Products for Medical Use, including immunobiological medicinal products, by pharmacy organizations and individual entrepreneurs holding a pharmaceutical activity license, as approved by the Ministry of Health of Russia.

Upon receipt, the buyer checks the integrity of the transport packaging, independently opens it, verifies the contents against the packing list, checks for damage to the secondary (consumer) and primary packaging, ensures the medicinal product has the proper appearance (where possible), and signs for receipt.

The regulation of legal relations associated with remote sale is not new to the legislator. Under Article 497 of the Civil Code, "a retail purchase and sale agreement may be concluded based on the buyer's familiarization with the description of the goods offered by the seller via catalogs, prospectuses, booklets, photographs, means of communication (television, mail, radio, and others), or by other methods that exclude the possibility of direct familiarization of the consumer with the goods or a sample of the goods when concluding such an agreement (remote method of sale)".

Furthermore, "unless otherwise provided by the seller and the buyer, such an agreement is deemed performed from the moment the goods are delivered to the location specified in the agreement, or, if the place of transfer is not specified, from the moment the goods are delivered to the buyer's location".

The buyer's refusal of the goods prior to delivery is considered possible provided the buyer compensates the seller for expenses incurred in connection with performing the agreement (most often, expenses related to delivery).

Remote sales are subject to the requirements of the Law of the Russian Federation No. 2300-1 dated February 7, 1992, On Protection of Consumer Rights (the "Law on Protection of Consumer Rights"), which establishes that "prior to concluding an agreement, the seller must provide the buyer with information about the goods, their consumer properties, place of manufacture, the seller's name and location, the price and terms of purchase, the payment procedure, delivery, service life, shelf life, and warranty period, as well as the period during which the offer to conclude the agreement remains valid".

The consumer has the right to refuse goods of proper quality within 7 days after delivery. However, if information on the procedure and deadlines for returning goods of proper quality was not provided in writing at the time of delivery, the consumer may refuse the goods within 3 months of delivery. The return of goods of proper quality is possible if their commercial appearance and consumer properties are preserved. Upon refusal, the seller must return the amount paid under the agreement, excluding the seller's expenses for returning the goods, no later than 10 days after the consumer submits the relevant demand.

However, there are exceptions to this rule, including for medicinal products. Under Article 25 of the Law on Protection of Consumer Rights, the return of goods of proper quality may be carried out except for goods included in the relevant list of goods not subject to exchange and return. We recall that the List of Non-Food Goods of Proper Quality Not Subject to Return or Exchange for a Similar Product of Different Size, Shape, Dimension, Style, Color, or Configuration, approved by Decree of the Government of the Russian Federation No. 55 dated January 19, 1998, has been repealed. However, Decree of the Government of the Russian Federation No. 2463 dated December 31, 2020, approved a new List of Non-Food Goods of Proper Quality Not Subject to Exchange. Medicinal products are listed in the first clause of this list; therefore, they are generally not subject to return.[9]

Nevertheless, medicinal products of substandard quality are subject to return under the general rules for returning substandard goods. Specifically, the consumer may, at their choice, demand a replacement with a product of proper quality, or demand a refund of the amount paid and delivery costs; the consumer is also entitled to full compensation for damages. It is also important to note the buyer's right to demand free elimination of defects, though this right is practically unfeasible for medicinal products. Most often, consumer claims relate to the return of medicinal products with expired shelf lives, as this violation is most easily proven. Conversely, purchasing a medication with the wrong effect or characteristics (not as prescribed) is not always the seller's fault (often due to the buyer's error), and such a violation by the seller is difficult to prove, especially in remote sales. In such cases, the evidence may be based on the discrepancy between the information posted by the seller or provided to the patient (e.g., via correspondence or telephone) and the information in the instructions. Thus, although remote sales of medicines are subject to general requirements, they have their own specific features.

Grounds for Terminating Remote Sale Permits for Medicinal Products

A remote sale permit for medicines may be terminated on the following grounds:

• termination of the pharmacy organization's pharmaceutical activity license;
• non-compliance of the pharmacy organization with the Rules;
• the pharmacy organization being held administratively liable two or more times within one calendar year from the date of permit issuance under Articles 6.33 (circulation of falsified, counterfeit, substandard, and unregistered medicinal products) and 14.4.2 (violation of legislation on the circulation of medicinal products) of the CAO RF;
• the pharmacy organization's decision to cease conducting remote retail trade of medicinal products.

Within 3 business days of establishing the aforementioned facts, Roszdravnadzor adopts a decision to terminate the pharmacy's permit, notifying the pharmacy organization and (from September 1, 2021) aggregator owners with whom the pharmacy has an agreement.

Importantly, Roszdravnadzor is authorized to adopt decisions that serve as grounds for blocking websites used for remote sale of medicines if the following criteria are met:

• the existence of an offer for the retail trade of falsified, substandard, or counterfeit medicinal products for medical use;
• the existence of an offer for the retail trade of unregistered medicinal products for medical use. From September 1, 2021, if an offer to sell a medication not registered in the Russian Federation is discovered, the aggregator owner must stop hosting the offer and notify Roszdravnadzor;
• the existence of an offer for the remote retail sale of prescription drugs, narcotic drugs, psychotropic drugs, or medicinal products with an ethyl alcohol content exceeding 25%;
• the existence of an offer for the retail trade of medicinal products using domain names and (or) website page pointers not specified in the remote sale permit.[10]

According to the official Roszdravnadzor website, 42 websites used for illegal remote sale of medicines have been blocked. The main reasons for blocking were:

• the existence of an offer for the retail trade of unregistered medicinal products ("Mifepristone", "Misoprostol" – medications for medical termination of pregnancy);
• the existence of an offer for the remote retail sale of prescription drugs ("Reduxin", "Alprazolam", "Tramadol", "Clonazepam", etc.);
• the lack of a pharmaceutical activity license and remote sale permit.[11]

Furthermore, according to recent news, Roskomnadzor blocked the website of the major pharmacy chain "Erkafarm" for the first time, which was suspected of online trade of prescription drugs. Roszdravnadzor identified the violations following an appeal from the Ministry of Internal Affairs for the Kunashaksky District of the Chelyabinsk Region.[12] However, the website was unblocked shortly thereafter.

Thus, active legislative work is currently being conducted to develop the remote sale of medicinal products.

For instance, the Bank of Russia posted an information message stating that to ensure uninterrupted online purchases of medicines and to support online trade, the Bank of Russia is considering establishing maximum acquiring fees for online card payments.[13]

The Russian Government is also considering launching the sale of medicines through the Public Services Portal. This new service is expected to simplify life for Russians and guarantee the absence of counterfeit pharmaceuticals.[14]

Based on the above, it can be concluded that the remote sale of medicinal products indeed requires separate legal regulation. We believe that with the practical application of newly adopted acts governing remote sales, changes and additions to existing legislation will be made, and new legislative initiatives will be proposed.

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References

[1] Pharmacy Remote Trade Rules Announced. Tatyana Batenyeva. Rossiyskaya Gazeta. May 22, 2020.

[2] Appellate Ruling of the Appellate Board of the Supreme Court of the Russian Federation No. APL21-10 dated March 2, 2021.

[3] Decree of the Government of the Russian Federation No. 827 dated May 31, 2021, On Amending the Rules for Issuing Permits to Conduct the Retail Trade of Medicinal Products for Medical Use via Remote Sale, Conducting Such Trade and Delivery of Said Medicinal Products to Citizens.

[4] Medicines Being Listed on Marketplaces. A. Osipov, N. Shurenkov. Kommersant. June 1, 2021.

[5] Government Clarifies Requirements for Pharmacy Organizations Allowed to Conduct Online Sales of Medicines. Website of the Government of the Russian Federation.

[6] Decree of the Government of the Russian Federation No. 697 dated May 16, 2020, On Approval of the Rules for Issuing Permits to Conduct the Retail Trade of Medicinal Products for Medical Use via Remote Sale, Conducting Such Trade and Delivery of Said Medicinal Products to Citizens, and Amending Certain Acts of the Government of the Russian Federation on the Issue of Retail Trade of Medicinal Products for Medical Use via Remote Sale.

[7] Order of Roszdravnadzor No. 4394 dated May 28, 2020, On Approval of the List of Documents Confirming Compliance of a Pharmacy Organization with the Requirements Granting the Right to Conduct Remote Retail Trade of Medicinal Products for Medical Use, the Procedure for Maintaining the Register of Issued Permits to Conduct Remote Retail Trade of Medicinal Products for Medical Use, and the Forms of Documents Used by the Federal Service for Surveillance in Healthcare when Issuing a Permit to Conduct Remote Retail Trade of Medicinal Products for Medical Use.

[8] Senin N.K. Remote Sale of Medicines Can Begin. Pharmacy: Accounting and Taxation. 2020. No. 6. pp. 14–20.

[9] Decree of the Government of the Russian Federation No. 2463 dated December 31, 2020, On Approval of the Rules for the Sale of Goods under a Retail Purchase and Sale Agreement, the List of Durable Goods Not Subject to the Consumer's Demand for Free Provision of a Product with the Same Basic Consumer Properties during the Period of Repair or Replacement, and the List of Non-Food Goods of Proper Quality Not Subject to Exchange, as well as on Amending Certain Acts of the Government of the Russian Federation.

[10] Order of the Federal Service for Surveillance in Healthcare No. 5527 dated June 29, 2020, On Approval of the Criteria for Evaluating Information Necessary for the Federal Service for Surveillance in Healthcare to Adopt Decisions Serving as Grounds for Including Domain Names and (or) Website Page Pointers... in the "Unified Register of Domain Names... and Network Addresses... Containing Forbidden Information".

[11] In Six Days, Roszdravnadzor Blocked 42 Websites Illegally Trading Medicinal Products via Remote Sale. September 18, 2020. Roszdravnadzor Website.

[12] Roskomnadzor Blocked a Major Pharmacy Chain's Website for the First Time. M. Kotova. Vedomosti. April 19, 2021.

[13] Information Message of the Bank of Russia dated March 20, 2020.

[14] Ministry of Communications Wants to Sell Medicines Online on the Public Services Portal. V. Bakhur. CNEWS. April 2, 2020.