Research & Development of Medicinal Products: Requirements of Russian Legislation

 

March 24, 2024

BRACE ©

The development of a new medicinal product ("Drug development") is a lengthy, labor-intensive, and expensive process. Decades pass from the idea and scientific research to the creation of a finished dosage form, and developers spend significant financial resources on it.

On average, developing a single medicinal product can cost about 2.5 billion dollars and take on average up to 10–15 years. Moreover, the path of creating a new drug can be interrupted at any stage: of all substances participating in preclinical development, only about 2% become registered products. The rest prove insufficiently effective or cause side effects [1].

This article will not examine in detail the specialized procedures for creating medicines based on the fundamentals of pharmaceutics and medicine, but will focus on the legal regulation of the stages of developing medicinal products for medical use in the Russian Federation. Additionally, we will consider the legal problems faced by developers of medicinal products.

Stages and Financing of Medicinal Product Development

According to Part 1 of Article 10 of Federal Law No. 61-FZ dated April 12, 2010, "On the Circulation of Medicines" (hereinafter – "The Law on Medicines", "Law No. 61-FZ"), the development of medicines includes the following stages:

• Search for new pharmacologically active substances (identification/creation of new substances not included in existing lists and classifications) and subsequent study of their medicinal properties;
• Preclinical studies (scientific research aimed at obtaining evidence of the safety, quality, and efficacy of the medicine);
• Development of manufacturing technologies for the pharmaceutical substance (the process of creating the active substance that possesses pharmacological activity and will be used for the production of the medicinal product);
• Development of formulations and manufacturing technologies for medicinal products (the process of producing the finished dosage form used in the prevention, diagnosis, and treatment of diseases).

By virtue of Part 2 of Article 10 of Law No. 61-FZ, the financing of medicine development may be carried out using funds from:

1. The Federal Budget. As a rule, funds are allocated in cases of a state order for the development of a medicinal product. For example, the Perm State Pharmaceutical Academy received a state assignment in 2023 to develop medicines for diabetes, blood diseases (anticoagulants), and fungal diseases. According to the university rector, "the academy has currently already synthesized active substances in all three areas. Development of medicinal products based on the obtained substances is currently underway. State support funds have been allocated for this work. It is assumed that the creation of the medicines will be completed within three years" [2].

2. Developers of Medicines. The Law on Medicines defines a Developer as an organization possessing rights to the results of preclinical studies of a medicine, clinical trials of a medicinal product, as well as the manufacturing technology of the medicine (Cl. 30, Art. 4).

3. Manufacturers of Medicines when performing research work under an agreement between the developer of medicines and the manufacturer of medicines.

This list is not exhaustive. Therefore, financing is permitted from other sources not prohibited by the legislation of the Russian Federation, such as funds from foundations, grants, donations, etc. An exception applies to narcotic drugs and psychotropic substances, as their development is carried out only in accordance with a state order and is entrusted to state unitary enterprises and state scientific research institutions holding the appropriate license for the development of narcotic drugs and psychotropic substances (Part 3 of Article 16 of Federal Law No. 3-FZ dated January 8, 1998, "On Narcotic Drugs and Psychotropic Substances").

R&D in the Development of Medicines

Initially, a medicinal product was considered a chemical compound obtained through chemical synthesis. With the development of scientific knowledge, this concept expanded. Medicines are obtained from sources of plant, animal, and mineral origin or using biotechnologies.

However, the creation of any new medicinal product is based on scientific research. Original medicinal products undergo the longest path from discovery to market launch. Recall that an original medicinal product is "a product with a new active substance that was first registered in the market based on preclinical and clinical studies of its quality, efficacy, and safety" (Cl. 10.1, Art. 4 of the Law on Medicines).

At the stage of searching for and studying new pharmacologically active substances, and further during the development of the pharmaceutical substance and the finished medicinal product, the use of Research and Development (hereinafter – "R&D") is indispensable. The pharmaceutical industry is currently the largest global investor in R&D. According to researchers, the 50 largest companies in the world by total R&D investment volume include 16 pharmaceutical companies, and their R&D expenditures are forecast to grow [3].

The legal regulation of R&D is extremely sparse. Chapter 38 of the Civil Code of the Russian Federation, consisting of only ten articles, is dedicated to contracts for the performance of R&D.

In accordance with Article 769 of the Civil Code, under a contract for the performance of scientific research work, the contractor undertakes to conduct scientific research stipulated by the customer's technical assignment, and under a contract for the performance of experimental design work, to develop a sample of a new product and design documentation for it.

Thus, these are two independent types of contracts. At the same time, current civil legislation does not provide a detailed definition of the terminology: "scientific research work", "scientific research", and "experimental design work", etc. The content of these concepts must be sought in other regulatory acts, in particular in Federal Law No. 127-FZ dated August 23, 1996, "On Science and State Scientific and Technical Policy".

Regarding the topic under consideration, Scientific Research Work (hereinafter – "NIR") is work of a prospecting, theoretical, and experimental nature performed to identify the possibility of creating a new pharmaceutically active substance and a medicinal product based on it. NIR is subdivided into:

• Fundamental (obtaining new knowledge);
• Applied (applying new knowledge to solve specific tasks).

Experimental Design Work is understood as work on the development of design and technological documentation for a prototype of a product.

As researchers of this topic point out, one of the main features of R&D contracts is the novelty of the results obtained and the possibility of creating new intellectual property objects (inventions, utility models, and industrial designs), as well as the creative nature of the work [4].

When considering the creation of medicinal products, one cannot avoid the topic of creating generic drugs. A generic (Russian legislation uses the term "reproduced medicinal product") has a qualitative and quantitative composition of the active substance equivalent to the original product and an equivalent dosage form. Put simply, a "generic" is a "copy" of the original product, which may differ from the original in the composition of excipients, and the difference in active substances or dosage forms permitted by regulatory documents. Of course, a generic represents the result of independent pharmaceutical development, but its development, as well as its subsequent testing, is much simpler. To register it and launch it on the market, it is required only to confirm its bioequivalence to the original product (an assessment of the rate and extent to which the active substance becomes available at its site of action when administered in the same dose and under similar conditions), as well as to wait for the expiration of the patent protection period for the original product.

In 2023, amendments were made to the Rules for granting subsidies from the federal budget to Russian organizations for conducting R&D [5]. Through these amendments, the development of a medicine, including preclinical studies, the development of manufacturing technologies for pharmaceutical substances and medicinal products carried out within the framework of innovative projects, was classified as R&D. A project is recognized as innovative if it is aimed at creating a replacement medicinal product (a medicinal product intended to replace products protected in the territory of the Russian Federation by patents of rights holders from unfriendly countries). The maximum subsidy amount for the development of a biological medicinal product is 100,000 rubles, and for another medicinal product – 50,000 rubles.

In the Russian Federation, which has adopted a course towards import substitution of medicines, state support in conducting scientific research work is an extremely important measure that should stimulate the development of Russian-made medicinal products. At the same time, obviously, in addition to financial support for the development of medicines, measures are required to train and "retain" highly qualified personnel, develop the material and technical base, etc.

Agreement on the Development of a Medicinal Product

Having reviewed the main issues of R&D in the development of medicines, the following nuances of preparing and concluding an agreement for the development of a medicinal product can be highlighted.

The subject of an R&D agreement in drug development is the work itself, not its tangible result. An R&D agreement may cover either the entire cycle of research, development, and manufacturing of samples of the medicinal product, or its individual stages (elements).

The essential terms of the agreement are the subject of the agreement, formulated in the technical assignment (Statement of Work), as well as the deadlines for the performance of work. The technical assignment for the development of a medicinal product is formed by The Customer based on the requirements imposed on the results of the work. As a rule, this includes the direction of research; tasks to be solved by the contractor; requirements imposed on the contractor's conclusions and recommendations, etc. In our view, it is also extremely important to provide for the price of the work for developing the medicinal product, and the rights and limits of use by each of the parties of the R&D results.

To avoid the risks of the agreement being recognized as not concluded or invalid, legal due diligence is required for its preparation and assessment.

Preclinical Studies of Medicines

The next stage is preclinical studies of the medicine. According to Article 4 of the Law on Medicines, a preclinical study of a medicine is biological, microbiological, immunological, toxicological, pharmacological, physical, chemical, and other studies of a medicine by applying scientific methods of assessment in order to obtain evidence of the safety, quality, and efficacy of the medicine.

Effectively, a preclinical study is a study of a potential medical drug to obtain information about the safety and biological efficacy of the agent. It is conducted using the following methods:

• "in vitro" (studies on cell and tissue cultures);
• "in vivo" (studies on animals);
• "in silico" (computer modeling).

Legal regulation of this institution in the Law on Medicines is represented by only one Article 11. Preclinical studies are conducted in accordance with the Rules of Good Laboratory Practice approved by the Council of the Eurasian Economic Commission dated November 3, 2016, No. 81 (hereinafter – "Rules of Good Laboratory Practice", "Rules No. 81").

The organization of a preclinical study is carried out by the developer of the medicine. Preclinical studies are conducted by test facilities. The law does not answer the question of who can act as such. The Rules of Good Laboratory Practice regulate this issue as follows.

A Test Facility ("test facility") is a laboratory (organization) having the necessary material and technical base and qualified personnel to conduct preclinical (non-clinical) studies of medicines in the relevant field.

The Rules of Good Laboratory Practice also distinguish the figures of "Test Facility Management," "Study Director", and "Principal Investigator."

Test Facility Management is entrusted with the following functions:

• Ensure the availability of a sufficient number of personnel, appropriate equipment, facilities, and materials for the timely and proper conduct of the study;
• Ensure the existence of a quality assurance program;
• Appoint a Study Director from among the test facility staff having qualifications appropriate to the study objectives;
• Approve the study plan;
• Ensure interaction between the Study Director, Principal Investigator, personnel responsible for the quality assurance program, and personnel participating in the study.

The Study Director is the person responsible for the overall conduct of the preclinical study. The Study Director:

• Organizes the conduct of the preclinical study, distributes duties among study participants;
• Ensures compliance with procedures indicated in the study plan, their correct documentation, and registration of all obtained raw data;
• Signs the final report.

The Principal Investigator ensures the conduct of the part (stage) of the study entrusted to them in the event of their performance at several test sites.

As we can see, the Rules of Good Laboratory Practice, despite detailed descriptions of the functions of test facility employees, also do not contain clear requirements for test facilities and do not provide specific answers regarding the level of education, specialization, and competencies of its staff.

A critical role in obtaining reliable results during preclinical studies is played by the existence of a quality assurance system. According to Clause 8 of Rules No. 81, a test facility must have a documented quality assurance program to guarantee that studies are conducted in accordance with Rules No. 81.

Test facility management must appoint personnel responsible for the quality assurance program, whose duties include developing Standard Operating Procedures (hereinafter – "SOPs") and systematically verifying compliance with them. These employees should not be involved simultaneously in conducting the study and verifying the quality of that study.

The test facility must have written SOPs approved by test facility management, describing the procedure for carrying out all laboratory and production operations, including:

• Receipt, identification, labeling, handling, sampling, use, storage, and destruction (disposal) of test items (medicines) and reference items;
• Maintenance and calibration of measuring instruments and equipment;
• Preparation of reagents, nutrient media, feed;
• Record keeping, reporting, and storage;
• Maintenance of premises where the study is conducted;
• Receipt, transport, placement, characterization, identification of test items and test systems;
• Implementation of the quality assurance plan for the preclinical (non-clinical) study.

Each separate unit and (or) each site of the test facility must have a copy of the current SOPs relevant to their activities.

Each preclinical study must be conducted according to the study plan. Any subsequent changes or deviations from the plan must be described, explained, approved, timely dated by the Study Director, and stored with the raw data of the study.

Based on the results of the preclinical study, a report is compiled containing a description and results of the conducted study. Subsequently, the preclinical study report is submitted during the registration of the medicine and is part of the registration dossier.

If evidence of safety, quality, and efficacy of the developed medicine is obtained as a result of the preclinical study, the process moves to clinical trials involving humans. More details on this can be found in our article on this topic [6].

Note that the preclinical study procedure can last from several months to several years and often does not yield in complexity to subsequent clinical trials.

Intellectual Property Rights in Drug Development

In accordance with Part 3 of Article 10 of Law No. 61-FZ, the rights of the developer of a medicine are protected by civil legislation. This refers to the norms of Chapter VII of the Civil Code of the Russian Federation regulating rights to results of intellectual activity.

Every new medicinal product is based on an invention. In accordance with Article 1350 of the Civil Code of the Russian Federation, an invention is recognized as a technical solution in any area related to a product (in particular, a device, substance, microorganism strain, plant or animal cell culture) or a method (process of performing actions on a material object using material means), including the use of a product or method for a specific purpose.

A medicinal product may include several invention objects:

• Active substance (formula and (or) method of obtaining the chemical compound);
• Composition (pharmaceutical composition);
• Method of obtaining the pharmaceutical substance of the finished dosage form and (or) the finished dosage form;
• Method of using a previously known substance as a medicine or for the treatment or prevention of another disease.

Inventions are a result of intellectual activity granted legal protection (intellectual property). Protection of intellectual rights is granted on the basis of a patent in the scope defined by the claims contained in the patent (Part 2 of Article 1354 of the Civil Code of the Russian Federation). Initially, the right to obtain a patent for an invention belongs to the author of the invention. It may pass to a successor, including by inheritance. If the invention was created by an employee in connection with the performance of their labor duties (service invention), the right to obtain the patent belongs to the employer, unless the employment contract provides otherwise.

Furthermore, the author may transfer this right under a civil law contract to another person. For example, conclude an agreement on the alienation of the right to obtain a patent. Such an agreement must be concluded in writing. Non-compliance with the written form entails the invalidity of the agreement. Unless otherwise provided by the agreement, the acquirer bears the risk of potential unpatentability of the right.

In practice, depending on the independence of scientific research and the magnitude of costs, different types of pharmaceutical inventions are patented. For example, the substance itself, the method of its production, and the method of use. According to researchers of this issue [7], patents for chemical compounds are the most valuable and independent, possessing the broadest scope of legal protection. A patent for compositions (mixtures) protects the invention more weakly because compositions (mixtures) imply a combination of individual chemical compounds for which independent patents can be obtained.

The patent holder owns the exclusive right to use the invention in any manner not contradicting the law, including import into the territory of the Russian Federation, manufacture, use, offer for sale, sale, other introduction into civil circulation, or storage of a medicine in which the invention is used. Other persons may not use the corresponding result of intellectual activity without the consent of the rights holder (Clause 1 of Article 1358 of the Civil Code of the Russian Federation).

The term of exclusive rights to inventions (medicines) is 20 years from the date of filing the application for the patent. For medicines, it can be extended by Rospatent for up to 5 more years if more than 5 years have passed from the date of filing the application for the patent to the date of obtaining the first marketing authorization (Clause 2 of Article 1363 of the Civil Code of the Russian Federation). Such a rule regarding medicines was introduced not by chance: preclinical and clinical studies can drag on for many years, delaying the launch of a new product on the market.

An application for term extension is filed by the patent holder during the patent's validity period. A refusal to extend, as well as the extension itself, can be challenged by an interested party in court. Let us illustrate the disputes arising from this with an example from judicial practice.

In Case No. SIP-461/2020 a foreign entity was granted a Russian patent for the invention "Insulin Derivatives" with a specific formula. The patent holder applied to Rospatent for an extension of the exclusive right to the invention. Based on the results of the application review, the patent term was extended until 2028. A Russian company applied to the arbitration court with a statement to declare the actions of Rospatent illegal. In support of the claims, it referred to the fact that the extension of the disputed patent hinders it in developing a biosimilar. The person challenging the patent believed that Rospatent made the decision to extend the patent term in the absence of necessary documents. The courts of the first and cassation instances refused to satisfy the stated claims on the grounds of missing the 3-month period established by law for challenging the actions of an administrative body. They indicated that the applicant, being a large pharmaceutical company, could not have failed to verify whether patent protection for the insulin derivative existed before starting development. The Intellectual Property Court decided that the supplementary patent certifying the extension of the exclusive right term could be challenged by an interested person in two ways: (a) via the procedure for challenging a non-normative legal act in accordance with Chapter 24 of the Arbitration Procedure Code of the Russian Federation within 3 months from the day the person learned of the violation of their right; (b) via a statement to declare the issued patent invalid during the entire patent term. Based on the chosen method of protection, the court refused to satisfy the application due to the missed procedural deadline [8].

This decision, supported by the Supreme Court of the Russian Federation, effectively opened the possibility of challenging the legality of a patent extension throughout its entire validity period, regardless of when the person learned of this fact.

The issue of the legality of registering reproduced medicines (generics) before the expiration of patent protection for the original product remains topical. The urgency of this problem increased when the state adopted a policy of import substitution, which is carried out, inter alia, through the development and registration of Russian generic drugs.

In 2009, the Supreme Arbitration Court of the Russian Federation formulated the position that actions to prepare and submit documents for state registration of a generic before the expiration of the patent do not constitute the use of the invention and are not a violation of the exclusive right. However, the manufacture or storage of the generic is not permitted until the patent expiration date [9]. This position was applied in practice by arbitration courts [10].

However, in Case No. A41-85807/2016 upon the claim of Novartis AG against Nativa LLC, the court recognized the actions of Nativa LLC regarding the registration of a generic and its selling price several years before the expiration of the patent for the original product as a threat of violating the exclusive right of the patent owner of the original medicinal product. In this case, the court obliged the defendant to file an application to suspend the registration of the generic [11].

Subsequently, during the consideration of case No. A40-106405/2018 upon the claim of AstraZeneca against Jodas Expoim LLC, similar actions were directly regarded by the court as a violation of the plaintiff's exclusive right. In this case, the defendant carried out the registration of the reproduced product and the maximum selling price for it before the patent expiration date. The court obliged the defendant to submit to the Ministry of Health of the Russian Federation an application for the cancellation of state registration and an application for exclusion from the State Register of Maximum Selling Prices. This decision was supported by the Supreme Court of the Russian Federation [12].

At the same time, recent judicial practice demonstrates that even if infringement of exclusive rights is confirmed, courts refuse to satisfy claims that are too abstract. For example, in Case No. A40-30991/2022, the court indicated that abstract claims for a ban on introducing a biosimilar into circulation are not subject to satisfaction [13].

Stability is not added by the institutions of "compulsory licensing" and "restriction of patent rights" that began to be applied in 2020–2022. Compulsory licensing is understood as the court granting a third party permission to use intellectual property, the rights to which belong to third parties, without the consent of the rights holder.

In 2019, companies "Sugen LLC" and "Pharmacia & Upjohn Company LLC" filed a lawsuit in the arbitration court against Nativa LLC and the Ministry of Health of Russia to compel the cessation of Eurasian patent violations, including prohibiting the introduction into civil circulation of a medicinal product containing the substance "Sunitinib" and compelling the cancellation of the state registration of the medicinal product "Sunitinib-Native" (Case No. A40-166505/2017). In support of the claims, they indicated that the product "Sunitinib-Native" manufactured by Nativa LLC is a generic of the original product "Sutent" and their invention is actually used in its production. Nativa LLC filed a counterclaim to compel the granting of a compulsory simple (non-exclusive) license to use the invention protected by the Eurasian patent on the territory of the Russian Federation. By decisions of courts of all instances, the initial lawsuit was denied, and the counterclaims of Nativa LLC were satisfied. Note that only in 2022 were all judicial acts canceled due to newly discovered circumstances because Rospatent declared Nativa LLC's patent invalid. Nativa LLC was prohibited from manufacturing and introducing into circulation the medicinal product "Sunitinib-Native" until the expiration date of the Eurasian patent [14].

More details on the practice of issuing compulsory licenses can be found in our article on this topic [15].

Restriction of patent rights is expressed in the granting by the Government of Russia of the right to use an invention without the consent of the patent holder. Currently, this is permitted in the interests of national security or for production for export purposes (Articles 1360 and 1360.1 of the Civil Code of the Russian Federation).

Thus, JSC Pharmasyntez was granted the right during 2021 to manufacture a medicinal product for the treatment of coronavirus infection, "Remdesivir". The patent holder for this product is the American company Gilead Sciences. An extension of the permit followed. In 2022, a second permit was issued to the Russian company R-Pharm for the same product, allowing the use of the invention until December 31, 2022. The rights holder's attempt to challenge this decision in court was unsuccessful [16]. More details on the practice of restricting rights holders' rights can be read in our article on this topic [17].

Summing up, we note that the development of Russian medicinal product development requires the adoption by the state of a whole complex of measures, such as: providing support measures to organizations engaged in innovative research, developing the material and technical base of R&D, ensuring financing of educational institutions and developing measures to stimulate researchers to work in Russia, as well as improving patent protection measures.

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References

[1] Long path from molecule to medicine: how to traverse it most effectively. September 25, 2018. Source: Interfax.

[2] Perm Pharmacademy received state order for development of diabetes medicines. November 16, 2023 // Novy Kompanion.

[3] Alexander Schuhmacher, Oliver Gassmann & Markus Hinder. Changing R&D models in research-based pharmaceutical companies // Journal of Translational Medicine, 2016, Vol 14 Article number: 105.

[4] Anikeychik N.D., Kinzhagulov I.Yu., Fedorov A.V. Planning and management of NIR and OKR. Study guide. // St. Petersburg: ITMO University, 2016, p. 11.

[5] Decree of the Government of Russia dated April 3, 2023 No. 529 "On Amendments to the Rules for Granting Subsidies from the Federal Budget to Russian Organizations for Financial Support of Costs for Conducting Scientific Research and Experimental Design Work on Modern Technologies within the Framework of Implementation by Such Organizations of Innovative Projects and Recognizing Certain Provisions of Acts of the Government of the Russian Federation as Void".

[6] Clinical trials of medicinal products for medical use. December 30, 2022. Source: https://brace-lf.com/informaciya/farmatsevticheskoe-i-meditsinskoe-pravo/1793-klinicheskie-issledovaniya-lekarstvennykh-preparatov-dlya-meditsinskogo-primeneniya

[7] N.V. Zavarzina. Patenting of pharmaceutical inventions: problematic aspects // "Journal of the Intellectual Property Court", 2022, No. 1 (35).

[8] Ruling of the Supreme Court of the Russian Federation dated February 9, 2022 No. 300-ES21-28654 in case No. SIP-461/2020.

[9] Resolution of the Presidium of the Supreme Arbitration Court of the Russian Federation dated June 16, 2009 No. 2578/09 in case No. A40-65668/08-27-569.

[10] Decision of the Arbitration Court of the Moscow Region dated May 19, 2017 in case No. A41-7505/2017.

[11] Resolution of the Intellectual Property Court dated April 24, 2018 No. S01-206/2018 in case No. A41-85807/2016.

[12] Ruling of the Supreme Court of the Russian Federation dated July 31, 2019 No. 305-ES19-8449 in case No. A40-106405/2018.

[13] Decision of the Arbitration Court of Moscow dated May 31, 2022 in case No. A40-30991/22-12-208.

[14] Ruling of the Supreme Court of the Russian Federation dated February 20, 2020 No. 305-ES19-28272 in case No. A40-166505/2017.

[15] Compulsory licensing of medicines. April 28, 2023. Source: https://brace-lf.com/informaciya/farmatsevticheskoe-i-meditsinskoe-pravo/1892-prinuditel-noe-litsenzirovanie-lekarstvennykh-sredstv

[16] Decision of the Supreme Court of the Russian Federation dated May 27, 2021 No. AKPI21-303 "On refusal to satisfy the administrative statement of claim on challenging the order of the Government of the Russian Federation dated December 31, 2020 No. 3718-r".

[17] Restriction of patent rights to medicines. April 30, 2023. Source: https://brace-lf.com/informaciya/farmatsevticheskoe-i-meditsinskoe-pravo/1893-ogranichenie-patentnykh-prav-na-lekarstvennye-sredstva