Under art. 53 of the Federal Law No 61 of April 12, 2010 “On circulation of medical products” wholesalers of medical products may sell medical products to manufacturers of medical products for production purposes; pharmacy institutions and veterinary pharmacy organizations; scientific-and-research and development organizations for research activities; sole proprietors licensed to carry out pharmaceutical activity or having a license to carry out medical activities; organizations and sole proprietors that deal with animals breeding, rearing and keeping. Article 54 of the abovementioned Federal Law stipulates two types of entities that can be involved in wholesale of medical products: manufacturers and wholesalers of medicines who shall wholesale medical products subject to the rules of good distributor practice, good storage and transportation practice for medical products. The activity of both shall be licensed. In order to become a wholesaler of medical products, an entity shall obtain relevant license in accordance with the Regulation No 1081 dated December 12, 2011, of the Government of the Russian Federation (hereinafter referred to as “the Regulation”). The Regulation also provides the definition of “pharmaceutical activity” which includes the following types of activities:
- wholesale of medical products for human use;
- storage of medical products and drugs for human use;
- transportation of medical products and drugs for human use;
- retail trade of medical products and drugs for human use;
- dispensation of medical products and drugs for human use;
- production of medical products and drugs for human use.
An applicant for the license for pharmaceutical activity shall apply to Roszdravnadzor and provide information stated in the Regulation, the procedure for license issuance is provided in the Order of the Ministry of Health of the Russian Federation [1]. Specific regulation is provided for licensing of medical products manufacturing. License of medical products manufacturer is issued by the Ministry of Industry and Commerce of the Russian Federation in accordance with the requirements of the Regulations No 686 dated July 06, 2012 of the Government of the Russian Federation “On the approval of the Regulations on medical products’ manufacturing”. Wholesale of medical products or their manufacturing without a license incurs liability under para. 2 art. 14.1 of the Code of Administrative Offences in the amount from forty to fifty thousand rubles with the confiscation of the manufactured items, production tools and raw materials or without such (applicable to legal entities).
Apart from that, it is illegal to take part in public procurements of medical products without a license for wholesale of medical products or a license for medical products manufacturing, which is confirmed by judicial and antitrust service practice. Roszdravnadzor highlights that it is the license for wholesale, not for the retail trade that is required for taking part in public procurements of medical products. Previously in its Information letters No IA/64889/17 dated September 19, 2017; No IA/41856/PR/17 dated June 21, 2017; No AD/43043/14 dated October 23, 2014 FAS concluded that when public procurements of medical products take place, the purchaser shall set in the procurement documents the requirement for the supplier to possess license for pharmaceutical activity with specification “wholesale of medical products”. Herewith, if the supplier is the manufacturer of medical products, he can take part in public procurements using medical products’ manufacture license (without obtaining license for wholesale of medical products).
Participant of public procurements includes information on the possession of such licenses in the second part of the request to participate in public procurements. It must be noted that procurement documents shall have an indication on certain type of license. If procurement documents lack the indication on certain type of license, such public procurements violate subpara. 2 para. 5 art 66 of the Federal Law No 44 dated April 5, 2013 “On the contract system for State and Municipal Procurement of Goods, Works and Services”, therefore, antitrust service is entitled to issue an instruction to rectify the discovered violations of legislation on contract system (Decision of Saint-Petersburg Department of federal antitrust service dated August 01, 2019 on case No. 44-4046/19; Ruling of the First commercial appellate court dated May 27, 2014 on case No. A43-21731/2013).
The interpretation of legislation provided by FAS is in line with the one provided by judicial bodies. The Supreme Court in its Decision dated December 05, 2016 No AKPI16-1012 stated that the opinion provided in FAS Information letter No AD/43043/14 dated October 23, 2014 “does not extend beyond proper interpretation of current legislation” and expressed solidarity with antitrust service explaining that “wholesalers or manufacturers of medical products are the only ones who can sell medical products through public procurements”.
Therefore, a supplier shall provide either a license for medical products manufacturing or a license for pharmaceutical activity specifying “wholesale of medical products”. The Letter itself has consolidating nature since its position was previously expressed by judicial bodies and antitrust services. The analysis of the Letter, judicial practice and decisions of antitrust services shows that even though the Letter is for informational and clarification purposes, the violation of the position thereof entails serious risks for businesses such as risks of receiving instruction to rectify the discovered violations of legislation and being held liable carrying out business activity without a license.
[1]
Order of the Ministry of Health of the Russian Federation No 130n of March 3, 2014 “On the approval of administrative regulations of Federal Service for Surveillance in Healthcare on the provision of government services for licensing pharmaceutical activity conducted by wholesale trader of medical products for human use and pharmacy organizations attached to the federal authorities, state academies of science”
Ksenia Stepanischeva, Counsel