New Legislation on Drug Circulation, Changes to Registration and Clinical Trials

Derek A. Bloom
Partner
Capital Legal Services 

Several changes to the regulation of the Russian pharmaceutical market are coming into effect or have been proposed during 2010 by the Health and Social Development Ministry (hereafter “the Ministry”). The changes come in response to recent increases in the cost of drugs and the H1N1 epidemic, otherwise known as swine flu. The Ministry is also concerned about administrative barriers in the registration process for drugs and the fees payable to the network of controlling agencies and expert organizations.

As of April 13, 2010, a new law on the circulation of drugs has been approved by the State Duma and the Federation Council and signed by the president of the Russian Federation. The new law sets out new pricing regulations and restates existing ones. This new law has been the cause of heated debate in the Duma and the entire pharmaceutical community. More than 300 amendments were submitted prior to the second reading of the draft law in the Duma, and only 45 of the proposed amendments were approved. The new law will come into force on Sept. 1, 2010, and will replace the current federal law on drugs.

The new law provides a detailed description of all registration and approval requirements and stipulates that applicants are to be provided with access to information regarding the status of their applications over the Internet. The new regulatory system will be a significant improvement from the current registration system in which registration procedures may take years and regulators have no liability for delays that they cause. The draft law introduces time frames within which each and every regulatory step is to be completed. Overall, the registration process for new drugs is supposed to take no more than 210 days.

Kirill Saturov

Senior Attorney
Capital Legal Services

The new law sets a single fee to be paid to the federal budget for new drugs to be registered and fixes its maximum amount at 300,000 rubles ($10,200). The respective changes have been made to the Tax Code. No additional amounts are to be paid to expert organizations. The fixed fee and registration time frames do not, however, include expenses and time required for clinical trials.

Foreign manufacturers are now required to conduct clinical trials of new drugs in Russia prior to their registration. A clinical trial conducted on an international basis will be acceptable if it was conducted with the participation of Russian patients. It is important to mention that Clause 5, Article 3 of the said law set forth a provision that clinical trials conducted outside Russia will be accepted on the basis of mutuality in accordance with international agreements of the Russian Federation, although no such agreements exist at the moment.

It is too early to conclude that these changes will benefit foreign manufacturers. Further explanations and regulations concerning, for example, the number of patients to be included in clinical trials in Russia may nullify the apparent achievements for foreign manufacturers.

The new law also introduces measures to protect the health and life of patients participating in clinical trials and sets out minimum amounts of compensation to be paid in the event of any damage to the health of participants in clinical trials.

The new law excludes any reference to so-called “orphan” drugs, which are used to cure rare diseases. One package of such drugs can cost more than a year’s supply of all other drugs for an entire hospital. According to statistics, nearly 5 million people in Russia are suffering from rare diseases. Expensive “orphan” drugs are not produced in Russia, and, therefore, the chance of a patient receiving treatment with these drugs is very low. The government is under pressure from public organizations and the media and has promised to settle this issue by means of special regulations by the end of 2010. What new measures are being considered is unclear.

Another disappointment for drug producers is the lawmakers’ refusal to allow amendments restricting access to clinical trial data for manufacturers of generic drugs. Accordingly, manufacturers of generic drugs are able to prepare their versions of patented drugs for sale literally the day after patent protection expires.

The lawmakers have tried to be protective of local manufacturers, consistent with the government strategy of developing the pharmaceutical industry in the Russian Federation. Drugs manufactured for export no longer need to undergo the registration process, and the same goes for drugs that have been sold in Russia for more than 20 years. However, starting from the year 2014, all local manufacturers must meet GMP, or “Good Manufacturing Practice,” requirements, part of a quality system covering the manufacture and testing of active pharmaceutical ingredients, diagnostics, pharmaceutical products and medical devices.