January 30 2017 Procedures and strategies for pharmaceutical brands Gorodissky & Partners | Intellectual Property - Russia Intellectual Property IntroductionSelection, clearance and registrationParallel imports and repackagingAnti-counterfeiting and enforcementAdvertisingGeneric substitutionOnline issuesIntroductionIn Russia, medicines are sold under strict government supervision: pharmacies are frequently checked by the Federal Service for Surveillance in Healthcare and the government controls the prices and quality of medicines.The volume of imported drugs exceeds that of domestically produced drugs. The most popular medicines relate to gastrointestinal tract treatments; these account for 20% of all medicines consumed. Cardiovascular medicines follow immediately afterwards.Pharmaceutical consumption is growing every year. The pharmaceutical market is quite profitable: 13% on average. Foreign producers have a large share of the market, with the biggest companies including Sanofi-Aventis, Novartis, Hoffmann La Roche, Berlin-Chemie, Bayer, Pfizer and GlaxoSmithKline. The large Russian players include companies such as Pharmstandart. Among the companies specialising in generics, Israeli company Teva Pharmaceuticals deserves special mention.Russian companies are gradually expanding their share of the market. Imported medicines take the lead in monetary terms; however, domestic medicines dominate in terms of type of medicine sold, accounting for 63% of sales. In 2013 the pharmaceutical market grew by 10%. In the same year, the share of domestic medicines grew by 26%. Hence, by 2018 the mark share of domestic medicines should reach 90%.Selection, clearance and registrationThe Law on the Circulation of Drugs 2015 regulates the procedure and requirements for registering a pharmaceutical product for the purposes of import, production, advertisement or sale. The procedure and requirements for registering a trademark are regulated by Part IV of the Civil Code.Under the Law on the Circulation of Drugs, drugs can be manufactured, sold and used in Russia only if they are registered with the Ministry of Health.A pharmaceutical product is registered with an indication of its name (eg, its international non-proprietary name (INN) or grouping, or chemical and trade name). Registration is granted in perpetuity, with the exception of products that are being registered in Russia for the first time.The Civil Code does not restrict the types of pharmaceutical product for which trademarks can be registered. In obtaining trademark registration, the holder acquires an exclusive right to use the trademark for any pharmaceutical product, regardless of its composition or purpose (unless the holder has limited the list of covered products by specifying compositions or purposes).However, the Law on the Circulation of Drugs prohibits state registration of:different pharmaceutical products under the same trade name; orthe same pharmaceutical product under different trade names (if the application is for registration as two or more preparations).Under the Law on the Circulation of Drugs, state registration of a pharmaceutical product can be cancelled in case of non-compliance with the above provisions or where a court decision confirms infringement of IP rights.Article 46 of the Law on the Circulation of Drugs states that pharmaceutical products may be released for circulation only if the packaging includes the name of the product in Russian. Accordingly, while a name may be registered as a trademark in Latin script, the law requires a Cyrillic transliteration to be placed on the packaging. Trademark protection for the mark in Latin does not automatically extend to all other scripts, including Cyrillic. Therefore, in order to secure stronger protection for an original drug name, the registration of Latin and Cyrillic versions of the name as separate trademarks is recommended.Registration of the name of a drug in the State Register of Medicines does not guarantee registration of that name as a trademark.The Civil Code establishes the following grounds on which designations for pharmaceutical products may be rejected:They lack distinctiveness or consist only of signs that are generally used to indicate the type of goods at issue; orThey comprise generally accepted symbols and terms, descriptive indications or signs representing the form of goods covered, determined exclusively or mainly by their nature or purpose.These provisions do not apply where a trademark has acquired distinctiveness through use in Russia (which must be proved with reference to the period before the filing date).Designations cannot be registered as trademarks if they:mislead consumers regarding the nature of goods or their manufacturer; orare contrary to the public interest, principles of humanity or morality.According to the practice of the Federal Service for Intellectual Property (Rospatent), the risk of misleading consumers regarding the identity of the manufacturer also exists where consumers associate a designation with the goods of another manufacturer based on previous experience.Thus, in 2015 Rospatent refused to register the trademark ЛОРАКТИВ (LORAKTIV) in the name of a Russian firm because it reproduced a pharmaceutical name previously used by an Indian manufacturer. Although the prior use was in Kazakhstan and the drug name was not registered in Russia, Rospatent found a risk of consumer confusion as to the origin of goods because Russia and Kazakhstan are members of the Eurasian Customs Union (functioning since 2010).As of October 1 2014, the Civil Code provides that a trademark may be refused if it incorporates a designation that is identical or confusingly similar to:another party's protected means of individualisation (eg, trademark, firm name, commercial designation or name of selection achievement);another party's copyrighted object or industrial design; orthe personal non-property rights of a famous person.Part IV of the Civil Code prohibits the registration of designations that are identical or confusingly similar to earlier firm names that are protected in Russia. Therefore, a preliminary search of the State Register of Legal Entities is recommended to ensure that no potentially conflicting firm names exist. A search of other relevant databases (eg, the State Register of Medicines) should also be conducted in order to identify any identical designations registered by third parties as trade names for pharmaceutical products.Part IV of the Civil Code contains no specific provisions on the regulation of INNs. Rospatent will nonetheless refuse registration where a mark is identical to an INN. However, it may not refuse registration of a mark that is merely similar to an INN, as this is not expressly prohibited by the Civil Code.In 2012 the Supreme Commercial Court ordered Rospatent to invalidate registration of the trademark КАРНИТОН (CARNITON, Registration 345444) in respect of Class 5 goods, as it was considered to be derivative of the INN Carnitine. The court stated that any action which may create a bar to the free use of an INN in Russia is contrary to the public interest and to the constitutional right to health protection and medical care.However, a trademark will sometimes not be considered similar to an INN. For example, Rospatent refused to consider the trademark БРАВАДИН (BRAVADIN, International Registration 1086422) to be similar to the INN Ivabradine.Parallel imports and repackagingParallel imports are regulated by Article 1,487 of the Civil Code (referring to exhaustion of rights for a trademark). The article provides that the use of a trademark by other parties in respect of the products covered by the mark is allowed only if those products have already been marketed in Russia by the trademark owner. Hence, Russian law recognises national exhaustion of rights. However, Russia is a member of the Eurasian Economic Union (EAEU), which has adopted regional exhaustion of rights. The EAEU comprises Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia, although Armenia and Kyrgyzstan joined the EAEU recently and are still undergoing a transitional period to regional exhaustion. The Anti-monopoly Service advocates the international exhaustion of rights.This issue has been subject to lengthy discussion without any tangible resolution. In 2015 and 2016 the issue of exhaustion of rights was discussed by the Eurasian Economic Commission, which comprises representatives of all five EAEU member states. One proposed alternative is to allow parallel imports of pharmaceuticals, auto spare parts and cosmetics. However, no solution is as yet on the horizon.Anti-counterfeiting and enforcementThe Federal Service for Surveillance in Healthcare is the government body that supervises the quality of pharmaceutical products. A network of laboratories in each federal circuit tests the quality of drugs against reference specimens. The Law on the Circulation of Drugs provides that the packaging of a pharmaceutical product must carry exhaustive information, including:the name;the INN;the name of the manufacturer;the number of the batch and date of production;the registration certificate number; andany other information necessary for the user.Further, the packaging of each product must bear a strip code enabling identification of the origin of that particular package.Numerous laws prohibit the counterfeiting of drugs. The Code of Administrative Offences provides heavy fines for acts of counterfeiting that do not fall under the provisions of the Criminal Code. Further, the Criminal Code contains provisions on:damage to health (which can apply to counterfeit medicines); andthe production and sale of counterfeit medicines.A separate provision of the Criminal Code concerns the unlawful use of trademarks. This is a general provision, although it applies equally to pharmaceutical trademarks. Relevant jurisprudence includes cases initiated because of the counterfeit manufacture of drugs and cases involving the unlawful use of trademarks.This year will see the planned introduction of a state information monitoring system which will include the individual marking of every package of medicine, enabling interested parties to trace every individual package back to its producer.AdvertisingA number of laws regulate advertising of pharmaceuticals. The Law on Advertisements concerns all types of advertisement; however, provisions which concern medical products represent a considerable proportion of the law. The law states that ads should be fair and authentic and should not claim exclusive IP rights if no such rights exist. Goods that are subject to state registration (including pharmaceuticals) may not be advertised if they are not registered. The law contains many other limitations that have no direct bearing on intellectual property, including advertising terms in print and on television.The Law on the Circulation of Drugs also limits advertising to over-the-counter (OTC) drugs. The content of the ad must correspond to the pharmacological data obtained during clinical trials. Ads may not:describe a drug as 'unique', the 'most efficient' or 'the safest';mislead regarding composition, origin or novelty;compare the advertised medicine with other medicines; orcreate an impression that patients may dispense with medical advice.OTC drugs account for about 50% of drug sales in monetary terms. Advertising OTC drugs is permitted and consumers often buy them based on information that they obtain from the media. Prescription medicines may not be advertised.Generic substitutionGeneric drugs may not be sold during the life of the patent for the original drug. All medicines must be registered before they can be authorised for use, which requires submission of pre-clinical and clinical trials. The Law on the Circulation of Drugs provides that for six years from the registration date of a drug, details of the pre-clinical and clinical trials submitted by the applicants during the registration process may not be obtained, disclosed or used commercially or for the purpose of state registration. Thus, although companies may initiate the generic registration procedure, they have no access to pre-clinical and clinical trials submitted by the original drug developers in this period. This provision echoes similar provisions in the laws of other countries. However, there is no patent linkage.The Law on the Circulation of Drugs sets forth requirements for generic drugs. The law states that a generic medicine must have the same qualitative and quantitative composition of active ingredients as the original drug. The Russian market has many generic drugs, which are sold at cheaper prices than the originals – often 20% to 50% cheaper. There have been isolated cases of generic drugs being marketed during the life of the original patent; however, these were successfully resolved by the courts in favour of the patent owners. Further, a preliminary injunction is available in such cases. Drugs sold by pharmacies or stored in warehouses may be seized until the dispute is resolved. For the most part, generics come onto the market from Russian, Indian and Chinese producers.There are plans to take stock of the state register of medicines. Generics whose safety and therapeutic efficiency are not sufficiently proven will be excluded from the register.Online issuesThis section concerns OTC medicines only. The online sale of drugs is prohibited; nevertheless, online pharmacies exist. Online pharmacies representing big chain pharmacies, where drugs may be ordered online but must be collected from the pharmacy, are safe for consumers. However, unregulated, anonymous online pharmacies exist that may trade in counterfeit drugs. Further, regardless of whether the drugs sold by these online pharmacies are counterfeit, they may not satisfy certain conditions of storage and transportation. According to the World Health Organisation, more than 50% of the drugs bought online from illegal anonymous sites are counterfeit.The Ministry of Health plans to allow the online sale of drugs from January 1 2017. It is proposed that only licensed pharmacies be allowed to sell drugs online. When a drug is advertised on the Internet, the following must be indicated:the name of the vendor;the location of the pharmacy;the registration number of the company (where relevant); andthe licence permitting pharmaceutical activity.The same requirements will apply for individual entrepreneurs.For further information on this topic please contact Viacheslav Rybchak at Gorodissky & Partners by telephone (+7 495 937 6116) or email ([email protected]). The Gorodissky & Partners website can be accessed at www.gorodissky.com.