Pharmaceuticals & Healthcare
Various Laws Brought into Compliance with
New Healthcare Legislation
Recently Federal Law No. 317-FZ, dated 25 November 2013, (the “Law”)
was adopted to incorporate Federal Law No. 323-FZ “On the
Fundamentals of the Protection of Citizens’ Health in the Russian
Federation”, dated 21 November 2011, (the “Fundamentals”) more fully
into existing Russian legislation.
The Law was prepared by the Ministry of Healthcare of the Russian
Federation and the majority of its provisions came into effect on
25 November 2013, although certain provisions (including new
administrative sanctions) will be effective from 1 January 2014.
Medical Devices: VAT Issue
The Law amends the Russian Tax Code to bring its terminology into
conformity with the Fundamentals by replacing the previous terms
“product of medical purpose” and “medical equipment” with the single
term “medical devices.”
The Law decreases the VAT rate to 10 percent on medical devices for
which a new state registration certificate can be provided. Additionally,
medical devices may be completely exempted from VAT if, in addition to
a state registration certificate, a particular medical device is included in a
special list approved by the Russian Government (the “List”). Until
1 January 2017, the same VAT incentives can be obtained by presenting
a registration certificate for a product of medical purpose. This should
hopefully prevent a situation when the standard 18 percent VAT rate is
applied to the importation and sale of medical devices.
However, Russian customs authorities maintain that they have not been
provided with tools appropriate to differentiate between medical devices
subject to VAT exemption and those subject to a decreased VAT rate of
10 percent, since the currently approved List does not contain reference
to the HS classification of medical devices.
Pharmaceutical Companies: Interactions with
The Law amends Federal Law No. 61-FZ “On the Circulation of
Medicines” dated 12 April 2010 in two major respects.
Firstly, the Law on the Circulation of Medicines will now include an
article, which largely mirrors the wording of Article 74 of the
Fundamentals, governing interactions with medical and pharmaceutical
Secondly, the Law lists the requirements that pharmaceutical companies
(their representatives) must satisfy when organizing and/or financing
scientific and other events aimed at the professional development of
medical professionals or the provision of pharmacovigilance information.
The Law prohibits hindering the participation of other companies that
manufacture or distribute medicines with a similar pharmacological
mechanism to that of medicines manufactured or distributed by the
company organizing or financing the relevant event.
Companies (their representatives) must also make information on the
event (its date, place and time, agenda, plan and participants) available
by placing it on its official webpage not later than two months prior to the
event. They are also required to pass the above information to the
Federal Service for Surveillance in Healthcare (Roszdravnadzor), which
should then place it on its official website.
New Administrative Punishments
The Law amends the Code of Administrative Offences of the Russian
Federation by introducing new violations in the area of circulation of
medicines and violation of the established rules on circulation of medical
devices among others.
Violations of the legislation on circulation of medicines for which
administrative sanctions were introduced include (i) breach of the rules
on wholesale and retail sale of medicines; (ii) sale of falsified, counterfeit
or bad quality medicines; (iii) sale of falsified, counterfeit or bad quality
medicines resulting in harm to health or creating the threat of such harm.
Any violation of the rules on circulation of medical devices is now a
punishable administrative offence.
A separate administrative offence is established for failure to provide the
authorized state body with information if required to do so by healthcare
legislation. Even though it is not certain yet, this rule is likely to apply to
pharmaceutical companies for failure to inform Roszdravnadzor about
events they organize and/or finance.
Lastly, and surprisingly, the long-awaited amendments to the Code of
Administrative Offences of the Russian Federation on administrative
sanctions for violation of Article 74 of the Fundamentals (governing
interactions with medical and pharmaceutical professionals) have not
been introduced by the Law.
This LEGAL ALERT is issued to inform Baker & McKenzie clients and
other interested parties of legal developments that may affect or
otherwise be of interest to them. The comments above do not constitute
legal or other advice and should not be regarded as a substitute
for specific advice in individual cases.