The holiday season is traditionally a time to sum up the results and analyse the key trends of the first-half year. We would like to share with you our collation of key court decisions on disputes regarding circulation of medicines and medical devices in Russia issued during the first half of 2012.
Public procurement of medicines and medical devices
A situation where two bidders enter into a loan agreement and one of the bidders makes a no-bid decision after the starting price drops by only 0.5%, is not an evidence of collusion.
The Department of the Federal Antimonopoly Service for Saint Petersburg found the actions of two bidders for the procurement of medicines collusive. The antimonopoly authority based its conclusions on the following facts: (1) shortly before the tender the bidders entered into a concessional loan agreement for RUB 200 million which, in the authority’s opinion, constitutes an evidence of financial cooperation between the bidders in order to influence the tender’s results; (2) after the first auction step by one of the bidders – starting price decrement by 0.5%, the second bidder made a no-bid decision, which is an evidence that the free and competitive bidding for the contract is nothing but simulation and that a malicious collusion is the case.
The court, however, dismissed both allegations of the antimonopoly authority, founding that the existence of a loan arrangement does not prove that the mandatory rules of the antitrust law were violated. Furthermore, the fact that a reduction in the starting price (though by 0.5% only) resulted in the contract being awarded at a price lower than the starting price is an evidence of the fair bidding.1
Placing two medicines in one auction lot for complex therapy purposes is permissible and does not constitute a factitious lot extension with the aim of restricting competition
The court arrived at this conclusion in a case involving CJSC Biocad and the Department of the Federal Antimonopoly Service for the Vologda Region.
A municipal customer created a single lot for the procurement of two medicines for complex therapy purposes (Paclitaxel and Epirubicin). The antimonopoly authority found this to be an unjustified lot extension for the purpose of narrowing the number of bidders. One prospective bidder was able to supply only one of two medicines: CJSC Biocad, a manufacturer of Paclitaxel, may sell medicines of its own production, but has no license for conducting a pharmaceutical activity and therefore has no right to resell medicines produced by other companies, i.e. Epirubicin.
However, the court dismissed the conclusion of the authority founding the customer’s actions lawful. The court stated that taking into account the customer’s requirement in compatible (functionally and technologically related) medicines to be used together in complex therapy, the consolidation of two medicines in one lot is justified as the purpose of such consolidation was to achieve the most efficient results in the treatment of oncological diseases.2
N.B. It should be noted, however, that this decision had been adopted before the Federal law dated 20.07.2012 № 122-АЯ changing the rules of creating the lots for purchasing of medicines entered into force.
Import of medicines for clinical trials
CJSC Biocad successfully appealed the decision of the Ministry of Health and Social Development to refuse to issue a permit to import medicines for clinical trials.
The Ministry of Health and Social Development refused to issue a Permit to import a parcel of unregistered medicine for clinical trials substantiating its decision by the fact that the applicant failed to submit detailed justification (calculation) as to the quantity of the medicine concerned.
It should be noted that in fact the applicant provided its justification in the form of a table containing quality analysis and control, stability analysis and safety control methods broken down by necessary quantity of pills per method.
The court found that the information provided by the applicant is sufficient to obtain the permit to import a parcel of the medicine for clinical trials. The Ministry’s requirement to submit additional information for a more detailed justification is beyond the scope of reasonable interpretation of the term “justification”, unreasonable and violates the rights of the importer.3
Inventions, trademarks and patents
Phezipam trademark application rejected
The court upheld the decision of Rospatent to reject Phezipam trademark application (the applicant – OJSC Tatchimpharmpreparaty) for its confusing similarity with Phenazepam, a well-known trademark that was registered earlier.4
It is prohibited to produce or sell a medicine that contains a patented invention of another pharmaceutical company.
The court issued the decision prohibiting the respondent to produce, store, advertise, sell or otherwise dispose of the Uroprost medication founding that it contains an invention titled “Medication for treatment of prostate diseases “Vitaprost”, patented in the Russian Federation.
The fact that the invention was used is evidenced by the presence in Uroprost of every feature listed in the independent claim of Russian patent N 2113404 or an equivalent feature. The presence of such features was proved by the results of a patent and technical expert examination. However, the opinions of the experts divided. Two of three experts determined that Uroprost contains features of the invention concerned, with one of the experts arriving at the opposite conclusion. The court found that two substantiating opinions of three constitute sufficient evidence.5
Non-compliance with the temperature conditions for storing thermolabile medicines
A failure to comply with the temperature conditions for storing thermolabile medicines forms sufficient grounds for administrative order to suspend business operations.
The commercial court for the Altai region satisfied the claim filed by the prosecutor’s office in Biysk against Gorodskoy aptechny sklad+ seeking a two week suspension of activities for a failure to comply with the temperature conditions for storing thermolabile medicines at a store and inventory room of the pharmacy shop.
The court imposed the sanctions of that magnitude because, according to the court, such failure constitutes a non-compliance with the pharmaceutical licensing requirements to appropriate storage of medications and therefore the punishment cannot be mitigated.6
Use of the term “wholesale” in advertising medicines that are sold at retail prices constitutes a false advertising.
The Department of the Federal Antimonopoly Service and the court found it unlawful to advertise medicines using the slogans – “Wholesale Price Pharmacy” and “prices for goods marked with “O!” correspond to wholesale prices based on the results of the marketing survey by OOO Pharmaimpex in the Kirov region”.
The court found these advertisement slogans false and misleading. Given the fact that the respondent “is not the producer of the medicines concerned…the price for the medicines is not a wholesale price and is equal to the actual manufacturer’s price plus a markup”. In addition, in the court’s opinion, the use by the advertiser of the above statements amounts to unfair completion as it puts its competitors to a disadvantage.
According to the court, the company has no right to advertise its prices as wholesale prices as a consumer may think that the company resells medicines at supplier’s prices without adding any markup. The fact that the markup added by Pharmaimpex may be low and the consumer price may be really close to the wholesale one (even if the consumers themselves are sure it is) is of no importance.7
Information about discounts on medicines shall contain a notice warning about counterindications and a notice about the period of discounts.
The court upheld the position of the antimonopoly authority founding that the advertisement containing information about a 10% discount violates two norms of the advertising law at one time: absence of a notice warning about counterindications and necessity to read the instruction, and a notice about the period of the discount campaign. Both such notices are required for this type of advertisement.8