On December 29, 2017, the RF President signed Federal Law No. 425-FZ of December 28, 2017 On Amendments to the Federal Law On the Circulation of Pharmaceuticals ("Law 425-FZ"). Under Law 425-FZ, in order to ensure effective quality-control for pharmaceuticals and afford protection against fake and counterfeit medicines in Russia, a federal state IT system is going to be set up in Russia for monitoring the movement of pharmaceuticals from manufacturer to end user.

According to the amendments made by Law 425-FZ, from January 1, 2020, pharmaceuticals manufacturers will have to put special identifiers on pharmaceuticals packaging that will enable the tracing of movements (tracking) of pharmaceuticals from the manufacturer right up to the end user. The RF Government will detail the specifications for these identifiers and the process for putting them on packaging in a separate document.

Tracking will be possible because manufacturers, importers, distributors, pharmacists, medical organizations and other pharmaceuticals markets actors listed in Law 425-FZ will have to enter details of pharmaceuticals in a special monitoring system, yet to be set up. Procedures for setting up and operating the monitoring system, providing data from the system and posting public information from the system on the Internet will be approved by the RF Government, which will also appoint an operator for the system. For particular pharmaceuticals, including those on the list of vital and essential medicines or the Seven Nosologies list, the Government might put in place particular requirements for the launch of the monitoring system, including timeframes for that process.

As of January 1, 2020, penalties will be introduced for the production or sale of pharmaceuticals that do not have identifiers or have non-compliant identifiers and for the late inputting of data into the monitoring system. Presumably, to this end, further amendments will be made to the RF Administrative Offences Code, because the current version of it does not include all of these offences.

A prototype tracking system is already up and running in Russia, on a voluntary, test basis for the time being – the experimental use of identifiers and monitoring of the circulation of particular types of pharmaceuticals is underway on the territory of the Russian Federation and will go on until December 31, 2018. More than 30 leading pharmaceuticals manufacturers (including Pfizer, Abbott, Bayer, Novartis, Johnson & Johnson and others) , pharmaceutical wholesale and retail organizations and medical organizations are taking part in the experiment. The RF Federal Tax Service is running the IT system for the experiment.

The participants in the experiment rate it as very important and are "fully supporting it". They have commented that "this initiative serves the interests of all market actors" and have said that it will enable them "to mitigate risks", "reduce direct business losses from counterfeit and fake products, reduce costs through more effective logistics management and make it easier to enter foreign markets" .

The processes involved in the experiment are detailed in implementation guidelines approved by the RF Ministry of Health , which, among other things, allow new participants to join in on the experiment while it is ongoing. This means that pharmaceuticals market actors that have not yet joined the experiment still have an opportunity to try out the monitoring system on 'soft' terms, before pharmaceuticals tracking becomes compulsory in Russia.

The subject of the battle against fake and counterfeit products, although a somewhat different aspect of it, also comes up in connection with the unceasing efforts by the Federal Antimonopoly Service ("FAS") with regard to the legalization of parallel import to Russia. Despite the fact that, to date, the legality of parallel import has not been enshrined in legislation at the national or EAEU (Eurasian Economic Union) level, there have already been cases in which the regulator has used the anti-trust instruments available to it to compel foreign manufacturers not to restrict the ability of unofficial importers to import their goods to Russia and the use of those instruments by FAS has been upheld by a court . One of the main arguments that business makes against the legalization of parallel import is a projected increase in fake and counterfeit products on the Russian market. If the compulsory tracking system is successfully rolled out, it can be expected to significantly reduce this risk, with regard to pharmaceuticals, at least.

We also note that some other important changes have been made by Law 425-FZ. In order for pharmaceuticals and active pharmaceutical ingredients to be registered, details will now have to be submitted of the applicant and manufacturer's registration as a taxpayer in their country of incorporation – they will need to show their tax ID numbers. The holders or owners of registration certificates for pharmaceuticals and the manufacturers of pharmaceuticals and active ingredients registered before January 1, 2018 will have to submit details of their registration as taxpayers by January 1, 2019.