COVID-19 related support measures for pharmaceutical and medical device companies

Mazars Russia overview of legislative initiatives and changes in the field of healthcare amid the global pandemic COVID-2019.

1. State regulation of drug prices in the event of an epidemic

On March 26, a law that allows the RF Government to establish maximum selling prices for certain medicines and medical products that are not included in the list of essential drugs (ED), entered into force. The exact pricelist will be approved by the Government. The similar provisions are provided for the limits of wholesale and retail mark-ups to the actual selling prices of manufacturers for these medicines and medical products. This legislative initiative arose due to a significant increase of the prices of medical masks.

In accordance with the Law, it is not allowed to sell and distribute medicines and medical products at prices that, including VAT, exceed the limits. The rule applies for 90 calendar days from the date of approval of the pricelists.

However, the Government may set maximum prices and surcharges in the following cases:

  • emergency situation;
  • threat of spreading a dangerous disease;
  • detection of an increase in these prices by at least 30% in the regions within 30 calendar days after the government decides to track retail prices for these medicines and medical products.

Status: entered into force on March 26, 2020.

Source: Federal Law N 67-FZ of 26.03.2020 "On Amendments to Article 60 of the Federal Law "on Circulation of Medicinal Products" and article 38 of the Federal Law "On the Basics of Public Health Protection in the Russian Federation".

2. Fine of up to 6 million rubles for overcharging medicines

Article 14.4.2 of the Administrative Code "Violation of legislation on the circulation of medicines" is proposed to be supplemented with a new provision. There would be administrative responsibility for the sale of medicines at prices exceeding the limits established by the Government.

In case of overcharging for medicines in emergency situations (see above) legal entities would be subject to fine from 2 to 6 million rubles or their operations will be suspended for up to 90 days.

Status: the Draft Law on relevant changes has been submitted to the State Duma https://sozd.duma.gov.ru/bill/928924-7

3. Online sales of pharmaceuticals

Russian President Vladimir Putin signed a Decree that allows to sell medicines online with their subsequent delivery. This applies to over-the-counter pharmaceuticals for unlimited period of time and for prescription pharmaceuticals until end of 2020 (expected to be introduced).

The Decree was issued in order to ensure the availability of medicines for citizens under quarantine.

The RF Government was instructed to develop the procedure for issuing a permit for the remote sale of such medicines, the procedure for its implementation and the rules for their delivery. The RF Government is also obliged to strengthen control over compliance with the requirements of the Russian legislation in the field of circulation of medicines in terms of preventing the circulation of counterfeit and, if necessary, submit proposals for changes in legal regulation in this area aimed at increasing the responsibility of pharmacies.

Status: the Decree entered into force on March 17, 2020.

Source: Decree of the President of the Russian Federation of March 17, 2020 N 187 "on retail sale of medicinal products for medical use" (publication number: 0001202003170037), Federal law of 26.03.2020 N 67-FZ, Draft Law https://sozd.duma.gov.ru/bill/285949-7

4. Banking support for pharmaceutical activities

The Bank of Russia informed about measures of drug manufacturers support until September 30. In particular, it is planned to:

  • introduce a reduced risk index of 70% for ruble-denominated credit requirements for legal entities that produce pharmaceuticals and medical devices;
  • reduce to zero the allowances to the risk index for foreign currency loans provided to organizations that produce medicines and medical devices.

Status: planned for adoption.

Source: Information from the Central Bank of the Russian Federation dated March 10, 2020 "Comments of the Bank of Russia on temporary regulatory relief for banks in connection with the spread of COVID-19”

5. Simplified registration procedure for certain medical products

For 36 types of medical products, including masks and respirators, a simplified state registration procedure has been established, allowing the producers to sell them faster.

Status: entered into force on March 19, 2020.

Source: Decree of the Government of the Russian Federation of 18.03.2020 N 299 "on amendments to the Rules of state registration of medical products"

6. Financing of pharmaceutical activities

The Government will encourage Russian manufacturers of products that are needed for the prevention and control of coronavirus.

More than 23 billion rubles have already been allocated to support the medical and pharmaceutical industry. First of all, the funds will be used for state purchases of necessary equipment (contactless thermometers and installations for air disinfection).

Source: http://government.ru/news/39242/

Moreover, the Government has allocated 10.2 billion rubles for incentive payments to medical workers who aid people infected with coronavirus. Another 1.6 billion rubles were allocated for incentive payments to employees of Federal Service on Surveillance for Consumer rights protection and human well-being.

Source: Order of the RF Government dated 18.03.2020 N 648-p

7. Other planned measures for the pharmaceutical sector in the framework of the Plan of priority measures to ensure sustainable economic development in the context of the deteriorating situation due to the spread of a new coronavirus infection COVID-19 N 2182p-P13 dated 17.03.2020

a) Establishment of a zero rate of import customs duty on goods determined by the RF Government, including pharmaceuticals and medical devices (we have not found any official regulations in open sources as of 02.04.2020);

b) Temporary suspension of the “third extra“ rule for public procurement of medicines and medical devices according to the list of goods determined by the Ministry of industry and trade and the Ministry of health (we have not found any official regulations in open sources as of 02.04.2020);

c) The Introduction of support measures for manufacturers of medical products, personal protective equipment and disinfectants, including special loans from Industrial development Fund (we have not found any official regulations in open sources as of 02.04.2020);

d) The Introduction of uniform non-tariff regulation measures within the EEU in the form of a prohibition of export of critical medicines, medical equipment and materials, protective and hygiene products. The prohibition on the export of certain medical devices is already in effect and will last until June 1, 2020 (Government Regulation N 223 of March 2, 2020)

e) Monitoring of the availability of medicines, medical devices, disinfectants and personal protective equipment with trade organizations. The Federal Anti-Monopoly Service holds monitoring daily starting from March 15.

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