In light of the volatile situation with COVID-19, the president of the Russian Federation signed Decree No. 187 dated 17 March 2020 “On Retail Trade of Medicines for Medical Use” (“Decree No. 187”) under which distance selling of over-the-counter (“OTC”) medicines is permitted. Following execution of Decree No. 187, efforts to draft and pass a new law allowing distance selling of medicines intensified. On 1 April 2020 the law passed in its third reading by the State Duma and on 3 April 2020 it was signed by the president. In spite of much discussion by market participants on this topic over the last few years, some of whom had contributed to the development of a draft law which previously failed to pass in the Russian parliament, the onset of the COVID-19 pandemic has proved to be a decisive factor in the passage of the new law on the distance selling of OTC medicines.
More recently, on 16 May 2020, the Government of Russia adopted Resolution No. 697 (the “Resolution”) to regulate some of the issues which remained unresolved by the introduction of the new law. Without further regulation in this area, the effective functioning of the distance selling market of medicines would be practically impossible. As a result of the adopted Resolution, on 26 May 2020 the first permits regulating the distance selling of medicines were issued to several market players.
With the signing of Decree No. 187 and the passage of the new law, several issues relating to the distance retail medicine trade have been resolved. In particular, the law addresses some of the following prevailing market concerns:
- Distance selling of OTC medicines (except illegal drugs, psychedelic medicines and medicines containing over 25% of ethyl alcohol) is now permitted. Distance selling of prescribed medicines (except illegal drugs, psychedelic medicines and medicines containing over 25% of ethyl alcohol) is now also permitted in cases of emergency or where there is an “occurrence of a threat of transmission of a disease constituting a danger to the public”, the specific rules for which will be temporarily determined by the Government of Russia on a case-by-case basis; and
- The distance retail trade of medicines can be undertaken by pharmacies that (i) hold a licence to perform pharmaceutical activities and (ii) have obtained the permission of the Federal Service for Surveillance in Healthcare.
Detailed regulation setting out (amongst other things) additional requirements for organisations engaged in remote trade (in addition to the requirement to obtain the relevant licence and permit), as well as specific rules relating to the delivery of medicines and payment for them is set out in the Resolution. In particular, the Resolution:
- specifies that the distance retail medicine trade may be carried out by pharmacies (registered in any acceptable form, except by individual entrepreneurs) that have a licence to carry out pharmaceutical activities, which they held for at least 1 (one) year, and provided that such pharmacy meets the following criteria:
- operation of pharmaceutical activities in at least 10 (ten) places in Russia. However, the Resolution does not contain any restrictions with respect to the territories in which medicines may be delivered (accordingly, if all the other requirements set out in the Resolution are met, a pharmacy could sell OTC medicines remotely throughout Russia);
- availability (on any legal basis) of premises equipped in accordance with the legislative requirements for the storage of orders (medicines);
- existence of a functioning website which complies with the detailed regulations set out in the Resolution, relating to the process for ordering medicines. The Resolution also states that the pharmaceutical retailer is permitted to operate a mobile application; however, according to a direct interpretation of the Resolution, any such application is optional (i.e. at the retailer’s discretion) and is independent of (and so does not exclude) the obligation to maintain a functioning website;
- availability of an own courier service that has the necessary equipment to maintain the appropriate temperature for the delivery of thermolabile medicines, or a contract with a courier service that has such equipment; and
- availability of an electronic payment system and/or mobile payment terminals designed for electronic payments, including those made by bank cards, directly at the place of service provision.
- regulates the general procedures for (i) order acceptance, (ii) concluding the point-of-sale purchase process, and (iii) delivery of orders, including provision for the possibility of the buyer refusing to accept the delivered goods. In particular, the Resolution establishes the following:
- an order may be placed by phone, through the website or through a mobile application. In any event, the pharmacy must ensure that the confidentiality of consumers’ personal data is maintained;
- during acceptance of an order an authorised employee of a pharmacy should inform the buyer of key information / instructions in relation to proper consumption of the specific medicines ordered (as well as about other issues, including price, expiration date, terms of sale, storage rules) and confirm with the buyer the necessity of providing documentation that verifies the quality of the medicines delivered, when delivered outside the location of the pharmacy;
- the conclusion of the point-of-sale purchase agreement in relation to the medicines may be determined either (i) by reference to the point at which the pharmacy issues a cash/commodity receipt or other document (including an electronic document in case of cashless payment) confirming payment; or (ii) by reference to the point at which the pharmacy receives a notification of the buyer’s intention to purchase the medicines;
- delivery must be carried out by an employee of the pharmacy or other (third party) organisation on the basis of an agreement specifying a procedure, which is compliant with the Resolution, and the responsibilities of the parties. The Resolution also sets out requirements for packaging and storing medicines during transportation;
- the order should be delivered to the address specified by the buyer, either directly to the buyer or to a person who presents originals or copies (including in electronic form) of the receipt or other documentation confirming the conclusion of the point-of-sale purchase agreement, payment for the order (if applicable) or confirmation of delivery slot;
- the buyer has the right to refuse delivered medicines which are of proper quality before the payment for the order (if the payment should be made after the delivery of the medicine), and in such case only the delivery service should be paid;
- in case of delivery of medicines which are of improper quality (for example, the delivered medicine does not meet legislative requirements regarding its quality, quantity or composition), the buyer has the right to return it to the person carrying out the delivery without payment for the delivered medicine and (if applicable) the service of its delivery, and has the right to demand proper execution of the order;
- a pharmacy should ensure it maintains or has access to a system for detailed monitoring of the transportation and distribution of medicines (specifying the date of the order, the order number, relevant pharmaceutical forms, the delivery date and other relevant information).
- regulates the procedure for obtaining a permit for the distance sale of medicines from the Federal Service for Surveillance in Healthcare (such permit may be obtained, amongst other means, through communication technologies). To obtain a permit a pharmacy should provide documents confirming its compliance with all the requirements specified in the Resolution. A permit shall be issued within 5 (five) working days from the date of receipt of all necessary documents by the Federal Service for Surveillance in Healthcare. The Resolution also provides for the establishment of a register of issued permits, but at the moment of publication of this article such a register is not in operation; and
- provides grounds for terminating a permit.
Therefore, the distance selling activities of pharmacies which are already engaged (and were engaged prior to the Resolution’s adoption) in the distance medicine trade will not be legally valid unless their activities meet the requirements set out in the Resolution.
Despite the adoption of the Resolution, which resolves a number of issues essential for the functioning of the distance selling medicine market, some problem areas remain unresolved or insufficiently regulated. For example, these include the following:
- The Resolution does not comprehensively address how an employee of a pharmacy should inform the buyer of instructions relating to the proper consumption of the relevant medicine. Therefore, it is still unclear whether the presence of an extensive description on the retailer’s website in conjunction with the possibility of the buyer asking questions in a dialogue window through the website (or over the phone) will be sufficient to satisfy the buyer's rights to information and consultation in this respect;
- The Resolution does not regulate some questions that have long been of interest to the market, such as (i) whether it is permitted for pharmaceutical retailers to categorise their medicines according to a pre-defined ranking which relies on the internal settings of the retailer’s website (noting that this could allow pharmaceutical retailers to prioritise medicines that are most profitable for them, rather than medicines which are most appropriate for the individual buyer’s needs), and (ii) whether it is permitted for pharmaceutical retailers to recommend specific medicines to the prospective buyer based on the buyer’s search queries, in circumstances where such recommendations are also most beneficial to the pharmacy, as well as other questions relating to marketing.
Please note that the rules for selling prescription medications in an emergency have not yet been developed. It remains to be determined whether the Russian Government will be able to quickly and efficiently develop temporary rules for the sale of prescription medications, which will also ensure the proper level of control over market players and the prompt circulation of prescriptions in case of an emergency. It is not yet possible to provide a more comprehensive response on this issue. HSF will continue to monitor additional subordinate legislation on this subject and will inform you of any developments as soon as the respective regulation is passed.
The contents of this publication are for reference purposes only and may not be current as at the date of accessing this publication. They do not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action based on this publication.
© Herbert Smith Freehills 2020