The New Licensing Conditions on Turnover of Pharmaceuticals Become Effective
On 30 November 2016, the Licensing Conditions for Conducting Business Activities on Manufacturing, Wholesale and Retail Trade in Pharmaceuticals, Import of Pharmaceuticals (save for active pharmaceutical ingredients) (the Licensing Conditions) were approved by Regulation No. 929 of the Cabinet of Ministers of Ukraine (the CMU). The licensees should promptly bring their activities in compliance with the new Licensing Conditions.
Implications for licensees
The Licensing Conditions consolidated requirements to all types of economic activities connected with pharmaceuticals, specifically: import, manufacture, wholesale and retail trade. These requirements impose additional obligations for licensees compared to the previous licensing conditions approved by the orders of the Ministry of Health of Ukraine (the "MOH") No. 723 dated 31 October 2011 (manufacture, wholesale and retail trade of pharmaceuticals) and No. 143 dated 20 February 2013 (import of pharmaceuticals). Furthermore, the Licensing Conditions postpone certain obligations for importers until 1 March 2018. Pursuant to the previous import licensing conditions, the latter obligations formally became effective on 1 March 2016, but could not technically be implemented by importers. As a result, the licensing authority, i.e. the State Service of Ukraine on Pharmaceuticals and Control of Narcotics (the "State Pharmaceuticals Service") announced that that it would not verify licensees' compliance with the above-mentioned provisions during licensing audits.
The Licensing Conditions became effective on 20 December 2016, except for certain requirements applicable to importers, which become effective on 1 March 2018. The licensees should bring their activities in compliance with the requirements of the Licensing Conditions within two months after their effective date, i.e. by 20 February 2017, except for the obligation of the pharmacies to ensure accessibility of premises for the disabled pursuant to the state construction regulations, rules and standards by 20 December 2017.
What the regulation says
The most important changes for licensees are summarized below.
- Introduction of the manufacturer's obligation to conduct qualification of raw materials' suppliers and document its results;
- Introduction of the manufacturer's obligation to maintain protocols regarding the supply chain and its traceability for each active ingredient;
- Introduction of the manufacturer's obligation to conduct an audit of active ingredients' manufacturers and distributors regarding compliance with the GMP and GDP requirements;
- Introduction of detailed requirements to the outsourcing activities, including contract manufacturing, in particular: (i) specific requirements to the contracts; (ii) requirement to store the protocols of manufacture, analysis and distribution; and (iii) requirement to store the reference samples; and
- Introduction of more detailed requirements to the procedure for recalling pharmaceuticals and manufacturers' self-inspections.
- Introduction of more detailed requirements to the quality system of the wholesaler;
- Introduction of the wholesaler's obligation to conduct self-inspections;
- Elimination of the requirements for the minimum stock of pharmaceuticals to be maintained by the wholesaler; and
- Introduction of the wholesaler's obligation to conduct qualification and approval of suppliers prior to any procurement, as well as to verify the supplier's compliance with the GDP requirements.
- Introduction of the prohibition to place pharmacies in any objects except those property rights to which are subject to state registration (thus, the pharmacies cannot be placed in small architectural forms);
- Introduction of the pharmacy's obligation to ensure by 20 December 2017 accessibility of premises for the disabled pursuant to the state construction regulations, rules and standards;
- Introduction of more detailed requirements for the storage of pharmaceuticals not owned by a pharmacy;
- Cancellation of the pharmacy's obligation to get approval of its operating hours from the local executive or self-government authorities (except for communal and state pharmacies); and
- Prohibition to use the name and/or trademark on the outdoor signs if the name and/or the trademark contains reference to the following:
- level of prices or other pricing characteristics that can influence consumers' intentions regarding buying goods in that pharmacy;
- misleading information regarding the pharmacy's focus on providing services to certain social groups; and
- comparison with other pharmacies.
Note: similar requirements regarding prohibition to use the name and/or trademark on the outdoor signs existed in the previous licensing conditions, but they were repealed by the MOH based on an administrative court decision. The court ruled that the MOH exceeded its authorities by setting limitations for the use of the registered trademarks and/or names of the pharmacies in breach of the Law of Ukraine "On Licensing Certain Types of Business Activities" which does not prescribe the respective rights of the licensing authority. Nevertheless, the same limitations were established again in the Licensing Conditions.
- Postponement of certain requirements for importers until 1 March 2018, including the following requirements:
- entering into agreements by the importer with the marketing authorisation holder, and/or the manufacturer, and/or the supplier of pharmaceuticals;
- introduction of the pharmaceutical quality system;
- stability testing after introducing the pharmaceutical into turnover;
- outsourcing agreements related to the import of pharmaceuticals; and
- storage of reference and archive samples of pharmaceuticals by the importer; and
- Specification of documents' content regarding traceability of products that should be stored by the importer.
Lastly, the Licensing Conditions introduced more detailed requirements to the education and training of the licensees' authorised persons (specific degrees and specialisation to be obtained by the authorised persons), which are applicable to all licensed types of activities.
Actions to consider
The licences issued by the State Pharmaceuticals Service prior to the effective date of the Licensing Conditions remain valid. However, as mentioned above, the licensees should bring their activities in compliance with most of the new requirements of the Licensing Conditions by 20 February 2017.
It is worth noting that the Licensing Conditions do not stipulate the licensees' obligation to comply with the CMU regulations on state price regulation for pharmaceuticals and maintaining the minimum stock of pharmaceuticals falling into the scope of the reimbursement programme (based on CMU Regulations "On the State Price Regulation for Pharmaceuticals" No. 962 and "On Introduction of the Pharmaceuticals' Cost" No. 863 dated 9 November 2016). Thus, the State Pharmaceuticals Service will not be entitled to verify compliance with the mentioned regulations within the Licensing Conditions compliance audits. However, other state authority, i.e. the State Service of Ukraine on Safety of Food Products and Consumer Protection, is authorised to verify compliance with the state pricing regulations.
The Licensing Conditions introduced additional requirements to licensees which are harmonised with the GMP and GDP requirements. While the Licensing Conditions became effective on 20 December 2016, certain requirements applicable to importers become effective on 1 March 2018. The Licensing Conditions should be complied with by all licensees by 20 February 2017, except for the obligation of the pharmacies to ensure accessibility of premises for the disabled pursuant to the state construction regulations, rules and standards by 20 December 2017.
It is expected that, in order to comply with the requirements of CMU Regulation "On Introduction of the Pharmaceuticals' Cost" No. 863 dated 9 November 2016, the State Pharmaceuticals Service will draft amendments to the Licensing Conditions to include the pharmacies' obligation to maintain the stock of pharmaceuticals falling into the scope of the reimbursement programme. We will keep you informed of any developments in this regard.