Use of patents without authorization of the right holder

On December 15, 2020, in the first reading, the Russian State Duma approved amendments to Article 1360 of the Civil Code "Use of an Invention, Utility Model or Industrial Design in the Interests of National Security" ("Amendments to Article 1360").

The Amendments to Article 1360 were submitted in November 2019 at the initiative of the Russian Anti-Trust Authority (FAS), and it took more than a year for the draft to pass the first reading. However, the legislative process is likely to move forward quickly now as a reaction to foreign sanctions against Russia.

According to the current wording of Article 1360, the Russian government has the right in the interests of defense or security of the state to allow the use of an invention, utility model or industrial design without the patent holder's consent and subject to prompt post factum notification and payment of a commensurate compensation to the patent holder. The draft amendments extend the state's march-in rights "to cases of emergencies related to the life and health of the citizens".

Though Article 1360 in its current wording was in force since January 1, 2008, it has never been utilized by the state, until a very recent Remdesevir case. On January 31, 2020, the Russian Government issued Order No. 3718-r, which allows the Russian generic company Farmasintez to use inventions under Remdesevir-related patents owned by Gilead Science Inc. and Gilead Pharmasset LLC (Eurasian Patents Nos. N EA025252, EA025311, EA029712, and EA028742) until January 1, 2022, without the consent of the patent holder and subject to payment of compensation. In justifying the decision, references were made to Article 31 of TRIPS (discussed below).

The methodology for determining the amount and procedure for compensation payment to a patent holder must be approved by the government. No final text about these guidelines is yet publicly available. Reportedly, compensation should be payable within three months after the first sale of the generic takes place and should be linked to the amount of a relevant state purchase order. According to the official state procurement website zakupki.gov.ru, on January 21, 2021, the first batch of generic Remdesevir produced by Farmasintez under the trade name Remdeform was purchased by Krasnodar Clinic Hospital No. 1 for the total amount of 3,500,000 rubles (approximately 46,000 USD).

According to the website of the Ministry of Health, both original and generic Remdesevir received market authorizations as of October 14, 2020, but only Farmasintez has registered the minimum sales price for its generic Remdesevir and can participate in the state procurement tenders.

Consideration of amendments related to compulsory licensing under 31(bis) TRIPS

The second reading of the draft law on amending Chapter 72 of the Civil Code (the Patent Law) is scheduled for February 2021. On March 18, 2020, it passed the first reading with the following wording:

"Article 1360.1. Use of an invention for the production of a medicinal product for the purpose of its export in accordance with an international treaty of the Russian Federation."

The Government of the Russian Federation shall have the right, in the cases and on the conditions stipulated by an international treaty of the Russian Federation, to make a decision on the use of an invention for the production in the territory of the Russian Federation of a medicinal product for the purpose of exporting it without the consent of the patent holder, informing him of this as soon as possible and with payment to him of a proportionate compensation. The said decision must contain information on the volume of production of a medicinal product determined by the needs of a foreign state, to whose territory the medicinal product is to be exported. The packaging of such a medicinal product must have a special designation."

The reference to an "international agreement" here means Article 31-bis of the TRIPS Agreement. It allows for the provision of a compulsory license for export purposes, provided that such a use is authorized in exceptional cases, considered on its individual merits, and subject to a commensurate compensation payable to the right holder.

Under corresponding Article 31 of TRIPS, such a compulsory license may only be permitted if, prior to such use, the proposed user has made efforts to obtain authorization from the right holder on reasonable commercial terms, and with such efforts having failed. However, Russia (or any other WTO member) may waive such a pre-negotiation requirement with a right holder in the event of a national emergency or other circumstances of extreme urgency, provided that the right holder shall nevertheless be notified as soon as reasonably practicable.

Expedited registration procedure extended for another year

Several Russian vaccines, medicines, and medical devices related to the treatment of COVID-19 are registered under the expedited procedure established by Government Resolution No. 441, dated April 3, 2020. We prepared a report on it earlier. In summary, under the expedited procedure, the submission of limited clinical data allowed the subject to subsequent post-registration monitoring.

The Russian Ministry of Health therefore issued a registration certificate № ЛП-006395, dated August 11, 2020, for a vaccine to prevent the novel coronavirus infection COVID-19, which was developed by the National Research Centre for Epidemiology and Microbiology, named after academician N.F. Gamaleya.

The Gamaleya Vaccine is registered under the Gam-COVID-Vac trade name and it is a vector two-component vaccine based on the human adenovirus. The vaccine does not contain the components of the COVID-19 virus. A two-fold injection scheme usually allows for the formation of long-term immunity. The prior experience of using other vector vaccines (with a two-fold scheme of administration) shows that immunity may last up to 2 years. On January 18, 2021, Russian President Vladimir Putin announced plans for mass immunization. According to the Ministry of Health, even before that date, 800,000 people had already been vaccinated, and over 1,500,000 doses supplied to regions. However, comprehensive statistics on how many people have been immunized in Russia to date is not yet available.

The label for Gamaleya vaccine contains a disclaimer that it has been registered under the expedited process with a limited amount of clinical data trials involved. Therefore, each administration of Gam-COVID-Vac has to be reported to health surveillance authorities. Similar disclaimers are included on the labels for Farmasintez's Remdeform and Gilead's Veklury®.

On November 16, 2020, the Russian government issued Resolution No. 1832, amending Government Resolution No. 441, clarifying what documents need to be submitted as part of the expedited process. Also, the period of availability for such an expedited registration was extended until January 1, 2022.

The term of validity of marketing authorizations (MA) that were obtained during April – December 2020 has also been extended until January 1, 2022. No additional registration requirements are imposed on MA holders regarding medicines that were registered earlier in Russia under the expedited procedure, provided that they applied for extension prior to December 31, 2020.

At the same time, permits for the temporary circulation of unregistered medicines for the treatment of COVID-19 (allowed by Resolution 441) are extended until January 1, 2022. The circulation of authorized medicines shall not go beyond the expiration of their shelf life, however.

The online sale of OTC drugs

In March 2020, presidential Decree No. 187 "On Retail Trade in Drugs for Medical Use" authorized the online sales of OTC drugs. In April 2020, the Federal Law "On the Circulation of Drugs" 61-fz was amended to include online drug sales on the list of permitted activities subject to license.

Government Resolution No. 697 provides a detailed procedure for online sales and was approved on May 16, 2020. These sales are not permitted, and will not likely to be permitted in the near future for prescription drugs and medicines containing more than 25% ethanol.

By June 2020, special licenses for online sales within Russia were already issued to 36 pharmacy chains. Licensees should meet a number of criteria, such as:

  1. having a prior record of activities and a pharmaceutical license for at least one year;
  2. having at least ten pharmaceutical sites across Russia;
  3. maintaining a website or mobile application that allows users to select from a variety of payment methods;
  4. having its own or contracted delivery service with cold storage capabilities; and
  5. having an electronic or mobile payment system to pay for goods at the place of service.

Pharmacies are required to enter information about online (and offline) drugs sales into the monitoring system that was launched for all medicines in July 2020.

Reportedly, the highest demand for online sales was in May-August 2020, and it declined after quarantine measures were softened in June.

No comprehensive statistics about online OTC sales are yet available, however. According to Nielsen, 48% of Russians preferred to buy OTC drugs online, while IPSOS says that in the spring of 2020, only 18% of Russian customers used online services. Other sources provide different figures of online sales ranging from 8% to 31%. Apparently, logistics were improved since spring 2020, and now it is possible to buy cheaper online than offline, and with same-day delivery. Some authorized pharmacies such as Eapteka provide the incentive of free delivery for any purchase over 2,000 rubles (approximately 25 USD).