Ukraine: the law on cancelling marketing authorizations due to ties with Russian/Belarusian pharmaceutical manufacturing became applicable

23/ 08/ 2022

In brief On 19 July 2022, the Ministry of Health of Ukraine (MOH) approved Order No. 1251 (Order). The Order enables the implementation of Law No. 2271-IX (Law) aimed at preventing the turnover of pharmaceuticals manufactured in Russia or Belarus, or marketed by marketing authorization holders affiliated or otherwise related to companies with pharmaceutical manufacturing in these countries. On 29 July 2022, the Order was registered by the Ministry of Justice of Ukraine and became effective. Thus, from 29 July 2022, the Law became applicable. The final version of the Order has been revised from the first draft, which we briefly analyzed in our earlier legal alert. However, it still lacks clarity on the criteria for challenging marketing authorizations of a specific marketing authorization holder and the detailed and transparent procedures around these suspensions and withdrawals, giving rise to concerns about taking potentially arbitrary decisions. Recommended actions We expect that the Law will affect many international pharmaceutical companies that have a presence in Russia and/or Belarus and in Ukraine. This includes not only companies that operate manufacturing facilities in Russia and/or Belarus, but also companies that fall under the broad and vague criteria set forth below. We recommend that companies assess their current operations against the recent changes to identify their level of exposure. A summary of the criteria and procedures for suspending/withdrawing marketing authorizations, as well as the products that will not be affected by the Law, is set out below. In more detail The Law: criteria for suspension/withdrawal Based on the Law, the MOH is authorized to perform either of the following actions: 1) Cancel or refuse a marketing authorization, if at least one stage of the manufacturing process is carried out by an entity with manufacturing facilities in Russia or Belarus 2) Cancel or suspend a marketing authorization, if its holder or holders representative in Ukraine is directly or indirectly affiliated to an entity that meets/has met the following conditions: A. Directly or indirectly carries out manufacturing of pharmaceuticals in Russia or Belarus B. Carried out the following after 23 February 2022: Concluded transactions on taking part in at least one stage of manufacturing a pharmaceutical or an active pharmaceutical ingredient (API) by an entity located in Russia or Belarus Provided for the use of an entity located in Russia or Belarus pharmaceutical tangible or intangible assets or related patents, authorizations, licenses, marketing authorizations, rights and other documents required for the manufacturing of pharmaceuticals or APIs, or lent, rented out, licensed out or sold such assets, rights or documents directly or indirectly to a Russian or Belarusian resident for manufacturing pharmaceutical products C. Is a representative, representative office, branch, licensee, marketing authorization holder, manufacturer or supplier of an entity listed in (A) or (B) above. Based on the Law, the MOH would only be able to cancel a marketing authorization after suspending it for three months and if the marketing authorization holder continues to carry out the activities set forth in item 2 above after the expiry of the three-month period. The Cabinet of Ministers of Ukraine must agree to cancel the marketing authorization. The adoption of the Law does not immediately trigger a refusal, cancellation or suspension of any of the impacted marketing authorizations. Instead, the Law provides the MOH with the authority to decide on the refusal, cancellation or suspension of marketing authorizations on a case-by-case basis. The Law will remain effective for three months after the termination or cancellation of martial law. The Order: products that will not be affected by the Law The products whose marketing authorizations will not be suspended/withdrawn include the following: Pharmaceuticals with less than two analogues (based on ATC-5 and NFC-1 classification) registered and supplied to Ukraine within the preceding year, provided that, for each of the analogues, the marketing authorization holder provides a letter guaranteeing the capacity to fulfill 100% of the countrys demand for such a product. In the absence of such letters, the minimum quantity of analogues must be three. Biological products Innovative products Products included in protocols for treating orphan diseases as listed at https://www.orpha.net Products in a dosage/form that have no generic substitutes registered and sold in Ukraine Products covered by the procurement agreements entered into before 24 February 2022 Products included in the list of medicines prequalified by the World Health Organization Products approved by the US FDA within the United States Presidents Emergency Plan for AIDS Relief (i.e., products holding PEPFAR US FDA Tentative approval) The Order: procedure for suspension/withdrawal The MOH is authorized to take decisions on suspending/withdrawing marketing authorizations as follows: Within five days of obtaining the proposal on suspension/termination from the authorized entities (those include, e.g., the State Service of Ukraine on Pharmaceuticals and Control of Narcotics and the State Expert Center of the MOH and State Intelligence Service), the MOH must inform the marketing authorization holder of having received such a proposal. The special MOH committee will gather monthly (or more frequently, at a committees members or the MOHs initiative) to review the proposals and provide recommendations to the minister of health on whether to suspend a marketing authorization. The MOH committee must inform the marketing authorization holder about the proposed withdrawal and the grounds for the same as set forth in the Law (though the Order provides no timeframe for informing the marketing authorization holder). Within 10 days, the marketing authorization holder may provide a written objection justifying the absence of such grounds that must be considered by the MOH committee. The MOH takes a decision on the suspension of a marketing authorization on the basis of the committees recommendation. The MOH is authorized to cancel the decision on the suspension and renew the marketing authorization within five days of obtaining the information that the marketing authorization holder has eliminated the grounds for the suspension. Pharmaceuticals placed on the market before the marketing authorization is suspended may be used until the expiry of their shelf life. Upon the expiry of the six-month period, the MOH is authorized to permanently withdraw the suspended marketing authorization, upon the approval of the Cabinet of Ministers of Ukraine, unless within six months of the suspension date, the MOH is provided with information to its satisfaction setting out the following: - That the grounds that gave rise to the initial suspension have been eliminated - The termination of the manufacture of nonexempt pharmaceutical products in Russia or Belarus and confirmation of initiating such termination - The marketing authorization holders confirmation that they will terminate their investments in Russia and/or Belarus and/or exit Russia and/or Belarus within one year Upon the Cabinet of Ministers of Ukraines approval, the MOH takes a decision on withdrawing the marketing authorization. The decision is valid throughout the martial law and three months thereafter. The Order does not provide clarity on how the relation to a business entity engaged in/enabling manufacturing in Russia and/or Belarus will be determined, how the MOH will decide what specific marketing authorizations will be challenged and what the procedure for renewing the suspended/terminated marketing authorizations would be. Contacts Olha Demianiuk Partner Baker McKenzie Olha Sviatenka Associate Baker McKenzie

In brief

On 19 July 2022, the Ministry of Health of Ukraine (MOH) approved Order No. 1251 (“Order“). The Order enables the implementation of Law No. 2271-IX (“Law“) aimed at preventing the turnover of pharmaceuticals manufactured in Russia or Belarus, or marketed by marketing authorization holders affiliated or otherwise related to companies with pharmaceutical manufacturing in these countries. On 29 July 2022, the Order was registered by the Ministry of Justice of Ukraine and became effective. Thus, from 29 July 2022, the Law became applicable.

The final version of the Order has been revised from the first draft, which we briefly analyzed in our earlier legal alert. However, it still lacks clarity on the criteria for challenging marketing authorizations of a specific marketing authorization holder and the detailed and transparent procedures around these suspensions and withdrawals, giving rise to concerns about taking potentially arbitrary decisions.

Recommended actions

We expect that the Law will affect many international pharmaceutical companies that have a presence in Russia and/or Belarus and in Ukraine. This includes not only companies that operate manufacturing facilities in Russia and/or Belarus, but also companies that fall under the broad and vague criteria set forth below. We recommend that companies assess their current operations against the recent changes to identify their level of exposure.

A summary of the criteria and procedures for suspending/withdrawing marketing authorizations, as well as the products that will not be affected by the Law, is set out below.

In more detail

The Law: criteria for suspension/withdrawal

Based on the Law, the MOH is authorized to perform either of the following actions:

1) Cancel or refuse a marketing authorization, if at least one stage of the manufacturing process is carried out by an entity with manufacturing facilities in Russia or Belarus

2) Cancel or suspend a marketing authorization, if its holder or holder’s representative in Ukraine is directly or indirectly affiliated to an entity that meets/has met the following conditions:

A. “Directly or indirectly” carries out manufacturing of pharmaceuticals in Russia or Belarus

B. Carried out the following after 23 February 2022:

Concluded transactions on taking part in at least one stage of manufacturing a pharmaceutical or an active pharmaceutical ingredient (API) by an entity located in Russia or Belarus
Provided for the use of an entity located in Russia or Belarus “pharmaceutical tangible or intangible assets” or related patents, authorizations, licenses, marketing authorizations, rights and other documents required for the manufacturing of pharmaceuticals or APIs, or lent, rented out, licensed out or sold such assets, rights or documents directly or indirectly to a Russian or Belarusian resident for manufacturing pharmaceutical products

C. Is a representative, representative office, branch, licensee, marketing authorization holder, manufacturer or supplier of an entity listed in (A) or (B) above.

Based on the Law, the MOH would only be able to cancel a marketing authorization after suspending it for three months and if the marketing authorization holder continues to carry out the activities set forth in item 2 above after the expiry of the three-month period. The Cabinet of Ministers of Ukraine must agree to cancel the marketing authorization.

The adoption of the Law does not immediately trigger a refusal, cancellation or suspension of any of the impacted marketing authorizations. Instead, the Law provides the MOH with the authority to decide on the refusal, cancellation or suspension of marketing authorizations on a case-by-case basis.

The Law will remain effective for three months after the termination or cancellation of martial law.

The Order: products that will not be affected by the Law

The products whose marketing authorizations will not be suspended/withdrawn include the following:

Pharmaceuticals with less than two analogues (based on ATC-5 and NFC-1 classification) registered and supplied to Ukraine within the preceding year, provided that, for each of the analogues, the marketing authorization holder provides a letter guaranteeing the capacity to fulfill 100% of the country’s demand for such a product. In the absence of such letters, the minimum quantity of analogues must be three.
Biological products
Innovative products
Products included in protocols for treating orphan diseases as listed at https://www.orpha.net
Products in a dosage/form that have no generic substitutes registered and sold in Ukraine
Products covered by the procurement agreements entered into before 24 February 2022
Products included in the list of medicines prequalified by the World Health Organization
Products approved by the US FDA within the United States’ President’s Emergency Plan for AIDS Relief (i.e., products holding PEPFAR US FDA Tentative approval)

The Order: procedure for suspension/withdrawal

The MOH is authorized to take decisions on suspending/withdrawing marketing authorizations as follows:

Within five days of obtaining the proposal on suspension/termination from the authorized entities (those include, e.g., the State Service of Ukraine on Pharmaceuticals and Control of Narcotics and the State Expert Center of the MOH and State Intelligence Service), the MOH must inform the marketing authorization holder of having received such a proposal.
The special MOH committee will gather monthly (or more frequently, at a committee’s members’ or the MOH’s initiative) to review the proposals and provide recommendations to the minister of health on whether to suspend a marketing authorization.
The MOH committee must inform the marketing authorization holder about the proposed withdrawal and the grounds for the same as set forth in the Law (though the Order provides no timeframe for informing the marketing authorization holder). Within 10 days, the marketing authorization holder may provide a written objection justifying the absence of such grounds that must be considered by the MOH committee.
The MOH takes a decision on the suspension of a marketing authorization on the basis of the committee’s recommendation.
The MOH is authorized to cancel the decision on the suspension and renew the marketing authorization within five days of obtaining the information that the marketing authorization holder has eliminated the grounds for the suspension.
Pharmaceuticals placed on the market before the marketing authorization is suspended may be used until the expiry of their shelf life.
Upon the expiry of the six-month period, the MOH is authorized to permanently withdraw the suspended marketing authorization, upon the approval of the Cabinet of Ministers of Ukraine, unless within six months of the suspension date, the MOH is provided with information to its satisfaction setting out the following:

– That the grounds that gave rise to the initial suspension have been eliminated

– The termination of the manufacture of nonexempt pharmaceutical products in Russia or Belarus and “confirmation of initiating” such termination

– The marketing authorization holder’s confirmation that they will terminate their investments in Russia and/or Belarus and/or exit Russia and/or Belarus within one year

Upon the Cabinet of Ministers of Ukraine’s approval, the MOH takes a decision on withdrawing the marketing authorization. The decision is valid throughout the martial law and three months thereafter.

The Order does not provide clarity on how the relation to a business entity engaged in/enabling manufacturing in Russia and/or Belarus will be determined, how the MOH will decide what specific marketing authorizations will be challenged and what the procedure for renewing the suspended/terminated marketing authorizations would be.

Contacts

Olha Demianiuk
Partner Baker McKenzie

Olha Sviatenka
Associate Baker McKenzie