From 1 July 2020 any organization that deals with the circulation of medicines is obliged to enter into "Chestnyy ZNAK" – track and trace system for medicines (the "System") – information about any operations performed with medicines. Failure to enter such information and the sale of non-marked medicines entails administrative liability in the form of large fines.
What happens in practice?
In practice, the operation of the System means that each transaction – from manufacturer to distributor, from distributor to warehouse, from warehouse to pharmacy, from pharmacy to end consumer (or in any other sequence) – requires obtaining a digital "passport" for each package of the medicine.
Such a "passport" or marking code can only be provided by the Operator, which, at the moment, is the Limited Liability Company "Operator-CRPT" (the "Operator"). The Operator copes with this task with varying success, and often the System provides marking codes with a long delay, which stops the established chain of "delivery" of the medicine from the manufacturer to the end consumer – the patient. In addition, delays are not uncommon when receiving confirmation of correct data transmission from the System.
The pharmaceutical sector was mentally prepared that the System would not work perfectly, however, at the end of September and in October 2020, the pharmaceutical sector faced constant freezes and outages of the System, which, together with the rush demand for a number of medicines due to the COVID-19 has led to the fact that hundreds of thousands of packages of medicines are physically ready for transfer "along the chain", but such transfer cannot be carried out due to the unstable operation of the System.
Who should be responsible for system outages?
In accordance with the Decree of the Government of the Russian Federation No. 1556 dated 14 December 2018 the Operator undertook to be responsible for the uninterrupted operation of the System. Such responsibility is civil and is based on the provisions of the agreement for the provision of services for the provision of marking codes (the "Agreement"), the standard form of which was approved by the Ministry of Industry and Trade of the Russian Federation at the end of 2019. In fact, the conclusion of an Agreement with the Operator is the responsibility of the subject of medicines circulation – otherwise, marking codes simply cannot be obtained, and as mentioned above, the sale of non-marked medicines entails administrative liability.
At the same time, a simple analysis of the Agreement (in most cases, the Agreement was signed without the possibility of changing any provisions) shows that the section "Liability of the Parties" provides that the Operator disclaims responsibility for overloading telematic communication channels, outages in the operation of Internet connections, communication lines, communication channels, other hardware and software that are not in the possession or control of the Operator.
Since the Agreement is binding on the conclusion, and the Operator is the only agent in the field of medicines marking, the Agreement is essentially a contract of affiliation in the context of Article 428 of the Civil Code of the Russian Federation. Consequently, the Agreement is subject to the rules that the party that joined it, that is, the subject of medicines circulation, has the right to declare the non-application of unfair conditions or their voidance. So, the above conditions of the Agreement on the limitation of the Operator's liability, if the Operator appeals to them as part of the pre-trial settlement of the conflict, can potentially be recognized as unfair and, as a result, void in court. However, it is important to take into account that the burden of proof that the Operator did not agree to a different interpretation of the section of the Agreement "Responsibility of the Parties" lies with the subject of medicines circulation.
In addition to the potential recognition of the limitation of liability under the Agreement as void, for subjects of drug circulation that have signed the Agreement, if they incur losses due to the Operator's violation of its obligations to provide marking codes, it is also possible to apply to the court to recover such losses.
Pharmaceutical market reaction
It is noteworthy that the pharmaceutical market has already reacted to what is happening: for example, the Association of Pharmacy Institutions "SoyuzPharma" came out to the President of the Russian Federation on 21 October 2020 with a proposal to consolidate the Operator's responsibility in regulations.
Moreover, it appears that the introduction of the notification mode of operation of the System for distributors and pharmacy chains, which was announced on 24 October 2020 by the Minister of Industry and Trade Denis Manturov, is obviously a half-measure aimed at only a part of the subjects of drug circulation, which does not solve the existing problems, and as it stands today is not supported by-law.
It is obvious that outages in the System will occur in the future as well. It is important for both subjects of drug circulation and subjects of circulation of other goods for which marking is already mandatory or will become mandatory in the near future, to have real leverage in order to minimize financial losses.
Moreover, in addition to applying to the court for judicial protection, we also strongly recommend that subjects of drug circulation who have already signed or will sign an Agreement with the Operator in the future, try to change the provisions of the Agreement on limitation of liability as part of the negotiation process.
TA Legal Consulting Team
Nina Belozerseva, Counsel
Anton Ivanov, Junior Associate
