Russian Federation: FAS Russia Official Recommendations On The Commercial Policies Of Manufacturers Of Pharmaceuticals And Medical Devices Holding A Dominant Position On The Market

Last Updated: 7 July 2015
Article by Anna McDonald and Marat Mouradov

On June 30, 2015 on its official site FAS Russia published recommendations for entities holding a dominant position on pharmaceuticals markets and medical devices markets (hereinafter together "pharmaceutical companies") to develop and apply commercial policies.

In recent years FAS Russia has been paying close attention to the Russian pharmaceuticals market and the medical devices and equipment market. Based on the results of audit and after considering numerous (and quite high-profile) cases of violation of antimonopoly laws by pharmaceutical manufacturers, FAS Russia entered into a direct dialogue with the market players in order to formulate transparent and clear rules of conduct for pharmaceutical companies on the Russian market. One of the results of that dialogue are the official FAS Russia recommendations for entities holding a dominant position on pharmaceuticals markets and medical devices markets to develop and apply commercial policies (hereinafter the "Recommendations") approved by the Presidium of FAS Russia on June 17, 2015 and published on the FAS Russia site on June 30, 2015.

The Recommendations are based on the results of analysis of FAS Russia practice, and their text cites examples from the notorious cases of OOO Novo Nordisk, ZAO Kompaniya Bakster and TEVA PHARMACEUTICAL INDUSTRIES LIMITED.

Formally, the Recommendations apply only to those pharmaceutical companies that hold a dominant position on the market. However, considering that companies selling an INN drug that has no analogues in practically all cases will be considered monopolists on the market for that particular drug, it is obvious that many, if not most pharmaceutical companies should pay attention to the Recommendations. The text emphasizes that defining the size and boundaries of the product market is a multifaceted and complex process, and not only obvious criteria (such as sales and amount of revenue) should be taken into account, but also the criterion of interchangeability. In particular, FAS Russia pays particular attention to the fact that for a drug that cannot be replaced by other drugs the size of the market will be equivalent to the size of the market precisely for that irreplaceable drug and, accordingly, a company distributing such a unique drug in Russia will be considered a monopolist on the market for that drug. It is also important to note that the interchangeability or irreplaceability of any drug by other drugs should be established by a court.

The Recommendations strongly urge pharmaceutical companies holding a dominant position on the market for the relevant drugs to openly, objectively and reasonably select their counterparties and establish a transparent and clear system of discounts, bonuses and other economic benefits for them. In the context of this process, the Recommendations are particularly timely for companies that fall under American and English anticorruption legislation (FCPA and UK Bribery Act), which often leads to such pharmaceutical companies setting overstated and unreasonable (subjective) criteria for local distributors. Below is a brief overview of the key provisions of the Recommendations.

  • The Recommendations propose that pharmaceutical companies adopt a detailed commercial policy that, inter alia, must contain criteria for selecting counterparties, a procedure for such counterparties' due diligence based on the results of which the pharmaceutical company will decide whether to enter into a contract with the counterparty or refuse to do so, the list and authorities of the officers participating in the due diligence process and the list and authorities of the officers deciding whether to cooperate with the counterparty or to refuse such cooperation, the timeframe and procedure for reviewing counterparties' applications for cooperation/entry into a contract and the terms of cooperation with them defining the price of the product, sales volume, payment terms, etc. The commercial policy is required to include a draft standard contract with the counterparty containing all of its material terms, and the form of the new counterparty application. The Recommendations require the pharmaceutical company to post the template of such contract on its website and ensure free access of any third parties to it. It is recommended that all counterparties be promptly notified of any changes in the policy and/or templates of the contract and/or application.
  • The document presents an inexhaustive list of objective criteria for selecting counterparties, for example: the counterparty having no arrears on taxes and duties or no indebtedness to a pharmaceutical company, the counterparty having been registered and holds the required licenses, the top managers of counterparty not having criminal records, etc. It is noted that the requirements to a counterparty may touch on the legal, financial and business aspects of the counterparty's activities; however, the list of such requirements and the list of documents requested by the pharmaceutical company to perform due diligence on the counterparty as those appear in the policy must be exhaustive and must contain clearly worded, clear and unambiguous criteria for selecting counterparties.
    It is noted separately (citing the presumption of innocence) that information in the mass media, including on the Internet, as well as information obtained unofficially (for example, by telephone) concerning the counterparty's officers' involvement in corruption cannot be a basis for refusing to enter into a contract.
    In order to avoid antimonopoly risks FAS Russia strongly recommends that pharmaceutical companies not suspend the supply of product and not to refuse to enter into a contract with a counterparty until a competent state authority of the Russian Federation declares the counterparty guilty of committing an offense that is inconsistent with the criteria for selecting counterparties established by the pharmaceutical company, and makes it impossible to continue cooperation with that counterparty.
  • As a way of significantly mitigating antimonopoly risks, FAS Russia strongly recommends that pharmaceutical companies describe the process of selecting counterparties in their commercial policy in detail, disclosing all of the possible stages of review of applications for cooperation (execution of a contract), naming the officers involved in the pharmaceutical company's decision-making process in the matter, and also stating the maximum period for reviewing applications of counterparties, including at each stage of the due diligence, and the possibility of extending the due diligence period at each stage justifying the possible reasons. FAS Russia does not recommend, in particular, that pharmaceutical companies overlook the importance of setting and sticking to maximum time periods for reviewing applications, highlighting such actions as a factor increasing the probability of the pharmaceutical company being deemed as abusing its dominant position on the market for the product in question.
  • FAS Russia allows a pharmaceutical company to use different commercial terms (financial benefits) (discounts, bonuses) for different counterparties, but only provided that this difference in the terms offered is economically justified. Among the permitted grounds for having different financial benefits, FAS Russia cites purchasing volume, prepayment, purchase of products from the warehouse or illiquidity of the product being sold. At the same time, it is not recommended to connect granting financial benefits with the purchase forecasts at tender indicating the regions of future supplies, as this could be considered as an unfair collusion at auction or coordination of economic activity, which is prohibited by the antimonopoly legislation. FAS Russia emphasizes in particular that pharmaceutical companies in the majority of cases are capable of independently planning the volume of their sales, based on information on past and projected volumes of the public client's needs for the relevant pharmaceuticals and about tenders held by the public client during the calendar year (including taking into account information on the number of patients who are taking the medications in question).
  • FAS Russia allows pharmaceutical companies to carry out systematic audits of their counterparties to check compliance by the latter with the terms of the pharmaceutical company's commercial policy.
  • The Recommendations call upon pharmaceutical companies to keep good records reflecting their interaction with counterparties: each stage of the process of interacting with the counterparty should be documented, all incoming and outgoing correspondence must be registered, each stage of the process of reviewing applications for cooperation and taking decisions on them should be recorded in a document, be signed and state the names of the pharmaceutical company officers who took part in the management decisions. It is also recommended to keep all applications and correspondence, as well as internal documents supporting the decision-making process for at least 5 years.
  • FAS Russia recommends to include in the commercial policy a detailed description of the grounds and procedure for the pharmaceutical company ceasing operations with a counterparty. The list of grounds for terminating a relationship should be exhaustive and the grounds themselves should be clearly worded and be interpreted unambiguously. As an example FAS Russia cites such objective grounds for terminating a contract with a counterparty as the latter's liquidation, failure to meet the selection criteria, the counterparty going out of business, payment arrears (exceeding a threshold), and agreement of the parties.
    Formally, failure to comply with the Recommendations should not give rise to any liability or other adverse consequences. However, it is obvious that FAS Russia compiled them on the basis of practical conclusions that FAS has gathered based on the results of cases considered involving pharmaceutical companies, and that the Recommendations reflect the official position of FAS Russia as to the interpretation of the relevant actions of pharmaceutical companies on issues that arise most often in their business. Thus, compliance with the Recommendations may considerably reduce the risk of being held liable for violation of Russian antimonopoly law. That being said, undoubtedly, open and transparent interaction with counterparties will reflect positively on the company's reputation.

It should be noted that the mere adoption by a pharmaceutical company of a commercial policy compliant with the Recommendations does not mean that liability cannot be imposed if a violation has been proved. However, having the working mechanisms described in the Recommendations, specifically, having a policy and making sure its provisions are in compliance with the principles set out in the Recommendations (especially if the policy has been agreed with FAS Russia) may be a factor mitigating liability. It is precisely the quality of the policy from the perspective of its procedure for preventing violations that may provide a real opportunity to a pharmaceutical company to assert in the court that the company is not at fault because it used all of the capabilities available to it and spelled out in the policy to prevent a violation, or at least to mitigate its adverse effects.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions