Features of the supply of medical devices within the framework of Federal law № 44-FZ. Problematic situations in the execution of the contract and ways to solve them.
SHARIKADZE D.T.1, General Director of FSBI
«Russian Scientific and Research Institute for Medical Engineering» of Roszdravnadzor
TIKHONOV YU.A.1, Chief Legal Officer of FSBI
«Russian Scientific and Research Institute for Medical Engineering» of Roszdravnadzor
For quotation: Sharikadze D.T., Tikhonov Yu.A. Features of the supply of medical devices within the framework of Federal law No. 44-FZ. Problematic situations in the execution of the contract and ways to solve them // Vastnik Roszdravnadzora. – 2021. – Vol. 2. – P. 32-40.
FEATURES OF THE SUPPLY OF MEDICAL DEVICES WITHIN THE FRAMEWORK OF FEDERAL LAW № 44-FZ. PROBLEMATIC SITUATIONS IN THE EXECUTION OF THE CONTRACT AND WAYS TO SOLVE THEM
Keywords: delivery of medical devices, customer, supplier, standard contract, purchase documentation, technical requirements
The article provides a legal analysis of the features of the supply of medical devices to medical organizations. The main regulatory legal acts that the customer is obliged to follow when purchasing medical devices are specified. Some problematic situations that arise during the execution of a contract for the supply of medical devices are considered, as well as recommendations for solving and preventing problematic situations during the execution of the contract are proposed.
The supply of medical devices is a quite complicated process for both a customer and a supplier. The customer has to prepare properly completed and duly executed tender documentation, organise procurement procedure, appropriately accept a delivery and put the medical device in service in cooperation with the supplier. According to a law-enforcement practice in regard to the supply of medical devices, that cannot be considered as homogeneous, some process actors are unable to meet this challenge successfully.
Since it is not possible to provide a comprehensive legal analysis of the procedure of the supply of medical devices in a format of a short article, this research addresses only core issues of supply of medical devices to medical organizations coupled with some problem points that customers face during discharge of contracts. Solutions to those challenges are also suggested in the article.
The contraction and rapid spreading of novel coronavirus infection (COVID-19) has assigned healthcare professionals tasks related to early diagnostics and prompt provision of medical aid for patients suffering from the infection. At the moment intensive studies of clinical and epidemiological features as well as development of methods for COVID-19 prophylactic and treatment are still under way. However, no less important mission on providing medical treatment relating to other health problems remains on Russian Healthcare System. Thence the need for provisions of the national healthcare system with high quality, efficient and safe medical devices within as short time as possible has risen exponentially nowadays. A tool in furtherance of this critical federal mission is a supply of medical devices that is realized within the processes of Federal Law No. 44-FZ dated by 5 April 2013 “On the Contract System in State and Municipal Procurement of Goods, Works and Services” (hereinafter Law on the Contract System).
Principal Laws and Regulations of Russian Federation on rules for medical devices supplies
In accordance with Article 34, paragraph 1, of the Law on the Contract System and the Regulation of procedure for development of standard contracts approved by the Resolution of the Government of the Russian Federation dated by July 2, 2014 No. 606 “On the procedure for development of standard contracts, standard conditions of contracts, and also about cases and conditions of their application” , the Ministry of Health of the Russian Federation issued an Order dated by October 15, 2015 No. 724n (revised at 19.08.2020) “On Approval of a Standard Contract for Delivery of Medical Devices, Putting the Medical Device in Service, Service Regulation Education for Specialists Operating Medical Devices and Specialists Performing maintenance of Medical Devices” (hereinafter Standard Contract).
The standard contract consists of the Standard Contract itself coupled with the following supplements:
- annex 1. Specification;
- annex 2. Technical Requirements;
- annex 3. Shipping Order (Distribution Plan);
- annex 4. Delivery Acceptance Certificate on a device;
- annex 5. Certificate of Operational Acceptance and provision of training and briefing services for specialists;
- annex 6. Consolidated Register of device delivery slips;
- annex 7. Accounts Reconciliation Statement;
- annex 8. Obligation Discharge Certificate against the contract.
Moreover, it’s worth noting that annexes 3, 6 and 8 are included in Standard Contract if the supply is carried out on behalf of a third parties under the conditions of central purchasing or a provision to several places of delivery.
Whereas it is necessary to purchase medical devices from limited liability company Stentex, the Ministry of Health of the Russian Federation issued an Order dated by December 21, 2016 No. 982n “On Approval of the Standard Contract for the Supply of Bare-metal Stents for Coronary Arteries, Stents for Coronary Arteries, Drug-eluting Stents for Coronary Arteries (with non-absorbable polymer coating), Standard Balloon Catheters for Coronary Angioplasty, Aspiration Catheters for Embolectomy (thrombectomy) that is awarded with the sole supplier – the Stentex, LLC and the Federal State Budgetary Institutions and State Budgetary Institutions of Territorial Entities of the Russian Federation, and in Accordance with the Information Card of the Standard Contract”.
The definition of a term “medical device” could be found in the article 38 of the Federal Law dated by November 21, 2011 № 323-FZ “On Fundamentals of Healthcare of the Russian Federation Citizens”. It is an essential requirement for the supply of the particular medical device that circulation of medical devices within the Russian Federation is allowed if they are registered by the authorized government body under the procedure established by Government of the Russian Federation. The registration of medical devices is conducted in compliance with the Resolution of the Government of the Russian Federation dated by December 27, 2012 No. 1416 (revised at 24.11.2020) “On Approval of Rules for State Registration of Medical Devices”. Certificated medical devices have to be listed in the registry of medical devices.
When forming lots for the supply of medical devices, the customer must take into account the requirements and restrictions established by:
- Federal Law No. 135-FZ dated by July 26, 2006 (revised at 17.02.2021) “On Protection of Competition”;
- Resolution of the Government of the Russian Federation dated by April 15, 2014 No. 341 (revised at 27.07.2019) “On the Provision of Benefits to Organizations of Persons with Disabilities in Determining a Supplier (Contractor) in Relation to the Offered Contract Price and the Price per the Unit of Goods, Work, the Service” (along with the Regulations on the provision of benefits to organizations of persons with disabilities in determining a supplier (contractor) in relation to the offered contract price and the price per the unit of goods, work, the service”) (hereinafter Resolution No. 341);
- Resolution of the Government of the Russian Federation dated by February 5, 2015 No. 102 (revised at 06.03.2021) “On Restrictions and Requirements for Admission of Certain Types of Foreign Medical Devices to Supply for the Purpose of State and Municipal Needs” (hereinafter Resolution No. 102);
- Order of the Ministry of Health of the Russian Federation dated by dated by June 4, 2018 No. 126n (revised at 10.07.2020) “On Requirements for Admission of Goods Originated from Certain Foreign Country or a Group of Foreign Countries to Supply for the Purpose of State and Municipal Needs” (registered in the Ministry of Justice of the Russian Federation on 24.10.20, No. 52516) (amended and revised on 01.10.2020) (hereinafter Order No. 126n).
Rules for the formation of a lot and descriptions of medical devices in the procurement documentation
Then forming lots for purchase, all medical devices could be conveniently classified into several groups (each group ought to be purchased separately):
1) medical devices not specified in the Lists of the Resolutions No. 341, No. 102 and No. 126n;
2) medical devices specified in the List No. 1 of the Resolution No. 102 (to meet state and municipal needs);
3) medical devices specified in the List No. 2 of the Resolutions No. 102 (to meet state and municipal needs);
4) medical devices specified in two Lists of the Resolution No. 102 (to meet state and municipal needs): for example, devices for blood transfusion, blood substitutes and infusion solutions, containers for the procurement, storage and transportation of blood and its components.
5) medical devices specified in of the Resolution No. 341 and in the List No. 2 of Resolution No. 102 (to meet state and municipal needs) for example, consumables for heart-lung machines, consumables for lung ventilators.
6) medical devices specified in of the Order No. 126N.
|EXAMPLE of a failure of the client to comply with requirements for dividing lots for the supply of medical devices
Office of the Federal Antimonopoly Service for the City of Moscow Decision in case No. 2-57-14399/77-18 (0373200583118000126) dated 21.11.2018
“The Commission of the Office established that along with the supply of medical devices related to the OKPD code No. 32.50.12.000: “Surgical or laboratory sterilizer”, included in the supplement to the Order of the Ministry of Health of the Russian Federation No. 126n, the Customer also needs to supply devices with OKPD codes No. 220.127.116.11: “Other complex diagnostic or laboratory reagents that are not included in other classifications”; No. 18.104.22.168 “Indicators” that are not included in the supplement to the Order of the Ministry of Health of the Russian Federation No. 126n.
Thus, the Commission of the Office concludes that the complaint is validated and the part 1, paragraph 1 of the Article 33 of the Law on the Contract System is violated.
The description of the procurement object must meet the following requirements:
1) be based on the rules of the regulation (if requirements are established);
2) correspond to the catalog of goods, works, services;
3) take into account the requirements of antimonopoly legislation;
4) comply with the Law on the Contract System;
5) take into account the requirements of the legislation on technical regulation;
6) take into account the requirements of the legislation on energy saving and on increasing energy efficiency;
7) take into account the wishes of the customer.
The customer is obliged to comply with all the rules for describing the object of purchase.
Also, while describing medical devices, customer needs to determine the need to apply the requirements of technical regulations adopted in accordance with the legislation of the Russian Federation on technical regulation, documents developed and applied in the national standardization system, adopted in accordance with the legislation of the Russian Federation on standardization.
Listing in the procurement documentation of a large number of GOSTs, as well as the phrase “the procurement object must comply with the current GOST, Sanitary Regulations and Norms, etc.” is not a proper description, which is confirmed by the Decision of the Supreme Court of the Russian Federation dated by 01.02.2016 No. 301-KG15-18555, A17-394/2015:
“… paragraph 3.2.2 establishes the requirements for the procurement object by attaching normative (technical) documents (GOSTs) to the documentation, which entrusts the auction participants with the functions of independently choosing the necessary parameters and indicators of the procurement object that comply with these regulatory documents. At the same time, sufficient evidence of the need for such requirements has not been presented. Taking into account that the auction documentation is not based on the objective needs of the customer, the court found it not complying with the requirements”.
The customer should strictly follow the following rule: specify in the procurement documentation exactly those GOSTs that are directly related to the procurement object and use only the current technical regulations and GOSTs in the description of the procurement object.
In order to comply with the requirements of the Article 33 of the Law on the Contract System, customers that are purchasing according to the rules of this law, while describing the object of procurement, should determine the requirements for purchased goods, works, services in order, on the one hand, to increase the chances of purchasing goods with precisely those parameters that correspond to their needs, and, on the other hand, not to limit the number of participants in the procurement unreasonably. Thus, in order to comply with antitrust laws, the technical characteristics of the supplied medical devices specified by the customer must correspond to at least 2-3 manufacturers of medical devices.
In this case, the customer ought to take into account that he is not entitled to establish requirements for the chemical composition and (or) components of the product, and (or) for the indicators of production technology, for testing the product, and (or) for the indicators, the values of which reveal while testing a certain production lot after been manufactured.
This statement is confirmed by the Decision of the Supreme Court of the Russian Federation dated by 09.02.2017 No. AKPI16-1287 “On refusal to satisfy the application for invalidating paragraph 3 of the letter of the Federal Antimonopoly Service No. IA/44536/16 “On the establishment by the customer of requirements for the composition, instructions for filling out an application for participation in the procurement”:
“It worth noting that the Law on the Contract System does not oblige the procurement participant to have the goods in stock at the time of filing the application, when the customer establishes the requirements for the description of goods by the procurement participants in the documentation and procurement notice. Therefore, the customer’s requirements to closely describe the chemical composition and (or) components of the goods, and (or) indicators of production technology, testing of goods, and (or) indicators, the values of which reveal during testing of a certain production lot after been manufactured in the application (by providing indicators and (or) their values both in the form of a single value, a range of values, and preservation of a constant value) have signs of restricting access to participation in the purchase”.
Execution of a contract for the supply of medical devices
In order to successfully execute the completed contract, it is advisable for the customer to include in clause 3 of the contract “Interaction of the parties” a sub-clause on contact persons, both on the customer’s and supplier’s parts. The inclusion of this sub-clause in the contract for the supply of medical devices will allow the parties to organize the effective interaction and promptly resolve the arising issues during the execution of the contract. In practice, term of delivery for medical devices is often stated in calendar days from the date of the contract completion. If the delivery is carried out in accordance with the distribution plan, and/or the contract provides for such stages, then the situation that parties may mistake in determining the delivery date of medical devices is possible.
It is advisable to the customer to make a calculation with the determination of a specific delivery date under the contract and send a notification to the supplier independently after the completion of the contract with the supplier in order to strictly adhere to the terms of delivery of medical devices under the contract. Also, customer must follow the algorithm presented in table 1 during the execution of the contract.
Technical and (or) operational documentation of the supplier (manufacturer) for the supply of medical devices under the contract
In accordance with subparagraph “b” of paragraph 5.3 of the Standard contract, the supplier provides the customer with “technical and (or) operational documentation of the manufacturer (producer) of the equipment in Russian language”. At the same time, the supplier is able to independently determine the list of documentation provided, which, in our opinion, is not correct if a specific list of documentation for a medical device is absent in the Standard contract and Appendix No. 2 to the Standard contract “Technical Requirements” enables. After receiving the medical device and putting it on the balance sheet, the customer will have to operate the delivered medical device. Not only the health, but also the life of the patients will depend on the correct operation of such devices. Technical and (or) operational documentation for a medical device presented in full is very important in terms of safe and efficient operation.
However, the question: why in the Standard contract is used the following definition: “technical and (or) operational documentation” arises reasonably. The term “technical documentation” is used in the legislation of the Russian Federation. This definition can be found in article 743 of the Civil Code of the Russian Federation: “technical documentation and statement of estimates” and is used exclusively in relation to a construction contract. In accordance with paragraph 1 of the Article 743 of the Civil Code of the Russian Federation “The contractor is obliged to carry out construction and related work in accordance with the technical documentation that determines the scope, content of work and other requirements for them, and with a statement of estimates that determines the price of work.” Since the delivery of a medical device under the Standard contract is, obviously, irrelevant to the construction contract, the definition of “technical documentation” in the context of Article 743 of the Civil Code of the Russian Federation could not be applied to the Standard contract. The question – what does the “technical documentation” have to do with medical devices arises reasonably. Let us try to understand this issue.
Nowadays, a technical equipment of modern medical organizations is characterized by a wide variety: from the simplest products to the most complex engineering systems (for example, medical oxygen stations, pressure cylinders and other systems operating under pressure). A list of “operational documentation” has been established in accordance with Appendix 8 to the Federal Rules and Regulations in the Field of Industrial Safety “Industrial Safety Regulation for Hazardous Production Facilities Using Equipment Operating under Excessive Pressure”, that is approved by the Order of Rostechnadzor dated by March 25, 2014 No. 116 (hereinafter – FNP No. 116).
Let us now consider another document that also establishes safety requirements for similar equipment. The manufacturer ensures compliance of equipment and safety devices with the parameters and characteristics established by the design documentation and the requirements of this technical regulations at the manufacturing (production) stage in accordance with the Technical Regulations of the Customs Union “On safety of equipment operating under excessive pressure” (hereinafter – TR TS 032/2013). The manufacturer conducts tests of the equipment determinated in the design documentation. Deviations from design documentation in the manufacture (production) of equipment are agreed with the developer (designer). The equipment must be safe during its entire service life if the consumer takes measures to ensure his safety, established in the “technical documentation”. The technical documentation supplied with the equipment includes:
a) equipment passport;
b) a copy of the safety case;
c) general scheme;
d) passports of safety devices (in accordance with the project documentation if any exist);
e) calculation of the throughput of safety devices (in accordance with the design documentation if any exist);
f) calculation of equipment endurance;
g) operation manual (instruction);
h) drafts, diagrams, calculations and other documentation in accordance with the supply agreement (contract).
The equipment passport is the main document for equipment identification. The presence of an equipment passport is mandatory for the circulation of equipment within the customs territory of the Customs Union at all stages of its life cycle. The equipment passport is issued by the manufacturer, who impresses the passport with a seal and puts the date of its registration. The safety justification for the equipment is prepared at the stage of development (design) of the equipment. The safety case provides an analysis of the risks to the equipment, as well as the minimal necessary safety measures. The original of the safety justification for the equipment is kept by the developer (designer), and a copy is kept by the equipment manufacturer and the organization operating the equipment.
As a result, on the territory of the Russian Federation we have two applicable documents, which have the same sphere of legal regulation, but use different terminology. In the first document – operational documentation, and in the second – technical documentation.
However, we should not forget that pressure equipment is just one of many items supplied to medical organizations. Therefore, both a customer and a supplier with the exception of the pressure equipment must be guided by GOST R 2.601-2019 “Unified system for design documentation (ESKD). Operational documents “, while supplying medical devices.
In accordance with paragraph 3.1.1 of GOST R 2.601-2019, an operational document is a design document that, individually or in combination with other documents, defines the rules for the operation of products and (or) contains information on certification of the main parameters and characteristics (parameters) of products guaranteed by producer, as well as guarantees and information on its operation during the established service life. The list of operational documents established by GOST R 2.601-2019 is demonstrated below (see figure). At the same time, GOST R 2.601-2019 contains a list of mandatory operational documents (equipment book, passport, label, list of operating documents), as well as documents, the need for the development of which is established by the manufacturer (developer) of a medical device.
On the basis of the above facts, in order to prevent different interpretations by the parties to the contract (what list of technical or operational documentation must be submitted to the supplier), it is advisable for the customer to state on the contract a regulatory act: the corresponding GOST or Technical Regulations, which the supplier will be obliged to follow while submitting documentation to the customer. Ideally, the customer has the right to specify (for example, in Appendix 2 to the contract “Technical Requirements”) a list of the technical or operational documents needed for the supplied medical device.
Also, an analysis of the practice of executing contracts demonstrates that the customer and the supplier have disagreements regarding the form of the submitted technical or operational documents. There are no requirements in the Standard contract that the documents must be paper-based. While receiving documents from the supplier in electronic form, customer does not know how to argue the legality of his demands for the supplier to provide documents in paper form.
In accordance with paragraph 11.1 of the Article 2 of the Federal Law dated by July 27, 2006 No. 149-FZ “On Information, Information Technologies and Information Protection”, an electronic document is documented information presented in electronic form, that is suitable for perception by a person with the use of electronic computers, as well as for transmission over information and telecommunication networks or processing in information systems.
Paragraph 1 of the Resolution of the Plenum of the Supreme Court of the Russian Federation dated by December 26, 2017 No. 57 “On certain issues of the application of legislation regulating to the use of documents in electronic form in the activities of courts of general jurisdiction and arbitration courts” provides the following definition of this concept: “an electronic document is a document created in in electronic form without preliminary documentation on paper, signed with an electronic signature in accordance with the procedures established by the legislation of the Russian Federation”.
According to paragraph 1.6.1 of the Regulation of the Certification Center of the Eurasian Economic Commission, an electronic document means an electronic document certified by an electronic digital signature and meeting the requirements of the general infrastructure for documenting information in electronic form.
Therefore, the following main features of an electronic document can be distinguished:
- electronic form;
- compliance with the requirements for documenting information;
- certification of information with an electronic digital signature.
Thus, the customer has absolutely legal grounds for refusing to accept technical or operational documentation executed by the supplier in electronic form, but without complying with the requirements for documenting information and/or without certifying the information with an electronic digital signature.
The best option, which excludes an ambiguous interpretation by the customer and the supplier of the form of fulfillment of this obligation, is an indication in the contract in what form the supplier must provide technical or operational documentation – paper or electronic.
Conditions for the inclusion of a procurement participant in the Register of unscrupulous suppliers
Another problematic aspect of the execution of the contract for many customers is the situation when the supplier commits significant violations of the terms of the contract, but the customer, due to ignorance of the procedure, is not able to take the necessary steps to enter the supplier into the register of unscrupulous suppliers. Failure to take appropriate measures against unscrupulous
suppliers, including their non-inclusion in the register of unscrupulous suppliers, leads to the fact that unscrupulous suppliers continue to work in the medical device supply market, and this circumstance, of course, can negatively affect the quality and safety of the supplied medical devices.
At the same time, customer’s right to terminate the contract unilaterally on the grounds provided for by the Civil Code of the Russian Federation is established in the provisions of paragraphs 8, 9 of Article 95 of the Law on the Contract System. In this case, a decision-making is allowed only in connection with a significant violation of the terms of the contract. That is, on the grounds provided for by the Civil Code of the Russian Federation for unilateral refusal to fulfill certain types of obligations, if that was provided for by the contract:
- a major violation by the supplier of the requirements for the quality of the goods, more specifically, the discovery by the customer of unrecoverable defects, defects that cannot be eliminated without disproportionate costs or time expenditures, or are revealed repeatedly, or appear again after their elimination, and other similar shortcomings (paragraph 2 of the Article 475 Civil Code of the Russian Federation);
- non-fulfillment by the supplier of the customer’s demand for the completion of the goods within a reasonable time (paragraph 1 of Article 480 of the Civil Code of the Russian Federation);
- repeated violation by the supplier of the terms of delivery of goods (paragraph 2 of Article 523 of the Civil Code of the Russian Federation).
Documents to confirm the substantiation of the reasons for unilateral refusal of the customer to fulfill the contract are, for example, expert assessment, acceptance certificates drawn up with the participation of the supplier (contractor, contractor), shipping documents, decisions/orders of regulatory authorities, pre-action correspondence and other documents that fix the facts of non-fulfillment/improper fulfillment of obligations under the contract.
Such persons are also entitled to submit documents confirming the proper fulfillment of their obligations under the contract, while considering the inclusion (non-inclusion) of information about the supplier (contractor) in the register of unscrupulous suppliers due to the customer’s decision to unilaterally refuse to execute the contract.
It should also be noted that in the absence of grounds for terminating the contract (non-fulfillment / improper fulfillment of obligations under the contract), information about the supplier (contractor, executor) shall not be included in the register of unscrupulous suppliers, while the actions of the customer who made a decision to unilaterally refuse to fulfill the contract in breach of the provisions of the part 8, 9 of Article 95 of the Law on the Contract System, contain signs of an administrative offense provided for by the paragraph 6 of Article 7.32 of the Administrative offences Code of the Russian Federation. Same situations happens when the customer has all legal grounds to initiate the procedure for including the supplier in the register of unscrupulous suppliers are indicated in the scheme, which is an attachment to the letter of the FAS Russia dated by March 12, 2019 №IA/18794/19 (Table 2).
Summary and conclusions
All things considered, it should be noted that any section of the contract may contain other provisions that are not specified in the standard-form contract, depending on the nature of the obligations under the contract. These provisions should not contradict the legislation of the Russian Federation and other provisions of the contract and take into account the specificity of purchase. Thus, as a recommendation, it is possible to offer customers a thoughtful and unconventional approach to the procedure for the delivery of medical devices, and professionally treat the development of technical requirements for medical devices planned for delivery at the stage of forming the procurement documentation.