BIS authorizes exports of medical devices to Russia, Belarus and occupied Ukraine (with conditions) | Arent Fox Schiff

May 2, 2024 Vaseline stjohnson 0

License Exception MED, released by the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) on April 25, authorizes the export, re-export, or in-country transfer of EAR99 “medical devices” to non-military hospitals, but it comes with new restrictions. and due diligence requirements.

Background

Since the new Russian invasion of Ukraine began on February 24, 2022, the BIS has steadily expanded export controls to include licensing requirements for almost all medical devices (think everything from X-ray machines and sophisticated equipment to catheters and needles). Meanwhile, the Ukrainian regions of Crimea, Donetsk and Luhansk (currently under Russian occupation) are subject to a near-total embargo as well as comprehensive economic sanctions.

Starting April 29, medical device exporters will be able to take advantage of the MED License Exception under Article 740.23 of the Export Administration Regulations (EAR).

What does MED cover?

Items included

Only “medical devices” that are EAR99 (that is to say not described in the Commerce Control List (CCL) (1) and EAR99 parts, components, accessories or attachments thereof. BIS defines “medical devices” using the definition of “device” contained in Sec. 201 of the US Food, Drug, and Cosmetic Act:

“(An) instrument, apparatus, implement, machine, device, implant, in vitro reagent or other similar or related article, including any component, part or accessory, that is:

  1. recognized in the official National Formulary, or the United States Pharmacopeia, or any supplement thereto,
  2. intended for use in the diagnosis of diseases or other conditions, or in the cure, mitigation, treatment or prevention of diseases, in man or other animals, or
  3. intended to affect the structure or any function of the body of man or other animals, and which does not achieve its primary intended purposes through chemical action in or on the body of man or other animals and which does not depend on being metabolized to achieve this. of its main purposes…”

Destinations

Russia, Belarus and the Ukrainian regions of Crimea, Donetsk and Lugansk.

Additional requirements for spare parts

MED covers replacement parts for medical devices only if:

  1. The sole purpose of the transaction is to replace a broken or non-operational part, component, accessory or accessory of a “medical device” that is already authorized under MED.
  2. The number of spare parts that are exported or stored does not exceed the number of parts that are used with or in the relevant medical devices within Russia, Belarus or the embargoed areas of Ukraine.

Careful! Limits, restrictions and due diligence

MED only relieves exporters from licensing requirements under Sections 746.5 (industrial sector sanctions between Russia and Belarus), 746.6 (embargo to Crimea, Donetsk and Luhansk) or 746.10 (luxury goods sanctions to Russia and Belarus) of the EAR. DOES NOT apply to:

  • Any other licensing requirements, such as those that still apply to any item described in the CCL, or any item captured by a foreign direct product rule (even if the same US-produced item is now authorized by MED).
  • Restrictions on banned persons or restricted end uses. Be sure to check if there are end users that could be military hospitals.
  • Export, re-export or transfer to any production facility or with the knowledge that the item will be used to develop or produce other things (rather than used directly as a medical device). Assembling a medical device in a hospital or medical facility for use in that same hospital or facility is still fine.

Additionally, parties that rely on MED must “maintain a distribution system that ensures that (exported, re-exported or transferred items) are not delivered to prohibited persons or any entity engaged in any type of production.” BIS provides several examples of acceptable verification procedures: obtaining assertions or other documentation from a recipient, or periodic on-site checks (e.g, by the exporter, an auditing company or a recognized non-governmental organization (NGO). BIS officials have verbally confirmed that the agency deliberately included options other than on-site verification, given the risks and current impracticality of snooping around Russia to conduct compliance checks on U.S. exports.

Verification records must be retained for five years and provided to BIS upon request.

Food for take away

The MED licensing exception provides much-needed relief to American medical providers who have had to deal with BIS licensing requirements, follow-up questions, and the lengthy approval process over the past two years. However, any business dealing with Russia (or Belarus, not to mention the widely embargoed and sanctioned Ukrainian regions of Crimea, Donetsk and Luhansk) should not let its guard down. It remains as important as ever to vet customers and counterparties, verify end use and maintain good records. Please contact your export compliance advisor if you have any questions or concerns.

(1) Due to the EAR Statement of Understanding on “medical equipment”, products incorporating items in the CCL not controlled for fear reasons (nuclear/chemical/biological weapons or missiles) that are specially designed for medical end use, They are classified as EAR99.

(See source.)