New License Exception for Medical Devices Destined for Russia, Belarus and Certain Regions of Ukraine: BIS Announces a Final Rule Amending the Russia and Belarus Sanctions Under the Export Administration Regulations (EAR)

At a Glance

• Beginning on April 29, 2024, medical device exporters were able to take advantage of License Exception MED under §740.23 of the Export Administration Regulations (EAR).
• License Exception MED provides relief to U.S. medical supplied who have had to adhere to BIS’s strict license requirements and approval process.

On April 25, 2024, the Department of Commerce’s Bureau of Industry and Security (BIS) announced the issuance of a final rule that amends the Russian and Belarus Sanctions under the Export Administration Regulations (EAR) to “add a new license exception for EAR 99 medical devices and related parts, components, accessories and attachments for use in or with medical devices that are destined for both countries and the temporarily occupied Crimea region of Ukraine, or the covered regions of Ukraine.” 

The full text of the new rule was published on April 29, 2024, and is now in effect.

New License Exception for “Medical Devices” Under 15 C.F.R. §740.23

A new license exception for medical devices (License Exception MED) can be found at 15 C.F.R. §740.23 and authorizes the export of EAR99 medical devices, as well as parts, components, accessories and attachments that are themselves EAR99 and intended for exclusive use with EAR99 medical devices. In short, it includes any medical devices shipped with or separately from pharmaceuticals. 

“Medical devices” are defined in section 201 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321) as including “medical supplies, instruments, equipment, equipped ambulances, institutional washing machines for sterilization and vehicles with medical testing equipment.” 15 C.F.R. 772. A statement of understanding concerning medical equipment in Supplement No. 3 to Part 774 further clarifies this definition. 

BIS clarified that the parts, components, accessories and attachments are limited to those which are necessary for replacement or maintenance in or with medical devices, which will also reduce the likelihood of diversion to industrial or military end uses. 

Restrictions to License Exception MED

License Exception MED does have some restrictions, including:

• Transactions that involve a proscribed person as defined in 15 C.F.R. 772.1, including military end users 
• Transactions that support the Russian military-industrial base
• Transactions destined for production facilities, as defined in 15 C.F.R. 772.1
• Transactions where the items are intended to develop or produce items in Russia (based on actual knowledge or reason to believe)
  
  • BIS clarified that the assembly of a finished medical device completely produced outside the proscribed regions in a hospital or other health care facility is not considered production

Verification Procedure and Recordkeeping

License Exception MED requires that exporters verify that the actual end use of the goods is as expected, does not involve any of the restrictions and that records of such verifications will be kept for five years. Some examples of verifications are the following:

• Obtaining affirmations or other documentation from a consignee as part of an exporter, reexporter or transferor’s compliance program
• Periodic onsite spot-checks by the exporter or by an internationally accredited auditing firm, or by an internationally recognized nongovernmental humanitarian organization

Takeaways

We expect the new license exception will enable companies to continue their exports of life-saving medical devices to Russia without awaiting the BIS administrative licensing process. However, utilizing this license exception requires the enhancement of compliance programs, especially in the verification procedure and recordkeeping.

Please note that we will continue to closely monitor this situation and provide timely updates, as warranted. 

Legal Clerk Yeonjoo Lee-Kim contributed to this article.