Czech President Signs Law Limiting Medicine Re-Exports – But Will It Work?

The Czech President, Miloš Zeman, has signed off an amendment to the Medicines Act giving the health ministry the ability to ban the parallel export of specific medicines where there is a risk of shortages of those products on the domestic market.

Under the amendment, which was passed by the Senate in December last year and then went to the Chamber of Deputies for final approval, the State Institute for Drug Control (SUKL) and the health ministry will draw up a list of “irreplaceable” medicines whose availability could be jeopardized by wholesalers exporting them to other EU countries where prices are higher.

However, there appears to be some disagreement over how effective the measure will be, with some local lawyers suggesting it could actually have the opposite effect to the one intended, partly because the amendment also includes a mechanism for lowering the prices of generics and biosimilars.

Under the revised Medicines Act, products will be chosen for inclusion on the “irreplaceable medicines” list on the basis of data collected by SUKL from companies, distributors and pharmacies regarding the volume of medicines circulating on the Czech market. Anyone intending to export these products would have to notify SUKL, which would have 15 working days to ban the export.

Any wholesalers that re-export medicines without notifying the agency open themselves up to a fine of up to CZK 20m (€740,000) and could lose their license for a maximum of two years.

The move has not gone down well with the EAEPC, the association representing parallel traders in Europe. It told the Pink Sheet in January this year that the draft amendment was “a law against exports and not against ‘shortages’,” noting that the European Commission had taken action against other EU countries that had taken steps to curb parallel exports. (Also see "Parallel Traders Slam Czech Plan For List Of Non-Exportable Drugs" - Pink Sheet, 10 Jan, 2017.)

According to Tomáš Čihula and Lenka Kušnier of law firm Kinstellar, the amendment “seeks to balance the individual interests of distributors and the options they have in this regard under EU law and the public interest in respect of having medicinal products available for the treatment of patients in the Czech Republic.”

As well as a provision specifically on parallel exports, the amendment includes new measures to ensure “appropriate and continued supplies” of medicines. It says that pharmacies have the right to ask any distributor to supply certain medicinal products, and that these products must be provided within two working days. “All distributors,” they add, “are then entitled to invite the holder of a marketing authorization to supply the medicinal products within the scope of the distributor’s market share.”

This new provision “is quite controversial and raises a number of practical questions,” according to the Kinstellar lawyers. “In particular, the amendment inappropriately attempts to ensure continued supplies of medicinal products by setting a specific key for allocating supplies of medicinal products to distributors.”

It is not clear who would be responsible for establishing the distributor’s market share for the purposes of this allocation, they say. In addition, they point out, the regulation does not presume any mechanism based on which MAHs [marketing authorization holders] could verify that a particular request from a distributor corresponds to actual patient need.”

The new provision may therefore produce less stability than at present in terms of ensuring continued supplies of medicines, and it could actually result in more, rather than less, parallel exporting, they say.

This, Čihula explained to the Pink Sheet, is partly because for certain medicines – often more expensive specialized drugs that may be more open to parallel trade – are distributed using a particular distributor or by using the direct-to-pharmacy or direct-to-hospital methods. This allows the MAH to control their distribution and ensures that they will be dispensed in the Czech Republic and not exported.

“However, the amendment may enable distributors to obtain the product and export it,” Čihula said, because it does not provide any tool to verify that the requested medicinal products were actually delivered by a distributor to a pharmacy and not exported.

Clinical Trials, GMP, Prices

The amendment also includes measures relating to generic and biosimilar prices, clinical trials, and good manufacturing practice (GMP).

Čihula said that the prices of generics and biosimilars would decrease because of changes that have been made to the formula that is used in calculating the maximum prices of such products.

As for clinical trials, the amendment simplifies the procedures for authorizing and conducting studies, including the protection of particular groups of trial subjects (such as minors, people in custody or those whose capacity is impaired), the establishment, composition and activity of ethics committees and the granting of their opinions, and the language requirements for clinical trial documentation.

In the GMP area, it contains measures to enforce the provisions of the EU legislation on GMP (Regulation No 1252/2014), and also aims to increase collaboration among the relevant authorities in identifying counterfeit medicines and preventing their movement in the supply chain, the Kinstellar lawyers say.

Although the amendment takes effect on April 1, 2017, the measures intended to ensure appropriate and continued supplies of medicines will not come into force until Dec. 1, while the entry into force of those relating to clinical trials will be linked to the date of application of the EU Clinical Trials Regulation (currently scheduled for October 2018), they add.

From the editors of Scrip Regulatory Affairs.