Out-Law News | 04 Oct 2019 | 1:20 pm | 3 min. read
The UK government recently published a list of 24 medicines, including 19 hormone replacement therapy products that cannot be parallel exported from the UK in response to what it said are "supply shortages due to manufacturing issues". Parallel export is the practice of buying goods already placed on the market in the UK in order to sell them in another country in the European Economic Area (EEA) where they are repackaged and relabelled in accordance with the requirements of the importing country.
In a letter to medicine wholesaler dealers, the government explained that those businesses that parallel export a product that features on the list risk being held in breach of the Human Medicines Regulations 2012 and could face regulatory action, including the potential suspension of their licence by the Medicines and Healthcare products Regulatory Agency (MHRA).
The imposition of export restrictions was welcomed by the Association of the British Pharmaceutical Industry (ABPI). The trade association said the restrictions will "stop some medicine wholesalers from taking advantage of the present circumstances" by purchasing medicines meant for UK patients and selling them on for a higher price in another EU country. It said such parallel exporting risks "potentially causing or aggravating supply problems".
Life sciences expert Nicole Jadeja of Pinsent Masons, the law firm behind Out-Law, said: "This unprecedented ban on exports, at a time when the pharmaceutical industry is working hard to limit any potential shortages in the supply of medicines in the UK anticipated by the impact of Brexit, cannot be a coincidence."
"Many stakeholders in the industry will welcome this measure to protect patients. In reminding wholesalers of their obligation to ensure the continued supply of medicines to meet the needs of patients in the UK, the government’s letter makes it clear that the list of medicines that cannot be parallel exported will be reviewed and updated on an ongoing basis. It will be interesting to see if the list expands in the event the feared impact of Brexit on short term access to medicines in the UK becomes reality," she said.
In its letter, the government explained that a medicine will only be included on the list of medicines that cannot be parallel exported from the UK in cases where "the medicine is required to meet the needs of UK patients; the medicine is either being parallel exported or is at threat of being parallel exported; and the export of that medicine is either contributing to, or may contribute to, a shortage of that medicine in the UK".
The health and social care secretary is responsible for determining whether a medicine meets those criteria for inclusion on the list.
Beyond the medicines listed as banned for export, Jadeja said uncertainty over the recognition of intellectual property (IP) rights post-Brexit is also causing industry concern.
Currently, trade mark holders in the EU have the exclusive right to control when and where their goods are first marketed in the European Economic Area (EEA). However, rights holders cannot control subsequent distribution of the goods once the goods have been placed on the EEA market.
Some businesses, particularly in the pharmaceuticals sector, buy goods placed on the market in one EU country and sell them in another, seeking to take advantage of the different market conditions, including often in relation to the pricing of the goods.
In a guidance paper published last year, the UK government explained that a 'no deal' Brexit would not change the current position in relation to parallel imports into the UK. However, it warned that UK-based parallel traders could face restrictions on exporting goods to countries in theEEA, which includes the EU27 nations.
"The impact of Brexit on parallel trade remains an area of uncertainty for industry, with imports and exports being potentially affected," Jadeja said. "Whilst the UK has said it will continue to apply EEA exhaustion on Brexit – so that the parallel trade of medicines from the EEA can continue, this position has not yet been reciprocated by the EU. In the absence of reciprocity, there may be restrictions on parallel imports of medicines from the UK to the EEA."
"A recent study was commissioned by the UK Intellectual Property Office and carried out by EY into the scale of parallel trade and is intended to help inform the exhaustion regime which the UK should adopt when it leaves the EU. The report sets out the views of a range of stakeholders from many industries and is inconclusive to the extent it identifies scope for further research into the scale and range of parallel trade. Nevertheless, it reports that the available data suggests parallel trade in pharmaceuticals is significant, being 5-10% of total pharmaceutical imports," she said.
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