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EU Parallel Trade restrictions and export bans for pharmaceuticals

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In 2018, the EU Commission adopted a “Paper on the obligation of continuous supply to tackle the problem of shortages of medicines”, providing that Member States may take measures to prevent or address shortages of medicines by restricting the free movement of goods within the EU.

While Member State may restrict the supply of medicinal products to traders in other EU Member States and may require prior notification or authorisation for this activity, such measures are only allowed as long as they are “appropriate, necessary and proportionate to protect the life and health of humans by preventing the occurrence of shortages of medicines.”

Currently, in a majority of Member States, legal frameworks are allow for the restriction or ban of exports of pharmaceuticals if there is a shortage or risk of shortage of a given product. In such case, manufacturers should generally notify upcoming and existing shortages and report information on parallel trade. For well-defined medicines, you will find legal provisions in certain countries allowing the issuing of export bans. Several Member States have also imposed export bans on certain goods in the context of the fight against COVID-19 (for example export bans on protective material such as face masks).

All such measures can in principle be justified on the grounds of “protection of health and life of humans” if they are proportionate (no less restrictive alternative being available) and do “not constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States” (Article 36 TFEU). This is no different in the fight against COVID-19. The EU Court of Justice has interpreted any limitation on parallel trade rather restrictively. Also recently (October 2019), the Belgium Constitutional Court annulled the Belgian amending Law on the unavailability of medicines for being in breach with EU law. The law sought to prevent shortages on the Belgian market by introducing an export ban on wholesale distributors (who have public service tasks). The Court found this prohibition unjustified, non-proportionate and therefore prohibited under European law.

The EU Parliament nonetheless acknowledged in a resolution adopted in September 2020 that shortage of medicines is a growing public health threat with a serious impact on healthcare systems and the right of every patient in the EU to access appropriate medical treatment, and called on the Commission to propose ambitious and concrete actions to address these issues in its EU Pharmaceutical Strategy.

One of the key policy goals of the EU Pharmaceutical Strategy is ensuring patients’ access to medicines. The Commission admits that there are different causes for the different levels of access to medicines within the EU and therefore proposes different initiatives to tackle this problem. It calls for increased cooperation on pricing and reimbursement systems in the EU, revision of the system of incentives and obligations in the existing pharmaceutical legislation and more understanding of the root causes. Existing Member States rules’ on medicine shortages (like strict control of stocks, (mandatory) notification requirements of parallel exports and financial sanctions in case of non-reporting) can pose (heavy) administrative/financial burdens on parallel traders. It remains to be seen how this EU Pharmaceutical Strategy will be implemented in the course of the next years and if ‘less price difference’ in the markets will make parallel trade less attractive.