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Slovak Government seeks to restrict parallel exports

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For several years, parallel exports have been a major concern for pharmaceutical companies in Slovakia and across the CEE region. They have been steadily eroding profit margins and exposing companies to the risk of regulatory sanctions. At the same time, parallel exports have led to shortages of supplies of essential medicines. The Slovak Government decided to address the issue by strictly regulating the distribution chain.

Prices of medicines in Slovakia are linked to the average of the three lowest prices in the EU. This has made exports from the Slovak market attractive for parallel traders and has even resulted in several widely publicised cases of unavailability of important medicines.

When addressing the issue, the Slovak Government has had to tread carefully. A previous attempt to control parallel exports had already been investigated by the European Commission for its compliance with EU law. The Government decided to address the issue by regulating the distribution chain. Wholesalers will only be allowed to export medicines with the consent of the relevant marketing authorisation holder. Pharmacies will generally not be allowed to sell medicines to wholesalers. Any violation can lead to a revocation of their licence and to fines of up to EUR 1,000,000.

In addition, to avoid shortages, all marketing authorisation holders will be obliged to set up a 24/7 emergency supply system that can be used by pharmacies on the basis of a scanned prescription (after redacting all personal data).

It is certainly commendable that the Government is trying to address a genuine problem. On the other hand, the new regulation leaves a number of unresolved questions. Most importantly, whether it is in compliance with the principle of the free movement of goods under EU law and whether pharmaceutical companies could fall foul of competition law rules when implementing the new regulation (e.g. by refusing to grant consent to parallel exports).

If you would like to learn more about this issue, feel free to read our recent e-alert.