Drug exports in a time of pandemic | In Principle

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Drug exports in a time of pandemic

The Minister of Health is issuing successive anti-export lists covering an increasingly wide catalogue of products at risk of shortages. This is to ensure access to drugs and medical devices for patients in Poland, especially during the difficult time of the COVID-19 pandemic. However, excessive expansion of the list of products may undermine the economic situation of producers manufacturing such products in Poland, which is probably not in line with the assumptions of the anti-crisis shield.

Exports of drugs in short supply

The export of drugs in short supply is not a new problem. It derives from the fact that the prices of medicinal products and medical devices vary between individual EU countries, and in Poland they are among the lowest. Despite the introduction of increasingly restrictive regulations imposed by the Pharmaceutical Law regarding the sale of medicinal products, the problem of the reverse distribution chain has not disappeared and may even increase in times of pandemic.

Additionally, the suppliers of active ingredients for the European and Polish pharmaceutical industry are most often located in Asia. Therefore, ensuring continuity of supply, especially in times of increased demand for medicines, may be a difficult challenge for pharmaceutical companies. Meanwhile, manufacturers of medicinal products and medical devices are bound by commercial contracts obliging them to make deliveries to customers in Poland but also abroad.

Anti-export lists in the past and nowadays

In 2018, a mechanism was introduced allowing the Minister of Health to publish anti-export lists. According to Art. 37av of the Pharmaceutical Law, on the basis of information provided by the Main Pharmaceutical Inspector, collected in the Integrated System for Monitoring of Trade in Medicinal Products, or other information concerning the availability of medicinal products, foods for special medical purposes or medical devices, taking into account the dynamics of trade, the minister in charge of health shall announce at least once every two months, by way of a notice, a list of medicinal products, foods for special medical purposes and medical devices at risk of a lack of availability in the territory of the Republic of Poland.

Since that mechanisms entered into force, the Minister of Health has issued a dozen or so such lists, but four so far in March this year alone (5, 10, 16 and 17 March). There were about 260 products on the first list and over 1,500 on the last. The list includes such items as painkillers, anti-inflammatory drugs, cardiological medications, glucose test strips, personal protective equipment, and thermometers. This shows the dynamic of the situation and forces businesses to track the content of these lists, especially if they have regular recipients of products outside Poland. Similarly, customers in Poland counting on deliveries from abroad may not receive products ordered from countries introducing similar restrictions.

Special export procedure

The export of a medicinal product, medical device, or food for special medical purposes included in the list is not excluded outright, but a special export procedure applies.

The intention to export a product covered by the anti-export list must be notified to the Chief Pharmaceutical Inspector at least 30 days before the intended export. The declaration should be prepared for each shipment and must contain a number of detailed data (including the EAN codes). Upon receipt of a complete declaration, the Chief Pharmaceutical Inspector has 30 days to object to the export. If the inspector objects, the undertaking may seek review of the decision. However, filing does not automatically allow the export, as the objection is immediately enforceable. But the challenge to the objection may affect how future export declarations are considered.

The notification obligation is related to further obligations with regard to monitoring the transport of products covered by the anti-export list under the Act on the System of Monitoring Road and Rail Transport of Goods, in particular the obligation to report individual transports in the SENT system to the register maintained by the tax administration.

This procedure generates costs on the business’s side (products are stored at the border at the expense of the entity declaring dispatch), and given its unpredictable result, it also creates the risk of inability to perform contracted deliveries to foreign customers. This exposes the business to legal liability for non-performance of the contract, unless the situation would be justified by invoking force majeure. Additionally, an objection to the export of the goods does not automatically mean that the goods can be purchased in Poland for the price they would have fetched under the unrealised contract.

Is the product on the anti-export list?

The answer to this question is not always easy, as the notices from the Minister of Health can be hard to decode. Sometimes the notices do not indicate the specific trade names of the products but just their category. Moreover, additional product categories (e.g. protective goggles, Tyvek coveralls or specific types of gloves) are subject to export restrictions contained in the Regulation of the Minister of Health of 13 March 2020 Declaring an Epidemic Threat in the Territory of the Republic of Poland (this regulation was amended three times within a week of its issue, i.e. on 14, 16 and 18 March).

The particular situation justifies increased regulatory action, but requires increased vigilance on the part of businesses to ensure that their actions always fully comply with current legislation.

Import restrictions imposed by some countries are the flip side of the coin. In general, they do not apply to the pharmaceutical sector, but particularly the food sector, as countries introduce restrictions on imports of products from countries affected by the epidemic. Therefore, it is worth keeping an eye on the regulations, adjusting the product range as far as possible to current market needs, but also not losing sight of foreign markets, which, despite a number of export and import restrictions and increased sanitary inspections at the borders, may prove crucial in difficult times of epidemic.

Joanna Krakowiak, Life Science and Regulatory practice, M&A and Corporate practice, Wardyński & Partners