In connection with the submitted draft of the Law on Amendments and Supplements to the Law on Medicinal Products in Human Medicine (ZLPHM), with which a proposal is made to introduce restrictive regime regarding parallel exports of medicinal products, as with the newly proposed art. 217a - art. 217c for each parallel export of a medicinal product, issued by a doctor's prescription, which is paid for with funds from the budget of the National Health Insurance Fund and the Ministry of Health, the Executive Agency for Medicines (EMA) should be notified, as in the assessment of the same authority, that the medicinal product is in limited quantities for the Republic of Bulgaria and that its absence can seriously endanger the life and health of citizens, IAL may refuse to carry out its export, the Confederation of Employers and Industrialists in Bulgaria /KRIB/, after discussion in Committee "Health" at KRIB expresses the following position:
This is how the proposed regime, in our opinion, appears in its essence unlawful, because it contradicts basic principles of European and Bulgarian legislation.
I. CONFLICT WITH EUROPEAN LEGISLATION AND ESTABLISHED EUROPEAN PRACTICE
1. First of all, the newly proposed regime constitutes a violation of the fundamental principle of the freedom of movement of goods enshrined in the Treaty on the Functioning of the European Union (TFEU).
1.1. Art. 35 of the TFEU states that they are prohibited the quantitative ones export restrictions between Member Statesas well as all measures of equivalent effect. The Court of Justice of the European Union gave an interpretation of the concept of "measures with equivalent effect" (in its judgment of 11 July 1974 in Case C-8/74 Procureur du Roi v. Dassonville) and as such defined all measures introduced by a Member State which may impede directly or indirectly, actually or potentially, trade within the European Union.
In its practice, the Court of the European Union has repeatedly had the opportunity to examine various types of national regimes introduced specifically for the export of products and has categorically adopted the practice that even the lightest of them - the notification one, leads to the creation of bureaucratic obstacles and, accordingly, to unjustified delay in the export. The notification regime has been categorically defined by the Court of the European Union as a direct and factual obstacle to free trade within the Community. In support, a number of decisions of the Court of Justice of the European Union can be cited, among which Decision of 3 February 1977, Case 53/76, Procureur de la République de Besançon v. Les Sieurs Bouhelier and others, Judgment of 16 March 1977, Case 68/76, Commission v Republic of France and Judgment of 20 May 1976, Case C-104/75, De Peijper, ECR 1976.
In view of the above, it can be concluded that the newly proposed regime for the parallel export of medicinal products undoubtedly has an effect equivalent to restricting exports, which is contrary to Art. 35 of the TFEU prohibiting quantitative export restrictions between Member Statesas well as all measures of equivalent effect.
1.2. With the newly proposed restrictive regime for the parallel export of medicinal products, an attempt has been made to violate Art. 35 of the TFEU should be justified by the protection of the highest value - the life and health of people.
With newly proposed Art. 217c, para. 3 introduces the possibility for the executive director of IAL to refuse, with a reasoned order, the execution of the parallel export, when it is established that:
1. the medicinal product is in limited quantities for the Republic of Bulgaria;
2. the lack of the medicinal product may seriously endangered life and health of citizens.
Indeed, Art. 36 of the TFEU introduces an exception to the prohibition of Art. 35 to create restrictions on exports, but only if they are based on considerations for the protection of people's health and life.
In their consistent practice, both the Court of Justice of the European Union and the European Commission categorically take the position that such type of bans or restrictions on trade, based on considerations for the protection of human health and life, can only be introduced if they are objectively necessary and proportionate to the objective, which is pursued.
Precisely because it is introduces an exception to the principle prohibition of Art. 35 of the TFEU for quantitative restrictions on exports between Member States, as well as any measures having equivalent effect, is required when using this exception to have a clear and precise argument proving that the introduced restrictions are objectively necessary and proportionate to the pursued goal. The state that introduces the fundamentally prohibited restrictions has the obligation to prove that they are necessary to protect the public interest - the life and health of people, as well as to prove that the introduced restrictions are proportionate and consistent with the goal pursued with them.
A/ When analyzing the proportionality of the introduced restriction on the export of medicinal products, the following essential questions are raised:
With the newly proposed restrictive regime, a distributor wishing to export medicinal products submits a notification to the IAL, and the IAL has the authority within 20 days to refuse the parallel export. Lack of clarity under what criteria exactly and on what grounds IAL will prohibit the export of medicinal products.
Formally, the newly proposed texts enable IAL to refuse the export if:
1. the medicinal product is in limited quantities for the Republic of Bulgaria;
2. the lack of the medicinal product may seriously endanger the life and health of citizens;
If these texts are to be applied in practice, the following unclear aspects remain:
A.1. It is not clear by what mechanism IAL will acquire reliable information about the available quantities of a given medicinal product in the country in order to assess whether it is in limited quantities. Realistically, to obtain reliable information, data should be collected from all wholesalers, manufacturers, pharmacies, hospitals and patients on available quantities of the given medicinal product, and it should be ensured that the information is accurate and true. Currently, there is no mechanism that would allow such information to be collected with a guarantee of its reliability.
A.2. Even if it is assumed that IAL can gather reliable information about the available quantities of a given product in the country, it is not clear what the criterion is for judging whether these quantities are "limited". Formally, the draft text says that IAL compares the consumed quantities of the given medicinal product in the last 1 to 3 months with the available quantities of the same medicinal product in the country and the quantities requested for export.
The question remains absolutely unclear in what ratio should be the quantities used in the previous 3 months compared to those available in the country and compared to those requested for export, in order to conclude that the medicinal product is in limited quantities. There is no clearly stated quantitative measure applicable to all cases, such as a precisely defined ratio of the quantities of a medicinal product used in the previous period to the quantities available and the quantities requested for export.
A.3. The second introduced reason for the refusal of the IAL to carry out the export is the lack of the medicinal product seriously endangering the life and health of citizens. There is no precisely defined criterion by which IAL makes an assessment, whether the lack of the medicinal product seriously endangers the life and health of the citizens of the country. The concept of "seriously endangering" life and what is the degree of danger above which the threat is serious and justifies the introduction of fundamentally prohibited export restrictions are also unclear.
A.4. The scope of the restrictive regime includes all prescription medicinal products, which are paid for with funds from the budget of the National Health Insurance Fund and the Ministry of Health. Among them, a very large percentage are not life-sustaining and life-saving medicinal products, which begs the question, since their absence cannot initially pose a danger to people's lives and health, what is the reason for such a regime to be introduced for them.
In conclusion, on the question of whether the proposed restrictive regime for the export of medicinal products is a measure proportionate and consistent with the objective of protecting people's life and health, it can be said that the proposed legal changes do not contain any direction for the mechanism, based on to establish the limitation of the quantities of a given medicinal product, nor an objective criterion based on which to assess whether the lack of a given medicinal product could seriously endanger the life and health of citizens. The legal void on all the issues raised undoubtedly leads to the conclusion that the proposed restrictions on the export of medicinal products are not proportionate to the pursued goal - protection of life and health of people.
B/ When analyzing the necessity of the introduced restriction on the export of medicinal products, the following essential questions are raised:
B.1. As noted above, in order for an exception to the prohibition on imposing restrictions on trade to apply, the nexus that it is being done for the purpose of protecting human life and health must be clearly demonstrated. The newly proposed restrictive regime in no way justifies that limiting the export of medicinal products guarantees the protection of people's lives and health.
No comprehensive assessment has been made of the reasons that can lead to drug shortages, and these in turn can be a variety of factors, ranging from problems in the production cycle and supply of raw materials, to manufacturers' failure to fulfill requests to wholesale merchants.
In its analysis of November 22, 2012, the European Medicines Agency (European Medicinal Agency) investigated the reasons leading to shortages of medicinal products in the member states. After a study, a shortage of raw materials in the production of medicinal products and problems with compliance with the requirements of good distribution practice in production processes were identified as the main ones.
B.2. As an additional argument for the need to study and take into account all the real reasons that can lead to a shortage of medicinal products, with a view to introducing restrictions on their export, are also the provisions of Directive 2001/83/EC of the European Parliament and the Council of 6 November 2001 on medicinal products for human use.
Art. 81, para. 2 of the same Directive stipulates "The holder of the authorization for the use of a medicinal product and the distributors of this medicinal product, within the limits of their responsibilities, ensure uninterrupted supplies of the product to pharmacies and to other entitled persons, so that the needs of patients in the given country are satisfied." This text imputes a commitment for carrying out the supply of medicinal products, as well to the holder of the authorization for the use of a given product, as well as to wholesalers. It cannot be overlooked that this is not taken into account in the proposed restrictive regime and it is addressed solely to wholesalers, without taking into account in any way the substantial participation of the holder of the authorization for the use of a medicinal product in the chain from deliveries. In reality, the role of the holders of the authorizations for use is fundamental, since it is with them that part of the responsibility falls to produce quantities of the medicinal products that meet the needs of the patients and, accordingly, to fulfill the requests of the wholesalers, who in turn are responsible for supplying them according to the needs of pharmacies and hospitals.
In view of the above, it can be concluded that other factors that influence the quantities of medicinal products available in a given country, such as the capabilities of manufacturers and the quotas for the number of medicinal products, were not taken into account when determining the prohibited restrictive measures on trade products designated for delivery by country by MAHs. Thus, the proposed restrictive regime, aimed solely at wholesalers, does not pass the test of necessity, which makes it unjustified and only creates an obstacle to the realization of the principle of free movement of goods.
II. CONFLICT WITH BULGARIAN LEGISLATION
Another important argument in support of the thesis of the illegality of the newly proposed restrictive regime on the export of medicinal products is the established principle that the administrative bodies in the Republic of Bulgaria work in compliance with the principles of openness, predictability и objectivity. The provision of Art. 2, para. 1 of the Law on Administration (LA), explicitly introduces this requirement, which in turn is a mandatory prerequisite for the work of the administration in a state governed by the rule of law. By applying these principles, it is guaranteed to all citizens and organizations that they can expect predictable actions from administrative authorities, especially in cases where these authorities have the power to regulate and prohibit the performance of a certain activity, and that towards them clear and precise criteria will be applied, not allowing for administrative arbitrariness.
As a body of the executive power on the basis of Art. 19, para. 4, item 3 of the ZA, the executive director of IAL is obliged to comply with the above principles. The newly proposed restrictive regime, with its general and unclear wording, is categorically in their deviation and creates an opportunity for the application of diverse practices, as a result of the possibility of a broad interpretation of legal norms. The lack of clarity by which mechanisms will be used to collect information about the available quantities of a given medicinal product in the country, based on which principles will be used to assess whether there is a shortage of medicinal products and whether this shortage threatens people's lives and health, opens the door for the administrative authorities to apply legal norms based on subjective judgment,randomly and even discriminatory. All of this leads to granting the administrative body operational autonomy to assess whether to issue a ban on parallel exports, which in turn is a prerequisite for misuse of power and development of corrupt practices.
With such conditions and prerequisites created, the principle of objectivity and openness in the work of the administrative body cannot be respected, and even less the principle requiring predictability of its behavior and decisions.
As a summary of the above arguments, it can be stated that the lack of clearly stated prerequisites, order and criteria for assessing the circumstances under the newly proposed Art. 217c, para. 3, would have a practical impact in enabling the administrative body - the executive director of IAL, to exercise, based on a subjective judgment, powers that constitute export restriction.
III. SIMILAR EUROPEAN CASES:
In support of the stated conclusions, a number of examples can be given from other European countries in which similar restrictive regimes were introduced, which were canceled after the intervention of the European Commission.
1. In May 2013, the Estonian government notified the European Commission of an upcoming change in the Estonian Medicinal Products Act, according to which distributors wishing to export medicinal products to another European country should submit a notification of their intention to the state Medicines Agency , which in turn has the power to ban exports in order to protect the health of citizens.
On the basis of its powers granted to it by Art. 9 of Directive 98/34/EC of June 22, 1998, the European Commission gives its detailed opinion that the introduction of such a regime constitutes an obstacle to the free movement of goods in the intra-Community market, which is a violation of Art. 35 of the TFEU. As a result of the intervention, the Estonian government has frozen the implementation of the regime in question.
2. The European Commission has initiated proceedings against Slovakia, on the occasion of Art. 19 of Slovak Law 459/2012 amending Law 362/2011 on medicines and medical devices. The reason for the initiated procedure is that the cited text introduces a notification system in cases of upcoming export of medicinal products within the Community. As a result of a complaint, the European Commission, on suspicions of the presence of disproportionate obstacles to intra-Community trade, started the EU PILOT Procedure against Slovenia.
3. It should also be noted that similar restrictive regimes were canceled in Greece.
Last but not least, the constant jurisprudence of the Court of the European Union should be taken into account, according to which any country that violates the provisions of European law should compensate the entities that have suffered damages as a result of this violation, no matter which an internal institution or body is responsible for this.
In the event that the newly proposed restrictive regime is adopted, which we strongly believe to be in conflict with European and Bulgarian legal norms, its application will inevitably lead to causing serious harm to the entities that will be affected by it. The extent of the damages subsequently could easily be proven by comparing the levels of exports before and after the introduction of the restrictive regime, and accordingly claimed for reimbursement by the state.
IV. CONCLUSION:
In view of the above, we believe that the proposed changes to the Law on Medicinal Products in Human Medicine, concerning the introduction of a restrictive regime for the parallel export of medicinal products, represent an unjustified violation of the basic European principle of free movement of goods and should not be accepted.
No arguments and evidence were found to justify the use of the exception giving the right to violate this principle in order to protect the highest value - the life and health of people.
In connection with the above, we express our categorical opinion against the adoption of the Law on Amendments and Supplements to the Law on Medicinal Products in Human Medicine submitted to the National Assembly on 09.10.2013 with signature 354-01-62, in particular the restrictive regime introduced with the newly proposed Art. 217a – art. 217c.
In conclusion, it can be said that based on the principles of free movement of goods, the parallel distribution of medicinal products in the European Community is an absolutely legal activity. The name "parallel" comes from its essence, namely that it represents trade outside the organized network of distribution established by the manufacturers of medicinal products and the quantitative quotas of medicinal products determined by them for individual countries. As such, parallel trade in medicinal products creates a real competitive environment and supports the regulation of medicinal product prices in Member States, and should therefore be protected, tolerated and encouraged.
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