The Bulgarian regime for control over parallel exports
In January 2014, amendments to the Bulgarian Act on Medicinal Products in Human Medicine introduced a notification regime for exports of reimbursed drugs from Bulgaria. Under the amendments, wholesalers were required to notify in advance the Bulgarian Drug Agency of each instance of the export of such drugs, including to another European Union Member State. The notification had to contain information on, among other details, the number of units intended for resale abroad and the destination.
Under last year’s amendments, the Bulgarian Drug Agency had 30 days to object to the planned export. The authority could do so if the quantities of the product that were available on the market at the moment of notification were insufficient to meet demand, if the export could lead to a temporary shortage of the product, or if the shortage could pose a serious threat to the health and life of patients. No specific, quantitative criteria were established to determine when the supply was insufficient to meet demand or when a temporary shortage could occur.
If the Drug Agency did not oppose to the planned export within a 30-day period, the export was considered admitted.
The Constitutional Court has quashed the grounds for opposing exports because of their arbitrariness and disproportionality
In a ruling on 29 January 2015, the Bulgarian Constitutional Court found that the grounds on which the Drug Agency could object to exports ran contrary to the principles of equal treatment of market players and of proportionality. In essence, the court took issue with the lack of specific and quantifiable criteria for establishing “insufficiency” and “temporary shortage” of the quantities available locally in each case. This, on the one hand, could result in arbitrary approvals or objections to planned exports from one instance to another and, therefore, unequal treatment of similar situations.
On the other hand, the court harboured serious doubts as to whether such a regime was a proportionate enough measure aimed at ensuring the security and sufficiency of local supplies. A ban on an export of a drug would have been admissible only in extreme situations, when no viable original or generic alternative of the exported product existed on the Bulgarian market and the demand for treatment indeed could not be met.
In the court’s view, these flaws of the notification regime made it operate, in effect, as a licensing regime. Its pivotal elements – the grounds for opposing exports – were found to be unconstitutional. The question of whether the regime may have also sidestepped the European Union’s free movement rules was only marginally addressed, without any specific deliberations or conclusions on this.
The ruling passed with nine out of twelve votes. Three judges submitted a dissenting opinion. They were essentially of the view that the notification regime was admissible and justified as a means of guaranteeing sufficient supplies of socially significant medicinal treatment and safeguarding public health, and that the grounds for opposing exports were not discretional.
Effects of the ruling
Technically, the ruling proclaimed as unconstitutional only the provisions allowing the Bulgarian Drug Agency to allow or object to planned exports. The repeal of these provisions will become effective at the moment when the court ruling enters into force, which is three days after the ruling is published in the Bulgarian State Gazette.
The requirement for notifying each instance of intended export was not revoked, and it therefore nominally subsists as such. However, the annulment of the grounds for opposing exports in effect prevents the Drug Agency from blocking them, and thus reduces the entire mechanism for control over the resale of drugs abroad to a reporting exercise.
Parallel exports from Bulgaria
Parallel exports of medicinal products from Bulgaria to other countries, including within the EU, have been a recurring practice for a number of years now. Official statistics value annual parallel trade at approximately BGN 300 million (approximately EUR 153 million). The sweeping scale of resale often results in an undersupply of treatment for certain socially significant diseases. It remains to be seen whether and how the Bulgarian government will address this situation and try to overcome the deficiencies of the Act on Medicinal Products described above, while still complying with the Bulgarian Constitution and European rules for the free movement of goods.