Can drugs that have been stockpiled in case of a no-deal Brexit legally be sold to other countries? Yes, at the moment they can, and because the pound is so weak compared with the Euro, there is a very real risk that this may happen, which is why the UK Government has introduced a temporary restriction on exports of certain drugs.
There is a lot of uncertainty surrounding what will happen in the event of a no-deal Brexit, in particular in relation to trade. There are concerns that we may be left with gaps on shelves in the short to medium term, as has been seen in the government's recently partially released Project Yellowhammer report, which has attracted widespread controversy, with potential threats to patient safety being a prominent issue. While the supermarkets are busy stockpiling mince pies, GPs and hospitals are more concerned that their patients may not be able to have their prescriptions dispensed from pharmacies, where gaps on shelves will have a much greater impact.
Earlier in the summer, the Department of Health and Social Care (DHSC) asked healthcare companies to build a six week supply of stock ready for no-deal Brexit, to mitigate any shortfalls in products and ingredients crossing the borders from the EU into the UK. Stockpiling is a key component of the DHSC's 'multi-layered' approach to no-deal Brexit planning along with re-routing, emergency freight options, trader readiness, etc. A high proportion of the pharmaceutical and medical devices industry players have built a stockpile wherever circumstances allow (many products have too short a shelf-life to be stockpiled), having had to manage their previous stockpile through the supply chain after the UK's exit date from the EU was extended in March and April.
However, the Association of British Pharmaceutical Industry (ABPI) warned of concerns that medicines that have been stockpiled for the UK market in the event of a no-deal Brexit could be sold off outside the UK before Brexit. This would widen the gap in supply in the UK post-Brexit, leaving patients unable to get the prescriptions that they need after the UK leaves the EU.
The concern is fuelled by the devaluation of the pound in the run-up to Brexit: if the pound continues to drop against the Euro, the rest of Europe becomes an increasingly attractive market in which to sell drugs, meaning that medicines that had been intended for the UK market are sold off elsewhere in the EU by wholesalers. The stockpiling programme is for medicines and medical products that would require a prescription or that you would usually get under supervision from a pharmacist, and that are either made in the EU or contain ingredients or components that are made in the EU.
The stockpiled drugs fall into two buckets: 1. Those that have been purchased by an entity in the EEA. Whether that entity bought them in the UK or elsewhere in the EEA, these drugs have already been put on the market in the EEA with the rightsholder’s consent. The trade mark rights in these drugs have been exhausted, meaning that the drugs can legitimately be sold on anywhere in the EEA (before or after Brexit). This is known as parallel trade. 2. Those that have not yet been put on the market in the EEA, because they have been transported and stored in the EEA but not yet sold in the EEA. The trade mark rights in these drugs are not exhausted. These drugs can currently be put on the market either in the UK or elsewhere in the EEA with the rightsholder's consent.
As we currently have EEA-wide exhaustion they can then be re-sold anywhere in the EEA. However if on Brexit, the UK were to enter into a national exhaustion regime, drugs first put on the market with the rightsholder's consent in the UK, could not be sold outside the UK without infringing trade mark rights. The likelihood of a national exhaustion regime is very low, and the Government has said that in the short term at least in the event of a no-deal Brexit, the UK will continue to recognise the EEA regional exhaustion regime. Post a no-deal Brexit, the introduction of duties on goods shipped from the UK to the EU could help stem the flow of drugs out of the UK, but for any temporary restrictions to have the full intended effect they would need to last beyond Brexit, possibly until the pound recovers against the Euro.
At the moment, parallel imports tend to flow into the UK, where goods can be bought inexpensively in other EU member states and resold at a higher price in the UK. If the pound continues to weaken however we will increasingly see the tide turn and parallel exports becoming more common than imports. As a result, and particularly in response to the ABPI's call for ministers to restrict parallel exports and attempt to stem the flow of drugs out of the UK, the Government has now announced a ban on drug exports of the medicines considered to be in shortest supply across the country. The export ban lists 24 drugs in total, including 19 hormone replacement therapy drugs, adrenaline pens for severe allergies, hepatitis B vaccines and a number of contraceptives. It is not yet clear how long this ban will stay in place for.
Currently, under EU legislation, for the UK Government to impose a temporary export ban to prevent stockpiled drugs being sold out of the UK, it would need to do so on the basis of Article 36 of the Treaty on the Functioning of the European Union (TFEU). Article 36 provides that the provisions of Articles 34 and 35 (which themselves prohibit restrictions on imports and exports between Member States) “shall not preclude prohibitions or restrictions on imports, exports or goods in transit justified on grounds of … the protection of health and life of humans … Such prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States.” Article 36 allows for a limited exception to the prohibition of any restrictions of the free movement of goods within the EU only where the public health justification is:
- genuine (i.e. designed to achieve a real and stated public policy perspective), and
- proportionate (i.e. the measure is appropriate to achieve the stated public health objective and not more restrictive than is necessary to achieve its legitimate objective).
A number of EU Member States have applied to the Commission to restrict exports on the basis of Article 36, with varying success. For example, the Belgian Constitutional Court is currently considering the legitimacy of an amendment to the Medicines Act made earlier this year by the Belgian Parliament which sought to tackle medicines shortages in Belgian pharmacies.
Another recent example is Romania: on 13 September 2019, the Romanian Ministry of Health announced, as a result of a public consultation, that it would suspend the exportation of 127 medicines for a six month period. The targeted medicines all run an increased risk of shortage and are indicated for the treatment of cancer and transplant patients. The measure will be notified to the European Commission and is expected to be blessed given the short-term, targeted, nature of the proposed restriction.
The EU has already made clear that, if the UK leaves the EU without a deal, parallel exports into the EU would not be possible as the UK would be outside of the single market. Ahead of Brexit, the restriction imposed by the UK on exports will need to be genuine and proportionate, meaning a temporary, targeted restriction could constitute a legitimate way of preventing the drugs stockpiles in the UK from being run down ahead of Brexit. As the precise details of the Government's new ban are still to be released, in particular its duration, it is not yet clear whether it would be deemed to be genuine and proportionate for the purposes of Article 36.