1. UNAVAILABILITY OF DRUGS
It will come as no surprise that the Belgian market regularly faces drug shortages, sometimes resulting in unavailabity of medication for patients. For example, the list drawn up by the Federal Agency for Medicines and Health Products (hereinafter: the "FAMHP") since January 2014 includes no fewer than 562 medicines that were reported unavailable for human use.(1)
The problem should not be overstated, as it is germane to understand that a 'reported unavailability' refers to medication that is only unavailable in a certain dosage, through a particular route of administration, in a certain pharmaceutical form or in a certain size of packaging. Accordingly, the FAMHP reports that notifications of unavailable pharmaceutical packaging represent on average 5% of the total number of packaging put on the market in Belgium.(2) Luckily then, occasions where particular medicinal products are not available at all, irrespective of the packaging or dosages, are few and far in between.(3)
Even so, the Belgian legislator has taken it upon itself to secure the supply of medicinal products, and this has proven to be challenging. This blog illustrates some of the problems the legislator faces. It briefly lays out how the chain of distribution in Belgium is currently organized, which challenges the Belgian legislator has sought to address, how the Constitutional Court has deemed the legislator's response problematic and what the impact of the Constitutional Court judgments might be.
2. ORGANIZATION OF THE BELGIAN MARKET
The organization of the drugs distribution chain in Belgium is quite tightly regulated. The Medicines Act(4) subjects every actor in the distribution chain to rigid permit requirements in order to safeguard patient health, in that patients' medication needs are fulfilled.
Hence, pharmaceutical companies developing medication require a developing permit. Manufacturers, in turn, require market authorization. And before any medication reaches the patient, medication is first generally sold to wholesalers, who in turn sell the medication to pharmacies which are permitted to provide them to patients.
These wholesalers are important in the Belgian distribution chain. They buy, keep, deliver or export drugs, save for to the general public, and these activities require a permit. Hence, a wholesaler needs a permit to contract with manufacturers, other wholesalers, pharmacies or importers. Moreover, these wholesalers are subject to public service obligations, in that they, alongside market authorized manufacturers, must assure that the Belgian market is permanently and sufficiently stocked.
Wholesalers, within this legal framework, come in two kinds. Aside from regular wholesalers, there are about 11 authorized wholesale distributors, who are subject to a supplementary public service obligation, in that they must have an assortment of medicinal products at their disposal that can permanently provide for the needs of a delineated geographical area within a short term.
To ensure the efficacy of the aforementioned public service obligations, both regular wholesalers and wholesale distributors may only distribute medicinal products to each other, or to pharmacies, either in Belgium or elsewhere in the EU. Moreover, both are required to deliver drugs to wholesale distributors, so that they may abide by their aforementioned public services obligations.
All this implies that pharmaceutical companies, regular wholesalers and wholesale distributors have to regulate their production, stock and deliveries to the needs of the Belgian market, implying that delivery to (hospital) pharmacies and to wholesale distributors are prioritized. Only surpluses – surpassing the Belgian market's needs – may be freely commercialized.
3. THE EMERGENCE OF A PROBLEM
Though this system seeks to ensure the security of supply, the legislator found himself facing a problem of parallel imports and export. Parallel import and export refers the market situation in which products are procured or exported by or to companies which usually do not have ties with manufacturers. These practices may steeply influence the price setting of products, to the detriment of manufacturers. This is why many manufactures work with quota, which seeks to limit stocks and thence limit parallel export practices.
Needless to say however, such quota practices of manufacturers may be hard to square with the public service obligations incumbent upon the (other) actors of the distribution chain. The FAMHP issued a circular in 2010 attempting the address this tension.(5) It also decided to increase its monitoring of the public service obligations. Apparently these measures were to no avail, or at least insufficient, as the legislator decided to step in.
On 7 April 2019, it adopted an amendment to the Medicine Act to address, inter alia, this issue (hereinafter: the "Amending Act"(6)). The Amending Act proposed to "strengthen" the position of the wholesale distributors, whose position within the distribution chain was modified: wholesale distributors would still be entitled to be the recipient of deliveries by manufacturers and other wholesalers, but they would solely be authorized to deliver to other wholesale distributors and (hospital) pharmacies in Belgium. Export, from now on, would have to be taken care of by regular wholesalers. The latter, however, would not be able to procure their products from wholesale distributors, even if the latter had fulfilled their existing public service obligations.(7)
The Belgian legislator sought to justify this new mechanism referring to the public service obligation of wholesale distributors. A cure had to be sought – so the legislator argued – for the refusal by manufacturers to deliver sufficiently to wholesale distributors. The refusal stemmed from the perceived risk by manufacturers that wholesale distributors might (indirectly through regular wholesalers) engage in parallel exports. By limiting the delivery authorization of wholesale distributors, this risk would be offset, and the supply of drugs on the Belgian market would be better secured: wholesale distributors, whose stocks are legally secured given the obligation imposed upon manufacturers to deliver to them, could focus their ensured stock on the Belgian market. It would thence be easier for wholesale distributors to fulfil their public service obligations.
The Amending Act entered into force on 18 May 2019, though not for long.
4. THE AMENDING ACT UNDER ATTACK
Several applicants filed appeals with the Constitutional Court. Not only did they request the law to be annulled, but they also called for a suspension of the law. And in fact, they got what they wanted.
In two judgments, dating 18 July 2019 (suspension) and 17 October 2019 (annulment), the Court decided that these measures could not pass constitutional muster because the export prohibition could not be justified, and was prohibited under European law.
First, the Court remaked that medicinal products, though rigidly regulated, do not escape the European internal market rules and hence are subject to the free movement of goods rules. Articles 34-35 of the Treaty on the Functioning of the European Union (hereinafter: "TFEU") enshrine the prohibition of as quantitative restrictions on imports/exports or measures having equivalent effect in order to ensure this free movement. The Court emphasized the effects of the measure on the regular wholesalers that could no longer obtain supplies from the wholesale distributors, and qualified the Amending Act as enshrining a measure having equivalent effect. Given that the impact was substantial on the regular wholesalers, the Court concluded that the measure was in principle prohibited.
Nonetheless, exceptions to this principle are enumerated in Article 36 TFEU. The Belgian government sought to rely upon Article 36's "protection of health" exception, and it could hardly be argued that the Amending Act did not claim to seek public health protection.
However, as the Court reiterated, any such exception must be suitable and necessary in order to attain the goal, and this was where the Amending Act faced its demise. For the Court lamented the lack of proof adduced by the Belgian government: the government had not provided data supporting the premise that wholesale distributors in fact negative impacted the availability of drugs. Conversely, the Court argued, the regulation of the distribution chain as applied before the Amending Act already sought to ensure security of supply, especially through its public service obligations.
Provided that the applicants had indeed provided unrebutted evidence that truly unavailable medicines constituted but a marginal percentage of the effective exported drugs, the Court was sufficiently convinced to suspend the Amending Act, taking into account the enormous economic impact of the proven refusal of manufacturers to supply the regular wholesalers. Later on, about a month ago, the Court annulled the Amending Act.
5. RESPONSE AND THE PATH FORWARD
In response to the Court's annulment, the National Association of Wholesaler-Distributors of Medicines (hereinafter: the "NVGV") claimed to be satisfied. Nevertheless, in a communiqué, the NVGV already called for "a broadly-based solution with the entire sector that addresses the real causes of the shortages". According to NVGV, experts agree that the problem needs to be tackled in several areas. In the words of the NVGV: "Better preventive information about the unavailability so that alternatives can be deployed in time, the mandatory creation of buffer stocks for the Belgian patient and the extension of the right of substitution for the pharmacist are already three valid options".(8)
The pressing question is how the legislator, attempting to give high priority to the interests of the patient, might react. At present, a national measure that is both solid and legal seems out of reach. First question is here is whether a response is really needed. As our Minister of Health herself indicates, there are only four really unavailable drugs for which no alternative is available.(9)
Nevertheless, the political climate exists to pursue further legislative action at the national level. And it seems that the legislator might take a new stab at it. N-VA and Open Vld, for example, have already submitted a joint bill(10) seeking to address drug shortage deploying some new parameters. Aside from an obligation to report any causes for shortages and aside from imposing costs on pharmaceutical companies when a patient needs to resort to alternative more expensive medication, the bill again seeks to impose an export ban, however, this time conditioned upon reporting of shortages on the Belgian market.
The latter solution might come to terms with the Court's assessment of the suitability of the measure, but it remains to be seen whether this bill can first muster sufficient support to pass(11) and then whether it can pass the other prongs of the internal market test that the Court eagerly deployed vis-à-vis the Amending Act that no longer exists.