A new Hungarian law, which amended Act XCV of 2005, (the Medicines Act) to introduce a supply obligation for pharmaceutical companies and an export ban on certain medicines, came into force on 6 July 2013.

Supply obligation

The amended Medicines Act imposes a general obligation on manufacturers to supply distributors in circumstances where the distributor claims that the stock is needed to satisfy Hungarian market demand. The wholesaler can only sell this stock to Hungarian healthcare service providers/pharmacies and cannot export it. The wholesaler must also keep records of all medicines received under this provision.

This provision is likely to raise many practical questions and may also affect current commercial contracts and supply chain management systems of pharmaceutical companies.

Firstly, pharmaceutical companies will be obliged to supply any pharmaceutical wholesaler where the distributor claims that the ordered medicine is needed to satisfy local market demand but is not entitled to request evidence from the wholesaler establishing the purpose and destination of the supplied products. However, the authority may monitor wholesalers because they must also keep records of all medicines received under this provision. Another practical question is whether a pharmaceutical company may refuse further supplies if the wholesalers promising to satisfy Hungarian market demands ordered a quantity of products which would be sufficient to meet market demand in Hungary. Also, the obligation to supply any wholesalers that claim to supply Hungarian healthcare service providers may affect existing supply/distribution agreements with wholesalers.

Export ban

The amended Medicines Act allows the competent authority (GYEMSZI) to prohibit the export of a particular medicine if there is a risk to patient supply in Hungary. The export ban will last as long as there is a real risk to security of supply subject to a maximum period of 12 months. Similar measures have also recently been introduced in Greece, the Czech Republic and Spain.

It is questionable whether this export ban complies with the EU free movement rules. On the one hand, it may be considered proportionate because it is designed to ensure security of supply for local patients and the ban only lasts as long as there is a genuine risk to patient supplies subject to a maximum of 12 months. Conversely, the amended Medicines Act allows an outright export ban in case of risk to patient supply and does not allow a more differentiated approach by imposing an export ban on only those wholesalers who actively engage in excessive parallel trade activities.

The reasoning to the amendments notes that the GYEMSZI may prohibit the export of a medicine based on the risk assessment of the authority and it is not clear how exactly the authority will proceed. It is likely that the GYEMSZI will start proceedings following notification from the marketing authorisation holder of a medicine of the fact that the export of a given medicinal product has reached such a quantity which endangers the continuous supply of the medicine in Hungary.

According to the amended Medicines Act, the GYEMSZI will have special supervisory powers to investigate – among others - any breach of the supply obligation of wholesalers. For instance, the GYEMSZI may conduct site inspection and make a forensic copy of databases. The authority may also conduct a dawn raid subject to prior authorisation from the public prosecutor. During the dawn raid, the GYEMSZI may search any premises, including private homes and cars of company representatives. The GYEMSZI may also impose a fine on the infringing company, the maximum amount of which is HUF 500 million (approximately EUR 1,700,000) which can be determined by the GYEMSZI by considering all the relevant circumstances of the case.