Parallel imports of pharmaceutical products: implications of EU enlargement

The completion of the EU accession negotiations for the CEE countries, Malta and Cyprus have important implications for potential parallel importing activity.

By "CEE countries" are meant Hungary, Poland, the Czech and Slovak Republics, Bulgaria, Romania, the Baltic States (Estonia, Latvia and Lithuania). The CEE countries, together with Cyprus and Malta, have completed their EU accession negotiations in time to accede to the EU during 2004, except for Bulgaria and Romania whose accession is expected in 2007. Therefore, for the majority of CEE countries, the full effectiveness of EC laws and regulatory controls in relation to medicinal and pharmaceutical products is relatively imminent. The Accession Treaty is expected to be signed in Athens in April 2003.

For a variety of reasons, principally deriving from bilateral Association or "Europe" Agreements between CEE countries and the EU, the basic free trade principles of EU law generally apply already to EU-CEE trade. This is because the Association Agreements incorporate:

• principles of free movement of goods: these are directly effective in EU courts; and

• obligations to uphold competition law principles: these are unlikely to be directly effective in EU courts. However, the wide scope of EU competition law makes e.g. a contractual ban on exports from Poland a potential infringement, even though Poland is not currently an EU Member State.

The picture is made more complex for pharmaceutical products by the marketing authorisation regime. Parallel trade in pharmaceutical products is only possible between existing EU Member States where parallel marketing authorisations exist in the countries of export and import for bioequivalent products. For the CEE countries, there is a commitment by the accession countries to reach EU equivalence for the dossiers behind national marketing authorisations by the time of accession, although some countries have asked for a transitional period to achieve this. Dossiers which are not EU equivalent will lapse.

The picture therefore emerges that once a dossier/marketing authorisation reaches EU equivalence, parallel importing from the CEE to the EU ought to be possible. That would be the case, but for a specific mechanism to be included in the Accession Treaty. This mechanism protects the intellectual property rights of patent or Supplementary Protection Certificate ("SPC") holders which were in place at a time when such protection could not be obtained in the relevant accession state.

Given the significance of the principle, the mechanism is worth quoting in full:

"With regard to [the new Member States] the holder or his beneficiary of a patent or Supplementary Protection Certificate filed in a Member State at a time when such protection could not be obtained in one of the above-mentioned Member States for that product may rely on the rights granted by that patent or Supplementary Protection Certificate in order to prevent the import or marketing of that product in the Member State or Member States where the product in question enjoys patent or Supplementary Protection Certificate protection even if the product was put on the market in that new Member State for the first time by him or with his consent."

The mechanism applies only to patents and SPCs, and not to any other form of intellectual property right.

What will be the impact? Typically patent protection for pharmaceutical products in many of the CEE countries came in between 1991 and 1994. If the full 5 year protection of the SPC is available, some products might enjoy up to 15 years' protection from parallel trading. The key dates will be:

• the filing date of the patent/SPC in a Member State; and
• the date when patent protection or SPC protection became available in (presumably) the relevant accession country.

That said, there will be new or recently launched products which will fall through this net and for which companies will need to consider alternative strategies.

If you have any further queries on this matter, please do not hesitate to contact Stephen Whybrow on +44 (0)20 7367 2175 or at [email protected], David Marks on +44(0)20 7367 2136 or at [email protected] or Zelda Pickup on +44 (0)20 7367 2043 or at [email protected]

Endnote

The transitional periods are: until 31 December 2005 for Cyprus; until 31 December 2006 for Malta and Lithuania; until 31 December 2006 for Slovenia and until 31 December 2008 for Poland.