Covid-19 and the restriction of parallel exports and hoarding of medicinal products

The Covid-19 pandemic has led to restrictions on our lives which most of us have never experienced before. The media has understandably focused on the restrictions brought into force last week on gatherings and being outside the home without a reasonable excuse. One restriction that has received little media attention is the banning of parallel exports of 80 crucial medicines, such as adrenaline, insulin, paracetamol and morphine.  The reason behind this restriction is simple – the Government is trying to ensure that keep medicines intended for UK patients are kept in the UK to assist in the fight against Covid-19.

On 25 March 2020, the Department of Health and Social Care (“DHSC”) issued updated guidance on the list of the medicines to which the ban applies. The list is being updated daily. The list already contained some medicines prior to the Covid-19 crisis, but has seen huge numbers of additional (and often common) medicines added in recent days. The Health Secretary has warned that any company found to be parallel exporting or hoarding these medicines will face “tough action” from the UK’s drug regulator, the Medicines and Healthcare Products Regulatory Agency (“MHRA”).   The reason for this tough stance is obvious – parallel exporting and hoarding medicines risk a devastating impact on the NHS’s ability to provide care if they fall into short supply. Individuals working in the pharmaceutical industry have no choice but to check the list of prohibited medicines on a daily basis.

Parallel Exporting

Parallel exporting means purchasing medicines already in the UK market in order to sell on to another country in the EEA.  There are limited exceptions to the prohibition, including:

1. Medicines may still be supplied to ships, planes, the armed forces and British citizens abroad.
2. Exports can be made to UK Crown dependencies and overseas territories.

• Exports can be made of medicines manufactured and intended for markets abroad (i.e. not intended for the UK market)

1. Where a parallel export was already agreed (and a final agreed purchase order has been received) prior to the date of restriction.

It is anticipated that the MHRA will scrutinise any such exports to ensure they catch any misuse of the exceptions.

Hoarding

Hoarding is when wholesale dealers withhold a medicine that is in short supply. Traders can still withhold medicines as part of their stock management arrangements (as agreed with marketing authorization holders).  Notably the Guidance also allows wholesalers to continue to stockpile in preparation for Brexit, but only at the request of the DHSC.

Consequences of breaching the guidance

Failure to adhere to the guidance is a breach of regulation 43(2) of the Human Medicines Regulations 2012 and may lead to regulatory action against being taken in respect of the wholesale dealer’s licence. Such action could include an immediate suspension of the licence, suspension of the supply of certain products under the licence, or a 28-day notice proposing to vary the licence to restrict or prevent export activity.  If the wholesaler continues to breach the restrictions, it will commit a criminal offence under regulation 34(1) (read together with regulation 18(1)) of the Human Medicines Regulations 2012. If found guilty of such an offence, a person could face a fine of up to £5,000.  There are more serious offences of giving false information in response to the notice, which could again result in a fine or, in the most serious of cases, result in a term of imprisonment of up to two years.

Given the unprecedented need in the UK for long-term supplies of basic medicines, the MHRA is likely to give little grace to those who flout the new restrictions on parallel exporting and hoarding. When parallel exporting on the basis of the exemptions set out above, or when hoarding in line with the guidance, pharmaceutical companies must now take extra care to ensure that the paperwork clearly supports the lawfulness of their actions.