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Consequences of Brexit for the distribution of medicinal products in Europe

01.02.2019

As part of our series on Brexit and its consequences for pharmaceutical companies (see our articles Brexit with or without a deal: Consequences for pharmaceutical companies and The impact of Brexit on medicinal product marketing authorisations), in this article we provide you with an overview of the consequences of Brexit for the distribution of medicinal products from the United Kingdom to the territory of the remaining Members States of the EU (“EU 27”).

From a regulatory perspective, this will in particular require new marketing authorisations and, in this context, sometimes corporate restructuring. In daily sales practice, the effects will be particularly noticeable in customs clearance. We recommend that any necessary restructuring measures be initiated at an early stage in order to be prepared for a “no deal” Brexit at the end of March 2019.

Formal requirements

Registered office of distributor

Directive 2001/83/EC on the Community code relating to medicinal products for human use, which is relevant for the marketing of medicinal products within the European Union, does not in principle require that the distributor have its registered office within the EU.

However, the Member States have not uniformly implemented the Community code, and some Member States (including Germany) expressly require in their national regulations that the distributor in the Member State concerned have its headquarters (registered office) in the territory of the European Union (cf. for Germany: sec. 9(2) German Medicinal Products Act (Arzneimittelgesetz – AMG)). A British pharmaceutical company would therefore, for example, have to relocate its headquarters to the territory of the European Union for the distribution of its pharmaceuticals in Germany after Brexit or would have to handle the distribution of pharmaceuticals via a European representative that holds the appropriate wholesale distribution authorisation (see below). Whichever option the company chooses, it will be necessary to reorganise its distribution and its corporate structure. It is therefore advisable to review the individual national requirements for the marketing of medicinal products for all EU Member States to which the respective British pharmaceutical company exports its medicinal products.

Wholesale distribution authorisation

A wholesale distribution authorisation is required in order to place medicinal products on the market in the territory of the European Union as a wholesale distributor (cf. Article 77(1) of Directive 2001/83/EC; implemented in Germany in sec. 52a German Medicinal Products Act). The only case in which this does not apply is the possession a manufacturing authorisation because this includes the wholesale distribution authorisation (Article 40(1) of Directive 2001/83/EC; sec. 13 German Medicinal Products Act).

The Community code does not require that the party applying for the wholesale distribution or manufacturing authorisation have its registered office in the territory of the European Union. British pharmaceutical companies that hold such a wholesale distribution authorisation could therefore in principle continue to engage in the wholesale distribution of medicinal products from the United Kingdom to the territory of the EU 27.

However, should the restructuring of marketing described above regarding the marketing authorisation holder’s registered office lead to the change of the wholesale distributor, the “new” wholesale distributor itself would have to apply for a new wholesale distribution authorisation. It is not possible to transfer this wholesale distribution authorisation from the old wholesale distributor to the new wholesale distributor.

“Qualified person responsible for pharmacovigilance”

A “qualified person responsible for pharmacovigilance” (“QPPV”) also has to be designated by the marketing authorisation holder (and in Germany by the distributor as well) for the marketing of medicinal products in the EU. This qualified person must be resident in the European Union (cf. Article 104(3) subparagraph 2 of Directive 2001/83/EC; for Germany sec. 63a(1) German Medicinal Products Act).

British marketing authorisation holders that want to export medicinal products to the territory of the EU 27 therefore have to designate such a person resident in the territory of the EU 27. Demand for such qualified persons is therefore likely to increase dramatically in the coming weeks and months, simply due to the fact that to date a large number of the designated qualified persons in the EU are resident in the United Kingdom. The number of qualified persons who have to be replaced is therefore already high. In addition, the number of qualified persons available outside the United Kingdom is limited. We therefore recommend arranging the designation of a qualified person resident in the territory of the EU 27 as quickly as possible, in order to pre-empt this shortage.

Import authorisation/import certificate

Finally, the United Kingdom will be regarded as a third country after Brexit, which is why it will be necessary for each wholesalers in the territory of the European Union to hold an authorisation to import medicinal products (cf. Article 40(3) of Directive 2001/83/EC; for Germany sec. 72 German Medicinal Products Act). For the import of active substances, the wholesaler also requires a certificate confirming that the imported active substances have been manufactured in accordance with the standards that have to be met for the manufacture of active substances within the EU (cf. Article 46b of Directive 2001/83/EC; for Germany sec. 72a German Medicinal Products Act).

Customs clearance

Until it leaves the European Union, the United Kingdom remains a Member State in terms of customs law. After it leaves, however, all goods delivered to the EU will have to be cleared at customs due the required customers formalities. Due to the additional work involved for the competent customs authorities, long waiting times for customs inspections are to be expected, which can lead to disruptions in the extremely sensitive supply chains due to longer storage times etc. Measures should therefore be taken together with the logistics service provider to ensure the protection of the medicinal products/active substances during customs clearance.
For more detailed information on the impact of Brexit on customs clearance we recommend the information website of the General Customs Directorate.

A brief recap:
What needs to be done?

Especially in view of the fact that the British House of Commons rejected the withdrawal agreement negotiated by Theresa May and due to the fact that the EU 27 have rejected any renegotiations, companies should prepare themselves for a “no deal” Brexit at the end of March. This means in particular that there will be no transitional period until the end of 2020 allowing companies to adapt to the new situation. The above measures should therefore be taken now and as soon as possible. This includes, if not already done, in particular...

… for suppliers:

• if necessary, relocation of company headquarters to the territory of the EU 27 or designation of a European representative via which distribution is carried out in the territory of the EU 27;

• if necessary, application for a wholesale distribution authorisation for the new wholesaler chosen due to restructuring;

• designation of a qualified person resident in the territory of the EU 27;

• ensuring proper supply taking the customs clearance required in future into account.

… for wholesalers in the EU 27:

• if purchasing medicinal products or active substances from a British company: applying for an import authorisation and, if necessary, a certificate confirming that the imported active substances have been manufactured in accordance with the standards that have to be met for the manufacture of active substances within the EU.