Parallel trade in medicines - the impact of the Falsified Medicines Directive

Parallel trade in medicines - the impact of the Falsified Medicines Directive

Parallel trade in medicines - the impact of the Falsified Medicines Directive

The recent introduction of additional safety features under the EU Falsified Medicines Directive (FMD)[i], including a unique 2D barcode and an anti-tamper device, has resulted in parallel traders having to remove the anti-tamper devices and replace these as the goods move across borders.

A key point in dispute is whether they may re-box the medicines or whether they must re-label and reapply anti-tamper devices to the original packaging (which might perhaps be looking a bit tired by now). An Advocate General’s opinion issued by the Court of Justice (CJEU) on 13 January 2022[ii] indicates that there is no automatic right to re-box in this situation. If this is followed by the CJEU itself then this will be welcomed by brand owners.    

The background

Parallel traders buy branded medicines in countries where they are cheaper and sell in countries where they are more expensive, thus arguably exerting a downward pressure on medicine prices. It is possible for them to do this because EU free movement of goods rules override the brand owner’s right to use its trade mark to control imports of the branded goods into the more expensive country. As they move the medicines across borders parallel traders are obliged to open the brand owner’s original outer packaging to insert patient information in the local language in accordance with national regulations. This now involves removing the tamper-proof security features required by the FMD and replacing these as described above.

Parallel traders prefer to re-box

Re-boxing the medicines in new outer packaging – rather than re-labelling using stickers and applying a new anti-tamper device to the original packaging - may result in a tidier product that is more likely to be acceptable to pharmacists and to patients. It may also give the parallel importer more opportunity to add its own branding, while still acknowledging the source of the product.  Re-boxing is, therefore, often preferred by parallel traders. Brand owners, by contrast, may prefer them to re-label because this often involves less change to the original packaging. Established CJEU case law (the "BMS conditions") provides that re-boxing is generally only permitted if it is necessary to obtain effective access to the market in the Member State of importation.[iii]

Is re-boxing necessary?

The question arises whether re-boxing is to be regarded as necessary where FMD safety features need to be removed or modified. The AG advises that both re-boxing and re-labelling the original packaging are in principle capable of complying with FMD safety requirements – there is no requirement to re-box. Depending on the circumstances, this may be true even where it is not possible to replace the anti-tamper device without leaving marks showing that the original anti-tamper device has been broken. The AG also concludes that the FMD requirements do not require the unique identifier code to be printed directly onto the packaging: over-stickering is permissible provided that the sticker used cannot be removed without damaging the packaging or leaving a mark showing that it had been torn off. This removes the argument that re-boxing is required to enable a new identifier barcode to be printed directly onto the new packaging.

When is re-boxing permitted?

The key point highlighted by the AG was that if in any particular case the changes made to achieve compliance with the FMD result in the repackaged medicines not being able to gain effective access in the new market (for example because they meet resistance from pharmacists or affect patient confidence) then re-boxing will be regarded as necessary under the BMS conditions and re-boxing may be justified. The question of whether re-boxing would be permissible on this basis in any particular case was for the national court to decide. This may, of course, lead to different outcomes in different countries.

The AG was critical of guidelines issued by national authorities in some countries providing that, in cases involving FMD features, re-boxing should be used other than in exceptional circumstances. He advised that national authorities had no right to lay down guidelines of this sort.

Is this relevant to the UK after Brexit?

Northern Ireland remains within the FMD system, and a single market in goods still applies as between Northern Ireland and the EU. As a result, the issues described above are of direct relevance to parallel imports into Northern Ireland from the UK and vice versa. By contrast, the FMD system ceased to apply in Great Britain from the end of the Brexit transition period (31 December 2020). However, under interim provisions, parallel goods from the EU27 are still permitted to enter the whole of the UK. Pharmaceutical parallel importers into Great Britain continue to be bound by principles set out in pre-existing EU and UK case law referred to above, including the principle that re-boxing is only justified if it is necessary to obtain effective access to the market.

[i] 2011/62/EU

[ii] C-147/20, C-204/20, C-224/20

[iii] Bristol Myers Squibb and others v Paranova – joined cases C-427/93, 429/93, 436/93

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