A falsified medicinal product is -
any medicinal product with a false representation of:The Directive thus affects the implementation of European trade mark law. It was approved by the European Parliament in February this year, with the expectation that it will "help safeguard the medicines supply chain and protect patients".
a) its identity, including its packaging and labelling, its name or its composition as regards any of the ingredients including excipients and the strength of those ingredients;
b) its source, including its manufacture, its country of manufacturing, its country of origin or its marketing authorisation holder; or
c) its history, including the records and documents relating to the distribution channels used
The EU member states are required to give effect to the Directive through their national legislation within 18 months, with implementation of some measures (such as product safety features) being phased in over five years.
The Directive covers all prescription pharmaceuticals unless specifically exempted. It does not cover non-prescription pharmaceuticals unless those products are considered to be at high risk of falsification. The Directive does not deal with unintentional quality defects. It does not explicitly refer to an objective of protecting industrial property (ie registered trade marks and patent rights); the focus is instead on "the major health threat that can arise from falsified medicines". However, protection of intellectual property throughout the chain from laboratory to consumer is a mechanism for addressing the "health threat" that has been evident in for example discoveries of fake painkillers that included plaster or anti-freeze and antibiotics that featured more rat droppings than active pharmaceutical ingredients (APIs).
Those discoveries have been highlighted in works such as Peter Aldous, 'Counterfeit pharmaceuticals: Murder by medicine' 434 Nature (10 March 2005) 132-136; Robert Cockburn, Paul Newton, E. Kyeremateng Agyarko, Dora Akunyili & Nicholas White, 'The Global Threat of Counterfeit Drugs: Why Industry and Governments Must Communicate the Dangers' 2(4) PLoS Medicine (2005); Theodore Kelesidis, Iosef Kelesidis, Petros Rafailidis & Falagas, 'Counterfeit or substandard antimicrobial drugs: a review of the scientific evidence' in 60(2) Journal of Antimicrobial Chemotherapy (2007) 214–236; Amy Bunker, 'Deadly Dose: Counterfeit Pharmaceuticals, Intellectual Property and Human Health' 89 Journal of the Patent & Trademark Office Society (2007) 493-515; and Albert Wertheimer & Jeremiah Norris, 'Safeguarding against substandard/counterfeit drugs: Mitigating a macroeconomic pandemic' 5(1) Research in Social and Administrative Pharmacy (2009) 4-16.
The Directive includes several measures of interest to intellectual property law students and practitioners.
Mandated safety measures include -
• introduction of safety features on packaging, for example tamper-evident seals and item-level serial identificationRepackaging by parallel importers is permitted but those traders are required to replace point-of-origin safety features with equivalent ones when repackaging the products.
• stronger rules on importing APIs
• verification by national licensees that manufacture of APIs is consistent with Good Manufacturing Practice and
• verification by national licensees that distribution is consistent with Good Distribution Practice.
The Directive addresses concerns regarding internet sales of medicines, claimed to be the most important channel through which falsified medicines enter the EU market. National rules for online pharmacies within the EU are not harmonised by the Directive and currently remain at the discretion of each state. However the Directive features introduction of an EU safe pharmacy logo - serving as a 'trust mark' - that is to be included on the sites of approved online pharmaceutical vendors, with a link to official national registers of all approved pharmacies. The aim is to allow consumers to identify legitimate sites within the EU (sites outside the EU would be unmarked and therefore suspect) and thus buy online with confidence.
Customs agencies, in co-operation with other authorities, are obliged to prevent medicinal products that are suspected of being falsified from entering circulation. EU member states must impose severe sanctions against entities that manufacture, distribute, import or export falsified medicines.
Rights owners and traders have been broadly supportive during public consultation about the Directive. The European Commission estimated that costs from 2013 to 2020 would include -
• between 6.8bn EUR and 11bn EUR, for manufacturers and importers of medicinal products, depending on the safety technique chosen;In summarising its impact assessment report [PDF] the Commission commented that -
• 157m EUR, for pharmacies, depending on the chosen approach;
• approx. 280m EUR, for wholesale distributors of medicinal products;
• approx. 403m EUR, for wholesale distributors who engage only in export activity;
• approx. 5m EUR, for other traders situated in the distribution chain;
• approx. 320m EUR, for manufacturers of API, with the bulk of these costs falling
on 3rd country manufacturers.
The report assesses the socio-economic consequences if manipulations of safety-features affixed on the medicinal product were in principle prohibited and shows that these impacts would mainly relate to parallel trade of medicinal products. This is due to the fact that parallel traders, as part of their business model, have to re-package medicinal products in view of, in particular, language requirements in the destination state.
The impact assessment shows that, in a first-round effect, the reduction of parallel trade leads to losses of turnover for these businesses (approx. 3.2 to 4.5bn EUR) and reduces employment (approx. 9 000 jobs in the EU). Moreover, the reduction of parallel trade removes price competition (between the originator and the parallel distributor) which may arguably reduce savings for public health budgets and/or social security schemes in high-price countries (DK, UK, SV, NL, DE). The exact amount of these savings is highly controversial. Studies conclude a range between 100m to 600m EUR per year in the EU.
The impact assessment also looks at second round effects of this policy option. It shows that the revenue and employment generated so far by parallel traders may be re-distributed to wholesale distributors and to the research-based industry. With regard to the latter, these revenues may be re-invested in R&D thus contributing to the competitiveness of this sector.
As regards potential savings for public health budget and social security schemes, the impact assessment sets out various arguments as to the extent of the savings and whether they could also be obtained through national regulation of pricing and re-imbursement in the high-price countries.
