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Legislative Interventions in the Production and Supply Chains of Pharmaceutical Companies, Medical Device Manufacturers and Suppliers – Duty to Provide Information, Delivery Bans, Export Regulations

Extended competences of the federal government

Currently, companies in the pharmaceutical and medical device industry are faced with legislation based on the considerable extension of competences of the federal government, under the bill called Gesetz zum Schutz der Bevölkerung bei einer epidemischen Lage von nationaler Tragweite. Additionally, they face export restrictions. 

The bill provides for a number of new competencies for the Federal Government, the Federal Ministry of Health may order measures in relation to medical devices, diagnostics, protective equipment, pharmaceuticals and narcotics, active pharmaceutical ingredients and auxiliary substances. These measures are relevant for manufacturers, suppliers of raw materials as well as auxiliary products and services for these goods.  

In particular, the bill amends the Infection Protection Act and authorizes the Federal Ministry of Health, by ordinance, consequently without the consent of the Federal Council, to order measures for the procurement, storage, distribution and delivery of medical devices, devices, diagnostics, protective equipment, pharmaceuticals and narcotics, active pharmaceutical ingredients and subsidiary ingredients. If necessary, such products can also be seized and used.

Intervention in production and delivery chains

Hence, the bill authorizes the Ministry of Health to intervene to a considerable extent in the production and delivery chains of pharmaceutical companies, medical device manufacturers and suppliers.

An example of this is the amendment to Section 5 (2) No. 4 Infection Protection Act provided for by the bill:

“Through legal ordinance, without the consent of the Federal Council, to take measures to ensure the supply of medicinal products including narcotics, active ingredients, raw  materials and auxiliaries, medical devices, laboratory diagnostics, auxiliaries, as well as personal protective equipment and products for disinfection, and in particular

a) Exceptions to the provisions of the German Medicines Act, the German Narcotics Act, […]
the medical device regulations and the occupational safety regulations relating to personal protective equipment, and manufacture, labeling, approval, clinical trial, application, prescription and supply, Import and export, transport and liability […],

(b) authorize the competent authorities, in individual cases, to derogate from those regulations referred to in (a)
Allow regulations, in particular exceptions to the regulations on production, labeling, application, prescription and dispensing, for import and export and for shipping […]

(f) enact provisions on levy, pricing […]. “

 Cross-border and export/import issues

For the manufacturers of the above-mentioned products, the question now arises as to how a regulation based on the bill will affect production, import and export. In particular, the question arises whether it is exclusively applicable to the German production facilities of such company.

Furthermore, there is the question of the relationship between the resulting regulations (such as the Pharmaceutical Supply Regulation of April 8th) and the import and delivery of products or components.

Since the bill and the regulations based on it intervene in the operation of German companies, but have no influence on the activities of foreign companies, there will in fact be distortions of competition.  

As an example, assume that a German biotech company is affected by the measures provided for in § 5 and is no longer allowed to supply its U.S. pharmaceutical customers.

On the other hand, it may still be possible for a German pharmaceutical company to receive auxiliary substances from a company seated in another EU member state or the United States.

New Regulations relevant for medicines and medical devices industry

A direct result of these expanded competences set forth by the bill is the Verordnung zu Beschaffung von Medizinprodukten und persönlicher Schutzausrüstung (Regulation on the procurement of medical devices and personal protective equipment for the epidemic caused by the SARS-CoV-2 coronavirus (BAnz AT 09.04.2020 V3).

The so called Arzneimittelversorgungsverordnung (Regulation on deviations from the provisions of the Fifth Book of the Social Code, the Pharmacy Act, the Pharmacy Works Ordinance, the Drug Price Ordinance, the Narcotics Act and the Narcotics Prescription Ordinance as a result of the SARS-CoV-2 epidemic (SARS-CoV-2 Medicament Supply Ordinance , BAnz AT 21.04.2020 ) is also based on the bill.

Section 7 of this regulation is particularly relevant to the industry. The Federal Ministry of Health and the bodies designated by it can request information from manufacturers and distributors of supply-related products for medical needs, for example on production quantities, stocks and prices.

Manufacturers and distributors of supply-relevant products for medical needs must “ensure (within the scope of their responsibility) an appropriate and continuous supply of the products.” Violations of the duty to provide information and the prohibition of charging surcharges can be penalized as an administrative offense.

National and EU-wide restrictions on production and export

France, Italy and Spain, for example, have enacted similar authorization bills.

On March 23, 2020, the French government enacted the Emergency Act No. 2020-290 to combat the COVID-19 epidemic (“Emergency Act”), but only for a period of two months. Under this regime, the Prime Minister and the Minister of Health are competent to take exceptional measures to deal with an epidemic, in particular restricting public liberties and imposing price caps on certain products in the event of stocks or supplies, confiscation of the necessary goods and services and medicines. Furthermore, the Emergency Act authorizes the French government for a three-month period from March 12, 2020 to use government regulations to enact new regulations without the approval of the French parliament.

All measures must be proportionate and be stopped as soon as they are no longer necessary. Neither the German Infection Act nor the bill expressly require reasonability or proportionality for the measures under the regulations.

Last week, the British Department of Health and Social Affairs (DHSC) excluded 80 “important” pharmaceuticals that are in high demand across Europe from parallel export.

Parallel export of medicinal products is based on the principle of the free movement of goods and services, relating to medicinal products that are sold to another European Member State (or even to a European country outside the EU) and then distributed by the parallel importer on its domestic market.

At the same time, EU-wide export restrictions already apply.
On March 14, 2020, the EU Commission issued an implementation regulation (Commission Implementing Regulation (EU) 2020/402 of 14 March 2020 making the exportation of certain products subject to the production of an export authorisation C/2020/1751, OJ L 77I, 15.3.2020, p. 1–7) with an export ban for EU member states to third countries, to ensure the supply of personal protective equipment as well as gloves and face shields in the EU. In individual cases, however, an exception can be granted on request if, for example, the export is necessary to maintain the operation of a subsidiary in a third country.

As a result, the national German export ban of March 12, 2020 issued by the Federal Office of Economics and Export Control as an export ban for medical protective equipment on the basis of Sections 6 (1) and 4 (1) No. 5 of the Foreign Trade Act was lifted.

As the EU Commission regulation does not apply to shipments, transport to EU countries is still possible.

Monitor the new regulations and changes!

The complexity of the different national and EU-wide regulations entails considerable legal uncertainty for companies.

It is now subject not only to EU regulations but to national regulations which services, deliveries, as well as which exports and imports are permitted within Germany but also within the European economic area. It is therefore all the more important to monitor these regulations. 

Our blog contributions shall provide an overview with regard to legal topics, legislation and case law and are supposed to provide some general information rather than constituting any specific advice. Please do not hesitate to contact Maiwald and in particular the authors of the particular contributions if have any questions on the addressed topics or on other legal issues.

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Dr Gisela Grabow


Lawyer (England/Wales)