COVID-19: Potential legal impact - Pharma (Spain)

In recent days, different measures have been adopted to counter the exceptional situation generated in Spain by COVID-19, including Royal Decree 436/2020, of 14 March, which declares the state of emergency to tackle the health emergency caused by COVID-19 ("RD 463/2020"). The situation is highly complex and rapidly changing; as a result, so as to provide clients with clear and up-to-date information that they might find useful, we have prepared this (non-exhaustive) e-bulletin on the situation’s potential impact on the different areas of business.

Pharmaceutical sector

Last week the Spanish Government adopted measures aimed at guaranteeing stocks of medicines, medical devices and other products necessary to protect public health, as we outline below.

However, by declaring a state of emergency, the Spanish Health Minister (article 13 of RD 463/2020) is now authorised to issue any orders necessary to secure stocks and the supply of goods and services necessary to safeguard public health, to temporarily commandeer and occupy industries, factories, workshops, businesses and premises, including private health centres and establishments, as well as any performing business in the pharmaceutical sector. RD 463/2020 also authorises the Health Minister to temporarily requisition goods and demand mandatory service provisions as may be required to protect public health.

On 15 March, the Health Minister issued a number of ministerial orders, including Order SND/233/2020, which instructed all Spanish and foreign companies in Spain that produce and/or import certain medicines and medical devices, or with capacity to produce them, to report within two days on the number of units available and daily production volume of certain medicines (such as COVID-19 diagnosis kits or chlorhexidine) and medical devices (facemasks, gloves, mechanical ventilators …).

• The production and supply of medicines. Companies must try to ensure the continuity of service. The Spanish Medicines Agency (Agencia Española de Medicamentos y Productos Sanitarios, or AEMPS) has increased monitoring of the supply of medicines and has called on companies to establish contingency plans to avoid supply shortage; it has also required pharmaceutical companies to report any abnormally high orders. In addition, Royal Decree-law 6/2020, of 10 March, has established (as measures to ensure public health) that, if a medicine, medical device or any product is affected by supply shortages, the health authorities may, in order to best guarantee distribution, order centralised distribution and even limit the prescription and administration of those products to at-risk collectives.
• Medicine prices. Royal Decree-law 7/2020, of 12 March, includes a modification to article 94. 3 of the Medicines Law (RDL 1/2015), which allows the Spanish Government to regulate the price of medicines and medical devices that do not require medical prescription (which are freely priced), as well as other products necessary to protect public health dispensed in the Spanish territory. Furthermore, in an exceptional health crisis, in order to safeguard public health, the Inter-ministry Commission for Medicine Prices (Comisión Interministerial de Precios de los Medicamentos) is able to set maximum retail prices for medicines and products for the duration of the exceptional situation.
• Public medicine supply contracts. Article 16 of Royal Decree-law 7/2020, on public procurement, establishes that contracts required to meet the needs connected to the protection of people and other measures adopted by the Spanish Council of Ministers to counter the impact of COVID-19 will be fast-tracked. In other words, according to article 120 of the Spanish Public Procurement Law, the procuring authority, without having to undergo a procurement process, may order the performance of whatsoever work or service to satisfy the sudden need, or freely contract those services or work totally or partially, without being subject to the formal requirements established by the law, including the existence of sufficient funding, for which it must notify the Council of Ministers (if involving the Central Spanish Administration) within 30 days.
  In the case of supplies that have already been awarded, modifications may be made to contracts with the aim of giving priority and bringing forward the supply of certain medicines and necessary products.
• Clinical trials. Modifications may be made to ongoing clinical trials protocols so that the test does not interfere with the care provided by hospitals, although at the same time protecting the health of test subjects. AEMPS is monitoring the situation and will issue instructions regarding the tests, the medicines received by patients or monitoring.
• Scientific congresses and meetings sponsored by pharmaceutical companies have been cancelled. It is clear that these cancellations can be considered to have been caused by force majeure. Although a case-by-case analysis would have to be conducted, there are valid legal arguments to challenge the application of penalties or the refusal to reimburse reservations paid as a result of cancellations caused by the spread of COVID-19.

To read the complete e-bulletin, here.