The article analyses the 2019 amendment of the EU Falsified Medicine Directive that introduced Article 54(a) and Article 4. The provisions are incorporated to protect the interest of patients. They are closely associated with the European Union Trade Mark Regulations and the Bristol-Myers Squibb Conditions (BMS Conditions) on parallel importations. Lastly, the article elaborates on the use of blockchain to overcome the issues of the 2019 amendment.
Counterfeit products are a bone of contention for every global business and are one of the issues for the pharmaceutical industry. The pharmaceutical industry is a sensitive industry with special regulatory requirements. European Medicines Agency defines counterfeit as medicines that infringe the trademark rights, and falsified medicines are fake medicines that are designed to mimic real medicines. COVID-19 pandemic witnessed a substantial increase in counterfeit healthcare products. In 2020, Interpol’s Operation Pangea XIV globally ceased counterfeiting vaccines, sanitisers, safety masks and other medical essentials.
The EU Falsified Medicines Directive (FMD) came into force in 2011 to protect the interest of the patients. The FMD has undergone several amendments in 2019. In my opinion, the inclusion of Article 54(a) and Article 4 is the most significant amendment. The provisions have overlapping effects on the European Union Trade Mark Regulations (EUTMR) and parallel importation rules of BMS Conditions. Article 54(a) of FMD mandates the manufactures to use Anti-Tampering Device (ATD) and Unique Identifier (UI) to authenticate the medicines.
UI contains information on the serial number, batch number and other information to validate the authenticity of products via two-dimensional barcodes. Two-dimensional barcodes have low security and can duplicate. Further, the FMD also mandates the manufacturers to upload the UI details to the Central EU repository to authenticate the products. ATD is a transparent sticker affixed over the text on the product to ensure that packaging is not reopened. Article 54(a), in conjoint reading with Article 15 of EUTMR and BMS Conditions, highlights trademark infringement issues.
Article 15 of the EUTMR defines the exhaustion of EU trademark rights and its exception. It prohibits the trademark owner from restricting the use of the EU trademark in the EEA unless there is a legitimate reason to oppose such a mark, such as damaged products. The BMS Conditions provides guidelines on parallel importation. One of the Conditions is that there is a need to repackage the products if marketed with different packaging to different states leading to the artificial partition of the EU market. As ATD and UI are affixed on the products, they are prone to tampering, and parallel importers can repackage them according to the BMS Conditions. It causes a conflicting regulatory requirement for the pharmaceutical organisation.
The FMD inclusion of Article 4 in 2019 allows the Commission to access viable technical options for UI. On a conjoint reading of Article 54(a) of FMD, Article 15 of EUTMR and BMS Conditions highlights trademark infringement issues on the practical application of UI and ATD. The question here arises, is there any efficient technology that could replace UI and ATD to prevent counterfeit?
In my opinion, blockchain is the answer to this question!
Blockchain an efficient technology- Curbing pharmaceutical counterfeits
Blockchain is an efficient technology that can be used as a viable technical option for the UI and also replace UI and ATD. Blockchain has been recognized in the US by pharmaceutical companies as an efficient technology for its supply chain to prevent counterfeits from the supply chain. The US Drug Supply Chain Security Act (DSCSA) enacted in 2013, mandates the use of computer software or technology to identify, track and trace prescription medicines and vaccines distributed within the US by 2023. DSCSA requires converting standardised applicable numeric identifiers to transmissible data. The retention period of the stored data is six years.
The MediLedger pilot project is supported by FDA, assisting pharmaceutical companies, adopting blockchain by 2023. In February 2020, the project’s final report highlight that curbing counterfeits is one of the main objectives of DSCA. It also states that numeric identifiers such as a serial number can be duplicated, which blockchain can prevent. Contradictory, in the EU, the FMD has only recognised UI in the pharmaceutical supply chain. Thus, analysing the FMD from the perspective of global regulations, there are flaws in the practical application of Article 54(a).
Counterfeiting in the pharmaceutical industry results in loss of revenue of the companies and is also a health hazard for the patients. Blockchain with IoT, allows the identifiers to authenticate using blockchain technology which secures the supply chain against counterfeit products. Thus, it is of paramount interest to analyse the defects in Article 54(a) of the FMD and utilise blockchain via Article 4 of FMD to conform to the BMS Conditions for parallel importation. To conclude, the Commission needs to look into the multi-disciplinary objectives on EU FMD, trademark infringement issues and parallel importation.
About the blogpost author:
Trishala is a Junior Legal Counsel at the GSK, India. She has completed a postgraduate degree in IT and IP law from the University of East Anglia, Norwich, UK. Her areas of personal interests is analysing inter-disciplinary subject matters related to IP and developing technologies such as blockchain and AI.
The assumptions, views and opinions expressed in this article are those of the author in her personal capacity and do not in any manner reflect or represent any policy, position, opinion, view or idea of GSK.
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