Use of criminal law to combat drug distribution


On 6 June 2019, another amendment to the Pharmaceutical Law came into force. Its aim is to reduce the occurrence of non-availability of medicines. According to the authors of the changes, only more severe penalties and broader penalisation can limit the undesirable occurrence of the reverse distribution chain. However, the first comments on these changes show that the threat of penalties alone may not be enough to achieve this goal. It has been known for some time now that the inevitability of punishment is an indicator of the effectiveness of criminal policy.

The reason for changes and a new philosophy of market regulation

The changes, mainly drafted by the Ministry of Justice, on one hand specify the rules for trade in medicinal products, and on the other hand are limited to the undesirable occurrence of patients’ lack of access to medicines. This happens when medicines purchased on the retail market are sold at a profit abroad, where their prices are much higher, instead of being sold to patients in Poland. This is not a new problem, nor is it the parliament’s first approach at combating drug mafias.

In 2015, the Ministry of Health determined that the problem was so urgent that the parliament should introduce punitive regulations for the sale of medical products in the reverse distribution chain (Art. 126b of the Pharmaceutical Law). From 1 April 2019, there is also an obligation to report to the system recording the trade in medicinal products (Integrated System of Monitoring the Trade in Medicinal Products—ZSMOPL). However, these changes, as acknowledged by the authors of the latest amendment, did not achieve their purpose, as according to all available data the export of medicines is growing year by year.

Also, the authors of the amendment admit that the severe penalties (even up to 10 years’ imprisonment) and newly introduced crimes (partly at the cost of abandoning administrative penalties) are designed to discourage participation in the reverse distribution chain. They also point out that some market participants (e.g. wholesalers) remained unpunished, as the existing regulations prevented them from being held liable. Now they want to punish any person consciously involved in illegal trade (such as a pharmacist, wholesaler, or management board member) who, through his actions, leads to a situation where a medicinal product does not reach patients but goes abroad.

New crimes

The changes affect mainly the distribution of medicines and sanctions for non-compliance with prohibitions and orders. The distribution of medicines in pharmacies is to consist in selling them to a patient or a medical entity, as well as donating medicines to certain entities (e.g. nursing homes) or transferring them to public authorities. In the case of healthcare providers, the purchase of medicines for purposes other than provision of healthcare services is prohibited, as in principle is the sale of medicines. Finally, in the case of wholesalers, it is prohibited to purchase medicines from entities other than the responsible entity, a trader authorised to manufacture or import medicinal products, or a company engaged in the business of wholesale trade.

The amendment has introduced penalisation of sale and purchase of medicinal products contrary to these rules (Art. 126b of the Pharmaceutical Law). The penalisation also covers quasi-dealing with stolen property, consisting in further trade in such a product, its export outside the territory of Poland, its transport within Poland, as well as storage. These are the basic types of crimes consisting of “participation in illegal distribution” and punishable by imprisonment from 3 months to 5 years.

The amendment has also introduced aggravated (more severely punished) types of this crime. The first occurs when the trade concerns property of significant value (over PLN 200,000). The law is constructed so that when the value of medicinal products traded exceeds this amount, increased liability is an option. This means that the profit made by the perpetrator from the sale of a medicinal product abroad does not matter. In this option, the stricter liability consists in the possibility of imposing a penalty from 6 months to 8 years of imprisonment.

The second aggravating circumstance consists of trade in a medicinal product included in the list of medicines at risk of non-availability. This list is published by the Minister of Health every two months and includes medicinal products, foodstuffs intended for particular nutritional uses and medical devices threatened with non-availability. The lists published so far have slightly differed from each other, in the sense that they have constantly included a specific group of products (antithrombotic drugs, insulin, and oncology drugs). However, the list is also a measure of market trends. Some drugs disappear from the list in certain seasons (e.g. influenza or measles vaccines), while others appear due to the high level of reimbursement (e.g. Losmina). Such changes to the list are important for the possible punishment. Generally speaking, removal of a medicine from the list will result in less severe punishment imposed by the court.

The amendment also introduces a separately penalised crime consisting in exporting from Poland or selling without notifying the Main Pharmaceutical Inspectorate (GIF), against GIF’s objection or before the end of the period for issuing an objection, a medicinal product, a medicinal product intended for particular nutritional uses or a medical device included in the list (Art. 126c of the Pharmaceutical Law). This offence is punishable by 3 months to 5 years of imprisonment, and existence of the offence depends strictly on the contents of the list. This means that removing a given product from the list should result in discontinuance of the investigation or the exporter’s acquittal.

Responsibility of companies for participation in drug distribution

Surprisingly, the amendment did not introduce the possibility of responsibility of collective entities (e.g. companies) for participation in illegal distribution of medicinal products. However, the Act on Liability of Collective Entities of 2002 maintains that a collective entity may be liable for an administrative offence under Art. 127 of the Pharmaceutical Law (e.g. failure to report the export from Poland of a drug from the list). This demonstrates far-reaching inconsistency on the part of the parliament.

However, a new bill on the liability of collective entities is awaiting consideration at the Sejm (as we have written here). This regulation, if it comes into force, would provide for the possibility of liability of companies for their participation in an “illegal distribution chain.” This liability could apply to both an entity with its registered office in Poland and an entity with its registered office abroad, but operating in Poland. Finally, it should be remembered that the new bill provides for liability for their own actions of companies, their employees and collaborators, i.e. potentially every participant in the reverse distribution chain.

Proportional restriction on the free movement of goods?

The proponents of the recent amendment consistently stated in the course of the legislative process that the proposals are not contrary to EU law. However, the justification for the changes gives the impression that the problem was not sufficiently researched. On one hand, Art. 36 of the Treaty on the Functioning of the European Union provides for the possibility of applying import, export or transit prohibitions or restrictions justified on grounds of protection of health and life. On the other hand, such restrictions must be proportionate. Proportionality should be viewed from the perspective of the impact of the regulations, in particular the extension of penalisation to potentially any participant in distribution, as well as the trade in medicinal products (both prescription and over-the-counter).

Moreover, the authors of the amendment did not provide any convincing evidence of the ineffectiveness of the existing Art. 126b of the Pharmaceutical Law and administrative sanctions. On the contrary, the draft indicates the amount of administrative penalties already imposed on illegal exports or sales (through the end of 2018, the courts had issued four administrative decisions imposing financial penalties totalling over PLN 64 million). Moreover, only in the last month, the public was informed of allegations made against several persons of participation in an organised criminal group involved in illegal trade in medicines. In such a situation, it is difficult to share the argument that the existing instruments proved to be ineffective and therefore it was necessary to introduce harsher responsive measures. In these circumstances, it is doubtful whether the recourse to criminal law as a last resort was actually proportionate to the introduced restriction.

Summary

The changes already in force, combined with the improvements awaiting entry into force (e.g. the possibility for inspectors to be assisted by the Police during inspections), as well as the implementation of the system of information on trade in medicinal products, are designed to limit the occurrence of non-availability of medicines, injurious to Polish patients. So far, however, after each such change, illegal exporters have adapted to the new legal environment. The problem of non-availability has not been solved and, what is more, the export of medicinal products is growing. Also, the recent changes may not bring the expected results, especially as transactions in e.g. over-the-counter medicines may fall within the zone of suspicion. This shows that the assumed objective—the elimination of undesirable phenomena—may not be so easy to achieve.

Artur Pietryka, adwokat, Business Crime practice, Wardyński & Partners