I INTRODUCTION

The Czech Republic's pharmaceutical market value (Rx, OTC and food supplements) increased by 5 per cent in 2019. The pharmaceutical industry in the Czech Republic is dominated by foreign global players such as Novartis, Sanofi, Roche, Pfizer and Teva.

The Czech pharmaceutical market is strongly dominated by large pharmacy chains which are often combined with wholesale operators within one business group, such as the Dr. Max chain, with more than 400 pharmacies, and the wholesaler ViaPharma, both of which are controlled by Penta Investments, and the BENU chain of pharmacies, which is part of Phoenix Group.

The Czech Republic, as an EU Member State, has implemented the relevant EU regulation related to medicinal products, namely Directive 2001/83/EC on the Community code relating to medicinal products for human use, and the rules and regulations governing medicinal products included in EudraLex. In domestic law, medicinal products are, in particular, regulated by Act No. 378/2007 Coll., on pharmaceuticals (the Pharmaceuticals Act) and by related implementing regulations and guidelines.

The rules governing medical devices are newly set out in Regulation (EU) No. 2017/745 (MDR) and in Regulation (EU) No. 2017/746 on in vitro diagnostic medical devices (IVDR), which will apply from 26 May 2020 and 26 May 2022 respectively. As both the MDR and the IVDR constitute EU law directly applicable in individual Member States, no further legal transposition into Czech law is necessary. Nevertheless, a new Medical Devices Bill implementing the MDR is currently being prepared, while in future the existing Medical Devices Act (Act No. 268/2014 Coll.) will regulate only in vitro diagnostic medical devices. Simultaneously, new regulation on the advertising of medical devices, similar to the regulation concerning medical products, is being introduced.

On 1 January 2019, a new regulation on the reimbursement of medical devices prescribed by public health insurance took effect. The crucial date was 1 June 2019, when the relevant medical devices had to be reapplied for under the new reimbursement system.

The main supervisory body for both human medicinal products and medical devices in the Czech Republic is the State Institute for Drug Control (the Institute). The Institute supervises all aspects of how human medicinal products are handled. The activities of the Institute include monitoring the quality, safety and efficacy of medicines at all stages of their development and use, including how they are advertised. Similarly, the Institute monitors the use of medical devices. The Institute also maintains a registry of medical devices. The second instance body supervising the Institute is the Ministry of Health. The Institute is also involved in price and reimbursement procedures for medicinal products and medical devices.

Veterinary medicinal products intended for administration to animals are supervised by the Institute for State Control of Veterinary Biologicals and Medicines.

Food supplements are particularly regulated by Act No. 110/1997 Coll. on food and tobacco products and Decree No. 58/2018 Coll. on food supplements and food composition. This Decree provides and regulates the requirements for the composition, labelling and use of food supplements. The Czech Agriculture and Food Inspection Authority is in charge of overseeing compliance with food supplements regulation. Before marketing a food supplement, the producers and distributors are required to send the Ministry of Agriculture a notification containing the text that will appear on the packaging of the product.

II THE REGULATORY REGIME

i Classification

Medicinal products

The Pharmaceuticals Act contains two separate definitions of 'medicinal product'. A medicinal product is understood to be either:

  1. a substance or combination of substances presented as having therapeutic or preventive properties in the case of human or animal diseases (presentation-based definition); or
  2. a substance or combination of substances which may be used in or administered to humans, or used in animals or administered to animals, either to restore, modify or affect physiological functions through pharmacological, immunological or metabolic action or to make a medical diagnosis (function-based definition).

Therefore, any product that is specifically described or recommended for the treatment or prevention of a disease, whether on its packaging or a package insert, is a medicinal product.

Medical devices

Unlike medicinal products, medical devices do not achieve their principal intended function in or on the human body by pharmacological, immunological or metabolic effects (however, their function may be supported by these effects). A medical device is an instrument, apparatus, aid, device, software, including software designed by its manufacturer for specific use for diagnostic or medical purposes and necessary for the correct use of a medical device, material or other item, intended by the manufacturer for human use for:

  1. the diagnosis, prevention, monitoring, treatment or alleviation of the disease;
  2. the diagnosis, monitoring, treatment, alleviation or compensation of injury or disability;
  3. the examination, replacement or modification of anatomical structure or physiological process; or
  4. conception control.

Food supplements

Food supplements are foodstuffs that are aimed at supplementing the normal diet and which are concentrated sources of nutrients or other substances with a nutritional or physiological effect, contained in the foodstuff alone or in combination, and which are designed to be taken in measured small unit quantities.

Borderline products

The Institute has the authority to issue opinions and decisions where doubt exists as to whether a certain product is subject to marketing authorisation as a medicinal product or an active substance, a homeopathic product or another product. Similarly, the Institute decides whether or not a particular product is a medical device and under which class of medical devices it should be classified. Any product that falls under the definitions of both a medical device and a medicinal product should be considered a medicinal product.

ii Non-clinical studies

Clinical trials are preceded by preclinical testing carried out on animals or cell cultures. The use of experimental animals is regulated in the Czech Republic by Act No. 246/1992 Coll., on the protection of animals against cruelty, which includes an obligation to use a method other than animal testing whenever such a method is approved and available.

The Institute oversees the compliance with good laboratory practice (GLP) in the field of pharmaceuticals. This field is particularly regulated by Decree No. 86/2008 Coll., laying down good laboratory practice in the field of pharmaceuticals, and by the Institute-issued Guidelines. A translation of the OECD Principles of Good Laboratory Practice forms an annex to the above-mentioned Decree. A National GLP Programme has been introduced and the Institute maintains a list of the testing facilities that meet GLP requirements. Any testing facility that complies with GLP principles is granted a GLP certificate issued by the Institute.

iii Clinical trials

Medicinal products

Approximately 400 clinical trial applications are submitted each year in the Czech Republic. However, the number of clinical trial applications has stagnated, and even declined, in recent years. Most clinical trial applications concern oncological, rheumatological and neurological indications.

The conduct of clinical trials is currently governed by Directive 2001/20/EC as implemented by the Czech Pharmaceuticals Act and related decrees and guidelines. Once Regulation (EU) No. 536/2014, whose aim is to harmonise and simplify clinical trial regulation across the EU, enters into force, expected during 2020, clinical trials will be carried out for a transitional period either under Directive 2001/20/EC or under Regulation (EU) No. 536/2014. After the transitional period, clinical trials will be carried out in accordance with the requirements set out in the Regulation.

The sponsor of each clinical trial must obtain the approval of the Institute, the approval of at least one ethics committee and the patient's consent (informed consent). As part of the clinical trial evaluation, all data from the preclinical studies and, where appropriate, any existing clinical trial are reviewed. Multicentre clinical trials must be reviewed by a specific ethics committee for multicentre trials. The Institute publishes a list of all such committees set up in the Czech Republic, as well as a list of other standard committees set up at healthcare facilities.

To make it easier for patients to find a suitable clinical trial, the Association of Innovative Pharmaceutical Industry (AIFP) has set up a patient counselling centre.

Medical devices

A medical device conformity assessment typically includes a clinical evaluation. A clinical evaluation of a medical device is a process that aims to critically evaluate clinical data and to demonstrate the safety and efficacy of the medical device under study, while also adhering to the intended purpose established by the manufacturer under normal conditions of use.

Clinical data is obtained through clinical trials of a given medical device, clinical trials or other studies carried out on an equivalent medical device as referenced in scientific literature, from published and unpublished professional reports or conclusions on the use of a given device in clinical practice or of an equivalent medical device bearing the CE marking. Clinical trial data is transmitted to the European Database on Medical Devices (Eudamed).

iv Named-patient and compassionate use procedures

Pharmacy exemption

In the Czech Republic, medicinal products can only be prepared in pharmacies under the conditions set out in the Pharmaceuticals Act, in Directive 2001/83/EC and in accordance with the interpretation contained in the judgment issued by the CJEU in Abcur AB v. Apoteket Farmaci AB (C-545/13). This applies to products prepared in a pharmacy upon medical prescription made out to a specific patient ('magistral formula') and to pharmacopeial products supplied directly to the patients served by the pharmacy in question ('officinal formula').

The Institute sets the amount and conditions for the reimbursement of each individually prepared medicinal product, radiopharmaceutical, transfusion product and advanced therapy medicinal product. The Institute also maintains a list of all individually prepared medicinal products.

Non-authorised medicinal products

Non-authorised medicinal products may be used and prescribed for treatment in the Czech Republic under the following conditions:

  1. no authorised medicinal product composed of similar therapeutic properties is distributed in the Czech Republic;
  2. the medicinal product is authorised abroad (or is an advanced therapy product);
  3. the use of the medicinal product is sufficiently justified by scientific knowledge; and
  4. the medicinal product does not contain a genetically modified organism.

The physician must also notify the Institute immediately of any prescription or use of a non-authorised medicinal product. Non-authorised medicinal products are only reimbursed under health insurance if this reimbursement has been pre-approved by the health insurance provider.

Specific therapeutic programmes

If there are whole patient groups (e.g., with a rare diagnosis) for which authorised medicinal products are not available, the Ministry of Health may give consent to use non-authorised medicinal products within 'specific therapeutic programmes', subject to an opinion issued by the Institute. Such a programme can be initiated by a physician, hospital, the Ministry of Health, medical professional society, health insurance company, patient organisation or pharmaceutical company. Programmes are approved for a limited period, and are also usually restricted to a specific diagnosis or group of patients, or specific healthcare providers. Furthermore, the distribution method and the number of packages may be regulated. Medicines used in a specific therapeutic programme may be covered by health insurance.

Off-label use of medicinal products

Medicinal products can be used off label (i.e., for other therapeutic purposes or in a manner other than that indicated in the approved summary of product characteristics (SmPC) if no medicinal product with the necessary therapeutic properties is in distribution. However, this use must be sufficiently justified by scientific knowledge. Nevertheless, medicinal products are typically not covered by health insurance in these cases.

Hospital exemption for advanced therapy medicinal products

In accordance with Regulation (EC) No. 1394/2007, on advanced therapy medicinal products, and in accordance with the Pharmaceuticals Act, hospital exemptions are intended to ensure that non-authorised advanced therapy medicinal products may be used to meet the individual medical requirements of a given patient. Hospital exemptions are typically used where, due to the nature of a given medicinal product or indication, sufficient clinical data cannot be obtained for the authorisation procedure.

Medical devices

If no corresponding medical device is on the market that meets the requirements of the Medical Devices Act, the Ministry of Health may grant exceptional authorisation to use a medical device that does not meet these requirements.

v Pre-market clearance

Medicinal products

Each medicinal product is subject to an authorisation procedure before being placed on the market in the Czech Republic (unless specific conditions for using non-authorised products apply). As an EU Member State, the Czech Republic recognises all standard types of marketing authorisations (national marketing authorisations, MRP/DCP procedures and centralised marketing authorisations carried out by the European Medicines Agency (EMA) valid throughout the EU).

According to the available statistical data on national marketing authorisations, the period for assessing applications was 150 days for generic products and 210 days for other types of national marketing authorisations. Applicants have 180 days to remedy shortcomings in the documentation submitted. This period is not included in the total duration of the registration procedure, and therefore the total duration of the registration procedure is often longer.

In addition to the marketing authorisation procedure fees, each marketing authorisation holder (MAH) is required to pay the Institute regular 'annual maintenance fees' as compensation for the costs of the Institute's activities associated with maintaining marketing authorisations. These fees amount to 39,100 korunas where the Czech Republic is a reference member state (RMS) and 19,500 korunas in other cases.

Medical devices

All medical devices intended to be marketed in the Czech Republic must carry a CE mark (including a written declaration of conformity) and must be accompanied by information in the Czech language on its safe use. A device registered in the Czech Republic or in any other EU Member State can be freely marketed in all European Union countries. Medical device registrations in the Czech Republic and the EU are valid for five years. Any manufacturers intending to continue to market their device in the European Union after this period must apply for a renewal.

The Registry for Medical Devices was launched in 2015. The system was created in order to collect data on the medical devices marketed in the Czech Republic and is accessible both by the competent authorities and the general public. The publicly accessible part provides information on all medical devices, field safety notices and registered entities. The other part of the platform provides the competent authorities with information on products, importers, distributors and notified bodies, incident reports, and data on conducted clinical trials.

Under the current Medical Devices Act, the manufacturer, the distributor and the importer (for medical devices in risk class I and certain in vitro diagnostic medical devices, distributors and importers are exempt from the notification duty) must submit an application for notification of a medical device to the Institute no later than 15 days after it has been introduced or delivered to the market. From May 2020, the new requirements under the MDR will apply to new medical devices marketed in the Czech Republic.

vi Regulatory incentives

Patents within authorisation or P&R procedures

The Institute does not examine the industrial property rights of third parties during marketing authorisation or pricing and reimbursement procedures. Moreover, according to the decision-making practice of the Czech courts, the application for the maximum price and reimbursement of the medicinal product as such does not constitute a breach of patent rights.

The Czech Patent Act also acknowledges a 'pharmacy exemption', whereby the individual in-pharmacy preparation of medicinal products upon prescription is exempt from patent protection. Additionally, the Bolar exemption was also incorporated into the Czech Patent Act and the Pharmaceuticals Act. This exemption applies to activities performed with the invented product for experimental purposes, including the experiment and tests necessary before the medicinal product is placed on the market.

Supplementary protection certificates

The Czech Industrial Property Office grants supplementary protection certificates (SPCs) of up to five years for substances that are protected by a valid patent in the Czech Republic as long as these are active substances in preparations registered before being placed on the market. In addition, such medicinal products may also be protected by a paediatric extension, which extends the lifetime of the SPC by a further six months.

The new Regulation No. (EU) 2019/933 introduces a manufacturing exemption from the protection granted under the SPC. The Regulation authorises EU-based companies to produce generic or biosimilar versions of SPC-protected medicinal products during the period of validity of the certificate if they are manufactured either for export to an EU market where protection has expired or never existed or are for storage during the last six months of the SPC's validity.

Data and market exclusivity

In the Czech Republic, the standard EU exclusivity regime known as the 8+2+1 rule applies. Current EU regulation grants eight years of data exclusivity for pharmaceutical products, which is followed by a two-year market exclusivity period. This cumulative 10-year period (eight years of data exclusivity plus two years of marketing exclusivity) may be further extended by one year for certain new indications which are proven to provide an additional clinical benefit compared with previous indications.

The market exclusivity period for orphan designated pharmaceutical products is 10 years. Each indication with an orphan designation confers 10 years of market exclusivity for the indication in question. Market exclusivity is extended by a period of two years if the orphan designation also relates to a paediatric indication.

vii Post-approval controls

Medicinal products

The obligations of marketing authorisation holders are included in the Pharmaceuticals Act and related decrees and guidelines. This regulation is to a large extent harmonised with Directive 2001/83/EC and EudraLex.

Adverse drug reaction

The EudraVigilance database was put into operation in 2017. As of that date, reports must be submitted to the EudraVigilance database directly within the time limits stipulated by law (i.e., serious reports within 15 days and non-serious reports within 90 days).

Periodic safety update reports

As part of their pharmacovigilance obligations, MAHs must send periodic safety update reports (PSURs) via the PSUR repository maintained by the EMA. Based on the assessment of the results of the PSUR evaluation, the MAH may submit an application to amend the marketing authorisation, including an updated SmPC and package leaflet.

Pharmacovigilance system of the marketing authorisation holder

To comply with its pharmacovigilance obligations, each MAH must operate a pharmacovigilance system through which it:

  1. collects information on the risks of medicinal products;
  2. evaluates the information referred to in (a) and considers options for risk reduction and risk prevention; and
  3. takes all necessary and appropriate measures.

Each MAH must carry out regular auditing of its pharmacovigilance system.

Qualified person responsible for pharmacovigilance

Each MAH must permanently have in place a qualified person responsible for pharmacovigilance. This qualified person is responsible for setting up and administering the pharmacovigilance system and should reside and carry out his or her pharmacovigilance tasks within the territory of the European Union. The Institute may ask a MAH to appoint a pharmacovigilance contact person in the Czech Republic, reporting to a qualified pharmacovigilance person.

Risk management plan

Each MAH must operate and update a risk management plan (RMP) for each medicinal product. RMPs must be proportionate both to the identified risks and the potential risks of a specific medicinal product and to the need for collecting post-authorisation safety data. This obligation does not relate to holders of marketing authorisations issued before 21 July 2012, unless the Institute imposes an obligation on these MAHs to introduce an RMP. The obligation to operate and update an RMP does not automatically imply an obligation to submit and update an RMP included in the registration dossier; for the majority of medicinal products, this obligation means carrying out standard pharmacovigilance.

Post-authorisation studies

There are several types of post-authorisation studies:

Post-authorisation safety studies (PASSs)

PASSs are implemented by MAHs at their own discretion or carried out following a decision of the EMA, the Institute or another agency, either imposing a duty during the authorisation process or afterwards in case of doubt regarding the safety risks of an authorised medicinal product.

Studies carried out in the Czech Republic are reported to the Institute. MAHs should also enter in the EU PAS Register all non-interventional PASSs conducted voluntarily in the EU or included in the RMP. At present, this function is fulfilled by the ENCePP Register.

Studies must not promote the use of a particular medicinal product, and MAHs must not provide HCPs with financial compensation other than for their time and expense spared for participating in these studies.

Post-authorisation efficacy studies (PAESs)

In its marketing authorisation decisions, the Institute may require MAHs to carry out a PAES if any doubts regarding certain aspects of a medicinal product's efficacy cannot be rectified before it is placed on the market, or if they are to maintain their marketing authorisation in the event that new information that may require a substantial revision of the previous efficacy evaluation, or other new efficacy data, comes to light.

PAESs should be notified to the Institute. Information on PAESs should also be entered in the EU PAS Register to support their transparency, whether initiated, managed or financed by an MAH voluntarily or as an obligation.

Non-interventional post-authorisation studies (PASs)

A PAS is generally any study in which the authorised medicinal product is used in the standard way and in accordance with the terms of the marketing authorisation, and in which the use of the medicinal product is not determined by the patient's inclusion in such a study but rather by the decision of the physician. Non-interventional PASs particularly include epidemiological, pharmacoeconomic and research studies.

PASs should not be used for advertising purposes (i.e., as supporting evidence for prescribing, supplying, selling, dispensing or consuming medicinal products). The Institute monitors how non-interventional PASs reported in the register are organised and assesses them in terms of whether they have any advertising nature. If the study is considered to be of an advertising nature, then further assessment will be undertaken as to whether the expert's remuneration for participating in the study is more than the maximum statutory amount of 1,500 korunas per year.

Notification regarding the presence on the market

Each MAH has a statutory duty to report when a medicinal product is placed on the market in the Czech Republic, when it is suspended or terminated, and when its marketing subsequently resumes.

Sunset clause

A marketing authorisations expires if the medicinal product has not been placed on the market in the Czech Republic within three years of its effective date. For generic medicines, this period only begins to run on the date when market exclusivity expires. It follows from the above that the three-year period for placing a generic medicinal product on the market begins to run on 1 January of the year following that in which the market protection of the reference product has expired.

Under certain circumstances, namely if there is no corresponding product on the market or if it is the first generic on the market, and where this may lead to a reduction in the price of medicinal products with the active substance in question, consequently leading to savings to public health insurance, an exemption may be granted to the sunset clause. This applies where the marketing authorisation would otherwise be invalidated due to the medicinal product not being placed on the market within three years of authorisation being granted.

Medical devices

The Czech Republic has adopted a Medical Devices Vigilance System, which is a system for reporting and evaluating adverse events and safety remedies for medical devices. The purpose of this system is to improve the health and safety protection of patients, users and third parties by reducing the likelihood of the same type of adverse event recurring at different times and at different locations.

A manufacturer or its representative, or an importer, must report to the Institute in writing any adverse incident associated with its medical device. If the Institute identifies an adverse incident, then it should report that information to the manufacturer or its authorised representative. The Institute should inform the other Member States, and the European Commission, of such measures taken or considered to minimise the recurrence of adverse events.

The Institute publishes a list of Field Safety Notices (i.e., communications sent out by medical device manufacturers or their representatives in relation to the safety remedy taken) on its website, and instructs importers and distributors to provide and document the internal process control system for distribution and import activities as well as adopt corrective actions.

Post-market clinical follow-up studies are carried out after the medical device has been launched. It acts as a subsequent collection of clinical data using a medical device in normal clinical practice. These studies will be newly regulated by the MDR.

viii Manufacturing controls

Medicinal products

Medicinal products must be manufactured by persons that are authorised to do so by the Institute and that meet the criteria of good manufacturing practice (GMP). The qualified person of the manufacturer is then responsible for ensuring that each batch of a medicinal product is manufactured and controlled in accordance with the Pharmaceuticals Act, its implementing legislation (including GMP), the marketing authorisation dossier and the marketing authorisation. The GMP guidelines issued by the Institute correspond to EudraLex – Volume 4 – Good manufacturing practice (GMP) Guidelines. The Institute maintains a list of approved manufactures and a list of GMP certificate-holding manufacturers of active substances.

The National Medicines Verification System of the Czech Republic (CZMVS) has been established based on Falsified Medicines Directive 2011/62/EU and Commission Delegated Regulation (EU) 2016/161. End users (i.e., all distributors and pharmacies) have access to this verification system. The National Verification Organisation (NOOL) was founded to create and operate the CZMVS and to provide individual entities with access to the CZMVS.

Medical devices

The conformity assessment usually involves an audit of the manufacturer's quality system and, depending on the type of device in question, also involves a review of the technical documentation provided by the manufacturer on the safety and performance of the device.

ix Advertising and promotion

Medicinal products

The Advertising Regulation Act defines the advertising of medicinal products as any information, persuasion or incentive intended to promote the prescription, supply, sale or consumption of medicinal products. Advertising activities include visits by representatives, the provision of samples and gifts, and the sponsorship of congresses, including travel and accommodation costs.

Advertising must only focus on authorised medicinal products, the information presented in advertising must not contradict the SmPC, and advertising must promote the rational use of the medicinal product by presenting it objectively.

Advertising rules differ depending on whether it is targeted at the general public or at HCPs (persons authorised to prescribe or dispense medicinal products, which is most often a doctor or pharmacist). Advertising targeted at the general public must only be carried out for non-prescription medicinal products. No gifts, promises, offers or other incentives may be offered to HCPs in relation to the advertising, unless they are of negligible value (up to approximately €60 per year) and relate to their profession.

Pharmaceutical companies in the Czech Republic usually also adhere to the ethical codes of the professional associations which regulate marketing practices, such as the AIFP (innovative firms) or the CAFF (generic firms).

Medical devices

The advertising of medical devices is not currently subject to specific regulation, and therefore general rules on advertising apply.

However, in relation to the adoption of new local regulation supporting the MDR and IVDR, a new medical devices regulation is being introduced which is largely inspired by existing regulation on medicinal products advertising. The bill distinguishes between advertising targeted at the general public and that targeted at professionals, and prohibits advertising targeted at the general public to promote devices which the manufacturer's instructions state must only be used by an HCP or which can only be dispensed upon prescription (voucher).

x Distributors and wholesalers

Medicinal products

Authorisation must be obtained from the Institute for distribution activities concerning medicinal products. Operators authorised to dispense medicinal products (such as pharmacies) must also obtain distribution authorisation if they wish to onward distribute part of the medicinal products. Distribution may also be carried out by the medicinal products manufacturer, albeit of its own medicinal products only. Distributors must appoint a qualified person and must comply with the rules of good distribution practice.

If a distributor distributes only medicinal and auxiliary substances, then the existence of an authorisation requirement will depend on the type of customer distributed to. If it delivers to medicinal products manufacturers, it does not need to obtain distribution authorisation.

Distribution authorisation is granted in one Member State and, if carrying out distribution in other Member States, the competent authorities are notified only as long as the distributor does not have its own distribution warehouse in those other countries. Distribution authorisation does not cover the import of medicinal products from non-EU countries, for which specific manufacturing authorisation must be obtained.

Medical devices

Any distributor intending to operate in the Czech Republic must submit a notification to the Institute via the Medical Devices Register prior to commencing its activities (except for distributors of medical devices falling under risk class I and certain in vitro diagnostic medical devices). Distributors must comply with good distribution practice, which lays down the requirements for maintaining the safety and performance of the medical device.

xi Classification of products

Medicinal products

Medicinal products can be categorised by their dispensing method as follows:

  1. prescription medicinal products;
  2. prescription medicinal products with a blue strip (for narcotic or psychotropic substances);
  3. restricted prescription medicinal products (may be prescribed only by a doctor with specific competence);
  4. OTC medicinal products; and
  5. restricted OTC medicinal products (such as with an age limit, maximum quantity of packages per purchase, a ban on mail order dispensing; as currently applies to products containing pseudoephedrine).

In 2018, the Czech Republic introduced the ePrescription system. Prescriptions in electronic form are stored in the Central Repository of Electronic Prescriptions (CREP). Each e-prescription has a unique 12-digit identifier and a bar code that a pharmacist can scan. If the pharmacist finds a prescribed medicine in the CREP, they can dispense it to the patient.

Medical devices

Any medical device that may endanger human health or life if not used under the supervision of a doctor may be dispensed only on prescription (voucher). A list of these medical devices is set forth in an implementing regulation. Medical devices are also issued on prescription if the patient is entitled to have the device reimbursed under public health insurance.

xii Imports and exports

Medicinal products

Imports of medicinal products from EU countries is covered by distribution authorisation. Imports from non-EU countries can only be carried out by a person who has been authorised to manufacture medicinal products by importing from outside the EU.

Parallel import means the distribution of a medicinal product from another EU country to the Czech Republic, where the distribution is not arranged for by, or in cooperation with, the MAH. Parallel import may only take place if a parallel import permit has been granted by the Institute. Parallel distribution is a similar activity that relates to centrally authorised medicines. This activity must be reported in advance to the EMA.

Medical devices

Import means the placing on the market of a medical device that has been obtained outside the territory of the EU. Imports may only be carried out by an importer registered with the Institute. The MDR places new and more extensive obligations on importers.

xiii Controlled substances

Medicinal products containing narcotic or psychotropic substances must only be dispensed against a specific prescription type bearing a blue strip. Pharmacies must report to the Institute concerning the status and movement of addictive substance stocks.

Addictive substances, preparations, precursors and auxiliary substances can only be imported or exported if an import or export permit has been issued by the Ministry of Health.

xiv Enforcement

Medicinal products

State supervision of human medicinal products in all areas is carried out by the Institute. The activities of the Institute include monitoring the quality, safety and efficacy of medicinal products in all stages of their development and use. For this purpose, the Institute uses a system of preliminary reporting; licensing, authorisation and registration procedures; inspections; laboratory controls; and monitoring of the practical use of medicines. It also gathers all appropriate information. The Institute is entitled to take action where a risk to public health arises, to impose penalties, and to request necessary documentation.

The Institute also monitors compliance with regulations on medicinal product advertising. However, TV and radio advertising for medicinal products is supervised by the Council for Radio and Television Broadcasting.

Medical devices

The Institute is responsible for the comprehensive market surveillance of medical devices. This means that it can oversee how the obligations set out in the Medical Devices Act are met across the entire distribution chain. The Institute's oversight activities as regards medical devices is therefore targeted not only at manufacturers, importers and distributors of medical devices, but also at others including pharmacies that dispense prescription medical devices to patients and healthcare facilities that use medical devices in the provision of healthcare services. The Institute has issued a methodology for the oversight of distributors and importers of medical devices.

III PRICING AND REIMBURSEMENT

i Medicinal products

In the Czech Republic, most reimbursable medicinal products are price-regulated. On the other hand, non‐reimbursable pharmaceuticals are not price-regulated. Regulated prices are set at ex‐factory level or are regulated according to statutory prices (for individually prepared medicinal products, as well as parenteral nourishment, radiopharmaceuticals and transfusion products). The ex‐factory price of a given medicinal product is set at the average of the three lowest prices based on the reference basket; reference basket states include all EU countries except Austria, Bulgaria, Cyprus, the Czech Republic, Estonia, Germany, Greece, Luxembourg, Malta and Romania. If the lowest price in the reference basket is extremely low (more than 20 per cent lower than the average of the next two lowest prices for the same product), then the price is set at the average of those next two lowest prices for the reference product. If a medicinal product (with the exception of highly innovative drugs) is not on the market in at least three reference basket states, the agreed price of the medicinal product can be used in the evaluation. If none of the above-mentioned procedures is applicable, the price is set at the maximum ex‐factory price of the closest therapeutically comparable medicinal product available in the Czech Republic or in the reference basket countries. For highly innovative medicines, the ex‐factory price can be set at the average manufacturer's price found in at least two reference basket states. MAHs can supply products for lower prices than the stipulated maximum ex‐factory price so as to reduce or eliminate the difference between the price and the reimbursement.

Reimbursement is based on a system of therapeutic indication-based reference groups. Each reference group includes medicinal products that are similar in effectiveness, safety profile and clinical use, and which are considered to be therapeutically interchangeable. All products within the same reference group have the same reimbursement price based on the daily therapeutic dose. The Institute may award a bonification price for any product that has a better effectiveness, a better safety profile or a better compliance rate than the reference medicinal product. The reimbursement price is set according to the EU lowest price for a medicinal product within a reference group, which then becomes a reference product.

Wholesalers and pharmacies are remunerated under a margin scheme. This scheme is published by the Ministry of Health. Margins are applied jointly for both wholesaler and pharmacy, with the lesser margin being kept by the wholesaler, and the greater margin being applied by the pharmacy.

Medical devices

In 2019, a new regulation was introduced on the reimbursement of prescription medical devices under public health insurance schemes.

Reimbursed medical devices are classified into reimbursement groups. Each manufacturer or distributor determines which reimbursement group its medicinal product should be classified into in its notification to the Institute. The Public Health Insurance Act stipulates a reimbursement limit for each reimbursement group. Furthermore, a prescription restriction may be in place to determine which physician may prescribe the medical device, any indication restrictions and the quantity limit.

The reimbursement of non-categorised medical devices that are not included in any of the reimbursement groups and are approved by the Ministry of Health is capped at 50 per cent of their price (100 per cent reimbursement is provided only for non-categorised medical devices that are subject to risk-sharing agreements).

IV ADMINISTRATIVE AND JUDICIAL REMEDIES

Appeals can be filed against decisions issued by the Institute regarding medicinal products and medical devices. Appeals are decided by the Ministry of Health (if not remedied by the Institute itself).

A judicial remedy can be sought from the court by filing an administrative action. Actions against decisions on appeal must be filed no later than two months after a decision is delivered. Judicial reviews are undertaken by the regional court as the first degree court and by the Supreme Administrative Court as the court of cassation.

V FINANCIAL RELATIONSHIPS WITH PRESCRIBERS AND PAYORS

All state-owned or public entities (including hospitals and other healthcare providers). must publish all private law contracts in the Register of Contracts no later than three months after each contract has been concluded, otherwise the contract will be considered void. Contracts are exempt from the obligation to be published in the Register if the performance value of the contract is below 50,000 korunas. Moreover, certain documents do not have to be registered (e.g., contracts concluded with individuals that do not fall within the entity's business activity, project documentation, drawings and contracts regarding the intelligence services or which affect the security of the Czech Republic). Additionally, the parties may redact or sanitise confidential data that cannot be disclosed under the laws governing free access to information, including trade secrets.

The Ministry of Health has introduced transparent management principles for organisations it directly manages, namely state-owned hospitals. Under these binding rules, bonuses are divided into addressed and unaddressed bonuses. An addressed bonus is provided in direct connection with a specific delivery of goods (a specific order, invoice, etc.) or a specific type of goods and is linked, for example, to the purchase volume at a particular time. It can be therefore divided by the unit price of the goods. The amount of unaddressed bonuses, on the other hand, cannot be linked to a specific supply of goods (order or invoice) or a specific type of goods, as this value is calculated separately or in aggregate. The Ministry recommends that the prices reported to health insurance companies should be adjusted to take into account any discounts or addressed bonuses received, or any invoice-related credits, refunds, and so on. Non-addressed bonuses cannot be reflected in the reported price because they cannot be allocated to a particular product or device. If a medicinal product is provided as a natural bonus, it should be provided free of charge in accordance with the price regulations. This medicinal product should also be reported to the health insurance company at no cost. Bonuses may only be accepted under a written contract, which must be published in the Register of Contracts. The organisation must use the revenues from the bonuses received solely for costs that are connected to the operation and upgrade of the medical facility.

The AIFP, a Czech association of innovative firms, has launched a transparency initiative based on the AIFP's Code on Disclosure of Transfers of Value from Pharmaceutical Companies to Healthcare Professionals and Healthcare Organisations (which implements a similar initiative by the European Federation of Pharmaceutical Industries and Associations (EFPIA)). The idea behind this initiative is for information on cooperation between HCPs and pharmaceutical companies to be published on a publicly available website. Most large generic firms have also acceded to this initiative.

VI SPECIAL LIABILITY OR COMPENSATION SYSTEMS

If an authorised medicinal product is used in the provision of healthcare and its use causes side effects not listed in the SmPC, the MAH is liable for any damage caused by those effects and cannot be relieved therefrom. If the side effects are listed in the SmPC, the MAH is held liable only if the MAH specifically caused the damage.

As regards off-label use or the use of a non-registered medicinal product, healthcare facility operators are liable for damage to the health or the death of any person resulting from that specific use of the medicinal product.

Regarding the use of medicinal products in clinical trials, the Pharmaceuticals Act places an obligation on both the investigator and sponsor to obtain liability insurance as a precondition for commencing a clinical trial.

The Czech parliament has recently approved the new Harm from Compulsory Vaccination Compensation Act, under which the state must compensate any vaccinated person who has suffered material and intangible damage from a vaccination. The state will also compensate the parents of any child who dies or has serious health disorders after a compulsory vaccination.

VII TRANSACTIONAL AND COMPETITION ISSUES

i Competition law

A new protected distribution system that aims to ensure the availability of medicinal products for patients was approved by the Czech parliament in late 2019. The new system amends the existing emergency system, which was introduced in 2017. Under the new regulation, any distributor providing an MAH with a written representation that it requires medicinal products in order to ensure the provision of healthcare to Czech patients and that it will not export those products is entitled to request sufficient supplies of medicinal products so as to meet the average demand over a two-week period for the medicinal products distributed by this distributor from operators authorised to dispense medicinal products (i.e., pharmacies). This regulation therefore imposes a contractual obligation on MAHs and a ban on exporting medicinal products that should be distributed through the protected distribution system and disrupts existing DTP distribution models. In doing so, this regulation restricts competition and contradicts the principle of the free movement of goods. This new regulation was not supported by the Ministry of Health, which has prepared its own emergency system based on the Slovak model, and this is now going through the legislative process. Under this newly proposed regulation, MAHs will be required to set up and operate a specific emergency system for the supply of their medicinal products if the availability of the medicinal product to patients cannot otherwise be ensured. The pharmacy will then be under obligation to use any medicinal product delivered after ordering it through the emergency system by dispensing it to patients upon prescription only.

In relation to the pharmaceutical market, further competition concerns may arise in relation to bonus schemes (which may include loyalty bonus elements).

ii Transactional issues

In recent years, the Czech Competition Authority has dealt at a local level with competition clearance for mergers and acquisitions involving pharmacy and wholesale chains such as Dr. Max/ViaPharma and BENU/Phoenix.

VIII CURRENT DEVELOPMENTS

i New medical devices regulation

Following the adoption of the MDR and the IVDR, new local laws will be adopted, namely the new Medical Devices Act relating to general medical devices. The existing Medical Devices Act will be amended and will apply only to in vitro diagnostic medical devices. An entirely new regulation on the advertising of medical devices will be adopted. This will be combined with the new regulation on the reimbursement of the medical devices, which was introduced in 2019.

ii Clinical trials

It is anticipated that the EU Clinical Trial Regulation will enter into force during 2020. It depends on the completion and full functionality of the EU Clinical Trials Portal; the Regulation will become applicable six months after this is confirmed.

iii ePrescription

A new ePresciption system was introduced in the Czech Republic. One of the key functions of this system is a Shared Patient Record. It enables healthcare professionals to work with the data available in the central repository of electronic prescriptions. Patient participation is based on the opt-out principle.

iv Biosimilars

The entry of biosimilars into the Czech market has slowed lately. This is mainly due to a legislative change which imposed a 30 per cent reduction on the maximum price of biosimilars as compared to original products (instead of the previous 15 per cent reduction). Discussions are currently under way as to whether such a price reduction is appropriate.


Footnotes

1 Kamila Seberová is counsel at Wolf Theiss.