Localization
PRK Partners / Czech Republic
Want to know more about localization in Czech Republic? Prepared in association with PRK Partners, a leading law firm in Czech Republic, this is an extract from The Pharma Legal Handbook: Czech Republic, available to purchase here for GBP 99.
1. Are there any rules or regulations requiring and/or encouraging localization in your country? What is the legal framework defining these localization rules and policies?
As a general rule, there are no localization requirements relating to medicinal products in the Czech Republic. However, some localization rules apply to specific products, such as those connected with the transfusion of blood and blood products. The Czech Ministry of Health can limit the export of these products, and local production can be prioritized if the supply is sufficient. Similarly, export of certain medicinal products can be restricted by Czech authorities.
In addition, there are requirements to obtain an authorization from the relevant Czech authority (in most cases the State Institute for Drug Control, (“SÚKL”) in order to conduct business activities concerning pharmaceuticals in the Czech Republic (manufacturing, distribution, etc.). Authorizations issued by competent authorities from EEA countries are recognized in the Czech Republic.
2. Have there been any recent significant changes involving localization rules? If yes, when did they take place and what did they involve?
There have been no significant changes.
3. Is the process of obtaining a marketing authorization impacted by localization policies in your country? If yes, how so (what are the incentives received or the requirements)?
Yes, to some extent. As a general rule, the Czech Republic does not recognize foreign marketing authorizations.
The Czech Act on Pharmaceuticals1 does not allow medicinal products to be placed on the market here without first being authorized by either (i) the SÚKL, in a national procedure, mutual recognition procedure or decentralized procedure or (ii) the European Commission in a procedure compliant with a directly applicable EU regulation (i.e. the centralized procedure). Furthermore, marketing authorization holders of any such products must have their registered office an EEA country.
4. Is the pricing process for pharmaceutical products impacted by localization policies in your country? If yes, how so (what are the incentives received or the requirements)?
No, the pricing process for pharmaceutical products is not impacted by localization policies in the Czech Republic.
5. Is the reimbursement of pharmaceutical products impacted by localization policies in your country? If yes, how so (what are the incentives received or the requirements)?
No, reimbursement of pharmaceutical products is not impacted by localization policies in the Czech Republic.
6. Is the access to public or public tenders of pharmaceutical products impacted by localization policies in your country? If yes, how so (what are the incentives received or the requirements)?
In general, no. Localization policies do not impact access to public tenders in the Czech Republic.
The law expressly states that the contracting authority must not restrict public tender participation of suppliers who have their registered office (i) an EEA country or (ii) in a state with which the Czech Republic or the EU has an international agreement on access to public tenders.
Even though the contracting authority may include specific conditions in the public tender, it must abide by the principles of equal treatment and non-discrimination and must not restrict competition without due justification. If the conditions of a public tender do not fulfil these principles or fail to follow the rules set by the Public Procurement Act2, the Office for the Protection of Competition (i.e. the relevant Czech authority) will terminate the public tender.
7. Are import tariffs, importation and/or exportation permits, trade and/or taxation of pharmaceutical products impacted by localization policies in your country ? If yes, how so?
The Czech Republic is a member of the European Union Customs Union; therefore, all import tariffs are regulated at the EU level. In particular, the Union Customs Code3 applies.
As regards distribution, anyone with a distribution authorization, from either the SÚKL or any other EU member state’s relevant authority, may distribute medicinal products in the Czech Republic. Distributors holding a license from another EU member state’s relevant authority only need to notify the SÚKL in advance that they plan to begin distribution activities in the Czech Republic (unless the distributor establishes a distribution warehouse in the Czech Republic, then a distribution authorization from the SÚKL is required). Both Czech and EU distributors are guaranteed the same rights and obligations.
Furthermore, under Czech law a holder of a distribution authorization is also entitled to export medicinal products to third countries (i.e. countries outside the EU).
However, in order to import medicinal products from third countries, an authorization to manufacture medicinal products in the scope of import from third countries (the “Import Authorization”) must first be obtained, i.e. a distribution authorization is not sufficient. The Import Authorization is issued by the SÚKL.
In general the taxation of medicinal products in the Czech Republic is not impacted by localization policies. However, indirect incentives do exist, aimed at specific areas, such as research and development (“R&D“). Under the Act on Income Taxes R&D expenses can be deducted from the income tax base. The amount of R&D expenses that can be deducted depends on the expenses recorded in the previous financial year; if they do not surpass expenses from the previous financial year, they can be deducted at 100%. Any expenses over the amount claimed in the previous financial year can be deducted at 110%.
8. Are there any other incentives or advantages offered by the current local localization rules in your country? If yes, what are they?
There are no incentives or advantages offered in the Czech Republic that relate exclusively to medicinal products.
9. Are there discussions about the possibility of implementing localization policies in your country? If yes, what are the proposed reforms and when should they come into place?
In reaction to the Covid 19 pandemic, discussions have begun regarding the EU’s dependence on medicinal products manufactured in Asia (China in particular) and whether this should be allowed to continue. However, this discussion is in its early stages.
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(1) Act No. 378/2007 Coll., on Pharmaceuticals
(2) Act No. 134/2016 Coll., on Public Procurement
(3) Regulation (EU) No 952/2013 of the European Parliament and of the Council of 9 October 2013 laying down the Union Customs Code
