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Life Sciences Newsletter No. 1/2021

Impact of the EU-UK Trade and Cooperation Agreement on Life Sciences Companies

In December 2020, the European Union and the United Kingdom concluded the Trade and Cooperation Agreement (TCA), which focuses on the creation of a free trade area between the parties, ensuring no tariffs or quotas on trade in goods from 1 January 2021. While the TCA does not cover all aspects related to the life sciences sector, it does cover matters such as medicinal products and intellectual property rights.

Annex TBT-2 of the TCA refers to Technical Barriers to Trade, specifically related to the trade and availability of medicinal products. The said Annex has as Guiding Principles, inter alia, the facilitation by the parties of the availability of medicines in each party’s territory, the promotion of public health, the protection of high levels of consumer and environmental protection.

It should also be noted that, although medical devices are not specifically covered by the TCA, in principle they should benefit from the tariff-free and quota free trade on goods.

On the other hand, Title V of the TCA aims to protect and respect intellectual property rights, referring in particular to patents inherent issues.

Natural CBD included in the European Commission's CosIng Database

In the wake of the ruling by the Court of Justice of the European Union (CJEU) that CBD originating from hemp should not be classified as a narcotic, the CosIng database has been updated.

In this sense, the CosIng now contains an entry dedicated to “Cannabidiol (CBD) – derived from an extract or tincture or resin of cannabis”. In this regard, it should be noted that previously only the entry for ‘CBD – synthetically produced’ was in the database.

What may be at the origin of this change is the November 2020 decision of the CJEU in the Kanavape case, in which the Court held CBD extracted from the entire hemp plant (including its leaves and flowers) should not be classified as a narcotic for the purposes of the 1961 United Nations Single Convention.

As regards CosIng, it should be mentioned that this is a database containing information on substances and ingredients which could, in principle, be found in cosmetic products. Although it has a purely informative purpose, Member States take its content into consideration when preparing legislation on cosmetics.

EU: Coronavirus vaccines subject to export authorisation

Commission Implementing Regulation (EU) 2021/111 of 29 January 2021 imposed the need for the obtention of a specific authorisation for the export of certain products, including coronavirus vaccines.

As part of the fight against the Covid-19 pandemic, the European Commission has concluded advance purchase agreements (“APAs”) with different producers of coronavirus vaccines, with the aim of ensuring the timely and affordable availability of these products to EU citizens.

However, in view of the disclosure by some producers of difficulties in supplying the vaccines within the agreed timings, the Commission Implementing Regulation (EU) 2021/111 was published, which aims to prevent the export of vaccines produced in the EU to non-vulnerable countries.

Such export authorisation should be granted by Member States if the volume of exports is not one that could jeopardise the continuity of supply of the vaccines necessary for the implementation of the APAs concluded between the EU and the vaccine producers. In addition, Member States shall previously seek the opinion of the European Commission and their decision must be in conformity with that opinion.

It should also be noted that the EU has made an exception for a number of countries for which the export authorisation requirement does not apply.

Impact of the Portuguese State Budget 2021 on the Life Sciences Sector

The impact of the current epidemiological situation also extends to the measures oriented to the health sector and which were approved in the State Budget for 2021 (Law no. 75-B/2020, of 31 December).

In relation to the VAT, it should be noted that the VAT exemption on intra-Community transfers and acquisitions of goods needed to combat the effects of the COVID-19 outbreak has been extended until April 2021. It should also be mentioned that it was determined the application of a reduced VAT rate of 6% for imports, transmissions and intra-Community acquisitions of goods such as respiratory protection masks and skin disinfectant gel, the use of which is recommended as a measure to combat the COVID-19 pandemic.

In what concerns the Personal Income Tax, the amounts incurred with the purchase of respiratory protective masks and skin disinfectant gel, which are subject to the reduced VAT rate, will be considered for deduction of health expenses.

Finally, and with regard to the special contributions, the contribution on the pharmaceutical industry is maintained, as well as the extraordinary contribution on suppliers to the medical device industry of the National Health System, which had been introduced in 2020.

Creation of the National Medicines Laboratory in Portugal

Decree-Law no. 13/2021, of 10 February, established the terms for the creation of the National Medicines Laboratory (LM). This body had been created through Law no. 2/2020 of 31 March, having been incorporated into the Army’s organic structure and having succeeded the Military Laboratory of Chemical and Pharmaceutical Products (LMPQF).

The LM, as a State laboratory, has the mission of contributing to the development of research and production of medicines, medical devices and other health products.

In this sense, the LM is endowed with a structure that enables public intervention in the medicines’ sector, the promotion of research and scientific knowledge.

It is therefore worth highlighting the fact that the LMPQF already produces orphan drugs for rare diseases, as well as drugs abandoned by the pharmaceutical industry, activating production lines to respond to emergencies or drug disruptions.

The LM is framed to be a bet on national production, ensuring the strategic production of essential medicines and supplying the needs not covered by the pharmaceutical industry. Finally, it should also be noted that the LM is part of the promotion of the Portuguese scientific and technological system in the drug sector, encouraging public research and therapeutic innovation.

VAT exemption on transfers of medical devices and vaccines in Portugal

Transposing Council Directive (EU) 2020/2020 of 7 December 2020, Law no. 4-C/2021 of 17 February establishes a temporary VAT exemption applicable to the transmissions of medical devices for in vitro diagnosis of COVID-19, to the vaccines against the same disease and to services related to the said products.

In this sense, the referred Law determines a temporary VAT exemption for transmissions, intra-community acquisitions and imports of medical devices for in vitro diagnosis of the disease COVID-19 that are in conformity with the applicable requirements of the respective European Union legislation.

The same exemption regime is extended to transmissions, intra-Community acquisitions and imports of vaccines against the COVID-19 disease, which have been authorised by the European Commission or by the national health authorities and also to the rendering of services closely linked to the aforementioned devices or vaccines.

Invoices documenting the transfer of goods or the rendering of services to which the said exemption applies shall mention the Law in question as the justification for the non-assessment of the tax.

Law 4-C/2021 will be in force until 31 December 2021.

Authors:

The content of this information does not constitute any specific legal advice; the latter can only be given when faced with a specific case. Please contact us for any further clarification or information deemed necessary in what concerns the application of the law.

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