GOOD DISTRIBUTION PRACTICE: DISTRIBUTION CONCEPTS AND LEGAL RELATIONSHIPS
In the introduction of the Guidelines of 5 November 2013 on Good Distribution Practice of medicinal products for human use (2013/C 343/01) it is stated that "Compliance with these Guidelines will ensure control of the distribution chain and consequently maintain the quality and the integrity of medicinal products"1. But the distribution channels often are complex. Therefore, the following overview summarises some of the possibilities:
Direct distribution by the manufacturer
In this case the manufacturer or holder of the Manufacturing Authorisation has certified and released the medicinal products himself and carries out their sale on his own expense and on his own responsibility. He supplies the qualified recipients (such as pharmacies, hospital pharmacies, pharmacies with wholesale trade authorisation) himself by means of his own or by delegated logistics centres. The manufacturing authorisation comprises the wholesale distribution authorisation for these products.
A Responsible Person according to Chapter 2.2 GDP-Guidelines does not necessarily have to be registered with the manufacturer/pharmaceutical entrepreneur, but the duties of the Responsible Person must be established and fulfilled internally. This means that the GDP responsibility lies completely with the manufacturer and the designated responsible persons.
Distribution through the wholesale trade
The medicinal products are sold to a wholesaler who resells them to third parties on his own expense and on his own responsibility. An authorisation to distribute by wholesale according to national law is required for the wholesale trade and the Responsible Person according to Chapter 2.2 GDP Guideline must be registered. In this case GDP responsibility passes to the wholesaler with the passage of ownership.
Distribution via (several) intermediaries
Distribution can also be carried out via one or several intermediaries. In most cases they are specialised in special medicinal products or groups of medicinal products; they purchase larger amounts from the manufacturer/ pharmaceutical entrepreneur (or from another intermediary) and resell these products (to further intermediaries or another wholesaler). For doing this an authorisation to distribute by wholesale is required, too, and these establishments are subject to supervision.
Distribution via brokers
Brokers (according to Chapter 10 EU GDP Guidelines) are persons brokering products between manufacturer, intermediary and wholesale trade without having the medicinal products physically at their disposal. This means, they do not hold their own stock. Insofar, the GDP Guidelines only apply to a limited extent to brokers. They do not receive an authorisation to distribute by wholesale and it is not required to designate a responsible person. But brokers are subject to a registration requirement in the EU (e.g. in Germany according to §§ 52c and 67 AMG). This means that the GDP responsibility remains initially with the vendor, but Chapter 10 of the Guidelines defines concrete requirements concerning the broker: quality system, handling of recalls and falsified medicines and especially the guarantee that the purchaser as well as the vendor hold a respective manufacturing authorisation or authorisation to distribute by wholesale.
What has to be taken into consideration?
The purchase or distribution by means of a broker require clear contractual provisions especially as concerns the passage of responsibility from the manufacturer to the trader (and from the Qualified Person to the Responsible Person). Brokering activities have to be separated from wholesale activities and the existence of the required registration is to be checked.Distribution via so-called pre-wholesalers
What is a pre-wholesaler? Pre-wholesale is neither defined in the EU GDP Guidelines nor in the GMP requirements in the Eudralex. The term appears in an assessment of the European Commission concerning the merger of Alliance boots with ANZAG (two wholesalers), where the business area pre-wholesale is addressed in connection with the issue of a monopoly situation.
"Pre-wholesaling is the provision of logistical services to pharmaceutical manufacturers, mainly consisting in the warehousing and transportation of pharmaceutical products from the manufacturer to wholesalers, hospitals and, in some instances, to pharmacies. The suppliers of pre-wholesale services do not take title to the pharmaceutical products they are storing and ownership remains with the manufacturer until delivery. Prewholesalers do not have a customer relationship with the intended recipient of the products but with the manufacturers who pay a fee or commission for the service. (…) Pre-wholesaling services differ from wholesaling in that they are services provided to the manufacturers and do not concern the purchase and sale of pharmaceuticals. Pre-wholesaling also differs from wider logistics and transportation services because pre-wholesaling requires sectorspecific knowledge, and the providers need a wholesale license as well as a license for the premises where the pharmaceuticals are stored (warehousing)."2
Thus a broker is defined by dealing in medicinal products without having physical access to them. The prewholesaler does the opposite, in principal - he has access without having ownership or without having the possibility to purchase or to sell the goods. But it differs from normal transportation services as the prewholesaler keeps stock, removes individual packages, carries out order picking if necessary and assembles a consignment according to an order forwarded by the client (manufacturer/ pharmaceutical entrepreneur) and carries out the transport to the recipient.
In some Member States (like Germany) no GDP certificate is issued for this. Pursuant to the definition of the term wholesale trade in the German Medicines Act the granting of an authorisation to distribute by wholesale requires the intention to do business and hence to have the ownership of the medicinal products: §4 (22) AMG:
"Wholesale trade in medicinal products is any professional or commercial activity for the purpose of doing business which consists in the procuring, storing, dispensing or exporting of medicinal products,..."3.
As a pre-wholesaler seen from the German point of view formally operates an external warehouse for the manufacturer under the (GDP) authority of the manufacturer this generates the necessity of a respective contract and of notification of the supervisory authority about the external warehouse. Inspections may be carried out as a result. But as a general rule the competent authorities in Germany do not issue the corresponding authorisation (or GDP certificate) to pre-whole wholesalers. But this is not valid for all of them since some pre-wholesalers are business divisions within a wholesaler, and others succeed in being inspected by the competent authority according to GDP and to receive an authorisation.
There exists a divergence within Member States. Pursuant to the GDP Guidelines the described activity of a prewholesaler is sufficient to generate the obligation to supervise or to be granted an authorisation to distribute by wholesale. According to Article 1(17) of Directive 2001/83/EC, wholesale distribution of medicinal products is "all activities consisting of procuring, holding, supplying or exporting medicinal products, apart from supplying medicinal products to the public" - introduction to the GDP Guideline.
Notwithstanding this the responsibilities have to be clarified: is the Responsible Person of the pre-wholesaler responsible or the Responsible Person of the manufacturer or rather the production management?
In Europe the situation in the trade in pharmaceutical products is heterogeneous - there are no continuously consistent distribution concepts at the moment. Some examples:
UK: Solus-wholesale concept: only one wholesaler receives goods from the manufacturer, but he has to supply all pharmacies even if the wholesaler does not deliver the rest of the products sold in these pharmacies.
Denmark: Public pharmacies (there are no chains in Denmark) are supplied by one of the two wholesalers, a direct supply by pre-wholesalers is practically non existent.
Norway: In Norway there are almost only chain pharmacies that are supplied exclusively by their associated group wholesalers.
Sweden: There are only two wholesalers that market the medicinal products exclusively and supply all pharmacies. This means that all Swedish Pharmacies buy at both wholesalers without being able to choose among two offers for a certain product.
France: Purchasing cooperatives use wholesalers for the storage and delivery of their own stocks. This means that contrary to the pre-wholesale concept the goods are already owned by the client and not by the manufacturer.
Responsibilities
Theoretically the responsibility of a Qualified Person ends with the batch certification. After the release the goods pass into the area of responsibility of the Responsible Person pursuant to GDP. The functions of the manufacturer's Responsible Person can partly be taken over by other persons with responsibility in order to avoid overlapping. In this case a job description is helpful. These responsibilities exist in principle also during storage and distribution by the wholesaler. The assumption of responsibility by a Responsible Person of the prewholesaler is possible if there are clear contractual provisions and the pre-wholesaler has been qualified accordingly.
Authors:
Konrad Betzler
... is pharmacist and Chief Pharma Officer. Before that he worked inter alia as Head of Quality Governance at Celesio AG and as Qualified Person at Catalent Pharma Solutions.
Wolfgang Schmitt
... is Operations Director and organises and conducts courses and conferences on behalf of the ECA Academy in the areas QA, GMP and GDP.
Suorce:
1 Introduction of the Guidelines of 5 November 2013 on Good Distribution Practice of medicinal products for human use (2013/C 343/01): "These Guidelines lay down appropriate tools to assist wholesale distributors in conducting their activities and to prevent falsified medicines from entering the legal supply chain. Compliance with these Guidelines will ensure control of the distribution chain and consequently maintain the quality and the integrity of medicinal products."
2 Source: Case No COMP/M.6044 -ALLIANCE BOOTS/ANDREAE-NORIS ZAHN In electronic form on the EUR-Lex website under document number 32010M6044
3 This has been confirmed explicitly by German supervisory officials in the course of a questions and answers paper concerning GDP of the ZLG (Central Authority of the German Federal Länder for Health Protection Regarding Medicinal Products and Medical Devices): questions and answers paper EFG 09 concerning the exercise of wholesale trade with medicinal products dated 19.03.2015.
