How to address product shortages during Covid-19

Maurits Lugard, Dr. Dorothee Schramm, and Anna-Shari Melin from law firm Sidley & Austin explain how pharmaceutical companies with products on the EU market can address product shortages and supply chain issues in the current Covid-19 crisis. 

In order to address Covid-19 related shortages, pharmaceutical companies with products on the EU market should monitor Covid-19-specific guidance, but also comply with existing EU guidance on shortages. Further, companies are well advised to review their supply contracts.

Monitor Covid-19 specific guidance

The European Medicines Agency (EMA) published a Q&A notice to stakeholders on regulatory expectations and flexibility during the Covid-19 pandemic (the Q&A Notice, latest version available here). 

The Q&A Notice covers various areas, including marketing authorisations and labelling. Most notably, it extends the validity of good manufacturing practice (GMP) certificates that support the manufacture and importation of medicinal products in the EEA until the end of 2021, without the need for further action from the holder of the certificate. The validity of time-limited authorisations/registrations to manufacture/import are also extended until the end of 2021, likewise without the need for further action from the authorisation/registration holder. The Q&A also responds to the question which adaptations to the work of the qualified person (QP) are possible considering travelling and other restrictions arising from the Covid-19 pandemic. 

The Q&A Notice further includes a section on pharmacovigilance (PV): marketing authorisation holders (MAHs) who, for justified reasons relating to the pandemic, are unable to continue standard reporting operations, should temporarily prioritise their reporting obligations as follows: (i) submission of serious individual case safety reports (ICSRs) associated with medicinal products used for the treatment or prevention of the pathogen causing the pandemic; (ii) submission of other serious ICSRs; (iii) submission of non-serious ICSRs associated with medicinal products used for the treatment or prevention of the pathogen causing the pandemic; (iv) submission of other non-serious ICSRs.

The Q&A Notice will be updated on a regular basis to reflect developments of the pandemic, and pharmaceutical companies with products on the EU market should monitor these updates closely.

Comply with existing EU guidance on shortages 

Even before the Covid-19 crisis started, EU regulators and industry had acknowledged that medicinal product supply shortages are a key issue and had begun in earnest to focus on how to prevent and manage such shortages (previously reported here). 

Under the current Covid-19 crisis, MAHs of medicinal products are advised to continue to comply with these aspects of the EMA guidance documents as well as the EMA Draft Reflection paper on Good Manufacturing Practice and MAHs of January 14, 2020 (the Draft GMP Reflection Paper), read in light of Covid-19:

Communicate with authorities and check your suppliers 

• Reporting all current, impending or anticipated shortages to the competent authorities. For all medicinal products, shortage notifications must be sent to the affected national competent authorities. For centrally authorised products, the shortage notification should also be sent to the EMA. In this context, companies should also be aware that the EMA, the European Commission and Member States’ national competent authorities have set up an “EU Executive Steering Group on Shortages Of Medicines Caused By Major Events” in response to the Covid-19 outbreak. 
• Having a shortage prevention plan specifically tailored to the current crisis. In particular, as root causes of Covid-19 related shortages may largely lie beyond the control of a company (e.g., numerous ill workers, a lack of disinfectants required for production, disruptions in transport and border control), pharmaceutical companies are well advised to actively monitor political and general world developments on a daily, if not more frequent, basis and to adapt their shortage prevention plans accordingly; and
• Having continuous communication with all operators in the supply chain to understand the challenges suppliers face in the current crisis as early as possible.

Review supply contracts In light of Covid-19

Companies should proactively review their existing supply contracts, in particular in order to assess the contractual allocation of risk under the terms of the contract as well as the governing law. The outcome of this exercise, in particular with respect to how diminishing supplies must be allocated between different customers and which party must ultimately bear the financial losses caused by Covid-19, should inform shortage prevention and management plans. 

In this context, we suggest that companies in particular: 

• Identify and document the root cause of a supply problem, as this is critically important for assessing whether companies can invoke a force majeure or similar defense;
• Send all required notices to the contract partner;
• Make every reasonable effort to overcome and manage the supply problem (otherwise the relevant contract or governing law may exclude the force majeure defense), and document these efforts;
• Establish the contractual obligations when a shortage requires allocation of existing supplies; and – again –
• Have open and continuous communication with all operators in the supply chain in order to be able to manage contract disputes proactively and resolve them efficiently.

Last but not least, in new supply contracts, companies should explicitly address possible problems related to Covid-19, rather than relying on a general force majeure clause, which typically only applies to unforeseen events.  Further tips on how to create a more robust supply framework for the future are available in Sidley’s recent webinar.