The ins and outs of localization in Romanian pharma. Prepared in association with Mușat & Asociații, a leading global law firm, this is an extract from The Pharma Legal Handbook: Romania, available to purchase here for GBP 75.
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?
Romania has a favourable tax regime for companies, which encourages many businesses to set up and to operate subsidiaries in Romania. However, there are no special rules or additional benefits for the localization of pharmaceutical companies.
In this context, numerous international pharmaceutical companies decided to set up marketing affiliates in Romania and many of them set up local distribution affiliates, duly authorised for the wholesale distribution of medicinal products. The number of pharmaceutical companies which hold manufacturing facilities in Romania is rather low.
Also, it is noteworthy that the import of medicinal products into Romania is allowed only based on an import authorisation issued by the National Agency of Medicines and Medical Devices. Hence, the non-resident pharmaceutical companies which export medicines to Romania need to have a local distribution partner or, alternatively, to set up a local distribution affiliate which will import the medicines in question.
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 recent changes in Romania providing for localization rules and policies applicable to pharmaceutical companies.
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)?
According to the in-force legislation, the process of obtaining a marketing authorization is not impacted by localization policies.
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)?
The pricing process for pharmaceutical products is not impacted by localization policies.
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)?
The reimbursement of pharmaceutical products is not impacted by localization policies.
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)?
The applicable legislation does not expressly provide that the access of pharmaceutical products to public tenders is impacted by localization policies.
However, in practice, the contracting authorities organizing public procurement procedures for medicines (e.g., the public hospitals) could provide for special requirements in the tender documentation which would require the procurement of medicines by local distributors.
The regulatory authorities also consider that the sale of the medicines to the Romanian hospitals and pharmacies should be performed by a local distributor authorised by the National Agency of Medicines and Medical Devices for the wholesale distribution of medicinal products.
Accordingly, localization policies could impact the public procurement procedures for pharmaceutical products and the supply of the medicines to the local hospitals and pharmacies.
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?
For the moment, no specific localization policies have impacted the tax rates applicable in Romania with respect to pharmaceutical products. As a general rule, the tax legislation establishes different taxation rules depending on the tax residency of the beneficiary of income. As such, resident entities that are corporate income taxpayers may benefit from certain profit tax exemptions or incentives (e.g. special deductions for research and development, tax exemptions for reinvested profits etc.).
Separately, as regards the customs legislation, the EU general rules regarding the preferential origin of products (for benefiting from reduced import rates based on trade agreements concluded by the EU with third countries), anti-dumping rules or specific import restrictions (e.g., import restrictions for products originating from Crimeea and Sevastopol) may apply. In addition, attention should be paid to the EU rules regarding the imports of medicinal products. For example, in case of importing medicinal products for veterinary and/or human use (with certain exceptions) the following requirements apply:
- Import authorization – it is required to obtain an import authorisation;
- Marketing authorization – Medicinal products may only be placed on the EU market when a marketing authorization has been issued by the competent authorities of a Member State or by the European Medicines Agency (EMEA). This authorization is granted only to applicants established in the EU. Through the EEA Agreement this is extended to include also Norway, Iceland and Liechtenstein. UK’s withdrawal due to Brexit will also have an impact on the placement of medicinal products, since the marketing authorization may be obtained only by applicants established in the EU, and many pharmaceutical companies transferred their marketing authorisations from UK entities to entities located in EU countries.
- Labelling and packaging provisions – as a rule, the label and the packaging should be drafted in Romanian language;
- Control of each batch; and
- The need to implement an EU and a national pharmacovigilance system.
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 other incentives or advantages offered by localization rules in Romania.
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?
There is currently no discussion about new localization policies in Romania.
It is noteworthy that, in 2020, the Romanian authorities reformed the reimbursement system in Romania, by changing the rules on the computation of the clawback tax – a statutory contribution due for the medicinal products traded in the country, which should be paid on a quarterly basis to the state budget. The new clawback methodology favours the marketing authorisation holders of generic medicines, including the companies which have manufacturing facilities in Romania, since they pay a lower clawback tax to the state budget.