Healthcare/Pharma/Life Sciences in Hungary

Healthcare/Pharma/Life Sciences in Hungary

Hungary
Tools
Typography
  • Smaller Small Medium Big Bigger
  • Default Helvetica Segoe Georgia Times

During the COVID-19 pandemic, the Healthcare/Pharma/Life Sciences sector has, not surprisingly, come into focus, with the production licencing and supply of vaccines and the ability of hospitals and healthcare facilities to operate and the production of healthcare products all attracting attention.

COVID-19 Vaccines. Time will tell whether Hungary’s use of Chinese and Russian vaccines not following European Medical Agency (EMA) guidelines will turn out to be wise. On the supply side, manufacturers of medicines and equipment are adapting their capacities to the rising demand for vaccine ingredients and packaging both within international supply chains and in the context of the political interest in some level of national self-sufficiency. The Hungarian Government has communicated its interest in establishing a national vaccine manufacture capacity. On the consumer side, it remains to be seen whether people receiving non-EMA-approved vaccines will be restricted in their freedom to travel and work within the EU, while domestically greater freedoms will be given to those who can show a “vaccine certificate.”

Hungary in Global Supply Chains. Hungary has long had a role in international supply chains and has a strong position in pharmaceutical and medical equipment and supplies, with both home-grown companies (some, such as Richter Gedeon, internationally recognized), and local operations of multinationals such as Teva. Sanofi-Aventis, Egis-Servier, and GSK. As supply chains are subject to restructuring, this currently results in the development of local capacity in areas such as vaccines and in foreign – e.g., Asian and American – companies establishing or acquiring operations in Hungary.

Private Healthcare Developments. For many years frustration with the services offered by the Hungarian State health system has been a major factor contributing to the demand for private healthcare facilities.  The situation has been exacerbated during the pandemic, as non-emergency surgeries have been delayed and public healthcare capacities have been exhausted by emergency operations and COVID-19-related tasks. Unsurprisingly, this has resulted in the increased use of the private healthcare system by those who can afford it – the workload of private hospitals has reportedly increased by about 20% since Covid appeared in Hungary. For lawyers this has given rise to Real Estate and M&A work.

Pharmacies. A recent trend has been for pharmacies in Hungary, which traditionally operated as small independent businesses and are legally required to be at least 50%-owned by qualified pharmacists, to move to new operating structures, such as franchise arrangements, which are currently not restricted by any regulation or official decision of Hungarian authorities. The advantages of this form of cooperation include a sounder financial background, the centralized procurement of a wide range of products, and more sophisticated marketing. The Hungarian Competition Office has recently taken interest in the wholesale drug system by examining whether this form of cooperation between pharmacies could result in prohibited concentrations on the market. The result of this examination will be interesting, as the new style of operation in a cooperative framework will be assessed through the lenses of regulations designed for more traditional structures. These steps provide work for M&A, regulatory, and antitrust lawyers.

Data Protection and Employment Issues. Vaccination is, in Hungary, voluntary. Employers in all areas have to consider whether they can require employees to be vaccinated, keeping in mind both necessity and proportionality, as the individual’s freedom to choose and the employer’s general obligation to ensure safe and healthy working conditions, including by ensuring protection against infection, conflict. The Hungarian National Authority for Data Protection and Freedom of Information recently published guidelines stating that employers shall generally be entitled to request nothing further from employees than to present their vaccination certificates. As the costs of private healthcare are frequently borne by health insurance, it is becoming increasingly common for employment packages to include healthcare insurance as a benefit, changing long-standing practice in Hungary.

At the time of writing, Hungary had among the highest number of deaths per million in Europe. Notwithstanding the country’s disastrous performance during the pandemic – or maybe because of it –the healthcare and life science sectors will continue to be active and generate work for lawyers.

By Richard Lock, Partner, and Csilla Bertha, Life Sciences Lawyer, Lakatos, Koves & Partners

This Article was originally published in Issue 8.5 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.