Legal framework for placing drug precursors on the market in the Czech Republic

The drug precursors are regulated mainly by the Czech Act No. 272/2013 Coll., on drug precursors as amended (the “Czech Drug Precursors Act”). The Czech Drug Precursors Act defines all important terms and also rules for operating with substances and regulates offences and sanctions for such offences in this area in accordance with the EU legislation on control and monitoring of trade in drug precursors (Regulation (EC) No 273/2004 and Regulation (EC) No. 111/2005). The drug precursors may be defined as chemicals that are primarily used for the legitimate (legal) production of a wide range of products, like medicine, perfumes, plastics, cosmetics etc.; however, they can also be misused for the illicit (illegal) production of drugs.

GBL has widespread industrial uses. One significant use of GBL is as an intermediate in the manufacture of pyrrolidones, which are widely used industrial chemicals. A second significant use of GBL, because of its strong solvency properties, is in cleaning products such as circuit board cleaners in electronics, in paint strippers and as a component of nail polish removers. It is used as a solvent for polyacrylonitrile, cellulose acetate, methylacrylate polymers, and polystyrene. Other applications include the production of herbicides and pharmaceuticals, and is used as an intermediate in the synthesis of DL-methionine, piperidine, phenylbutyric acid and thiobutyric acid.

According to European Drug Report 2017 the recreational use of GBL has been reported among subgroups of drug users in Europe for the last two decades. GBL is a non-scheduled drug precursor and in accordance with the EU legislation on control and monitoring of trade in drug precursors (Regulation (EC) No 273/2004 and Regulation (EC) No. 111/2005), GBL is covered by the EU voluntary monitoring scheme for drug precursors.

Under Czech law, GBL is listed as a precursor and auxiliary substance (drug precursor) in the Annex to Government Decree No. 485/2013 Coll., on lists of precursor and auxiliary substances and their annual quantitative limits, as amended by Government Decree No. 252/2015 Coll.

We would like to introduce you to Czech legislation on drug precursors and to point out some important information that could help you to set up a successful business in Czech Republic.

Please beware that this information focuses on substances listed in the Annex to Government Decree No. 485/2013 Coll., on lists of precursor and auxiliary substances and their annual quantitative limits, as amended by Government Decree No. 252/2015 Coll. (1,4-Butanediol, Red Phosphorus and GBL). Other substances listed in Category 2 and 3 in the Regulation (EC) No 273/2004 (e.g. Acetone, Toluene) have very similar (yet a bit stricter) procedure of obtaining permission to operate as the procedure for precursor and auxiliary substances, such as GBL, is derived from it. The procedure of obtaining license for Category 1 substances differs as it is harder to comply with the stricter rules governing it.

This information does not represent a comprehensive analysis of the issue at hand but merely outlines the current legal framework and contains our opinion on the above-described issues and we are not able to assure that any explanation different from our conclusions herein would not be adopted by the respective civil or arbitration courts in the future.

1 Obligations before placing precursor and auxiliary substances on the market

1.1 Entrepreneurial natural persons, legal persons and state administration bodies that intend to supply the precursor material or excipient to the Czech Republic or other Member States of the European Union in quantities exceeding the quantitative limit set by the implementing legislation (the annual limit for GBL is 0 kg) within one year for one precursor material or excipient prescription are required no later than the date of commencement of this activity:

(i) be registered;

(ii) appoint a contact natural person for activities with precursor materials and auxiliary substances.

1.2 Submit an application to the Czech Ministry of Health (the “Czech Ministry of Health”) for registration on the designated form containing

(i) the name of the precursor material or excipient;

(ii) the addresses of the establishments where the applicant intends to operate with the substance, and

(iii) name, or names, surnames, address of the place of permanent residence, job classification and signature or recognized electronic signature of the contact person for activities with the substance.

1.3 The Czech Ministry of Health shall register the applicant and issue him with a registration certificate if:

(i) the integrity of the applicant and the contact person is proven (proof of good repute such as an extract from an extract from the Criminal Records Register is needed);

(ii) the applicant has attached to the application for registration an extract from the commercial or similar register of the applicant or the instrument of incorporation of the applicant; and

(iii) the applicant has attached to the application for registration a document appointing a contact person.

The contact person can only be appointed if the “to be appointed person” is a natural person and he/she has proven it‘s integrity. It is not necessary for the person to be an employee or a member of the statutory body.

The contact person ensures communication with the relevant administrative authorities and signs the application for registration, reports to the Czech Ministry of Health the quantity of supplied precursor and auxiliary substances and stating the customer on a certain form, the evidence of loss, destruction and disposal of precursor and auxiliary substances and the evidence of inspections carried out.

The contact person can only be appointed if the “to be appointed person” is a natural person and he/she has proven it‘s integrity. It is not necessary for the person to be an employee or a member of the statutory body.

The contact person ensures communication with the relevant administrative authorities and signs the application for registration, reports to the Czech Ministry of Health the quantity of supplied precursor and auxiliary substances and stating the customer on a certain form, the evidence of loss, destruction and disposal of precursor and auxiliary substances and the evidence of inspections carried out.

According to the section 37 of the Czech Drug Precursors Act, precursor and auxiliary substances must not be delivered to a natural person who is not engaged in business. Natural persons engaged in business, legal persons, and state administrative authorities may only deliver an initial or auxiliary substance to another person if they receive from it, prior to the making of the delivery, a duly completed customer declaration on a form the model for which shall be provided by an implementing legal regulation.

Furthermore, the applicant must have a place of permanent residence or a registered office in the European Economic Area or Switzerland. Without any of them, the applicant will not receive a certificate of registration.

Certificates of registration are issued for the period for which the applicant has been registered. The registration itself lasts (for individual activities) for an indefinite period of time, unless the applicant applies for a fixed period. This is the one of many crucial differences there are between Category 1 substances and Category 2 and 3 (including precursor and auxiliary substances). License for Category 1 substances lasts for 3 years and has to be renewed if the applicant wishes to continue to operate.

2 Obligations arising from supplying precursor and auxiliary substances on the market

2.1 After obtaining a certificate of registration, there are many new duties a supplier must comply with, especially he has to:

(i) report to the Czech Ministry of Health on a monthly basis the quantity of supplied precursor and auxiliary substances and stating the customer on a certain form, by the fifteenth day of the following calendar month;

(ii) keep records of receiving and dispatching of precursor and auxiliary substances in such a way as to prevent their deterioration, loss, destruction, misuse or theft for at least 5 years from the date of their acquisition, and

(iii) immediately notify the Police of the Czech Republic and the Czech Ministry of Health of any suspicious circumstances, in particular unusual orders for a precursor or auxiliary substance, which indicate that the precursor or auxiliary substance may be misused in the illicit manufacture of a narcotic, psychotropic or listed Category 1, 2 or 3 substance.

(iv) inform the Czech Ministry of Health by 31 March each year whether they continue with the activities for which they were registered.

3 Inspections and Offences

3.1 Inspections

The monitoring of compliance with obligations arising from operating with precursor and auxiliary substances is carried out by the authorized employees of the Czech Ministry of Health and the Czech State Institute for Drug Control as well as the members of the Police of the Czech Republic and the Customs Administration of the Czech Republic. These inspectors shall prove themselves by an inspector's card, the model of which is determined by implementing legislation.

Inspectors may also carry out an unannounced inspection and take samples of the substances to the extent necessary for the inspection. The compensation for the sample taken shall be paid by the competent administrative body to natural persons engaged in business, legal persons or state administration bodies only at their written request.

3.2 Offences

The Czech Drug Precursors Act enumerates many offences related to operating with such a substance. This wide range of offences goes from operating without license/registration to not appointing a new contact person after the former is permanently unable to perform its function. Certain examples of what could possibly happen are given here:

(i) For operating without being properly registered (this also applies for operating without license) the fine can go up to CZK 5,000,000 (approximately EUR 190,000).

(ii) For failing to inform the Czech Ministry of Health by 31 March each year whether registered persons continue with the activities for which they were registered the penalty is losing the registration/license.

(iii) For wrongly disposing some of the substances the fine can go up to CZK 2,000,000 (approximately EUR 76,400).

For some offences, it is possible to combine the penalty of losing the license/registration and the financial fine. Such an offence is the wrong disposing of certain substances.

For more information, contact us at:

JUDr. Mojmír Ježek, Ph.D.

ECOVIS ježek, advokátní kancelář s.r.o.
Betlémské nám. 6
110 00 Praha 1
e-mail: mojmir.jezek@ecovislegal.cz
www.ecovislegal.cz

About ECOVIS ježek advokátní kancelář s.r.o.
The Czech law office in Prague ECOVIS ježek practices mainly in the area of Czech commercial law, Czech real estate law, representation at Czech courts, administrative bodies and arbitration courts, as well as Czech finance and banking law, and provides full-fledged advice in all areas, making it a suitable alternative for clients of international law offices. The international dimension of the Czech legal services provided is ensured through past experience and through co-operation with leading legal offices in most European countries, the US, and other jurisdictions. The Czech lawyers of the ECOVIS ježek team have many years of experience from leading international law offices and tax companies, in providing legal advice to multinational corporations, large Czech companies, but also to medium-sized companies and individual clients. For more information, go to www.ecovislegal.cz/en.