Due to the current COVID-19 outbreak in Mexico, and the corresponding force majeure health emergency that has been declared in the country, the Mexican Government´s health services and most of the health care provided by the private sector, are requiring the urgent purchase, sale and importation of a large variety of health supplies, drugs, medical devices, testing materials, and other health and cleaning products, both in the international and local market.
The Mexican Government holds and controls the vast majority of hospitals and testing laboratories in the country, and is the main purchaser of health supplies, drugs, medical devices, and testing materials. Purchases made by the Mexican Government are ordinarily subject to strict Mexican government procurement laws, as well as to Mexican General Health Law (“GHL”) and its regulations, and the extraordinary actions and authority granted to the Ministry of Health (“MH”) in Mexico by executive orders issued under this emergency.
On March 27, 2020, President López Obrador published in the Official Gazette of the Federation, an executive order declaring specific extraordinary actions that the MH will be immediately entitled to undertake for the mitigation and control of COVID-19 (the “March 27 Decree”), in addition to those extraordinary actions already contemplated under the GHL.
Said extraordinary actions issued under the March 27 Decree include, among others, the ability for the MH to:
On April 1st, 2020, the Mexican Tax Administration Service (“SAT”) published in its website (to be later on officially published in the Official Gazette of the Federation), diverse administrative rules based on the March 27 Decree, in order to facilitate the customs clearance of the abovementioned goods, in importations to be made by the MH and related government entities during the emergency.
Purchases, sales and importations that are made not to supply the Mexican Government, but for supplying private health care institutions or other private businesses in the pharmaceutical, life science or health sectors in Mexico, are not ruled by Mexican Government procurement laws. Said transactions within the private sector remain subject to the general health and customs regulations applicable in Mexico. The MH and Cofepris (health regulator in Mexico) should, in our view, also be entitled to authorize emergency importations of drugs and other health supplies or products under the March 27 Decree, and other existing regulations and provisions, even in transactions to be carried out among particulars, and not only in sales made to the Mexican government. However, this should be reviewed on a case-by-case basis, as no other specific rules have been issued yet.
Companies may also explore, for their sales and importations to Mexico of the aforementioned goods for the COVID-19 emergency, the convenience or not to claim the application of other provisions already set forth in the GHL, and in other regulatory provisions and rulings available and issued by the MH before the COVID-19 emergency, including among others:
Having the proper advice, by combining legal expertise in health care, life science, customs and foreign trade, as well as in government procurement practice and other regulatory and transactional areas of law on a case-by-case basis, is relevant for the efficient implementation of these type of transactions in Mexico under this emergency.
Companies should also put in place and apply for the transactions mentioned above, the appropriate steps and policies to avoid falling into corrupt practices violating Mexican laws, the U.S. FCPA or other foreign laws of extraterritorial application. Entities and individuals participating in these transactions should also avoid unlawful antitrust or unfair trade practices, as well as other potentially illegal conducts restricting the offer, or artificially increasing or speculating with prices. All such potential infringements could be severely sanctioned by Mexican and other foreign authorities, with particular emphasis during this crisis.
Provisions under international treaties (such as NAFTA and, eventually, the USMCA), as well as other customs and regulatory requirements applicable in the foreign country selling and exporting the goods to Mexico (e.g., in the U.S.), and domestically, in Mexican territory, might also require specific consideration while entering into these transactions
For more information, please contact your Foley relationship partner. For additional web-based resources available to assist you in monitoring the spread of the coronavirus on a global basis, you may wish to visit the websites of the CDC and the World Health Organization.
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