Pharmaceutical Supply Agreement (Kenya)

A Pharmaceutical Supply Agreement in Kenya sets out the rights, duties and consideration binding the parties to it.

The Pharmacy and Poisons Act Cap. 244 establishes the Pharmacy and Poisons Board (PPB) as the national regulatory authority for pharmaceutical products in Kenya. The PPB, operating under Part II of Cap. 244, is responsible for registering all pharmaceutical products for sale in Kenya (Section 35 of Cap. 244 prohibits sale of unregistered medicines), licensing pharmaceutical premises including manufacturing facilities, wholesale dealer premises, and retail pharmacies, and regulating the quality, safety, and efficacy of pharmaceutical products through post-market surveillance. As of 2024, the PPB has been reconstituted as the Kenya Pharmacy and Poisons Board under the Health Act No. 21 of 2017 and continues its regulatory functions.

All parties to a Pharmaceutical Supply Agreement in Kenya must hold valid licences from the PPB. A wholesale drug dealer's licence under Section 32 of Cap. 244 is required to operate a pharmaceutical wholesale business. A retail pharmacy licence (pharmacist's licence and premises registration certificate) is required to operate a retail pharmacy. A manufacturer's licence is required to manufacture pharmaceutical products. Import permits are required under Section 36 of Cap. 244 for each consignment of imported pharmaceutical products. The PPB register of licensed premises and registered products is published on the PPB website and must be checked before entering into a supply agreement.

Pharmaceutical Supply Agreements in Kenya must also comply with the Kenya Bureau of Standards (KEBS) standards for pharmaceutical products, the WHO Good Distribution Practices (GDP) guidelines incorporated by the PPB into its licensing requirements, and the Anti-Counterfeit Act No. 13 of 2008 administered by the Anti-Counterfeit Authority (ACA) — which requires product authentication systems to prevent distribution of counterfeit medicines. The Medical Practitioners and Dentists Board (MPDB) and the Nursing Council of Kenya (NCK) regulate prescribers and dispensers, while the PPB regulates the supply chain.

The supply of narcotic drugs and psychotropic substances in Kenya is subject to additional controls under the Narcotic Drugs and Psychotropic Substances (Control) Act No. 4 of 1994, which requires specific licences, record-keeping, and security measures beyond those in Cap. 244. Pharmaceutical Supply Agreements covering controlled substances must specifically address these additional regulatory requirements.

The legal framework governing the Pharmaceutical Supply Agreement (Kenya) in Kenya draws on several key statutes and regulatory bodies. Under the Companies Act No. 17 of 2015, the Registrar of Companies at the Office of the Attorney General maintains the register of Kenyan companies. Section 3 of the Law of Contract Act (Cap. 23) governs contractual obligations. The Competition Authority of Kenya (CAK) enforces the Competition Act No. 12 of 2010. The Kenya Revenue Authority (KRA) administers corporate tax under the Income Tax Act (Cap. 470). The High Court of Kenya has unlimited original jurisdiction under Article 165 of the Constitution of Kenya 2010. Parties executing a Pharmaceutical Supply Agreement (Kenya) in Kenya should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Pharmacy and Poisons Act Cap. 244 sets the foundational requirements.

A Pharmaceutical Supply Agreement in Kenya under the Pharmacy and Poisons Act Cap. 244 is required in several common commercial situations involving the supply of pharmaceutical products.

A supply agreement is needed when a pharmaceutical wholesaler or distributor enters into a regular supply relationship with a retail pharmacy — community pharmacies, supermarket pharmacies, hospital out-patient pharmacies — to provide branded and generic medicines on ongoing credit terms. Without a formal supply agreement, the terms of supply, credit limits, return policies, and quality dispute resolution are undefined, leading to recurring commercial disputes.

A supply agreement is needed when a pharmaceutical manufacturer or importer engages a distribution partner to distribute its registered products through the Kenyan healthcare system. Kenya has a significant generic medicines manufacturing industry — including Universal Corporation Limited, Dawa Limited, Cosmos Limited, and Beta Healthcare International — and international pharmaceutical companies including GlaxoSmithKline Kenya, Reckitt Benckiser Kenya, and Sanofi Kenya distribute through licensed distributors under formal supply and distribution agreements.

A supply agreement is needed when a healthcare facility — public or faith-based hospital, Level 4 or Level 5 health facility, or private hospital — procures pharmaceutical products directly from a manufacturer or distributor rather than through the Kenya Medical Supplies Authority (KEMSA). Private hospitals including Aga Khan University Hospital, Nairobi Hospital, Mater Misericordiae Hospital, and MP Shah Hospital all maintain formal pharmaceutical supply agreements with multiple suppliers.

A supply agreement is needed when a county government pharmacy department or county health department establishes supply arrangements with pharmaceutical suppliers for medicines dispensed at county health facilities, complementing or supplementing supplies from KEMSA under the County Health System.

A supply agreement is also needed when a pharmaceutical company engages a cold chain logistics provider to distribute temperature-sensitive biological products — vaccines, insulin, biologics — that require specific storage and transport conditions under the PPB Cold Chain Management Guidelines.

Parties in Kenya should prepare a Pharmaceutical Supply Agreement (Kenya) proactively rather than waiting for a dispute to arise. Courts interpret agreements based on the written terms rather than oral representations. Under the Companies Act No. 17 of 2015, the Registrar of Companies at the Office of the Attorney General maintains the register of Kenyan companies. Section 3 of the Law of Contract Act (Cap. 23) governs contractual obligations. The Competition Authority of Kenya (CAK) enforces the Competition Act No. 12 of 2010. The Kenya Revenue Authority (KRA) administers corporate tax under the Income Tax Act (Cap. 470). The High Court of Kenya has unlimited original jurisdiction under Article 165 of the Constitution of Kenya 2010. Where the transaction involves regulated activities, prior approval from the relevant authority may be required before execution.

A Pharmaceutical Supply Agreement in Kenya under the Pharmacy and Poisons Act Cap. 244 must address the following critical elements to confirm regulatory compliance, commercial clarity, and product quality assurance.

Parties and Regulatory Credentials: Full legal names of the Supplier and Buyer, their physical and postal addresses, PPB licence numbers (wholesale dealer licence, retail pharmacy registration certificate, or facility registration number), and Kenya Revenue Authority (KRA) PIN numbers. The agreement should confirm that both parties hold valid, current PPB licences and that all products to be supplied are registered with the PPB under Section 35 of Cap. 244. If the Supplier is a foreign manufacturer, their authorised Kenya representative and import permit arrangements under Section 36 of Cap. 244 must be identified.

Product Schedule and Specifications: A detailed schedule of pharmaceutical products to be supplied — including international non-proprietary names (INN), brand names, PPB registration numbers, dosage forms, pack sizes, and applicable storage conditions (ambient, refrigerated, or frozen). The product schedule should reference the PPB registration certificate and the WHO International Nonproprietary Names (INN) list. Any changes to the product schedule — including new product registrations or deregistrations by the PPB — should trigger a contract amendment process.

Ordering and Delivery: Procedures for placing purchase orders, minimum order quantities, lead times, delivery locations, and delivery documentation (including delivery notes, certificates of analysis, batch numbers, expiry dates, and storage temperature records for cold chain products). Delivery terms should specify whether supply is on Ex Works (EXW), Cost Insurance and Freight (CIF), Delivered Duty Paid (DDP), or other Incoterms 2020 basis, particularly relevant for imported products cleared through the Kenya Ports Authority (KPA) at Mombasa.

Quality Assurance and Batch Documentation: Obligations for the Supplier to provide a Certificate of Analysis (CoA) and Certificate of Conformity (CoC) for each batch supplied, confirming compliance with PPB registration specifications and pharmacopoeial standards (British Pharmacopoeia, United States Pharmacopoeia, or WHO pharmacopoeia). The agreement should specify procedures for sampling, testing, and rejection of non-conforming batches, with reference to the PPB Good Distribution Practice (GDP) guidelines and the WHO GDP guidelines.

Pricing and Payment Terms: The agreed pricing structure — ex-factory price, distributor price, or pharmacy purchase price — and any applicable discounts, rebates, and promotional allowances. Payment terms should specify credit periods, acceptable payment instruments (M-Pesa merchant payment, RTGS via SWIFT, or cheque), late payment interest rates, and the currency of payment (KES or USD for imported products). The Kenya Competition Act No. 12 of 2010 prohibits resale price maintenance — provisions fixing the retail price at which the Buyer sells to end consumers are illegal.

Recall Procedures: A clear protocol for product recalls initiated by the PPB, the Supplier, or the Buyer following identification of quality, safety, or counterfeit concerns. The protocol should align with the PPB Product Recall Guidelines and specify notification timelines, quarantine procedures, return logistics, and financial responsibility for recall costs. Under Section 35A of Cap. 244 (as amended), both the Supplier and the Buyer have regulatory obligations to comply with PPB recall notices promptly.

Anti-Counterfeiting Compliance: Provisions requiring the Supplier to supply products with authentication features complying with the Anti-Counterfeit Act No. 13 of 2008 — including tax stamps, holograms, or digital authentication systems approved by the Anti-Counterfeit Authority (ACA) — and requiring the Buyer to report any suspected counterfeit products to the ACA and PPB.

Forms-legal.com provides this Pharmaceutical Supply Agreement Kenya template as a practical drafting framework for licensed pharmaceutical suppliers and buyers operating under the Pharmacy and Poisons Act Cap. 244.