The hospital exemption (HE) (Article 28(2) of Regulation (EC) No 1394/2007; the “ATMP Regulation”) rule allows the invaluable opportunity to provide patients with access to innovative, potentially life-saving treatments in situations of unmet clinical need. Unlicensed, developmental advanced therapy medicinal products (ATMPs) - cell-, gene- or tissue-based therapies - can be used to treat patients under certain conditions. Such products should be produced on a non-routine basis, custom-made for an individual patient under the responsibility of the requesting physician, for use in a hospital setting within the same Member State in which they are manufactured. The HE rule, and the specific requirements permitting its use, is further regulated at the Member State level, which has led to divergence in the implementation of HE across the European Union (EU). As a result, HE use varies significantly across Member States depending on their respective national legal implementation, policy makers’ interpretation of HE, clarity of guidance at the national level, reimbursement opportunities and level of ATMP research and development activities carried out by academic and commercial organizations. With important variations in how quality, safety and efficacy standards are implemented and controlled across EU Member States for ATMPs provided via the HE rule and a lack of transparency around its use, the HE rule draws concern around its potential impact on public health. In this article, the authors report results of a legal analysis of the implementation of HE across the UK, France, Germany, Italy, Spain, Poland and the Netherlands and research findings on its current utilization, highlighting divergences across countries as well as gaps in legislation and control in these countries. The significance of these divergences and the differing levels of enforcement are discussed as well as their associated impact on patients, industry and health care professionals.