On 10 April 2024, the European Parliament adopted its position on the Commission proposal to reform the core EU pharmaceutical legislation (see here and here).  In doing so, the European Parliament has met its ambitious timeline to adopt its position before the upcoming Parliamentary elections and marks a significant step in the legislative process. 

Parliament’s position comes less than a year since the Commission published its proposal, which consists of a new directive replacing Directive 2001/83/EC and a new master regulation replacing Regulation 726/2004, which will also consolidate the orphan and pediatric medicines regulations (see our prior EU Pharma Legislation Review blog series).  Many of Parliament’s amendments to the Commission proposal will be seen as improvements by the innovative industry, but there remain challenges and unresolved questions.

We provide below the top 8 takeaways for industry to consider during the next phase of the legislative process, which is a detailed review by the Council.

Continue Reading European Parliament adopts its Position on EU Pharma Law Review: 8 Key Takeaways for Industry

Last week (28 March 2024), the UK Health Research Authority (“HRA”) published a draft model investigator-initiated study agreement (“mIIS-CTA”) to govern investigator-initiated clinical studies (“IIS”) that involve NHS patients and receive support from commercial partners.  The HRA is calling for comments on the draft mIIS-CTA by 13 May 2024.

Continue Reading UK HRA Consults on a New Model Investigator-Initiated Study Agreement

Tune into this episode of Covington’s Life Sciences Audiocast, where Sibel Yilmaz, Majken Lagerbielke, and Leire Garagorri Eguidazu discuss the new market definition notice published by DG COMP, specifically the latest on the new guidance concerning pharmaceutical innovation markets and possible implications for analysing M&A and licensing deals.

Tune into this episode of Covington’s Life Sciences Audiocast, where Winsome Cheung and George Jenkins discuss the key trends in Life Sciences Transactions for 2024. The speakers discuss the outlook for deal-making in Life Sciences and predictions for deal trends, including in relation to nuclear medicine, GLP-1, antibody-drug conjugates and other modalities. The speakers also discuss some of the key legal considerations that are coming into increasing focus for Life Sciences Transactions, such as competition/antitrust considerations and the Inflation Reduction Act. This is the first Life Sciences Transactions audiocast for 2024, and we plan to release further audiocasts over the course of this year that dive deeper into some of the above topics.

The European Union has adopted various new rules for emergency situations relating to public health.  These new measures build on the experience gained from the COVID-19 pandemic and give new powers to the European Commission, in close cooperation with the Member States. 

The new rules create a complex public health crisis management system.  Measures that may be adopted under this system can be far-reaching.  They include supply chain monitoring, information requests, and sometimes direct intervention of authorities in production and distribution of critical products.  The primary aim of the new rules is to ensure availability and supply of these critical products in times of crises.

This blog briefly discusses the impact of the health emergency measures on medical devices.

Background

Based on the experience with the past pandemic, the EU has adopted several regulations aimed at tackling future public health emergencies, namely:

  • Regulation (EU) 2022/123 on a reinforced role for the European Medicines Agency (“EMA”) in crisis preparedness and management for medicinal products and medical devices (“Regulation 2022/123”).
  • Regulation (EU) 2022/2371 on serious cross-border threats to health (“Regulation 2022/2371”).
  • Council Regulation (EU) 2022/2372 on a framework of measures for ensuring the supply of crisis-relevant medical countermeasures in the event of a public health emergency at Union level (“Regulation 2022/2372”).

The Commission has also published a proposal for a Regulation on compulsory licensing for crisis management, which is currently going through the EU legislative procedure.  The Commission proposal for a Single Market Emergency Instrument, which does not relate specifically to health but indirectly impacts medical devices, is also going through the EU legislative process (see our blog on this topic here).

Impact of each Regulation on Medical Devices

a. Regulation on Reinforced Role for EMA

Regulation 2022/123 provides a framework for managing the impact of public health emergencies and major events, and assigns new tasks to the EMA, including monitoring, preventing and reporting shortages of medicines and medical devices.  The Regulation became applicable on 1 March 2022 for medicines and on 2 February 2023 for shortages of critical medical devices.  In respect of the latter, the Regulation established within the EMA the Executive Steering Group on Shortages of Medical Devices (“MDSSG”) to coordinate urgent actions within the Union in relation to the management of supply of critical medical devices and in vitro diagnostic medical devices in the case of a public health emergency. 

Following the recognition of a public health emergency, Regulation 2022/123 sets out certain measures that will impact medical devices:

  • The MDSSG must adopt and publish a list of categories of medical devices which it considers to be critical during the public health emergency.  MDSSG will gather information on those medical devices through EUDAMED, but also directly from importers, distributors, and national databases.
  • The MDSSG must then monitor supply and demand with a view to identifying shortages of critical medical devices. 
  • The MDSSG must also regularly report the information it gathers under the previous two points to the Commission and to Member States and make recommendations on approach to manage (potential) shortages of critical devices.
  • To facilitate the information collection detailed above, the EMA may request information from manufacturers of critical medical devices, authorised representatives, importers, distributors, and notified bodies.  Relevant economic operators will also have an obligation to proactively report information on shortages to the EMA.
  • The Commission, taking into account the MDSSG’s recommendations, must take all necessary action with a view to mitigating actual or potential shortages of medical devices included on the public health emergency critical devices list.  The Commission will be empowered to do this in a number of ways, including through adopting guidelines for Member States and liaising with third countries and international organizations.

b. Regulation on Serious Cross-Border Threats to Health

Regulation 2022/2371 entered into force on 26 December 2022.  It lays down rules for the surveillance, preparedness, response planning, and emergency research related to cross-border threats to health.  This Regulation repeals and replaces the previous Decision 1082/2013/EU.  In this framework, it addresses EU-Member States joint procurement for medical countermeasures (including medical devices) and provides that the Commission and Member States may engage, as contracting parties, in a joint procurement procedure. 

The Commission will take a central role in this process and will ensure coordination and exchange of information between parties, compliance with procurement procedures (including in particular the EU Financial Regulation (EU) 2018/1046), and execution of the procurement.  This could include development, stockpiling, distribution, and donation of medical countermeasures.  Importantly, Regulation 2022/2371 also permits the advance purchase of medical countermeasures in anticipation of a potential serious cross-border threat to health.  

c. Regulation on Supply of Crisis-relevant Medical Countermeasures

Regulation 2022/2372 establishes a framework of measures for ensuring the supply of crisis-relevant medical countermeasures (including medical devices) in the event that a public health emergency at Union level has been established.  It creates the Health Crisis Board to coordinate the implementation of measures adopted under the Regulation.

In the event of a public health emergency, Regulation 2022/2372 grants power to the Council to adopt, upon proposal of the Commission, a regulation activating the emergency framework and setting out appropriate measures to handle the situation.  There are five measures that could impact medical devices:

  • Monitoring: the Commission will monitor the supply and demand of crisis-relevant medical countermeasures, including medical devices: their production capacity, stockpiles, possible supply chain disruptions and purchasing agreements.
  • Procurement and manufacturing: the Health Crisis Board will advise the Commission on appropriate ways to procure crisis-relevant countermeasures, including medical devices (e.g., through existing contracts, or through Regulation 2022/2371).  In case of shortage, the Commission has power to help increase the availability of crisis-relevant medical countermeasures. 
  • Inventory of production and production facilities: the Commission may request manufacturers of crisis-relevant countermeasures, including medical devices, to inform on their production capacity and existing stocks, in the EU or in third countries.  The requested information may also include a schedule of production plans for the next three months.
  • Inventory of crisis-relevant medical devices: where it considered that there is a risk of shortage of medical devices, the Commission may request that manufacturers share an inventory of those medical devices.
  • Measures to ensure availability and supply: where it considers that there is a risk of shortage for medical countermeasures, including medical devices, the Commission may adopt measures to increase their availability (i.e., reorganize supply chains and utilise existing stocks).  In doing so, the Commission will have to act in coordination with concerned Member States and economic operators.  Potential measures include: (i) Facilitating the creation, expansion or repurposing of production capacities; (ii) Implementing procurement initiatives, reserving stockpiles; (iii) Facilitating the licensing of intellectual property and know-how.

d. Commission Proposal for a Regulation on Compulsory Licensing for Crisis-management

On 27 April 2023, the Commission proposed to establish a Union compulsory licensing of certain intellectual property rights in force in one or more Member States: patents (including published patent applications), utility models, or supplementary protection certificates. 

According to the proposal, the Commission may grant a Union compulsory license if an emergency or crisis instrument has been activated (e.g., if a public health emergency is recognized under Regulation 2022/2371, or where the emergency framework under Regulation 2022/2372 is activated).  If granted, the Union compulsory license would be limited to “crisis-relevant products” which could include medical devices.

The proposal is going through the legislative procedure.  On 13 March 2024, the European Parliament adopted a series of amendments (accessible here).  The Council has not yet adopted its position.

Conclusion

Regulations adopted in the wake of the COVID-19 pandemic create a complex public health crisis management system.  For medical devices, the primary aim of these Regulations is to ensure their availability and supply in times of crises.  To that end, new powers have been granted to the Commission, and new bodies have been created to monitor and oversee issues that could impact the supply of medical devices and in vitro diagnostic medical devices to the EU market. 

Measures that may be adopted under this new coordinated system could potentially be far-reaching.  They include supply chain monitoring, information requests, and sometimes direct intervention of authorities in production and distribution of medical devices.  It is difficult to predict how it will work in practice because its implementation has not yet been tested. 

Nevertheless, a possible future activation of this public health crisis management system is very likely to impact medical devices.  To anticipate measures under these Regulations, it will be important for companies to pay attention to the work of the Commission and newly created bodies as they monitor the market and report on its situation.

It is in any event reassuring to know that European institutions and regulatory agencies are committed to implementing a coordinated approach to manage shortages of critical products in the event of future pandemics or health emergencies. 

If you have any queries concerning the material discussed in this blog or medical devices more broadly, please contact members of our Food, Drug, and Device practice.

The High Court has quashed decisions by the Food Standard Agencies in England, Wales and Scotland (“the FSAs”) that concluded that monk fruit decoctions are a novel food.  The Court ordered the FSAs to re-consider their position by assessing all of the evidence submitted to the FSAs on its own merits, rather than the FSAs’ previous approach of rigidly applying (non‑binding) European Union guidance.  The judgment is available here.  This case is the first of its kind in Great Britain and is relevant for individuals and companies considering whether or not their foods or food ingredients are novel under the GB novel food regime, which requires evidence of significant consumption of a food prior to 1 May 1997 to conclude the food is “non‑novel”, and not requiring a novel food approval. 

Continue Reading Food Standard Agencies in Great Britain unlawfully classified monk fruit as novel, High Court rules

On March 11, 2023, the UK Government published its response (“Government Response”) to an independent review on equity in medical devices commissioned by the Department of Health and Social Care (“Review”).  The Government Response is not guidance nor policy rather it is intended to act as an action plan for tackling potential bias in the design and use of medical devices.  The Government Response fully accepts, and in turn makes a series of commitments in response to, the findings of the Review (which is broken down into 18 recommendations, 51 sub-recommendations, and 3 further calls to action).  Importantly, the Government “wholeheartedly agrees…that medical technology should be unbiased and equitable.” 

Bias in the medical device space, and within healthcare more broadly is (quite rightly) a topic of growing importance to governments, regulators and industry alike.  We set out some key points of interest from both the Review and the Government Response below.  We look forward to seeing more developments and guidance in this area going forwards given its significance to patients and the delivery of healthcare.  

Continue Reading UK Government Outlines New Action to Tackle Biases in Medical Devices

A UK judge has decided that Odysea Ltd, an artisan food company, can use the word “raw” to describe its small-batch, minimally‑processed honey.  Judge Neville, of the First‑tier Tribunal (General Regulatory Chamber), gave the decision on 26 February 2024.  The judgement is available here and opens with a classic reference to Winnie the Pooh:

  1. The things that make me different are the things that make me me”, said Piglet, who must have seen quite a bit of honey eaten over the years.  If he treated Pooh to some “raw honey”, what would be different about it?
  2. Plenty, says Odysea, who have sold thousands of jars of honey proudly labelled as “raw”: unlike ordinary honey, ours has not been heated above its natural temperature and has undergone far less processing, so is of better quality.  Describing one of Odysea’s raw honey products, the judges at the Great Taste Awards complimented the “subtle pine and fir flavours, the perfect level of sweetness, the hint of saltiness, the sheer sexiness of this honey”.
  3. Nothing, says Waltham Forest Trading Standards, who wants them to stop: all honey is raw because it has not been cooked, so it misleads consumers to suggest that yours is special.  Odysea has had to reprint its labels to say “artisan honey” instead.  The Tribunal must decide if that is right.
Continue Reading UK Judge Permits “Raw” Label for Honey

In an earlier blog, we wrote that the German regulation of pharmaceutical pricing and reimbursement is one of the most complicated legal areas in the entire world of life sciences laws. With the new draft “Medical Research Act” (Medizinforschungsgesetz or MFG) that came out in January 2024, the German government plans to add some additional nuances to this system.

Earlier this week, we had discussed the Medical Research Act in a separate blog where we discussed the proposed amendments for clinical trials in Germany. In this blog, we will focus on the proposed changes in the area of drug pricing and reimbursement.

1. The Medical Research Act and the German Market Access System

The Medical Research Act is part of Germany’s new National Pharma Strategy which aims to make Germany more attractive for pharmaceutical R&D and manufacturing. This new Pharma Strategy was announced on 13 December 2023 by the German government in a Strategy Paper. It proposes a number of measures to boost the German pharmaceutical sector (see our blog on the Pharma Strategy). On 26 January 2024, the draft Medical Research Act was distributed to stakeholders.

The Medical Research Act is a draft bill that includes legislative changes in several areas. These changes target following main areas:

  • The national laws and procedures on clinical trials with pharmaceuticals, medical devices and in-vitro diagnostics;
  • The German drug pricing & reimbursement (market access) laws;
  • The structure and competencies of regulatory agencies and ethics committees.

On the German market access system: The German drug pricing and reimbursement rules have been subject to literally numerous reforms over the past few decades. In 2011, a new system has been introduced for new drugs that is meanwhile well-known under the acronym: AMNOG (Arzneimittelmarktneuordnungsgesetz). The AMNOG system has two main steps: (1) an early benefit assessment of new drugs against a comparator treatment and (2) a subsequent negotiation of the reimbursement price based on the outcome of the early benefit assessment.

2. Proposed Changes to the Drug Pricing and Reimbursement Laws

Under the current laws, the negotiated reimbursement price for a new drug becomes public (through certain notification requirements). This can and is used by other countries as a reference when they determine drug prices. Further, the current German laws require that the AMNOG price negotiations take into account the price of the respective drug in certain other countries. Now, the Medical Research Act aims to restrict these possibilities for international reference pricing – in both directions.

The key proposals for the drug pricing and market access area include following measures:

a) Confidentiality of Reimbursement Prices for new Drugs

The new law introduces the option for pharmaceutical companies to agree on confidentiality of the reimbursement amounts for their new drug. This can be subject of the AMNOG negotiations with the federal health insurance association (GKV-Spitzenverband). The confidentiality would apply until the expiry of the product’s regulatory data exclusivity. Consequently, the agreed reimbursement price would not be listed in public sources and not even be told to pharmacies. The product would be sold with the (higher) price that the company determines and not with the agreed reimbursement price.

Hence, the new law would allow pharma companies to have two prices: the “public” price on the product package and the “real price” that was agreed in the AMNOG process. In return, the companies will be required to reimburse the health insurance funds and other payors the overpaid difference between the “public” and the “real price”. To enable healthcare insurances a control mechanism for this compensation claim, the pharma companies need to notify the “real price” to a limited group of stakeholders.

The option to keep the reimbursement amount confidential has long been a request of pharmaceutical companies as the German prices are often used as a reference price in other countries. Several companies who came out of the AMNOG process with a low reimbursement price withdrew their products from the German market in order to avoid a subsequent price erosion in other countries. Insofar, the Medical Research Act aims to avoid such scenarios.

However, based on the proposed laws and procedures in the Medical Research Act, we doubt whether the “real” reimbursement amount can really be kept confidential. As such, the law introduces an information claim against the health insurance association for customers that purchased such drugs so that these customers could get access to the “real” (confidential) price.

Overall, the new rules would also lead to more bureaucracy, complexity and costs in a system that is already extremely bureaucratic and complicated.

b) Drug Prices in other European countries shall no longer influence the German reimbursement prices

Related with the option for confidentiality of the German reimbursement price, the Medical Research Act also proposes that in the future the price of such products in other European countries shall no longer be considered in the German price negotiations. Under the existing laws, the sales prices in other European countries are taken into account in the reimbursement price negotiations (subject to some additional requirements). Under the new laws, this existing requirement for an “inbound” international reference pricing will be removed from the German AMNOG drug pricing laws.

c) Restricting the substitution of “confidential price drugs” by cheaper import drugs

The Medical Research Act also proposes that pharmacies shall no longer substitute medicines that have a confidential reimbursement price with cheaper (parallel) import drugs. To save costs, the existing German laws stipulate that in certain cases pharmacies must dispense identical but cheaper imported drugs instead of the more expensive locally launched drug. Since confidential reimbursement amounts remain unknown to pharmacies, they cannot determine the price difference against import drugs. Hence, the substitution obligation will be lifted for drugs with confidential reimbursement amounts.

3. International Consequences of the Reform

Over the last decade many pharmaceutical companies with innovative drugs chose Germany as their first launch country in the EU. One reason is that the timelines of the AMNOG process are strictly regulated and offer predictability. Germany is also still a high-price country for new drugs and offers an initial free pricing period of 6 months (until recently, 12 months).

For companies operating in Germany, the above outlined changes to the pricing and reimbursement laws can have a positive impact. The Medical Research Act notes that the confidentiality option has been requested by the pharmaceutical industry for a while. In fact, this could be an interesting new instrument, especially for companies whose products come out of the AMNOG process with an unsatisfactorily low price. 

Overall, it is an important point in the Medical Research Act that the law aims to restrict the (inbound and outbound) international reference pricing. Therefore, these changes would not only affect Germany but also the drug pricing situation in other countries.

Having said this, we again underscore that the way the Medical Research Act envisages to implement the proposed confidentiality of the reimbursement price is very complicated and has a number of loopholes.  

4. Next Steps of the Reform

The Medical Research Act is currently out for public consultation. On 20 February 2024, already next week, there will be a hearing about this draft with stakeholders. All interest groups can submit comments until 22 February 2024. It is a bit unusual that the hearing takes place before the stakeholder comments are collected. This is an indication that the German government is determined to implement the new law quickly to execute on the new Pharma Strategy. The above described changes are scheduled to take effect on 1 January 2025.

It remains to be seen whether all proposed amendments that we have discussed in this blog will be implemented as set forth in the current version of the draft bill. Usually, there will be changes in the course of the legislative deliberations – and we expect that there will be changes to these proposed rules, too. Therefore, affected companies and stakeholders should closely monitor the legislative process and consider submitting comments.

The Life Sciences Team of Covington & Burling LLP in Frankfurt (Germany) will keep you posted about the next developments.

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