On 14 July 2022, the European Commission published a proposal for a Regulation on “substances of human origin” (“SoHO”) intended for human application.  The proposed Regulation is intended to replace the existing and largely outdated Directives on SoHO, respectively on Blood and on Tissues and Cells.  These sets of rules govern the sourcing and use of starting materials for innovative therapies, such as blood, tissues and cells.  Pharmaceutical companies active in the manufacturing of advanced therapy medicinal products (“ATMPs”) are therefore well advised to closely monitor the developments surrounding the proposed Regulation.

The revised legal framework will uphold certain key principles from the existing rules, such as the general principle of voluntary and unpaid donation (although limited compensations for losses related to donor participation are permitted).  EU Member States will also retain full competences on ethical decisions regarding the provision of SoHO-based treatments in their respective healthcare systems.  However, the initiative also proposes a number of important changes to the existing legal framework on SoHO:

  • Harmonized application of rules across the EU: With the proposed Regulation, the European Commission intends to “improve harmonisation, ensuring a uniform level of protection across the EU and simplifying cross-border exchange and access of SoHO therapies”.  To this aim, the Commission will set up a “SoHO Coordination Board”, chaired by the Commission, which will act as an advisory body to support Member States in the uniform implementation of the Regulation (e.g., the SCB is tasked to develop common good practices for inspection and vigilance on SoHO).  With the choice of the legislative instrument, a Regulation, the Commission aims at reducing disparities in the implementation of rules by Member States.  At present, the roll-out of innovative therapies, such as ATMP, throughout EU Member States is hampered by disparities in the implementation of the applicable rules on SoHO.  By harmonizing the rules governing, the sourcing and the use of SoHO, the proposed Regulation is expected to significantly decrease the administrative burden on pharmaceutical companies.  The Commission’s initiative is therefore also a welcome and long overdue instrument to increase access to SoHO-based therapies for patients.
  • Extended scope of application: The proposal extends the scope of the Regulation to any SoHO that are to be applied to humans.  This means, in essence, that the Regulation will also cover substances such as breast milk, intestinal microbiota, and blood preparations that are not used for transfusion.  As an exception, Organs will continue to be regulated separately under Directive 2010/53/EU.  The proposed Regulation aims to provide a legal framework for all the activities to be performed on those substances, from donor recruitment to human application.
  • EU-wide technical standards for the protection of donors, recipients and offspring: SoHO have to be prepared and treated according to specific technical standards to ensure their quality and safety.  Under the proposed Regulation, such standards will be set out either by the European Commission through Implementing Acts or, in their absence, by the European Directorate for the Quality of Medicines & HealthCare (“EDQM”) and the European Centre for Disease Prevention and Control (“ECDC”).  The standards adopted by these expert bodies, which are already widely applied in the sector, will therefore become the main means to meet the EU standards of quality and safety for SoHO.
  • Enhanced self-sufficiency of SoHO supplies: The EU has historically been reliant on other countries for the supply of certain SoHO, such as the United States for plasma used to manufacture plasma-derived medicine.  To counterweight this trend, the proposal lays down provisions meant to ensure EU self-sufficiency and guarantee continuity of supply in case of unforeseen events.  EU Member States will therefore be expected to set up national SoHO emergency plans and alerts for SoHOs that are critically important for patients, in order to anticipate on EU supply interruptions and take timely action to mitigate those risks.
  • New “EU SoHO Platform”: This proposed platform will be developed, hosted, and centrally managed by the European Commission and will be accessible to competent authorities, SoHO entities and establishments (including healthcare providers), patients, donors (and offspring), expert bodies and the Commission.  The platform will allow for the collection and publication of data on donations, clinical use and possible adverse reactions. 

The proposal put forward by the European Commission will now be discussed in parallel by the Council and the European Parliament.  If adopted, the Regulation would come into force after a transition period (set at either 2 or 3 years). If you have any questions on this proposal, please contact Bart Van Vooren.

On 31 May 2022, the Italian Parliament approved Law 62/2022, also known as the Sunshine Act.  The Sunshine Act entered into force on 26 June 2022.  However, it will become fully enforceable once the Ministry of Health sets up the Public Register where companies will have to disclose their data and issues the necessary implementing acts.  This means that realistically the new transparency system will not be operational before 2023.  Nonetheless, it is critical that companies operating in Italy make sure that they are ready when the time comes.  Here, we outline some of the key features of the new Sunshine Act and the steps that companies could take in preparation.

Main differences with the transparency rules of the industry codes

Prior to the approval of the Sunshine Act, only member companies of trade associations, such as Farmindustria or Confindustria Dispositivi Medici, were under the obligation to disclose the transfers of value made to healthcare professionals (“HCP”) and organizations (“HCO”).  Non-member companies of those trade associations had no corresponding obligation, although many of those companies disclosed their transfers on a voluntary basis, following the provisions of the trade associations’ Codes of Ethics as best practice.

Now, all pharmaceutical companies operating in Italy will be under the obligation to disclose those transfers of value.  In particular, the Sunshine Act applies to any subject which directly or indirectly exercises an activity “aimed at the production or the placing on the market of pharmaceutical products, devices, instruments, goods and services, even of a non-health nature that can be marketed in the context of human and veterinary health”. 

According to the Sunshine Act, companies must report and disclose all their transfers of value, without exclusions.  This means that categories of transfers such as those for promotional materials, meals and medical samples, which are exempted under the industry codes, will also have to be disclosed under the Sunshine Act, provided they exceed a fixed threshold.

Additionally, the industry codes provide for the possibility of disclosing data on transfers in an aggregate form, rather than individually, in two circumstances: when collecting individual consent would not be possible or when the transfer concerns R&D expenses.  The Sunshine Act, however, excludes this option and requires companies to always disclose their transfers on an individual basis.

Transparency obligations under the Sunshine Act: the who, what, when, where and how

Under the Sunshine Act companies operating in Italy that produce or market medicinal products in Italy are in scope of the new transparency obligations.  Arguably, the Sunshine Act has a broad scope of application.  However, it is possible that, for example, a company manufacturing products which are still in the clinical investigation phase would not fall under that definition, as those products could not be considered as produced or placed on the market.

In any event, companies are required to disclose three distinct categories of transfers:

  1. Every semester – Transfers of money, goods, services or other benefits (“ToV”) occurred in the preceding semester and made to: (i) an HCP – when the individual value of the transfer exceeds €100 or the annual overall amount exceeds €1,000; and (ii) an HCO – when the individual value of the transfer exceeds €1,000 or the annual overall amount exceeds €2,500.
  2. Every semester – Agreements with HCP and HCO providing them with direct or indirect benefits “consisting of participation in conferences, training events, committees, commissions, advisory bodies or scientific committees or the establishment of consulting, teaching or research relationships” (“Agreements”) that have been stipulated with them in the preceding semester.
  3. By 31 January of each year – The details of those HCPs and HCOs that (i) holds quotas, shares or bonds in the company (“Shares”), or (ii) received fees from the company for the economic exploitation of their intellectual property licenses (“Licenses”), in the previous year.

Companies must disclose their transfers on a dedicated online database, publicly accessible, that will be set up and managed by the Ministry of Health within 6 months following the entry into force of the Sunshine Act (i.e., by 26 December 2022).  The database will be called “Sanità Trasparente”, will be composed of distinct sections for ToV, Agreements, Shares and Licenses, and will also include a section, equally public, for sanctions imposed on companies that are found in violation of the transparency obligations.  The data stored on the database (with the exception of sanctions) could be freely searched and sorted by the public for at least 5 years following publication. 

Finally, within 3 months from the entry into force of the Sunshine Act, the Ministry of Health in collaboration with the Agency for Digital Italy (AgID), the National Anticorruption Authority (ANAC) and, most importantly, the Italian Data Protection Authority (Garante Privacy), will decide on the structure of the database Sanità Trasparente, including its technical features and the procedure through which companies will submit their data online.  In practice, the system is set to incorporate privacy features by design and by default.

This means that, if the Ministry of Health sets up the database within the proposed timeframe, companies will have to disclose:

  • from the second semester of 2023, the ToV and the Agreements for the first semester of 2023;
  • from 31 January 2024, the Shares and Licenses for the year 2023.

As anticipated, the data that companies will have to disclose on the basis of the above will have to be disclosed exclusively on an individual basis.  To this end, the Sunshine Act establishes that privacy consent is considered provided at the moment when the HCP or HCO accepts the ToV or signs the Agreements or obtains the Shares or the Licenses.  Because the Sunshine Act rejects entirely the disclosure in an aggregate form, the R&D expenses will be disclosed as well on an individual basis and, arguably, with the data on Agreements.

Even though HCP or HCO consent is automatically provided, companies are still under the obligation to inform them of the disclosure by providing them with a privacy notice that must clarify, at a minimum, that their data will be published on the Ministry’s database Sanità Trasparente and their rights to lodge a complaint.

Enforceability of the Sunshine Act

Companies that do not comply with the transparency obligations of the Sunshine Act may incur in severe fines for each of the non-reported transfers.  For example, if a company omits to report a ToV, it may receive a fine of €1,000 increased by 20 times the amount of the non-reported ToV.  Non-complying companies would also face reputational damages.  As a matter of fact, fines also will be made public and freely searchable on the database Sanità Trasparente for at least 90 days following their publication.

Finally, the Sunshine Act provides that every individual may inform the Ministry of Health that a company is violating its transparency obligations.  Indeed, the Sunshine Act establishes that a violation of the transparency obligations constitutes a ground for whistleblowing reports. 

Critical steps that companies could take to get ready

Companies may make use of the transitional time preceding the full implementation of the Sunshine Act to get ready for what is to come.  Here are five steps we suggest companies could take:

Step 1: Review their internal policies, including those on the interactions with HCPs and HCOs and on disclosure of relations with pharmaceutical companies.

Step 2: Review their existing template agreements and implement the necessary changes.

Step 3: Review their privacy notices and draft or amend their existing notices to take into account the information obligation of the Sunshine Act.

Step 4: Establish an internal monitoring mechanism ensuring compliance with the collection and submission obligations of the Sunshine Act.

Step 5: Deliver awareness training to those in charge of the relevant internal functions.

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If you have questions, please contact us.  This article is intended to provide general information about legal developments.  Its content does not constitute legal advice.

The UK government has proposed legislation to open the way for gene‑edited food products in England.  The Genetic Technology (Precision Breeding) Bill (“Precision Breeding Bill”) sets out a new regulatory regime that may provide a faster and easier path to market for certain gene-edited plants, animals and derived products.

Overview of the Precision Breeding Bill

The Precision Breeding Bill applies to “precision bred organisms”.  These are defined in the Precision Breeding Bill as plants and animals that have been genetically modified through the use of “modern biotechnology”, where that genetic modification is of a type that could have been produced using “traditional processes” (i.e. selective breeding, grafting, embryo transfer, spontaneous mutation, etc.).  The definition of “modern biotechnology”, for the purposes of the Precision Breeding Bill, aligns with the set of techniques listed in regulation 5(1)(a) or (b) of the Genetically Modified Organisms (Deliberate Release) Regulations 2002 (S.I. 2002/2443).  Ultimately, the effect of the Precision Breeding Bill is to create a distinction in law between ‘precision bred organisms’ and all other ‘genetically modified organisms’ (“GMOs”) where the genetic modification could only have been produced using genetic modification technologies (e.g. introducing genes from one species into another, entirely unrelated, species).

The Precision Breeding Bill provides that a person wishing to use precision bred organisms for research or for marketing must first notify and register the precision bred organism.  Once notified and registered for research and development, the precision bred organisms can be released i.e. planted, bred or cultivated.  No specific authorisation is required.  Before marketing the precision bred organism, a person must apply for a ‘precision bred confirmation’, which indicates that the Secretary of State is satisfied, on the basis of information provided by the person, and scientific advice, that the organism qualifies as a precision bred organism.  The UK government will maintain a public register of all notified information. 

The Precision Breeding Bill also provides for an authorisation system for food and feed derived from precision bred organisms.  The UK Food Standards Agency (“FSA”) will have the power to conduct a risk assessment on food and feed derived from precision bred organisms, and recommend that the food and feed receive a marketing authorisation.  The FSA states that “[p]recision bred foods will only be permitted if our risk assessment judges them… not to present a risk to health, not to mislead consumers, and not to be nutritionally disadvantageous.”

The Precision Breeding Bill does not provide for any specific labelling or information requirements for precision bred organisms or products.  The FSA states that it is working on a relevant ‘consumer education project’, although it has not provided details.  

Initially, the government will open the new system to precision bred plants only.  It will not open the system to precision bred animals until it has established “a proportionate regulatory system for precision bred animals to ensure animal welfare is safeguarded”.

Legal and policy background

The Precision Breeding Bill would modify existing UK GMO regulation, which is derived from EU legislation.  The EU legislation provides that an organism is classed as a GMO where its genetic material has been altered in way that does not occur naturally.  It does not distinguish between instances where the genetic modification could have been produced using traditional processes and instances where the genetic modification could only have been produced using genetic modification technologies i.e. EU law does not provide for a separate category of precision bred organisms or similar.

The EU‑derived rules around “contained use” of GMOs (essentially in laboratory settings) are relatively straightforward.  The “deliberate release” GMO rules are more complicated, with complex risk assessments and authorization processes, and strict mandatory traceability and labelling requirements, including for food and feed which contains ingredients produced from GMOs.  Products produced using GMOs must be assessed and authorised on a case-by-case basis before they may be placed on the market. 

The UK government considers that the current, EU-derived “requirement for onerous and expensive authorisation processes for all products of genetic technology has stifled innovation in the UK”.  In contrast, the UK government argue that the Precision Breeding Bill will “cut red tape… [and] remove unnecessary barriers…”.  The proposals in the Precision Breeding Bill are based on advice from the Advisory Committee on Releases to the Environment (“ACRE”).  ACRE argues that the fact that an organism is produced through gene‑editing (or other genetic technologies) does not mean that it necessarily poses a greater safety risk than a traditionally bred or naturally occurring version of that organism.  Rather, ACRE argues, the final characteristics of an organism must be examined to determine whether it presents any safety risks.

Claimed benefits

Defra’s Factsheet on the Precision Breeding Bill claims that the change to the law will bring a number of potential benefits.  The Factsheet notes that precision breeding could enable “the development of crops that are more nutritious, resistant to pests and disease, resilient to climate change and more beneficial to the environment.  This in turn could reduce the need for pesticides, increase food production and reduce costs to English farmers.  Precision breeding can also enhance the health and welfare of animals through greater resistance to diseases and reduced use of antibiotics, and improved resilience to the impacts of climate change.”  The Factsheet also notes that permitting precision breeding “could help facilitate greater trade with countries that currently, or are planning to, make use of precision breeding technologies… [could] enable the creation of potential new export markets for UK-based producers… [and could] also lead to a greater willingness of companies to invest and sell products in the UK relative to the EU due to the creation of a more favourable regulatory environment.”

Territorial application

The territorial scope of the Precision Breeding Bill is limited to England only.  GMOs are regulated by the devolved powers in Wales and Scotland and, currently, neither administration appears willing to follow England’s lead and carve out precision bred organisms from the existing regime.  However, due to the mutual recognition principle in the UK internal market, it will be possible to place food and feed products derived from precision bred organisms on the market in Wales and Scotland, if they can be marketed lawfully in England.  In Northern Ireland, the existing restrictions in EU law on GMOs will continue to apply, and products produced using GMOs must be assessed and authorised on a case-by-case basis.

Timeline

Secretary for the Environment and Conservative MP, George Eustice, sponsored the Genetic Technology (Precision Breeding) Bill (the “Precision Breeding Bill”), and introduced it to the House of Commons on 25 May 2022.  Defra published a full impact assessment on 26 May 2022.  UK Members of Parliament will consider the Precision Breeding Bill again at a second reading on 14 June 2022.  It is not clear when the Precision Breeding Bill will be finalised but it may be before the end of 2022.

Meanwhile, the EU are also reviewing their GMO regime.  The European Commission has opened a public consultation on the regulation of plants produced through certain gene editing techniques, as well as food and feed products derived from those plants.  The consultation will close on 22 July 2022.

In three days’ time (on May 26, 2022), the EU Regulation on In-vitro-Diagnostic Medical Devices (the “IVDR”) becomes applicable in Europe.  But what will this mean for companies who sell in-vitro-diagnostic medical devices (“IVDs”) in the UK?

Following the UK’s exit from the EU, the IVDR will not become effective within Great Britain (i.e., England, Scotland and Wales), but it will apply to Northern Ireland.  Companies operating in both the EU/Northern Ireland and Great Britain will therefore need to be aware of the different obligations applicable to IVDs between these jurisdictions.

IVDR Background

The IVDR will replace the existing EU IVD Directive (the “IVDD”), but will not change the fundamental principles of how IVDs are regulated.  IVDs will be still be subject to a system of self-certification, notified body assessment (in certain instances) and CE marking.  Most notably, under the current system, ~90% of IVDs are self-assessed for conformity and self-certified by the IVD’s manufacturer.  By contrast under the IVDR, the new classification rules mean that this will be flipped to require ~90% of IVDs to be subject to notified body assessment.  This creates practical issues for manufacturers, since there are currently only seven notified bodies who are authorized to conduct conformity assessments under the IVDR.

Continue Reading What do companies supplying IVDs to the UK market need to know about the IVDR?

In collaboration with Corporate Law Group, New Delhi, India 

On December 16, 2021, India proposed amendments to the Biological Diversity Act, 2002 (the “BDA”) by introducing the Biological Diversity (Amendment) Bill, 2021 (the “Bill”).  The process to amend the BDA was undertaken in response to long-standing complaints by stakeholders in the Indian systems of medicine, seeds, and research sectors, as well as industry, that existing access and benefit-sharing (“ABS”) processes in relation to Indian biological resources are too burdensome.

The Bill has several objectives.  It seeks to attract foreign investment in Indian biological resources, to fast-track research, patent application processes, and transfer of research results, and to decriminalize non-compliance.  The Bill also seeks to further the conservation of biological resources in line with objectives of the Convention on Biological Diversity (“CBD”) and Nagoya Protocol to the CBD, to encourage cultivation of medicinal plants, and to support the Indian system of medicines.

The Bill’s proposed amendments are extensive and touch on many different aspects of ABS, but focus mainly on access and access procedures.  In this blog, we present the key proposed amendments, as well as next steps in the process for the adoption of the Bill.

Continue Reading India To Amend Its Biodiversity Rules

From 25 to 29 January 2022, the 150th session of the World Health Organization’s (“WHO”) Executive Board (“EB”) took place in Geneva, Switzerland.  Two years into the COVID-19 pandemic, a central theme for this session was the management of global health emergencies.  This post briefly outlines the main take-aways for pharmaceutical companies.

Continue Reading Key Take-aways from the 150th Session of the WHO Executive Board

On 20 January 2022, the National Institute for Health and Care Excellence (NICE) announced major changes to the processes and methods by which it assesses the cost-effectiveness of medicines and other health technologies.

NICE is an independent expert body tasked with appraising the cost-effectiveness of medicines and recommending whether a product should be funded by the National Health Service (NHS).  NICE is therefore considered the gatekeeper for medicines reimbursement; a positive recommendation obliges the NHS to fund a product.

NICE has announced a suite of detailed changes, which mark the culmination of a two-year-plus long “methods review”.  NICE will implement the changes in new guidelines.  They are due to take effect from February 2022.

Some of the new innovations affect the process by which NICE appraises medical technologies.  Perhaps most importantly, they also affect the manner in which NICE reviews submissions and its criteria for issuing positive recommendations.  Many of the changes are technical in nature.

NICE considers these changes “will give patients earlier access to innovative new treatments by allowing greater flexibility over decisions about value for money and consideration of a broader evidence base.”

The following are some headline points we noted:

  • Evolution of a Well-Established Framework. Although the changes are significant, NICE’s fundamental framework remains largely the same.  NICE appraisals will continue to focus on a technology’s incremental cost-effectiveness ratio (ICER) against an existing reference based on the quality-adjusted life year (QALY).  These are established health economic concepts that seek to quantify the relative utilities of a technology.  NICE’s baseline ICER for approving a product will remain broadly the same (e., below £20,000 or £30,000).  These thresholds have remained broadly unchanged for a number of years.  They can prove to be a major hurdle for higher-cost innovative medicines.
  • Flexibility for Disease Severity and Health Inequalities. NICE will have the flexibility to recommend technologies with ICERs higher than its traditional thresholds, depending on disease severity.  Products that treat the most severe diseases might receive a positive recommendation, even if their ICER exceeds the £30,000 upper limit (potentially up to £50,000).  Previously, this flexibility was reserved for end-of-life treatments.  NICE will also have some discretion for treatments that help to reduce health inequalities.
  • New Approaches to Evidence Review. NICE has committed to “enhance and expand upon” how it assesses real-world-evidence submitted as part of a review.  NICE has also given its appraisal committees additional discretion when reviewing products for which it is inherently difficult to generate sufficient clinical evidence (g.,  paediatric indications, rare diseases or complex cases).  NICE’s aim is to “to consider uncertainty appropriately and to manage the risks to patients and the NHS while preventing inappropriate barriers to valuable innovations.”
  • Clearer and Potentially More Expansive Approach to Highly Specialized Technologies. NICE has historically maintained a separate review programme for “Highly Specialised Technologies” (often medicines that treat rare diseases that have a heavy disease burden for patients).  Highly Specialized Technologies benefit from far higher ICER thresholds that apply to conventional therapies; reflecting the high-cost of developing rare-disease treatments.  The most recent changes streamline the entry-criteria for the Highly Specialized programme.  In principle, this may allow more products into the programme.  It may also help companies plan better, with clarity over whether a particular product qualifies.
  • Earlier Engagement and More Clarity Promised for Managed and Commercial Access. NICE has for some time had the ability to make interim positive recommendations, to enable companies to gather further data about a product’s cost-effectiveness.  Similarly, NICE may approve a product subject to a “commercial deal” the company has struck with the NHS.  NICE has committed to earlier engagement with the NHS and companies, when these situations arise.  The changes also ought to make it clearer when NICE can make these types of contingent or interim recommendations.  Notably, NICE declined to establish a standalone review system for these situations (which many in the pharmaceutical industry had called for).

It is worth noting that the ambition behind, and trajectory of, these changes go towards clarifying, speeding up and de-cluttering the review of the most promising and innovative technologies.  This ties together with other post-Brexit innovations to improve access to medicines.  These recent innovations include the new Innovative Licensing and Access Pathway (ILAP), which seeks to co-ordinate and streamline marketing authorization and market access reviews for innovative treatments.  They also include the creation of a new NHS Innovative Medicines Fund (IMF) in England.

No doubt, commentators, market access experts and industry will pore over the details of the changes over the coming days and weeks to survey the new landscape for health technology appraisals.

Whether the changes will have their desired effect remains to be seen.  Many of the innovations give appraisal committees more flexibility and discretion.  How committees exercise these new tools will be the critical point; and that will only become clear once we start to see the results of appraisals under the new system.

 

The Italian Legislative Decree 196/2021 (“Italian Decree”) implementing the Single-Use Plastic Directive (“SUPD”) will enter into force on January 14, 2022.  The Italian Decree diverges from the SUPD on significant aspects: it provides a more flexible definition of plastic; delays the entry into force of the ban on prohibited SUPs; and exempts from such ban specific biodegradable and compostable materials.  The Decree also imposes specific return obligations on waste plastic bottles.

While the Italian Decree provides companies with additional flexibilities to market their SUPs in Italy, companies should carefully assess the risks that may arise if EU Courts finally hold that the Decree is not compatible with EU law.

Continue Reading Italy Transposes Into National Law The EU Single-Use Plastic Products Directive

Following the federal election in September 2021, Germany will soon be led by a new three-party coalition, the so-called “traffic light coalition”, composed of the Social Democratic Party (SPD), the Liberal Democrats (FDP) and the Green Party (Die Grünen). This new federal government led by the new chancellor Olaf Scholz from the Social Democrats will replace the Merkel administration and will be in office for four years. On November 24, 2021, the new coalition has presented their coalition agreement with their plans for the next 4 years. The agreement needs to be approved by the respective party committees and it is expected that all three parties will approve it.

The new government’s roadmap foresees reforms in the healthcare and life sciences sector that will have a significant impact in particular on pharmaceutical and medical device companies but also healthcare providers and technology companies focusing on the healthcare and life sciences sector.

The coalition agreement has an own chapter for the healthcare and life sciences sector that among other things envisages changes to the regulation of pharmaceuticals and medical devices. In particular, there will be far-reaching cost-containment measures by amending the drug pricing and drug reimbursement rules. The new government also plans legislative changes in the areas of supply of medicines, vaccines and medical devices. Moreover, the enhanced digitalization of healthcare is a particular goal of the new coalition. With respect to digitalization, Germany generally and especially its healthcare sector starts from a rather low development stage (e.g., still widespread use of fax machines) so that significant investments will be needed.

It is also important that the new Ministry of Health will be a politician from the Social Democratic Party. This Ministry was led by a politician from the Christian Democratic Union for the last 8 years.

The new government also intends to enact changes to other areas of the broader life sciences industry, such as food advertising and the regulation of cannabis, alcohol and tobacco. The responsible ministries of Environment/Consumer and Agriculture/Food will be led by a politician from the Green Party.

Among other things, the roadmap of the coalition parties includes in particular the following plans with respect to the life sciences sector:

Pharmaceutical and Medical Device Companies

  • Pricing procedure. The coalition parties wish to amend the drug pricing and market access procedure (AMNOG). The AMNOG procedure starts with the market launch of a new medicine and can be divided into two procedural stages, namely the benefit assessment by the Joint Federal Committee (“G-BA”) and the negotiation of the reimbursement amount with the top association of the health insurances (“GKV-Spitzenverband”). Under the current regulations, the pharmaceutical companies are entitled to a period of free pricing for 12 months after the product launch. The coalition parties now plan to reduce this free pricing period for new drugs from one year to six months. According to their plans, the negotiated reimbursement price (Erstattungsbetrag) will apply from the seventh instead of the 13th month after launch. This will cut in half the period of free pricing for pharmaceutical companies. This measure is intended to increase cost-containment options for the statutory health insurance (SHI) fund.
  • Further cost containment measures to limit drug prices. The new government has also announced that it will generally strengthen the possibilities of the health insurances to limit the prices of medicines. The coalition agreement does not further elaborate on this important point so that it remains open which instruments the new government plans to provide the healthcare insurances with. In any event, the coalition agreement quite clearly and repeatedly speaks out the plan of the new coalition to limit drug prices and contain the expenditures of the healthcare insurances for drugs. The pharmaceutical industry needs to be prepared that the new government will employ several different measures to reach this goal.
  • Price freeze. Among the more concrete measures to limit drug expenditures, the new government plans to prolong the existing and quite controversial price freeze (Preismoratorium) for medicines. The price freeze was introduced back in 2010 and allows only very limited (inflation-reflecting) reimbursement of price increases for medicines. Following the most recent extension in 2017 for another five years, the price moratorium was expected to expire in 2022. This has now become very unlikely so that the industry needs to be prepared to a perpetuation of this significant cost containment measure which undoubtedly has a severe impact on pharmaceutical companies in Germany. The prolongation of the price free may trigger a new discussion around the legality of this legislative prohibition.
  • Federal Joint Committee. The new coalition parties plan to reform the rules governing the Federal Joint Committee (G-BA) to speed up its decisions. Among other things, the G-BA is responsible for conducting health technology assessments, i.e., assessing the (added) benefit of new drugs in the above mentioned AMNOG procedure for the market access of new drugs in Germany. The G-BA is also involved in health technology assessments of new medical devices and treatment methods and is also the key decision maker with respect to many other healthcare related matters (e.g., the exceptional reimbursement of off-label-use treatments). Therefore, the new government’s plan to “reform the G-BA” may have significant ramifications for life sciences industry companies.
  • Patient Rights and Patient Involvement in Market Access. Patient centricity appears to be another special concern for the new German government. The coalition agreement sets forth that the new government will strengthen the structures for independent patient counseling and enhance their independence. As part of the above mentioned reform of the G-BA and the market access rules, the new government will enhance the representation of patient groups in the G-BA. Further, the new coalition plans to make reforms to the exiting liability rules to improve the position of patients in medical liability matters. In that context, the new coalition also wishes to establish a new hardship fund.
  • Supply Security and Reshoring. The new coalition parties wish to prevent any shortages in the supply of medicines and vaccines. Among others, the parties want to take measures to relocate and re-shore the manufacturing of pharmaceuticals back to Germany or the EU. This includes reducing the bureaucratic burden, examining investment subsidies for production sites, and considering subsidies to ensure security of supply. In addition, a Health Security Act (Gesundheitssicherstellungsgesetz) is intended to ensure the efficient and decentralized stockpiling of medicines and medical devices, as well as regular emergency exercises for health risk personnel.
  • More Transparency and “Sunshine laws” against Conflicts of Interests. Germany has not yet enacted so-called “Sunshine laws” and does not require drug and device companies to disclose payments and transfers of value they make to healthcare professionals. The coalition agreement now announces that the new government will create more transparency about financial contributions made to healthcare professionals to avoid conflicts of interests. Hence, the new German government appears to consider new Sunshine legislation for the healthcare and life sciences sector in Germany.
  • Pharmacies. The new coalition envisages various changes and legislative amendments in the rules governing pharmacies and pharmaceutical services.
  • Digitalization. The coalition parties especially emphasize their goal to improve the digitalization of the German healthcare system. Among the many goals, they want to provide more telemedical services to patients on a regular basis. They also plan to accelerate the introduction of the electronic patient record (elektronische Patientenakte) as well as the connection of all relevant players to the telematics infrastructure. All insured persons in Germany should be provided with an ePA in compliance with the GDPR but its use will be voluntary (opt-out). In this context, Gematik, the agency currently tasked with the roll-out of the ePA, is to be expanded into a digital health agency.
  • Research Use of Health Data. The new German government also plans to enhance the possibilities to use health data for scientific research purposes by public and private entities. Insofar, a new act on the use of health data is envisaged (Gesundheitsdatennutzungsgesetz) as well as a new act governing registries (Registergesetz). These goals are also embedded into the broader healthcare digitalization strategy.

Beyond these specific changes affecting the pharmaceutical and medical devices space, the new government also plans further changes in the broader healthcare area which will have direct and indirect implications for life sciences companies. In particular, there will be changes in nursing care, hospital care and financing and health insurance.

Food industry and cannabis, alcohol and tobacco companies

  • Food. The coalition parties intend to create scientifically based reduction targets for sugar, fat and salt that are tailored to target groups. In addition, they want to prohibit advertising directed at children for foods with high fat, sugar and salt (HFSS) content in TV shows and other formats for under-14-year olds. Further, they want to develop further an EU-wide Nutriscore in a scientific and generally understandable way. The parties intend to strengthen plant-based products and advocate for the approval of innovations such as alternative protein sources and meat substitutes in the EU.
  • Cannabis, alcohol and tobacco. Germany plans to further liberalize Cannabis. In addition to the already legal provision of cannabis for medical purposes, there will also be controlled supply of cannabis to adults for recreational purposes in licensed stores in the future. This approach seeks to control the quality, prevent the distribution of contaminated substances and ensure the protection of minors. With regard to alcohol, tobacco and cannabis, the parties want to toughen the regulations for marketing and sponsoring.

Whistleblowing, Class Actions, Corporate Sanctions and other Plans

  • Whistleblowing Laws. The new German government has announced that it will implement the EU Whistleblowing Directive (EU) 2019/1937 into national law. In doing so, the new coalition plans to adopt national whistleblowing laws, which go beyond the scope of the EU Whistleblowing Directive and also include protection for whistleblowers that report breaches of national law and not only EU law violations. The implementation of the Whistleblowing Directive by companies will in any event require the establishment of local whistleblowing systems and procedures as it will not be sufficient to only refer to a corporate-group-wide whistleblowing system.
  • Class Actions and Collective Redress. The new German government plans to expand the currently available collective redress options for consumers. It will implement the new EU Directive on representative actions for the protection of the collective interests of consumers and the coalition agreement states that this will be implemented in a “user friendly” manner. Small companies should also benefit from the new “class action” options.
  • Corporate Sanctions and Compliance Programs. The new government plans to “protect honest companies from unlawful competitors” which will probably lead to amendments of the respective commercial laws. The coalition also wishes to revise the rules on corporate sanctions, including the level of sanctions, in order to improve the legal certainty of companies with regard to their compliance obligations. The last government had attempted to reform the existing German laws and enact new rules on corporate criminal liability. In that course, the companies should also be incentivized to implement robust compliance programs. In the last government, the SPD had pushed this legal reform idea. As the SPD is now the strongest party in the new government, it can be expected that the new government will soon present similar reform plans.
  • Internal Investigations. In conjunction with the reforms of the corporate sanctions rules, the new German government also plans to create a new legal framework for internal investigations by companies.
  • English as Court Language. The new government plans to establish English-speaking special chambers at German commercial courts.

The envisaged reforms of the coalition parties will have significant direct and indirect implications for life sciences companies. Therefore, all companies in this sector should closely monitor the upcoming legal developments in Germany.

Between 29 November and 1 December 2021, all member states of the World Health Organization (WHO) will convene for an extraordinary session of the World Health Assembly (WHA).  There is only one agenda item: whether or not to commence negotiations towards a legally binding, global instrument on pandemic preparedness and response.  Since it was first proposed by the European Union (EU) in November 2020, significant momentum has built towards some kind of International Pandemic Treaty (IPT).  The project is currently backed by the EU and more than 25 countries, though sceptics include the U.S., Russia, Brazil and China.

The IPT will be directly relevant to all pharmaceutical companies developing medical countermeasures (e.g. vaccines, diagnostics, and therapeutics) to most infectious diseases with epidemic or pandemic potential.  This blog summarizes key points that pharmaceutical companies should be aware of.

1. Public-private collaboration in the global system to detect and assess health threats

On 30 January 2020, the WHO Director-General declared the COVID-19 pandemic a “Public Health Emergency of International Concern”  The timeliness of this declaration has been under significant criticism.  As a result, there is consensus that the existing 2005 International Health Regulations (IHR) need to be reformed, and that a new system will be organized to rapidly detect and share information on outbreaks of “disease with pandemic potential.”

High-ranking officials at the WHO expect that this new monitoring system may function comparably to the existing Global Influenza Surveillance and Response System (GISRS).  This network of laboratories has been monitoring seasonal influenza for decades, as well as influenza with pandemic potential under the WHO’s Pandemic Influenza Preparedness (PIP) Framework since 2011.  Since early 2020, the GISRS network of infectious disease experts has been instrumental in the global response to coronavirus.

It is uncertain whether the IPT’s new monitoring system would absorb the GISRS.  In any case, the key message for industry is that most pharmaceutical companies can, will and even must interact with the new monitoring network under IPT.  For instance, under the PIP Framework, pharmaceutical manufacturers have been obliged to sign a Standard Material Transfer Agreement (SMTA) in order to be allowed to receive virus samples as well as sequence or epidemiological information.  In that context, the obligation to conclude these SMTAs was relevant mostly for manufacturers of influenza vaccines, a relatively small and well-defined group.  For the future IPT, it appears likely that its scope will comprise all pathogens “with epidemic or pandemic potential.”

These SMTAs will likely become the key legal instrument to organize public-private collaboration under the future IPT.  Importantly, their drafting is already underway in the context of a SARS-CoV-2 pilot project called the WHO BioHub System.  Without awaiting the outcome of the upcoming WHA Special Session, the WHO Secretariat already started chiseling away at the building blocks for the future IPT.  We zoom in on this BioHub and its draft SMTA, since they provide insight into key topics that will be central to the upcoming WHA Special Session: global equity, intellectual property, and funding the IPT.

2. Equity for global health: concrete impact for industry?

To prepare the Special Session of the WHA, a Member States’ Working Group was convened in July 2021, chaired by Indonesia and the United States.  The group published a so-called “zero draft” already on 28 October 2021, stating that equity is “at the core of the breakdown in the current system” and that equity is “ideally suited for negotiation under the umbrella of a potential new instrument.”  Much can be covered by the umbrella of equity, and pharmaceutical companies are well advised to monitor discussions on e.g. (i) equity as regards access to and distribution of medical countermeasures, and (ii) equity as regards intellectual property, technology transfer and  empowerment of local and regional manufacturing capacity during emergencies.  There are many moving parts, but it is clear that what happens at the Special Session later this month will be connected to parallel discussions and outcomes at the WTO on the TRIPS waiver.

At a more granular level, the SMTAs will likely be the legal instrument to organize the equitable contribution of the pharmaceutical industry under the IPT.  Companies that wish to develop medical countermeasures relating to pathogens of “epidemic and pandemic potential” will likely require physical samples for their R&D, or will need access to the information developed by the global monitoring system.  In order to obtain access to these materials and information, the SMTA will require companies to become “qualified entities” by WHO and agree to “benefit-sharing.”  The pilot phase of the WHO BioHub contains a draft SMTA “for the Sharing of Biological Materials with Epidemic or Pandemic Potential (BMEPP) with a Qualified Entity for non-commercial public health use.”  Article 4 of this SMTA states that “[i]n the event that the use of BMEPP results in  the creation of such material benefits, the Qualified Entity will engage with WHO to distribute and provide such benefits on a fair and equitable basis.”  While there is no clarity yet on what ‘benefit-sharing’ would be expected of companies under an International Pandemic Treaty, the existing regime for pandemic influenza is likely to be an inspiration.  In the SMTAs relating to pandemic influenza, companies have been given the option to agree to e.g. donations of vaccines, antivirals, medical devices and diagnostic kits; affordable pricing; transfer of technology and processes; granting of sublicenses to WHO; and laboratory and surveillance capacity building.

Last but not least, a point on funding.  A consensus has emerged that the cost of the new system should be shared between private and public actors.  Aside from the need for “sustainable resourcing”, there is little detail.  Currently, it is envisaged that the WHO would have a technical and convening role, with support from e.g. the International Monetary Fund (IMF) and the World Bank.  It is worth recalling that under the Pandemic Influenza Preparedness Framework, pharmaceutical companies pay a so-called “Partnership Contribution” which between 2012 and 2021 totaled to more than 227 million USD, on top of the “benefit-sharing” agreed through the SMTAs.  In practice, the contribution itself has not been too controversial, but rather issues such as transparency and accountability on how the monies have been spent by WHO to contribute to pandemic preparedness and response.

3. Next steps

The “zero draft” of 28 October 2021 states front-and-center that “the status quo is not acceptable to anyone.”  Though the legal nature and exact content is in flux, it is most likely that a new international system will emerge, and that pharmaceutical companies should pay close attention.

Covington intends to publish another update once the dust from the Special Session has settled.  In the meantime, do get in touch with Bart Van Vooren, partner in Covington’s life sciences practice.

With the assistance of Kolahta Ioab Asres, intern on global health policy.