The existing EU pharmaceutical legislation provides for a number of specific exemptions from the marketing authorisation requirement, including products supplied on a named patient or compassionate use bases; products compounded and dispensed in pharmacies (magistral and officinal formulations) and also for products necessary to respond to public health emergencies.  Given that a key policy goal behind the proposal to revise the EU pharmaceutical framework is to expand the availability of medicines, it may not be surprising that the draft Directive proposes some expansions to the exemptions relating to pharmacy compounding and also provides for an expanded regime for hospitals and other health institutions to prepare and use advanced therapy medicinal products (“ATMP”).  These provisions can, however, also conflict with the other objective of the revision, which is to stimulate innovation.

The Expanded Pharmacy Exemption (Magistral Formulation)

Article 3(1) of the Medicines Directive 2001/83/EC gave pharmacists the ability to compound or prepare medicinal products in their premises in response to a prescription for an individual patient.  The exemption is fairly narrow and the Court of Justice of the European Union (“CJEU”) has ruled that it should be applied restrictively.  In Joined Cases C – 544/13 and C – 545/13 Abcur, the Court held that there are three cumulative conditions for this exemption: (i) the product must have been prepared in accordance with a medical prescription issued before its preparation; (ii) it must be specifically for a previously identified patient; and (iii) the product must be dispensed directly to patients by the pharmacy that prepared it.  The CJEU also made clear that pharmacy compounded products are subject to the prohibition on the promotion of unauthorised medicines. 

It follows that pharmacists cannot prepare such medicines until they are presented with a prescription from a doctor, meaning that the exemption is very limited in practice.  The draft Directive retains these core requirements but adds that magistral formula products “may be prepared in duly justified cases in advance by a pharmacy serving a hospital, on the basis of the estimated medical prescriptions within that hospital for the following seven days.”  This will allow pharmacies to prepare limited stocks of products in advance of receipt of a prescription for an individual patient.  This may have significant practical implications, particularly where the pharmacy compounding activity is burdensome, or is difficult to repeat on an ad hoc basis in response to individual prescriptions.  We are likely to see pharmacies compounding product in a way that increasingly threatens the market for approved innovator products.  It is noteworthy, however, that this exemption applies only in “duly justified cases” and, if this provision is retained in the final text of the Directive, we will need to wait for clarification, guidance or case law to better understand whether or not this imposes significant practical limitations.

The Hospital Exemption for ATMPs

Article 3(7) of the Medicines Directive 2001/83/EC allows for the use of ATMPs in a hospital, when prepared on “a non-routine basis” and in accordance with specific quality standards.  The use must occur within the same Member State under the exclusive professional responsibility of a medical practitioner, in order to comply with the individual medical prescription of a “custom-made” ATMP to meet the needs of an individual patient. 

Article 2 of the draft Directive maintains this exemption but sets out specific rules for ATMPs manufactured for individual patients under the ATMP hospital exemption:

  • Member States, where the hospital is located, must approve the manufacturing of ATMPs prepared under the hospital exemption and must notify the EMA when they do so.  Where a Member State revokes a hospital exemption approval as a result of safety or efficacy concerns, it must inform the EMA and the Competent Authorities of the other Member States.  
  • Member States must ensure that the ATMP prepared under the hospital exemption comply with (i) the requirements equivalent to the good manufacturing practices (referred to in Article 5 of the ATMP Regulation 1394/2007); (ii) traceability requirements (referred to in Article 15 of the ATMP Regulation 1394/2007); and (iii) pharmacovigilance requirements equivalent to those provided at the EU level by the new Regulation replacing Regulation 762/2004.
  • The hospital exemption approval holder must collect and report data on the use, safety and efficacy of ATMPs prepared under hospital exemption to the National Competent Authority in the relevant Member States at least annually.  The Competent Authority must review the data and verify compliance with the above requirements.
  • The National Competent Authorities must report the data related to the use, safety and efficacy of ATMPs prepared under the hospital exemption to the EMA annually. The EMA, in collaboration with the national competent authorities and the Commission, will set up and maintain a repository of that data.
  • The Commission will adopt implementing legislation specifying: (i) the information required in applications for the hospital exemption approval, including the evidence on quality, safety and efficacy required for both the initial authorisation and the subsequent changes; (ii) the format for collection and reporting of the data; (iii) the modalities for the exchange of knowledge between hospital exemption approval holders within the same Member State or different Member States; and (iv) the modalities for preparation and use of ATMPs under hospital exemption on a non-routine basis.
  • Finally the EMA is required to report to the Commission on experiences gained with hospital exemption approvals.  It must make the first of these reports within three years of the date of entering into force of the new Directive and every five years thereafter.

There is a risk that this more detailed regime will constitute a framework whereby hospitals can engage in a more systematic (be it non-routine) manufacture of cell therapy and gene therapy medicinal products, as well as tissue engineered products.

A key question will be whether the existence of these hospital exempted ATMPs might impact whether innovator company ATMPs are deemed to fulfil an unmet medical need and benefit from extended regulatory data and marketing protection or orphan market exclusivity under the new regulatory exclusivity rules (please refer to our blogs on regulatory data protection and on orphan medicinal products for more information, available here and here).  This would be unfair.  First, hospital exempted ATMPs fall outside the scope of the standard EU pharmaceutical rules. Second, the exemption remains narrow in scope and applies only to “custom-made” ATMPs prepared on “a non-routine basis” to meet the needs of an individual patient.  Finally, the hospital exemption rules should not be used to undermine the incentives to develop new ATMPs under the main marketing authorisation regime.

However, it is worth noting that based on a report published by the EMA, there is a possibility to establish an “adapted framework” for “less complex” ATMPs developed and used under the hospital exemption, as mentioned in Recital 18 of the draft Directive.  Still, Article 28(1) of draft Directive sets quite strict standards for products that can be covered by adapted frameworks.

Finally, experience has shown that there is currently significant divergence between Member States in the use of the hospital exemption under the Medicines Directive 2001/83/EC.  The draft Directive aims to improve the application of the exemption, in particular through the harmonized requirements on manufacturing practices and pharmacovigilance.  However, the practical details of the hospital exemption will still be determined by Member States, so only time will tell whether the draft Directive achieves this objective. 

This blog is based on the wording of the EU’s proposal published on 26 April 2023.  This wording could significantly change during the legislative process.  Our Dublin, Brussels, Frankfurt and London teams will continue to monitor this legislation. We will be hosting a webinar to discuss the impact on 9 May. To sign up for the webinar please click here.

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Photo of Grant Castle Grant Castle

Grant Castle is a partner in London and Dublin practicing in the areas of EU, UK and Irish life sciences regulatory law. He supports innovative pharmaceutical, biotech, medical device and diagnostics manufacturers on regulatory, compliance, legislative, policy, market access and public law litigation…

Grant Castle is a partner in London and Dublin practicing in the areas of EU, UK and Irish life sciences regulatory law. He supports innovative pharmaceutical, biotech, medical device and diagnostics manufacturers on regulatory, compliance, legislative, policy, market access and public law litigation matters in the EU, UK, and Irish Courts.

He is one of the Co-chairs of Covington’s Life Sciences Industry Group and is Head of Covington’s European Life Sciences Regulatory Practice.

Grant regularly advises on:

  • EU and UK regulatory pathways to market for pharmaceuticals and medical devices, including in vitro diagnostics and on associated product life cycle management;
  • Pharmaceutical GxPs, including those governing pharmacovigilance, manufacturing, the supply chain and both clinical and non-clinical research;
  • Medical device CE and UKCA marking, quality systems, device vigilance and rules governing clinical investigations and performance evaluations of medical devices and in vitro diagnostics;
  • Advertising and promotion of both pharmaceuticals and medical devices; and
  • Pricing, reimbursement and market access for both pharmaceuticals and medical devices.

Grant also handles procedural matters before EU, UK and Irish regulators and UK and Irish market access bodies, where necessary bringing judicial reviews for his life sciences clients before the EU, UK and Irish Courts.

Chambers UK has ranked Grant in Band 1 for Life Sciences Regulatory for the last 18 years. He is recognized by Chambers UK, Life Sciences as “excellent,” “a knowledgeable lawyer with a strong presence in the industry,” who provides “absolutely first-rate regulatory advice,” according to sources, who also describe him as “one of the key players in that area,” whilst Chambers Global sources report that “he worked in the sector for many years, and has a thorough understanding of how the industry ticks.” He is praised by clients for his “absolutely first-rate” European regulatory practice. Legal 500 UK notes that he is “highly competent in understanding legal and technical biological issues.”

Photo of Peter Bogaert Peter Bogaert

Peter Bogaert has a broad European life sciences practice. He has detailed regulatory expertise under EU and national laws, handles legislative and other policy assignments and provides strategic advice. He also represents life sciences companies before the EU Courts in Luxembourg and in…

Peter Bogaert has a broad European life sciences practice. He has detailed regulatory expertise under EU and national laws, handles legislative and other policy assignments and provides strategic advice. He also represents life sciences companies before the EU Courts in Luxembourg and in local litigation in Belgium. Peter’s practice covers pharmaceuticals, biotechnology, medical devices, special foods and feed, cosmetics and other consumer products and he represents numerous innovative life sciences companies, including start-ups, as well as several industry associations.

Chambers Global notes that a client said: “He is an extremely experienced professional with broad expertise and provides sensible and well-balanced solutions.” He is consistently ranked by PLC as one of the leading life sciences lawyers globally and Legal 500 EMEA and Chambers Europe note Peter’s prominent regulatory pharmaceutical and environmental practice. Legal 500 EME noted that he is “a superb lawyer who is very pleasant to work with.” Peter regularly writes and speaks on life sciences issues. He is a founding member of the Brussels Pharma Law Group and also served for fifteen years as Managing Partner of the firm’s Brussels office.

Photo of Anna Wawrzyniak Anna Wawrzyniak

Anna Wawrzyniak is a senior scientific and regulatory advisor in the Life Sciences team. As a non-lawyer with a Ph.D. in biomedical sciences, Anna provides detailed scientific and regulatory advice to the firm’s pharmaceutical, food and feed clients. She draws on her technical…

Anna Wawrzyniak is a senior scientific and regulatory advisor in the Life Sciences team. As a non-lawyer with a Ph.D. in biomedical sciences, Anna provides detailed scientific and regulatory advice to the firm’s pharmaceutical, food and feed clients. She draws on her technical and regulatory expertise to help clients in strategic planning and in navigating regulatory proceedings, especially in areas where a deep understanding of the underlying science is important. In particular, she advises pharmaceutical clients on regulatory issues relating to product classification, biologics, advanced therapies, orphans, paediatrics, market and data exclusivities.

Anna has deep expertise in the following areas:

  • The development and approval of medicinal products;
  • Strategies for obtaining and maintaining regulatory exclusivities, including orphan market exclusivities, regulatory data exclusivities (new active substance status) and paediatric incentives;
  • Support to high stake litigation on regulatory aspects;
  • PRIME, accelerated approvals, conditional and exceptional marketing authorisations;
  • Advanced therapies, biologic and substances of human origin;
  • Borderline classification;
  • Regulatory due diligence;
  • Novel foods and food supplements; and
  • Feed.