A guide for life sciences companies coming to Europe
1. Introduction.........................................................................2 2. Medicinal products and medical devices........................4 3. Research and development............................................ 18 4. Clinical trials..................................................................... 22 5. Pricing.............................................................................. 28 6. Promotion, advertising and compliance ..................... 32 7. E-health and data protection......................................... 38 8. Product liability................................................................ 46 9. The Unified Patent Court (UPC) ................................. 52 10. Branding and design rights.......................................... 58 11. European structuring ................................................... 64 12. General considerations for companies doing business in Europe.............................................................. 68 13. Brexit................................................................................72 14. About Taylor Wessing....................................................78
Investing in the EU life sciences sector, in particular pharmaceuticals, biotechnology and medical devices, can unlock a substantial portion of the global life sciences market. A recent report by The Economist Intelligence Unit revealed that pharmaceutical spending in Western Europe alone accounted for US$252bn, or approximately 18% of global pharmaceutical sales. In Eastern Europe, spending was expected to grow strongly by 8% in 2015, twice the level expected in North America. Europe also boasts the second-largest biotechnology and medical technology markets globally, resulting in considerable scope for overseas companies to generate revenue by expansion into the EU.
The EU is an economic and political partnership between 28 European countries, founded on treaties agreed by all member countries. These binding agreements set out the EU's fundamental tenets, including the single market. This is a borderless internal market enabling most goods, services, money and people to move freely. In order to promote and enhance the single market, the EU enacts laws applicable to all 28 countries aimed at creating uniformity in how products and services are regulated across the continent, including the life sciences industry. The life sciences sector is heavily regulatory in the EU by a number of Regulations and Directives. All Directives have to be implemented by each EU Member State into its national law. Although Directives are intended to harmonise laws across all EU Member States, in reality their implementation differs between Member States, with the result that it is not always possible to take a "one size fits all" approach to complying with the legal framework for medicines and medical devices in the EU. The Treatment is designed to provide a high level overview of some of the most important issues to consider for any life sciences company coming to Europe.
2. Medicinal products and medical devices
an overview of their regulation in Europe
While the legal framework with regard to the authorisation of pharmaceutical products and the certification of medical devices has been harmonised to a very large extent, specific issues arise on a national level in relation to issues such as marketing and advertising, compliance, and pricing and reimbursement.
Medicinal products and medical devices
Under European legislation, a medicinal product is defined as any substance or combination of substances presented for treating or preventing disease in human beings. This includes combinations of substances that may be administered to human beings to make a medical diagnosis or to restore, correct or modify their physiological functions.
Before a new medicinal product can be placed on the market in Europe it must receive a marketing authorisation. There are four ways in which a marketing authorisation can be obtained in the European Economic Area ("EEA"):1
uu the centralised procedure this allows applicants to obtain an EEA-wide marketing authorisation directly through the European Medicines Agency (the "EMA"). It is mandatory for certain medicines, such as biological and biotechnology products manufactured by recombinant DNA technology;
uu the mutual recognition procedure this is available for medicines that have already received a marketing authorisation in one EEA member state. It is based on the principle that one member state should recognise a marketing authorisation correctly granted by another member state and, on the basis of that, grant a marketing authorisation in respect of its own country;
1 The EEA is the European Union together with Norway, Liechtenstein and Iceland.
uu the decentralised procedure this is similar to the mutual recognition procedure, but applicable for medicines which have not received a marketing authorisation at the time of application;
uu a national procedure this is for medicines that fall outside the mandatory scope of the centralised procedure and are intended for marketing only in one or a few countries.
To apply for a marketing authorisation, an applicant must be "established" in the EU. Non-EU companies will typically achieve this by setting up a subsidiary in a chosen EU country.
Companies may consider seeking formal scientific advice from EMA as to the tests and trials that should be performed in order to demonstrate their product's safety, efficacy and quality.
For new active substances a `full application' must be made, which is accompanied by a dossier of information relating to the medicine, including pharmaceutical tests, preclinical tests and clinical trials.
For medicines containing existing active substances, `abridged applications' are possible. These avoid the need to repeat the pre-clinical and clinical trials data of the original, by making reference to this data in the abridged application (see also data exclusivity below).
Medicinal products and medical devices
Manufacturers, suppliers and brokers Medicines regulation now extends to the entire supply chain for medicinal products, requiring the manufacture, supply and brokering of medicines in the EU to have the relevant licence:
uu Making, packaging (or `assembling') and importing human medicines in or to the EU all require a site-specific manufacturer's licence.
uu Wholesaler dealer licences are required for the sale or supply of medicine to anyone other than the patient using the medicine. Pharmacists are now also required to have a wholesaler licence if they supply medicines to anyone other than directly to the public.
uu A broker acts as an intermediary for another party in the supply chain, and does not pay for, own or physically handle the product. Wholesale dealing and brokering are different activities, and so companies which perform both activities are required to hold a wholesalers license and a brokers license where required by the respective national law. In a few Members States brokerage only needs to be notified to the competent authorities.
The formalities for obtaining these licences vary between EU member states. Obtaining a relevant licence in one member state can, in some circumstances, permit certain activities in other member states without the need for the same type of licence in the other member state.
Marketing authorisation holders in the EU are required to comply with ongoing pharmacovigilance obligations once their product is on the market. The obligations on marketing authorisation holders include: uu the submission of a risk management plan; uu keeping a pharmacovigilance system and to audit this
system at intervals; and uu the reporting of suspected adverse reactions. Where uncertainty about some aspect of the efficacy of a product has been identified the marketing authorisation holder can be required to perform post authorisation efficacy studies.
Marketing authorisation holders in the European Union are required to nominate at least one qualified person ("QP") in relation to their marketing authorisation. The QP must be permanently and continuously at the marketing authorisation holder's disposal, and is responsible for ensuring that batches of the medicinal product have been manufactured in accordance with all relevant requirements and legislation.
Where the marketing authorisation holder imports the medicinal product from outside the European Union, the QP must ensure testing within the European Union to the requirements of the marketing authorisation and any other tests or checks necessary to assure quality. The QP must also be satisfied that the medicinal products have been manufactured in accordance with good manufacturing practice (GMP) standards which are equivalent to those of the EU.
QPs must have a minimum level of scientific qualifications and industry experience. In some Member States, including the UK, smaller companies are permitted to employ a `contracted QP', who provides a part time service under contract rather than being an employee of the company.
Marketing authorisation holders must also nominate an appropriately qualified person responsible for pharmacovigilance in the European Union.
Medicinal products and medical devices
A company that has obtained a marketing authorisation on a product for the first time enjoys a period of `data exclusivity'. During this period, the authorisation holder's pre-clinical and clinical trials data may not be referred to in an abridged application for the same drug substance by another company (this does not, however, prevent another company performing its own trials and submitting a full application). For marketing authorisation applications made before November 2005, the period of data exclusivity varies across the EU member states, and is either 6 years or 10 years. However, for applications made from this date the `8+2+1' regime applies: data exclusivity applies for 8 years from grant of the marketing authorisation; after which a third party can use the pre-clinical and clinical trial data of the original marketing authorisation in their regulatory applications, but cannot market their product until after 10 years from the grant of the marketing authorisation. An additional 1 year of market exclusivity may be obtained by the authorisation holder if they are granted a marketing authorisation for a significant new indication of the medicinal product concerned.
To encourage companies to develop drugs for treating rare diseases, European legislation provides certain incentives. These include a 10 year period of exclusivity following the grant of a marketing authorisation. This is an absolute exclusivity, during which no directly competing or similar product can be placed on the market. For a product to be classed as an orphan medicine, it must be intended for the diagnosis, prevention or treatment of either: uu a life-threatening or chronically debilitating condition
affecting no more than 5 in 10,000 people in the EU at the time of submission of the application for orphan designation; or uu a life-threatening, seriously debilitating or serious and chronic condition for which, without incentives, it would be unlikely that the revenue after marketing of the medicinal product would cover the investment in development.
There must also be no other satisfactory method available for the diagnosis, prevention or treatment of the condition concerned or, if there is such a method, the new medicine must be of significant benefit to those affected by the condition. An application for orphan drug status is a separate application to an application for a marketing authorisation.
Medicinal products and medical devices
European legislation governs the requirements that manufacturers must meet before marketing medical devices, including active implantable devices and in vitro diagnostic medical devices (IVDs). These devices must meet certain `essential requirements' before they can be put on the market in a member state. If a device is considered to meet the essential requirements a CE mark can be applied to it. Once a device has a CE mark affixed in accordance with the relevant legislation, it can be put on the market anywhere in the EEA.
Medical devices in the EU can fall into one of 4 categories: Class I, Class IIa, Class IIb or Class III. Class I is the lowest risk category, Class III the highest.
uu A revised regulatory framework is currently being
drafted to replace the existing legislation the text
of which was agreed in May 2016 and it will come
into force around the beginning of 2017 (with a
transitional period of several years). The key aims of
the revisions include improving harmonization between
member states and tightening up regulation. The latest
drafts of the regulations include the following specific
modifications: Notified Bodies will have their position
and powers clarified and enhanced, while being subject
to strengthened supervision by Member States. New
powers will include the right for Notified Bodies to
undertake unannounced inspections;
uu greater transparency, including further development of the European databank on medical devices (Eudamed);
uu improved traceability of devices in the supply chain, including a phased and risk-based introduction of UDI (Unique Device Identification);
uu reinforced rules governing clinical evaluation throughout the life of the device;
uu improved market surveillance and vigilance, as well as better co-ordination between national regulators;
uu a new requirement for manufacturers to have a "qualified person" responsible for regulatory compliance;
uu new rules for the reprocessing of single-use medical devices; and
uu the possible introduction of a new expert group (the Medical Device Coordination Group) which will be able to invoke a "scrutiny mechanism". The MDCG could have the power to review and comment on Notified Body assessments of high-risk medical devices before the device is put on the market.
Medicinal products and medical devices
While the increased regulatory burden on manufacturers is likely to delay market access for innovative devices in Europe, the new regulatory framework is still likely to allow faster market access in Europe than in the US although the change in the regulations may have a significant impact for smaller US medical devices companies wishing to obtain a CE mark for their device.
Advanced therapy medicines
Advanced therapy medicines are medicines based on genes and cells. For example, gene therapy, somatic cell therapy and tissue engineered products. These products are specifically regulated in Europe. All advanced therapy medicines intended for marketing in more than one EU member state are authorised centrally via the EMA and subject to monitoring once on the market.
Biosimilars are biological medicinal products that are similar to an authorised biological product and which do not differ significantly from that product in terms of quality, safety and efficacy. There are three broad guidelines that apply to all biosimilars: an `overarching' guideline; a non-clinical and clinical issues guideline; and a quality issues guideline. These guidelines are supplemented by a number of product or class specific guidelines, also issued by the EMA.
As the number of biosimilars on the market grows, their marketing in the EU is likely to give rise to some interesting questions around what claims can be made in comparing a biosimilar to the original biological medicine.
Medicinal products and medical devices
3. Research and development
Research and development
The EU is a world leader in research and development, responsible for 24% of global expenditure on research, 32% of high impact publications and 32% of patent applications. There are a number of incentives for non-EU businesses conducting R&D activities in the UK and EU, as well as various legal issues that may need to be considered. R&D funding: Research and innovation in Europe are financially supported by the programme Horizon 2020, which will make nearly 80 billion of funding available between 2014 and 2020. The key research areas that are funded are announced in two year work programmes, and individual calls for research proposals within these fields are published on an ongoing basis. Most calls require a consortium made up of at least three organisations from different countries, and a number of search services are available to help identify potential partners. Incentives for life sciences research: Various regulatory incentives are available for life sciences investment in Europe. Fiscal benefits such as R&D tax credits are offered in some European countries, including the UK. Patent term extensions for medicinal products are designed to attract investment by offering greater exclusivity in the market. There are also incentives to encourage the development of medicines for rare diseases (so-called `orphan drugs'), including research grants, reduced fees for regulatory authorisations, and increased protection from market competition once the medicine is authorised (see also the Orphan Drugs section).
Key legal considerations uu Competition law: A research and development
agreement is a "horizontal agreement" within the scope of European competition or anti-trust law. Care should be taken to ensure that these agreements are drafted to comply with this legislation. Certain exemptions may apply, either in respect of an agreement individually or in respect of a category of agreements, by way of a block exemption regulation. uu Intellectual property: Issues concerning ownership of intellectual property commonly arise in the context of research collaborations. It is important that research partners record at the outset how intellectual property arising out of the collaboration should be owned, and what rights they should have to use and exploit such intellectual property. If this is not agreed, the default legal rules on intellectual property ownership and exploitation will apply, which vary from country to country around the EU. Businesses will also need to have agreements in place to ensure that they own IP rights developed by their employees and independent consultants or contractors, as this is not automatically the case in many EU countries.
Research and development
uu Confidentiality: Companies carrying out R&D activities must have appropriate confidentiality agreements in place from the outset to ensure that commercial confidentiality and potential intellectual property rights are protected. Confidentiality is often a key concern in collaborative projects, and the research partners will need to include protections for technical information brought into the collaboration as well as information generated in the course of the collaboration. Where R&D is conducted with academic partners, these protections may need to be balanced against the academic collaborator's obligations regarding the publication of results and the dissemination of ideas.
Other sector-specific regulation: Other legal issues may apply, depending on the nature of the R&D activities carried out, including the regulatory requirements governing clinical trials in the EU. European data protection law will apply in respect of research carried out with human subjects, and other regulatory areas may need to be considered for research involving the use of human tissues, animals or hazardous materials. Companies will also need to be aware of their obligations under European regulations to disclose research results, particularly in relation to clinical research.
4. Clinical trials
At the date of printing, clinical trials in the EU are regulated by European Directive 2001/20/EC. European Directives are not directly binding on EU Member States, but are required to be implemented into the national law of each country. This can lead to some variation in implementation. As a result, there was only partial harmonisation across the EU of the law relating to clinical trials. This created difficulties for pharmaceutical companies performing clinical trials in several European Member States. A new Regulation is intended to solve these problems and set the global gold standard for transparency in clinical trials.
In 2014 a new European Regulation on clinical trials was adopted, with the intention of addressing the lack of harmonisation of the law across Europe. The new Regulation will be directly enforceable in all EU countries. The Regulation may not come into force earlier than 28 May 2016 and only once the European Commission is satisfied that certain arrangements (including a EU wide clinical trials database) have been put in place. This, however, can be expected for later in 2016.
Once the new Regulation comes into effect, the transition provisions included in it mean that the existing European Directive may continue to apply to clinical trials where the clinical trial application was submitted before or within 1 year after the entry into force of the Regulation.
Key legal considerations
u Carrying out a clinical trial in the EU
u All clinical trials in the EU require a "sponsor" the individual or organisation responsibility for the initiation, management and/or financing of the clinical trial.
u The sponsor is ultimately responsible for designing, conducting, recording and reporting the clinical trial in accordance with good clinical practice but may delegate its duties by written agreement.
u Prior to starting a clinical trial, the sponsor must:
u obtain a favourable opinion from a relevant ethics committee that the anticipated benefit justifies the risks; and
u submit a clinical trials authorisation application in the country(s) where the trial is to be carried out.
u All investigational medicinal products must be manufactured in accordance with good manufacturing practice (cGMP).
u The new Regulation requires that certain information collected by EU Member States in connection with the authorisation and supervision of clinical trials must be made publicly available, subject to certain limited exceptions such as the protection of personal data or commercial confidentiality.
uu Data protection and informed consent uu The sponsor of the clinical trial is responsible for compliance with EU laws relating to data protection. uu A clinical trial may only be conducted if the trial subjects have given informed consent to their participation after being informed of the nature, significance, implications and risks of the clinical trial. Trial subjects can withdraw consent at any time. uu If personal data from a trial subject's participation in the study is to be transferred outside the EU for any reason, the informed consent form provided to the trial subjects must unambiguously request permission for such transfer.
uu Presence in the EU uu In relation to clinical trials of medicinal products, the sponsor of a trial in the EU must either be "established" in the EU or appoint a "legal representative" that is in the EU. uu In relation to medical devices, a company wishing to carry out a clinical investigation of a medical device in the EU must either be established in the EU or appoint an "authorised representative" that is in the EU.
About two-thirds of the EU's pharmaceutical expenditure is covered by public payers, so the pricing and reimbursement measures adopted by national health authorities have a significant impact on whether most patients will have access to a new medicinal product.
National authorities in charge of pricing and reimbursement assess the added therapeutic value ("ATV") of a medicine for the purpose of establishing a price. In particular authorities will consider efficacy, safety and pharmaceutical quality of a medicinal product as well as its effectiveness, cost-effectiveness, budgetary impact, the severity of the disease and other factors.
Since ATV-based evaluations are the basis for national pharmaceutical pricing, the decision on whether or not a drug offers an additional benefit will determine its price. Pharmaceutical companies are currently required to carry out such assessments in each EU Member State in order to determine additional pharmaceutical benefits.
This leads to two main problems: first, pharmaceutical companies as well as national authorities have to invest substantial time and money in the process for each country, since the current system does not permit the referencing of decisions in other EU Member States. Secondly, the decisions on a drug's benefits may vary from country to country, which impacts upon subsequent national pricing.
Through the external price referencing principle that is applied by most European countries, national regulatory pricing inuences pricing in other Member States. External price referencing means that the drug prices in the relevant countries are compared in order to x a national price or establish a basis for price negotiations with the relevant pharmaceutical company. As a result, price setting regimes for pharmaceuticals in the European Union are very diverse.
The disparity in pricing regimes means that any pharmaceutical company launching a new product in Europe has to carefully consider where to market its product rst.
6. Promotion, advertising and compliance
Promotion, advertising and compliance
The promotion of prescription only medicines in Europe is regulated under Directive 2001/83, as implemented into national law in each EU Member State. As a fundamental point, prescription-only medicines cannot be promoted to consumers in the EU. Promotion is only permitted to healthcare professionals and relevant administrative staff (such as hospital finance directors). Over-the-counter medicines may be advertised to consumers in the EU, but their promotion is subject to regulation under relevant national advertising codes (such as the CAP Code in the UK). There is no prohibition on the promotion of medical devices to consumers in some countries in the EU, although in practice most promotional activities for medical devices are aimed at healthcare professionals. "Promotion" is broadly defined under European law. At its most basic, the mention of a medicine's brand name and its indication comprises promotion. All promotional materials must be factual, balanced, up-to-date and accurate, and all claims made in them must be capable of substantiation by reference to data (typically the product's SmPC or CE mark approval, or published papers or data).
Promotion of a medicine before the grant of a marketing authorisation in Europe is unlawful, as is promotion of a medicine outside of its licensed indication.
The manner in which the advertising provisions of Directive 2001/83 have been implemented into national law vary between jurisdictions in the EU. In some countries (the UK and Germany for example) there is a system of selfregulation under an industry association's code of practice, such as the EFPIA and ABPI codes. All members of the respective associations are required to comply with the code of the association to which they have subscribed.
In France, any promotional document or material must be submitted for prior review by the French drug agency even if it is solely targeted at health professionals. Specific procedures imposed in France since 2012 go beyond the EU requirements.
Advertising may also be subject to the control of the competent authorities, as well as competent courts to which parties may apply in some jurisdictions under local unfair competition rules for example.
Promotion, advertising and compliance
The promotion of medical devices to healthcare professionals is governed by general advertising law, as well as industry body codes of practice, such as the UK Association of British Healthcare Industries (ABHI) Code of Business Practice. On an EU level, MedTech Europe an alliance of European medical technology industry bodies has introduced a new code of practice that will bind all members from 1 January 2017. Payments made to healthcare professionals by pharmaceutical companies must be publicly disclosed in accordance with EFPIA's Disclosure Code, which is broadly equivalent to the obligations imposed on US companies under the Sunshine Act. Life sciences companies coming to Europe should pay particular attention to the French Sunshine Act. The French Sunshine Act applies to all companies (EU or non EU) manufacturing or distributing certain products (whether or not they are marketed in France and including those that are not reimbursed) including: pharmaceuticals, medical devices, blood products, products based on human cells, non-corrective lenses and cosmetic products.
The French Sunshine Act requires the disclosure on a public website managed by the French Health Ministry of specific information on agreements concluded with, or of benefits in kind granted to, all categories of health professionals. This includes the disclosure of payments, and of reimbursement of costs, above 10 Euro.
The use of social media by life sciences companies has attracted considerable discussion and debate in recent years. Companies have found it challenging to balance the strict regulatory regime for advertising medicines with the attractive reach of social media channels and their potential for user generated content. The UK's Prescription Medicines Code of Practice Authority has issued some guidance on the use of digital communications channels by pharmaceutical companies and highlighted, for example, that it is very difficult to see how Twitter could be used in a compliant manner to promote prescription-only medicines.
7. E-health and data protection
E-health and data protection
To date, most pharmaceutical companies have tended to restrict their use of social media channels to disease awareness campaigns and corporate matters, and healthcare professional only forums.
The pace of innovation in eHealth is nothing short of astonishing covering mobile phone apps that provide direct medical support or connect to other medical devices, to patient monitoring devices, personal guidance systems, medication reminders provided by SMS and telemedicine provided wirelessly.
Over the past few years, eHealth has become one of the fastest growing markets. Global revenues for the eHealth market are predicted to grow from US$ 2.3bn in 2013 to US$21.5bn by 2018, with the European market being the largest eHealth market by 2018.
As eHealth takes off, an increasing number of devices are generating or capturing data relating to health and lifestyle. Many eHealth products will constitute "medical devices" within the meaning of the relevant EU and national legislation with the result that they will be subject to regulation intended to ensure the safety of users of such products. With respect to eHealth products that capture or generate data, the EU has adopted data privacy laws, which in the EU are referred to as laws on data protection, to ensure that this information is handled appropriately at all times. These
E-health and data protection
include requirements that the data is lawfully obtained, used responsibly, kept securely and that relevant consents are collected.
Meanwhile, data protection is becoming an increasingly important area of compliance for businesses across the EU and the data protection laws adopted across the EU member states currently vary in their interpretation of the EU law (although a new General Data Protection Regulation has now been agreed to address fragmentation and is likely to come into full force some time in 2018).
Non-compliance with the medical devices or privacy legislation can trigger negative PR, brand damage, regulator enforcement (including, prosecution and, in the case of serious breaches, fines) and civil claims.
eHealth products as medical devices A medical device is defined as any instrument, apparatus, appliance, software or material whose intended purpose is (among others) the diagnosis, prevention, monitoring, treatment or alleviation of disease or of an injury or handicap, or the control of conception and which does not achieve its principal purpose by pharmacological, immunological or metabolic means. Many eHealth devices or applications will fall into this definition and will thus be regulated under the Medical Devices legislation and will require CE marking before they can be put on the market.
Whether an eHealth product is a medical device or not will be determined by what the manufacture intends the eHealth product to be used for. This intent will be determined in light of how the eHealth product is marketed, in particular the data supplied on the labelling, in the instructions and/or promotional materials. The manufacturer is responsible for deciding whether a product is a medical device and there are likely to be grey areas. However, if the eHealth product ought to bear a CE mark as a medical device but the manufacturer has mistakenly decided it should not, the relevant national authorities can require the product to be taken off the market. Manufacturers should, therefore, give careful consideration to this issue from an early stage.
Personal Data/Sensitive Personal Data
Unlike the term "Personally Identifiable Information" in North America, personal data in Europe means any data which relates to a living individual who can be identified from that information or in conjunction with other information. Data relating to an individual's health is sensitive personal data, which is even more strictly regulated. When the new General Data Protection Regulation comes in, new definitions and regulations around personal data will come into effect across the EU.
E-health and data protection
New European Data Protection Legislation: the data protection landscape is set to change following political agreement on a new General Data Protection Regulation which is likely to become law in 2016. The Regulation will strengthen data subjects' rights, impose far tougher sanctions and increase the compliance burden on businesses. Again, it is important for businesses to consider how they may need to prepare for these changes. Data exports to the USA: EU data protection law prohibits the transfer of personal data to countries or territories outside the EEA unless they are considered to provide adequate protection. One of the ways certain US organisations used to be able to demonstrate an adequate level of protection was by signing up to the Safe Harbor principles, a self-certification standard operated by the US Department of Commerce and enforced by the FTC.
E-health and data protection
The Safe Harbor regime came under scrutiny in the wake of the Snowden revelations around mass surveillance of European data by the US intelligence agencies, but while the EC was trying to renegotiate it, the CJEU found that Safe Harbor was invalid and effectively ended it as a means of lawfully transferring personal data from the EEA to the USA. After a short compliance holiday, regulators are looking to enforce this and organisations exporting data to the USA will have to rely on other solutions like using standard model contract clauses or Binding Corporate Rules. The situation is, however, uncertain as doubt has also been cast on these transfer mechanisms so those affected will need to watch developments closely.
8. Product liability
Across the European Union, medicines and medical devices are subject to the general product liability rules of the EU member states. An exception applies to Germany and, to a limited extent, Spain and a few other jurisdictions, whose national laws provide for particularly strict liability regimes that specifically apply to medicines. Within the European Union, the general product liability laws are based on:
uu a strict liability regime (without fault) under the national laws of the member states implementing the EU Product Liability Directive 85/374/EC ("the PL Directive"), and
uu supplemental fault-based liability systems (negligence) under the national laws of practically all EU member states.
Both liability regimes apply in parallel. While it is generally easier for a claimant to establish a claim under the strict liability regime of the PL Directive, fault-based liability (negligence) continues to play a role in cases where a claimant seeks to recover damages beyond the limitations and liability caps that apply under the PL Directive (see below)
"Product" is defined widely under the PL Directive, such that it will apply to almost all medicines and medical devices. However, custom made drugs or devices do not typically fall within the scope of the PL Directive as it only covers products that have been industrially produced.
The "Producer" is defined broadly to include:
uu any person who, by putting his/her name, trade mark or other distinguishing feature on the product, presents himself/herself as the producer;
uu any importer who has imported the defective product, component or raw material into the European Union; and
uu any supplier (e.g. the retailer, distributor or a wholesaler) if the producer cannot be identified.
There are three elements to establishing liability under the PL Directive: a product defect; damage; and a causal link between the two.
A product is deemed to be defective if it does not provide the safety that consumers generally are entitled to expect taking all of the circumstances into account, including the presentation of the product, its use that could be reasonably expected and the time when the product was put into circulation.
In a decision of March 2015, the Court of Justice of tthe European Union has arguably significantly enlarged the concept of a "product defect" under the PL Directive with regard to implantable medical devices. The court held that a potential defect in pacemakers and implantable cardioverter defibrillators could lead to the conclusion that all devices of the same model/series are defective. In this case, the
claimant only needs to prove that there was an increased number of device failures in the same batch or series and no longer needs to prove that the individual implant he or she had received suffered from a relevant defect. A key issue with medical devices is whether the way in which the product is presented, including the information and warnings given by the producer, provides consumers (and not only healthcare professionals) with adequate understanding of its inherent dangers. Liability is generally not capped. However, EU Member States may set a limit for the total liability of a producer in the case of death or personal injury caused by identical items with the same defect. The PL Directive contains a number of defences which a producer may seek to rely on, including: uu he did not put the product into circulation; uu the defect is due to compliance of the product with
mandatory regulations issued by the public authorities; uu the state of scientific and technical knowledge at the
time when the respective producer put the product into circulation was not such as to enable the existence of the defect to be discovered (the so called "state of the art" defence).
Under both the PL Directive and in negligence, the liability of the producer can be limited if the producer can prove that the consumer's negligence caused or contributed to the damage. There is a limitation period under the PL Directive: three years starting from the date on which the claimant became aware or reasonably could have become aware of the damage and its cause, the defect and the identity of the producer. There is also a longstop date for liability: ten years from the date on which the product was put in to circulation. While the substantive product liability laws of all EU Member States are largely harmonized under the PL Directive, the national procedural laws and court practice of the Member States which apply, among others, in product liability litigation can differ quite significantly, so local advice is essential.
9. The Unified Patent Court (UPC)
The Unified Patent Court (UPC)
National and European patents
In Europe it is possible to obtain either a national patent or a European patent for an invention. National patents are granted through national government offices. European patents are applied for through the European Patent Office (EPO). A European patent application typically designates several, or all, of the European Patent Convention countries in which protection is sought (currently 38 countries). Once granted, the patent turns into a bundle of national rights each providing national protection registered in the national offices of the designated countries. Any dispute that arises concerning a national or European patent must proceed in the national court of the country of registration. However, all national designations of a European patent may be opposed centrally in the EPO, providing the opposition is filed within nine months of grant.
European and national patents provide exclusivity against exploitation of the product or process technology claimed in the patent by a third party. This exclusivity lasts for a period of twenty years from the filing date. This is a right of exclusivity to the claimed technology, but not a right to exploit it as such: a patent may fall within the scope of an earlier, third party owned patent, requiring permission from that third party before the later patented technology can be used.
A number of requirements must be satisfied for the claimed product or process technology to be eligible for patent protection in Europe. The technology must be: `novel' (it is new); it must involve an `inventive step' (it is non-obvious); it must also be capable of `industrial application'; and, it must not fall within the list of excluded subject matters (for example, stem cells obtained from human embryos directly, or indirectly, are unpatentable). Furthermore, the specification of the patent must be `sufficient' it must disclose the invention in a manner which is clear enough and complete enough for it to be performed by a person skilled in the technology concerned.
The Unifed Patent Court (UPC)
Supplementary Protection Certicates
European Union law provides a system of supplementary protection certicates ("SPCs") by which the term of protection for pharmaceutical products (and second medical uses of products) may be extended after patent expiry. An SPC may provide up to 5 years further monopoly protection for products that were covered by the expired patent. In order to obtain an SPC, there are three key conditions that must rst be satised: u the product must be protected by a basic patent in
force; u a valid authorisation to place the product on the
market as a medicinal product must have been granted (this must be the first authorisation to place the product on the market as a medicinal product); and u the product must not already have been the subject of an SPC.
The Unitary Patent and Unified Patent Court
The Unified Patent Court ("UPC") and the European patent having unitary effect ("Unitary Patent") was expected to come into full force in early to mid 2017, although this is now likely to be delayed by the Brexit process. The Unitary Patent is a single right protecting an invention, which prohibits anyone but the owner or their licensees from practising the invention in all of the participating EU Member States. The UPC is a new pan-European court intended to improve upon the existing system, in which enforcement and revocation often requires parallel litigation in more than one national court, with associated costs and the possibility of inconsistent decisions.
The UPC has exclusive jurisdiction for the enforcement or revocation of Unitary Patents. The decision resulting from such actions will have effect in all the participating EU Member States. Likewise, it will be possible to enforce or revoke European patents in all their countries of designation by one decision of the UPC. However, during a transitional period of seven years (the "Transitional Period"), there is the choice whether to litigate European patents in the national courts or the UPC. During the Transitional Period, European patents may also be opted-out of the UPC system altogether, for their entire duration.
National patents are unaffected by the UPC and will continue to be enforceable and revocable in the national courts only.
10. Branding and design rights
Branding and design rights
Clearing and registering your brand
Trade Marks In Europe it is possible to register a company's trading name, brand name and logo as a trade mark either through a European Union Trade Mark ("EUTM") covering the whole of the EU or through a national registration in one of the Member States. Registration of a trade mark confers a statutory monopoly in the use of that trade mark in relation to the goods or services for which it is registered. An EUTM also gives indefinite protection in 28 Member States subject to the EUTM being used. The EU operates a "first to file" system and registration is not dependent on use. The trade mark right can be secured across the whole EU or in one Member State and no obligation to use the trade mark for up to five years. Life sciences companies wanting to set up business in the EU should consider filing a trade mark application at any early stage of planning, well in advance of launch. It is good practice to clear use of a new name in the EU by checking for prior conflicting rights. Failure to do so can be costly and embarrassing if it is later blocked by an injunction.
Designs There are various types of design right protection in the EU, both registered and unregistered. The latter is not a monopoly right but protects against copying. The pan-EU registered design right can be particularly useful because it is quick and low cost to register, and can be maintained without any use requirement. The UK, uniquely, has an additional national only unregistered design right.
Protecting and enforcing non-traditional trade marks
Within the EU non-traditional trade marks such as colours and three-dimensional marks are capable of being registered to protect the look of the product and its packaging. This can be particularly important in the pharmaceutical industry, where consumers will often identify their medication by reference to how it looks.
In order to register colour and 3D shape marks, the marks must be capable of distinguishing the goods or services of one undertaking from those of another. 3D marks must not consist exclusively of a shape imposed by the nature of the goods, or a shape of goods that is necessary to obtain a technical result, or a shape which gives substantial value to the goods.
Branding and design rights
Proving distinctiveness of these types of marks, in particular, shape marks, can be difficult and many applications fail. However, even if companies are unable to register these elements of their product as trade marks, they may be able to rely on passing off rights in the UK and unfair competition in other EU countries. Alternatively, consideration should be given to registered or unregistered design rights as a means to protect the appearance of products. European regulators do not have rules requiring manufacturers to use specific colours to indicate the presence of specific active ingredients. However, manufacturers are required to consider, for regulatory purposes, whether the use of a particular colour on a device would compromise patient safety. For example, manufacturers may need to consider whether the use of a certain colour for an inhaler is strongly associated in the minds of patients with a different clinical effect.
Parallel Trade issues
Goods from within the EEA Once goods are placed on the market in the EEA, the general rule is that they can be freely traded within the EEA, regardless of the presence of a trade mark on those goods. This is to preserve one of the fundamental principles of EU law: the free movement of goods within the EEA. However, restrictions on free movement are permitted where they are "justified..." or there are "legitimate reasons..." for the restriction. Particular problems can arise in this respect from repackaging. Repackaging of pharmaceutical goods re-labelling, re-boxing, over-stickering to enable them to be sold in a different EU Member State to the one in which they were originally marketed may provide a "legitimate reason" for opposing that further sale. This is because the repackaging affects the "specific subject matter" of a trade mark changing the labelling of a product is liable to affect the guarantee of origin of the product that a trade mark is meant to provide.
Branding and design rights
A trade mark proprietor may not stop the supply of repackaged EEA products if: uu repackaging is necessary, and use of the trade mark
constitutes artificial partitioning; uu repackaging cannot affect the original condition of the
product; uu the packaging clearly states:
uu who repackaged the product, and uu the name of the manufacturer; uu the presentation is not liable to damage the reputation of the trade mark and its proprietor; and uu the importer gives notice and, on demand from the trade mark owner, must supply a specimen of the repackaged product.
11. European structuring
a checklist for life sciences companies coming to Europe
Any life sciences company wishing to do business in the EU needs to give careful consideration to how to structure its operations. This brief checklist highlights some of the key considerations:
uu Corporate structuring: in which country should there be subsidiaries or branches of the company? Which country's subsidiary should sit at the top of the European group of companies?
uu Tax structuring: in which country should the intellectual property ("IP") rights be situated and is there a preferential tax regime in that jurisdiction which can reduce the effective tax rate arising to the IP holding company in respect of income or gains arising from the licensing or use of those IP rights? The IP could be licensed to group companies depending on the preferred operational model of the group (which could, for instance, involve a separate entity in the group undertaking manufacturing of pharmaceutical products or devices from the entity which holds the IP).
uu Inter-company agreements: what services or goods are required between group companies? For instance, this could include licensing of IP rights. Consideration should be given to appropriate pricing for the provision of such services or goods (as tax rules often require arm's length pricing), the imposition of any withholding taxes on the payment of royalties and the value added tax ("VAT") consequences arising from the payments.
uu First EU foothold: In which country should the company first commence operations in the EU? Will this also be the first country to launch the product?
uu Pricing: In addition to considering where your first base in the EU should be, reference pricing applicable in the EU to pharmaceutical products should be taken into consideration: product launch in a country with a liberal price setting mechanism is preferable.
uu Sales model: will the company have subsidiaries or branches in each relevant country in the EU and sell directly? Will the company employ its own sales and marketing team, or use a CSO (contract sales organisation)? Or will distributors be used in some or all countries?
uu Regulatory and operational licences: which corporate entity will hold the marketing authorisation or CE mark? Which corporate entities will apply for other relevant operational licences, such as manufacturer's importer's licences, wholesale dealer's licences or broker's licences?
uu Intellectual property: which intellectual property rights should the company seek to secure in the EU? Which entity within the company's group should hold those rights? Will the rights need to be licensed within the group?
See also the general checklist in the next chapter.
12.General considerations for companies doing business in Europe
General considerations for companies doing business in Europe
In addition to the checklist in Chapter 11, you should also, as a minimum: 1. Remember that the law differs between EU states, although it is harmonised in some areas. 2. Plan ahead and take advice early. 3. Take immigration advice: this is key if you want to send employees to work in the EU don't take steps to set up without it. 4. Not forget that employment law is different in each EU state use local law contracts and take advice before terminating employees or changing their terms and conditions. Beware of the risks of using consultants. 5. Not grant stock options to employees in the EU without first taking specialist advice. 6. Consider protecting your trade marks early: a Community Trade Mark covers all EU states. 7. Decide on the appropriate method of trading in each EU state early on, with appropriate advice. 8. Ensure you have adequate insurance in place to cover your operations in the EU.
9. Protect the business consider a review of contractual terms and conditions, websites, privacy policies, anti-bribery and corruption policies and the like.
10. Get in touch with Taylor Wessing to discuss your plans and ask any questions you may have on the points covered in The Treatment!
On 23 June 2016, Britain voted in a referendum to leave the European Union. One of the many uncertainties thrown up by the so-called "Brexit" vote is the impact of the UK leaving the EU on the regulatory regime governing the granting of marketing authorisation applications for medicinal products, as well as the CE marking system for medical devices.
Currently there are four routes through which a marketing authorisation (MA) for a medicinal product can be obtained: the centralised procedure; the decentralised procedure ("DCP"); the mutual recognition procedure ("MRP") and the national procedure (see chapter 2 for full details). The first three of these are all governed by EU law and give rise to MAs that take effect across the entire EU (under the centralised procedure) or, in the case of the DCP and MRP, require cooperation between national competent agencies of the Member States of the EU.
In relation to medical devices, the CE marking regime is based upon three European Directives that have been implemented in the UK. Two of these Directives are due to be replaced by two European Regulations in 2017, and it is therefore highly likely that these will take effect in the UK before the terms of Brexit have been agreed with the EU.
The UK's decision to leave the EU will necessarily impact on the way in which these procedures and regimes operate. The precise extent of the impact will not be clear for some time,
and will depend on the negotiations between the UK and the remainder of the EU after Article 50 has been triggered, as well as the nature of the UK's relationship with the EU after it leaves. Predicting how these issues will play out with any certainty is clearly very difficult and we do no seek to do so here. Instead we highlight some of the key questions to consider, and provide some initial comments on where the Brexit negotiations could end up in relation to the life sciences sector.
First, it is important to note the following facts when considering the Brexit negotiations that lie ahead in the context of the life sciences sector:
uu The UK is a sizeable life sciences market within the EU and applicants will be likely to want to have marketing authorisations (or medical device approvals) in both the EU and the UK. Adopting a system in which completely separate applications are needed will therefore increase the costs for applicants and increase the workload of the MHRA and regulators in the EU. Separate systems with a lack of mutual recognition would seem unnattractive on both sides.
uu The MHRA is a well-respected regulator for both medicines and medical devices. It often takes the role of the RMS (Reference Member States) during DCPs, and frequently carries out assessments on behalf of the EMA. If the MHRA was not available to provide that role,
it would put additional pressure on other EU regulators and may impact on the experience and expertise available to applicants in the current EU system. uu It is unclear what would happen to MAs that had been granted through MRPs or DCPs where the MHRA had been the RMS. In these circumstances, the MHRA will hold the dossier and will have carried out the assessment. These functions will need to be transferred if the UK is not able to take part in these procedures going forward and that too would put additional pressure on other EU regulators (and on the MHRA to transfer those assessments). The same is true where the MHRA is a CMS (Concerned Member State), but in such cases the impact will only be on the MA in the UK. uu Any medical device manufacturer will want to be able to place their CE marked device on the UK market, and will not want to go through separate procedures for the UK and the EU.
Taking all of these points into account, it is clear that there would be a benefit to both the applicants and the regulators for the MHRA to remain part of the centralised procedure, DCP and MRP post-Brexit. The question remains whether or not it is possible to achieve this, which will depend on the precise nature of UK's future relationship with the EU and the exit deal that is concluded.
For instance, European Economic Area (EEA) states (Iceland, Liechtenstein and Norway) are able to participate in DCPs and MRPs, and centralised MAs also apply in those countries. So if the UK were to become a member of the EEA then the route is well-trodden, although some will view this option as less likely given the need for the UK to accept the free movement of people as an EEA member.
Switzerland, on the other hand, is a European Free Trade Association (EFTA) state (like Iceland, Liechtenstein and Norway) and although it has access to the free market, it does not participate in the regulatory procedures. Something more than a trading agreement with the EU will be needed in order for the UK's role in the regulation of medicines and medical devices in Europe to be maintained. What that would look like, however, is unclear at this stage.
We believe that there is reason to be optimistic that a negotiated solution will be reached in which the efficiencies of the current systems are maintained, not only because such a scenario would benefit the EU and the users of the system as well as the UK, but also because the UK life sciences sector enjoys an excellent reputation globally and so its continued pre-eminence, and easy accessibility, is likely to be a priority for the UK Government.
In the meantime, the MHRA has encouragingly made it clear that "taking a full, active role in European regulatory procedures for medicines remains a priority" (see https:// www.gov.uk/government/news/medicines-and-healthcareproducts-regulatory-agency-statement-on-the-outcome-ofthe-eu-referendum). As the Brexit negotiations evolve, we will be tracking their progress and providing our comment through our life sciences microsite, Synapse (www.taylorwessing.com/ synapse)
14. About Taylor Wessing
About Taylor Wessing
Taylor Wessing is a full-service international law firm, working with clients in the world's most dynamic industries. We take a single-minded approach to advising our clients, helping them succeed by thinking innovatively about their business issues. Our focus on the industries of tomorrow has enabled us to develop market-leading expertise in: uu Technology, Media and Communications uu Life Sciences uu Private Wealth uu Energy At Taylor Wessing we are proud of our reputation as a forward-thinking firm. We support clients wherever they want to do business. Our 33 offices around the world are not token presences they blend the best of local commercial, industry and cultural knowledge with international experience to provide proactive, integrated solution for our clients.
We are specialists in the life science sector. Our team includes lawyers with extensive industry experience and a deep understanding of the sector, having variously spent time working at a number of pharmaceutical and biotech companies, and having worked closely with a large number of life sciences clients over many years. Taylor Wessing offers the capability in providing legal advice to life sciences companies through the full life cycle of their businesses. Taylor Wessing is widely regarded as one of the leading firms in providing a comprehensive legal service to the pharmaceutical, biotech, medical device, diagnostics and research tool sectors. This is based on our market leading practice across the full range of practice areas essential in providing services to the sector.
About Taylor Wessing
Our range of clients is diverse: from multi-national pharmaceutical companies to biotech start-ups, and it includes manufacturers of medical devices, diagnostic companies, research tool manufacturers and providers of healthcare services. Our international life sciences group has extensive expertise advising across the full range of areas central to the business of our life science clients: uu fund formation, venture capital, M&A and capital
markets uu regulatory and anti-trust advice uu licensing and partnering agreements uu collaboration and R&D agreements uu pharmaceutical and medical device patent litigation uu European strategy and set up
Dr. Wolfgang A. Rehmann International Head of Life Sciences, Munich +49 (0)89 2 10 38 192 email@example.com
Tim Worden Partner, Cambridge/London +44 (0) 1223 446429 firstname.lastname@example.org
Dr. Manja Epping Partner, Munich +49 (0)89 2 10 38 223 email@example.com
About Taylor Wessing
Evelyne Friedel Partner, Paris +33 1 72 74 03 40 firstname.lastname@example.org Dr. Dieter Natlacen Partner, Vienna, CEE +43 (0)1 716 55 0 email@example.com Wim Maas Partner, Eindhoven +31 (0) 88 02 43 105 firstname.lastname@example.org
Thank you to the members of the International Life Sciences team at Taylor Wessing who made valuable contributions to The Treatment: Sally Annereau, Chris Benson, Nikol Davies, Samantha Deacon, Daniel Dziewiecki, Paul England, Manja Epping, Evelyne Friedel, Diana Heimhalt, Colin McCall, Henning Moelle, Georgia Powell, Wolfgang Rehmann, Matthew Royle, Talitha Shkopiak, Catherine Webb and Tim Worden.
Europe > Middle East > Asia
Taylor Wessing LLP 2016 This publication is intended for general public guidance and to highlight issues. It is not intended to apply to specific circumstances or to constitute legal advice. Taylor Wessing's international offices offer clients integrated international solutions. Though our offices are established as distinct legal entities and registered as separate law practices, we are able to help our clients succeed by providing clear and precise solutions with high-level legal and commercial insights. For further information about our offices and the regulatory regimes that apply to them, please refer to taylorwessing.com/regulatory.html and rhtlawtaylorwessing.com.