Eurasian Economic Union

Eurasian Economic Union pharmaceutical regulatory reforms

The Eurasian Economic Union (EAEU) is introducing major new changes in the marketing of pharmaceuticals across its members - which include Russia, Belarus and Kazakhstan - from 1 January 2016.

One of the key areas to change will be pharmacovigilance; the new EAEU Pharmacovigilance Regulation is due to be adopted by the end of this month and enter into force on 1 January 2016.

The PV Regulation will bring the EAEU more into line with the EU rules on pharmacovigilance, for instance, by requiring companies to appoint a QPPV to be present in one of the countries in which they operate within the EAEU to be responsible for all the other relevant EAEU countries.

According to the new rules, the QPPV must possess the necessary theoretical and practical knowledge for the performance of the pharmacovigilance duties and be trained to use the pharmacovigilance system of the MA holder by the MA holder prior to his/her appointment to this role. The QPPV should also have experience in the pharmacovigilance system management, performance of examinations or have access to such examinations in the fields of medicines, pharmaceutical sciences, epidemiology and biostatics. The QPPV should reside and work in one of the EAEU states. The QPPV can provide services to more than one MA holder if he/she is capable of performing all pharmacovigilance obligations in this respect.

Currently no transition period is envisaged in the PV Regulation.

Other pharmaceutical regulatory changes including in relation to the registration of products are due to be introduced by the EAEU and are still technically due to come into effect on 1 January 2016 due to the provision in the Treaty on the establishment of the EAEU and the Agreement on Common Principles and Rules for the Treatment of medicinal preparations within the EAEU dated 23 December 2014, which provides for the establishment of common market of medicinal preparations within EAEU and free flow of medicinal preparations starting from 1 January 2016. However, unlike for the PV Regulation, the authorities have not yet published a decision in respect of the timing for the adoption of other pharmaceutical regulatory changes.

Europe

Notice from the Commission on aspects of the application of Articles 3, 5 and 7 of Regulation (EC) N° 141/2000 on Orphan Medicinal Products launched for public consultation

On 16 November 2015, the European Commission launched a three-month consultation for its draft notice providing a non-legally binding interpretation of the application of Articles 3 (criteria for designation), 5 (procedures for designation and removal from the register) and 7 (Union marketing authorisation) of Regulation (EC) N° 141/2000 on Orphan Medicinal Products. The notice is intended to replace the Commission’s Communication on Regulation (EC) N° 141/2000 (2003/C178/02) in order to “streamline” available guidance and to adapt the content of the current Communication to reflect evolving science. Prior to public consultation, the draft notice was submitted to the Member States and the European Medicines Agency (EMA), and their comments are reflected in the consultation paper.

The Consultation focuses on five key topics:

  1. Clarification of the definition of “significant clinical benefit”

The proposal aims to further clarify how sponsors need to demonstrate significant clinical benefit in light of the experience gained over the years. It also addresses the need to justify in which cases a new pharmaceutical form represents a significant clinical benefit in order to avoid delays in generic entry. Among others, the paper puts forward the idea of removing the possibility of claiming significant clinical benefit based on a potential increased supply. Some Member States believe that medicinal products prepared in hospitals should also be considered for the assessment of significant clinical benefits.

  1. Encouraging the development of orphan medicinal products for communicable diseases (e.g., Ebola)

In the past, the European Commission has refused orphan designations for products intended to treat conditions that did not arise in the EU. However, the Ebola crisis showed that, although a condition may not prevail either in Europe or to the extent required to meet the orphan drug criteria, it can nevertheless become a serious public health threat. Therefore, it is suggested that the incentives offered by the Orphan Drug Regulation should be provided to aid the development of medicines with zero prevalence in Europe.

  1. Simplifying the procedure for the re-assessment of orphan drug criteria when two authorisation application procedures are pending in parallel for two orphan drugs

When two marketing authorisation applications for orphan drugs are conducted in parallel (i.e., with a difference of not more than one or two months), it may prove difficult for an applicant to demonstrate significant clinical benefits over the other product, which has only just received a positive opinion from the Committee for Medicinal Products for Human Use. In such a case, it is proposed that the sponsor be exempted from the requirement to prove significant clinical benefit. This is, however, without prejudice to Article 8 (3) (c) of the Orphan Drug Regulation, which requires establishing clinical superiority over an already approved similar orphan medicinal product prior to applying an exception to the market exclusivity of the first approved orphan drug.

  1. Introducing the re-assessment of the orphan criteria for a new subset of the condition when a sponsor extends the use of its product after marketing authorisation

This topic is related to the evolving area of personalised medicine and the increasing trend of issuing orphan drugs for the treatment of subpopulations of patients. Extensions of orphan drug authorisations are still being encouraged but the extension applications would only be accepted in the event that new indications are of significant clinical benefit over existing therapies.

  1. Clarification on processing the transfer of orphan drug designations between sponsors

Under the new proposals, it would no longer be possible to transfer an orphan drug designation from a third party to a sponsor who has already obtained an orphan drug marketing authorisation for another pharmaceutical form of the same active substance and for the same condition. The rationale given for these proposals is the delays experienced, until now, in the entry of generics.

EMA publishes good practice guide on medication errors

On 27 November 2015, the EMA published a good practice guide on medication errors and launched a webpage with information on the Agency’s recommendations to prevent medication errors for certain medicines.

The new good practice guide complements the Good Pharmacovigilance Practices (GVP) guidelines. It consists of two parts:

  • Part 1 sets forth how adverse reactions caused by medication errors should be recorded, coded, reported and assessed.
  • Part 2 contains guidance on key principles governing risk management planning in relation to medication errors.

The guidance primarily focuses on medication errors associated with suspected adverse reactions. However, EU GVP requires marketing authorisation holders to summarise information on medication errors (regardless of whether or not such errors are associated with adverse reactions in periodic safety update reports) and to reflect the knowledge of the risk of medication errors in risk management plans. The guidance also discusses collaboration with national patient safety organisations and any other authorities or organisations responsible for patient safety incident reporting and learning systems in EU Member States.

The guidance issued by the EMA must be placed against a background of wider efforts to avoid medication errors. In 2004, a world alliance for patient safety was created under WHO’s umbrella and leadership, with the aim of improving the safety of healthcare in member countries by developing, among others, global standards and norms for patient safety, and encouraging research in the field of patient safety. In the EU, the Council adopted a Recommendation (2009/C151/01) in 2009 encouraging Member States to: prioritise patient safety in public health policies; establish a competent authority for patient safety; and establish “blame-free” reporting and learning systems, among other measures.

Meanwhile, many Member States have included patient safety as a priority in public health policies and have established a competent authority to oversee such matters. Separate reporting and learning systems have also been set up. However, only a small number of reporting and learning systems have been found to be fully compliant. The status of the implementation is further described in the European Commission’s second report on patient safety of 19 June 2014 (COM (2014) 3 71).

New EFSA Guidance on the assessment of Foods for Special Medical Purposes

On 26 November 2015, the European Food Safety Authority (EFSA) published the scientific and technical guidance on Foods for Special Medical Purposes (“FSMPs”) in the context of Article 3 of Regulation (EU) N° 609/2013, of 12 June 2013, of the Parliament and the Council on food intended for infants and young children, food for special medical purposes and total diet replacement for weight control (the “FSG Regulation”).

The European Commission had requested EFSA to provide scientific and technical guidance on FSMPs to ensure a uniform implementation of the FSG Regulation across the European Union, which will enter into force on 20 July 2016 (with the exception of certain provisions that have already entered into force). More precisely, this guidance specifies the procedure to be followed to decide whether a food falls within the scope of the FSG Regulation and to which category of food covered by the FSG Regulation a given food belongs (Art. 3 of the FSG Regulation).

This guidance is to assist in the preparation and presentation of well-structured dossiers for food products notified as FSMPs. It presents a common format for the organisation of information and outlines:

  • the information and scientific data which may be included in the dossier; and
  • the key issues which should be addressed in the dossier for EFSA to advise on different aspects that the Commission may consider when taking decisions pursuant to Article 3 of the FSG Regulation, under the proposed use(s).

It is worth clarifying that the objective of this guidance is not to specify the requirements which specific food products should fulfil in order to be classified as FSMP, but rather to guide on the type of information that will be evaluated by EFSA in order to provide its advice to the Commission.

Finally, it should be pointed out that this guidance will be kept under review and will be further amended and updated as appropriate in light of experience gained from the scientific assessment of dossiers for specific food products notified as FSMPs, and in light of future Community guidelines and legislation.

Changes to the Eucomed Code of Business Practice

A harmonised MedTech Europe Code of Business Practice is to be adopted by Eucomed and European Diagnostic Manufacturers Association (EDMA) members, as part of the move to formally establish MedTech Europe as the combined European MedTech industry association.

Eucomed and EDMA members voted to adopt a combined code on 2 December 2015, and the new code will become binding for EDMA and Eucomed corporate members by 1 January 2017.

Importantly, new provisions have been introduced to phase out direct sponsorship of healthcare professionals to conferences. These provisions must be implemented by corporate members by 1 January 2018, with national associations having an extension until 1 January 2020.

The UK's national association, the Association of British Healthcare Industries (ABHI), has welcomed the new code. Andrew Davies, Director of Market Access at the ABHI said "It is crucial we continually appraise and ensure our Code maintains the high ethical and professional standards expected of our industry."

Further details on the new MedTech Europe Code can be found here.

Global harmonisation of combination product regulations

In an article recently published in Clinica Medtech Intelligence, Roberto Cursano of the Rome office and Neil O’ Flaherty of the Washington office compare the EU and US regulatory frameworks for combination products focusing on the definition and regulatory status of such products and discussing the challenges of global regulatory harmonisation in this area.        

Belgium

Pharma rebates on the competition law radar

The UK’s national competition regulator, the Competition and Markets Authority (CMA), announced on 2 December 2015 that it is investigating a suspected abuse of dominance relating to discounts offered for a pharmaceutical product. Neither the product nor the company have yet been named, and details released by the CMA are very limited.

The CMA estimates that it will take until May 2016 to carry out its initial investigation, after which it will decide whether to proceed with or close the investigation.

In June of this year, the CMA closed a previous investigation into a suspected loyalty-inducing discount scheme on administrative grounds. The CMA did not conclude that competition law had not been violated, but stated that pursuing the case was not a priority and that any further investigation would have had limited, if any, impact on consumer welfare.

Competition law prohibits companies that have a “dominant position” (generally assumed as having a market share of over 40%, but this can be lower) from offering loyalty-inducing discounts or rebates to customers, as this can exclude smaller firms from competing fairly in the market. This in turn can dampen innovation and ultimately harm consumers. Chip-maker Intel received a staggering fine of EUR1.06 billion from the European Commission for such behaviour.

These cases demonstrate that rebate schemes offered by companies with dominant positions are increasingly receiving attention from regulators, and that regulators are now also targeting such conduct in the pharmaceutical sector. This could be particularly problematic for pharmaceutical companies, owing to the very narrow market definitions that the European Commission and national competition authorities typically apply to pharmaceutical products. Such a limited definition means that most companies are likely to be found dominant in at least one, if not many, products. Discounting is also common practice in the pharmaceutical industry.

It will be interesting to see whether in this case and future rebate cases the CMA will follow the European Court of Justice’s lead from the recent Post Danmark II case, or if it will use the pure economic analysis suggested by the European Commission’s Enforcement Priorities Guidance.

This guidance sets out what is known as the “as-efficient-competitor” test. If smaller rivals can match a dominant company’s rebate scheme without having to sell at a loss—thereby taking account of the small rival’s much lower volume of sales (known as the “contestable share”)—then this will be seen as aggressive pricing competition and should be encouraged, not investigated. If, however, the smaller rival could only match the dominant company’s rebate by selling at a loss, this would be deemed a competition law problem.

While in Post Danmark II the Court did recognise the “as-efficient-competitor” test as a tool to help with its analysis, it did not choose to apply the test, leaving it to stand as mere guidance rather than hard law. Instead, it confirmed three categories of rebate defined in previous case law:

  • Exclusivity or near-exclusivity rebates, which are generally presumed illegal
  • Quantity-related rebates, which are reflective of cost savings for each individual customer (a near-impossible category to satisfy)
  • Third-category rebate schemes, which must be analysed using the “in the round” test (based primarily on economics, but also takes other elements into account).

For dominant companies, in practice only third-category rebates will ever be permitted and a full analysis of the potential effects will be necessary for a company to be completely satisfied that what they offer is in compliance with competition law.

As a leading competition authority in Europe, the CMA’s enforcement actions are often followed by other competition regulators, meaning that the outcome of this CMA investigation can have serious implications for pharmaceutical companies’ pricing practices throughout Europe. As we saw in Intel, abusing a dominant position through exclusionary rebate schemes can attract high fines. It remains to be seen what, if any, enforcement action will be taken in this latest investigation.

Germany

New early draft legislation to curb online-only doctor consultations by prohibiting pharmacies from accepting their prescriptions

A new early draft legislative bill by the German Ministry of Health (primarily aimed at adapting existing German law to the EU clinical trial regulation N° 536/2014) provides that medicinal products may only be dispensed upon prescription if, prior to such prescription, “personal contact” has been made between the prescribing doctor and the patient.

Contents of the current draft

The current draft bill (Entwurf eines Vierten Gesetzes zur Änderung arzneimittelrechtlicher und anderer Vorschriften), dated 25 November 2015, contains two new provisions:

  • First, the German Drug Act shall be amended to require that medicinal products for human use may only be dispensed if “prior to the prescription a personal contact has occurred between the doctor or dentist, and the person for whom the medicinal product is prescribed.” The draft authorises the German Ministry of Health to regulate in more detail the requirements for the necessary “personal contact.” However, the draft allows for exceptions to this rule in certain justified circumstances, particularly if:
    • (1) the patient is known to the prescribing doctor or dentist from prior “direct contact”; and
    • (2) the prescription is merely a repeat or fill-up prescription. (In fact, for doctors who have had prior face-to-face contact with their patients, the so-called E-Health Act, a different bill recently passed by the German Parliament on 4 December, foresees regulation specifically allowingonline video consultations to complement, and follow up on, the principal face-to-face consultations in the doctor’s office.)
  • Secondly, the German Pharmacy Operations Regulation shall be amended to prohibit pharmacists from dispensing Rx medicinal products if the pharmacist can determine that the prescription does not meet the aforementioned requirement of prior personal contact having been made between the prescribing doctor and the patient.

Government intent is clear, the legal implementation is not

With the draft bill, the German government strives to deliver on its promise in its coalition agreement to require direct doctor-patient contact to be made for initial prescriptions. The coalition agreement clarifies that “online consultations” shall not be deemed to have met this requirement, associating patient health risks with online-only consultations.

While the government’s intent may be clear, the current draft bill is less specific, leaving the important implementation of the “personal contact” requirement to the subsequent government regulation. Furthermore, the actual curbing effect on online-only doctor consultation services may be initially limited if patients try to redeem their prescriptions through online pharmacies based in other EU Member States (even though the current draft bill does not appear to provide for such loophole). As for the legislative process ahead, in particular, pharmacies may try to oppose the current draft bill so as to avoid an additional prescription checking requirement, as well as the potential legal and financial liability resulting from accepting a prescription that may have been issued without establishing the required “personal contact” between doctor and patient.

Conclusion

The current draft bill is still in its very early stages and the presented provisions on prescription requirements may still undergo substantial changes. Nonetheless, participants in the healthcare market should be aware that the legal landscape for online-only (i.e., without initial face-to-face consultation) doctor consultation services in Germany, particularly those operating exclusively from other EU Member States, is likely to become increasingly restrictive over the coming year. Hence, they must adjust their strategic planning accordingly.

Italy

The National Anti-Corruption Authority publishes the 2015 Update to the National Anti-Corruption Plan

On 16 November 2015, the new National Anti-Corruption Plan (the “Plan”), adopted by the National Anti-Corruption Authority, has been published in the Official Gazette of the Italian Republic.

In the Plan, a whole chapter is dedicated to healthcare, providing public entities (e.g., public and university hospitals and local health authorities) with guidelines for the implementation of their anti-corruption plans and for the adoption of further measures designed to strengthen risk management and prevent and combat possible corruption.

The purpose of the Plan is to increase transparency in the healthcare sector and to exert further control over financial relationships between public and private entities in order to avoid possible conflict of interest situations. Among the various measures introduced by the Plan, healthcare professionals and employees involved in the management of public resources and decision-making processes are required to disclose to their public employers, through specific declarations, their interactions with pharmaceutical and medical devices companies, including participation in congresses and events sponsored by the same companies which would not otherwise require the authorisation of the relevant employers.

Entry into force of Decree on Patent Box

According to the Decree on the Patent Box (the “Decree”), entered into force on 21 October 2015, entrepreneurs and public and private companies and entities are entitled to a reduced taxation on incomes deriving from the exploitation of intellectual properties, industrial patents, trade marks, formulae and processes, as well as information gained in the industrial, commercial or scientific fields, which are legally enforceable.

The tax benefit, which consists of a deduction equal to 30 percent for 2015, 40 percent for 2016 and 50 percent for 2017 from the incomes deriving from the intangibles indicated above, is aimed at rendering the Italian market more attractive for national and foreign long-term investments as it encourages the placement in Italy of intangibles currently held abroad, ensures the management of such intangibles occurs in Italy (thereby avoiding their relocation abroad) and promotes investment in research and development activities.

The provisions of the Decree are in line with fiscal models already adopted by other EU Member States such as Belgium, France, the UK, Luxemburg, the Netherlands and Spain, and also comply with the OECD’s principles on the matter of tax treatment of incomes deriving from the exploitation of intellectual property rights.

The Netherlands

Dutch Court overrules preferential policy of Health Insurer to prescribe cheaper generic drug

The Dutch Court has ruled that it is not the health insurance company, but primarily the physician, who determines whether there is a medical necessity for the provision of and reimbursement for a particular drug to an insurance policyholder. If a health insurance company has any doubts regarding, or disagrees with, a physician’s determination, the policyholder should discuss this with the relevant physician or request a second opinion. The judgment was given by the district court of Zeeland-West-Brabant in an action brought by a patient against his health insurance company (CZ) with respect to the reimbursement of the drug Lipitor (Atorvastatin). The court ruled that, based on a medical necessity statement of the policyholder’s cardiologist, CZ is required to retroactively reimburse the client for the medication.

The specific circumstances were as follows:

  • The patient had been taking a cholesterol synthesis inhibitor prescribed by his cardiologist for more than 10 years due to heart disease and high cholesterol levels. In 2012 he was informed that CZ would no longer reimburse the drug, known as Lipitor, based on the company’s preferential policy. CZ would only reimburse a cheaper, generic drug produced by the same manufacturer.
  • Although the cheaper drug was considered to contain the same active substances as Lipitor, after two weeks of taking this the patient suffered from various side effects, such as muscle aches and painful legs. According to his cardiologist, these health complaints were caused by the use of the cheaper replacement. After a few months the cardiologist decided to prescribe Lipitor again to prevent further health issues.
  • A medical necessity statement was made by the cardiologist in which he explained why it was necessary to deviate from the preferential policy of the health insurance company.

Nevertheless, CZ refused to reimburse the policyholder for the drug Lipitor due to its preferential policy. In a letter to the patient, the health insurance company stated that the active substances and auxiliary agents in Lipitor and the replacement were identical, and that they only differed in name and packing.

The district court judge rejected the defences of CZ and awarded the claim of the patient for breach of contract. According to the “Summary of Product Characteristics” of the Medicines Evaluation Board, the auxiliary agents in both drugs were different. Furthermore, the judge clarified that a medical necessity can only be determined by a physician. CZ had not contacted the cardiologist of the patient to discuss his medical necessity statement nor had CZ requested a second opinion. The court ruled that the recommended drug should not have been denied without any prior consultation.

The Dutch healthcare system is dominated by a handful of very large insurance companies that, on occasion, issue rigid decisions on what is to be reimbursed or not. This court decision clarifies that, ultimately, it remains to be the physician who is responsible for both the patient’s health and the medication to be prescribed.

European Court of Justice to rule on the scope of the reduced VAT rate for “package deals”

The European Court of Justice (ECJ) recently received a request for a preliminary ruling with regard to the application of a reduced VAT rate in a case that concerns a so-called “package deal.” Although this particular case concerns equestrian sports, the outcome of this case may also have an implication for products of manufacturers of medical devices that are sold as part of the so-called “package deals”. In such a deal, manufacturers of medical devices sell their products, i.e., the medical devices, in combination with other goods and/or services.

Because hospitals are, in principle, not entitled to deduct the input VAT charged to them by their suppliers, the VAT charged becomes a cost. Therefore hospitals, and also manufacturers of medical devices, are keen on the application of a reduced VAT rate, since this minimises the VAT costs for the hospital.

In various jurisdictions, the supply or lease of medical devices as such can be taxed at the reduced VAT rate. However, the supply of other (capital) goods and/or additional services in principle is taxable at the general VAT rate. Depending on the facts and circumstances, combining such medical devices, other (capital) goods and/or services into a package deal can result in the reduced VAT rate being applicable on the package as a whole.

The referring national Czech Court assumes that the application of the reduced VAT rate for “package deals” depends on whether or not the different elements of the deal must be considered to have “equal status.” the question has been raised as to how it can be determined whether various elements of a package deal have an “equal status” or whether a relationship of a principal and an ancillary element can be recognised between the various supplies. Furthermore, the European Court of Justice has been asked if, in case of “equal elements”, the low VAT rate can still be applied on the package as a whole.

We note that the questions of the referring court presuppose that “equal status” is a relevant factor in respect of the applicable VAT rate for package deals. At this point in time, this is not at all clear. Therefore, it will be firstly interesting to see whether the questions raised will be answered by the ECJ in the first place. If the ECJ will answer the questions, it will also be interesting to learn how the applicable VAT rate can be determined in the case of “package deals”.

Although the case is pending and a ruling is not be expected within the next 14-18 months, manufacturers of medical devices are recommended to closely monitor package deals sold in the meantime, so that they can react promptly to any ECJ ruling.

Saudi Arabia

New requirement for health insurance policy for Saudi’s business travellers, including expats

In late November of this year, the Saudi Council of Cooperative Health Insurance (the “Council”) announced a new requirement for holding a health insurance policy for the Kingdom’s visitors, including expat visitors, for business travel. This was made in response to the Council of Ministers’ decision (issued in March 2014) to include health insurance policy as a prerequisite for visit visa applications, as well as transit visa applications.

The Council has already licensed seven cooperative health insurance companies to carry out electronic sales of health insurance policies that meet the Council’s requirements. The maximum coverage under these health insurance policies is SAR100,000. Visitors to Hajj, Umrah for diplomatic reasons and state guests are all exempt from such requirements.

The minimum coverage under the required policies will include all medical check-ups, diagnosis, treatments, medicines, hospitalisation expenses, pregnancy and delivery cases, dental and gum diseases, dental fillings, root canals, extractions of pus, emergency renal dialysis cases, medical evacuation within the Kingdom and abroad, and injuries due to traffic accidents. The expenses also cover preparation and repatriation of the insured visitor’s body to his or her home country.

This step is part of a wider trend in the GCC to introduce compulsory health insurance.

Spain

The Spanish Supreme Court supports the allegations made by the pharmaceutical sector regarding the Reference Price System

In November, the Spanish Supreme Court released a new judgment that led the Spanish Ministry of Health, Social Services, and Equality to adopt a more down-to-earth approach to the Reference Price System of medicinal products in Spain.

Specifically, upholding the allegations made by the Business Association of the Pharmaceutical Industry of Spain (“Farmaindustria”), the ruling repealed the Second Additional Provision of Royal Decree 177/2014 of March 21, on the reference pricing system and homogeneous groups of medicinal products in the National Health System, and certain information systems in connection with the reimbursement and pricing of medicines and medical devices.

The referred provision had been deemed controversial by companies and organisations in the pharmaceutical industry, as it established the obligation of laboratories to report when a medicine is sold at a lower price in any other country of the European Union. This in practice means that in no case should a medicine be sold in Spain at a higher price than in any other EU Member States.

The main legal basis upon which the High Court repealed the this provision is the fact that Spanish Law 29/2006—currently Royal Legislative Decree 1/2015, which approved the revised text of the Law—on Guarantees and Rational Use of Medicines and Medical Devices, contains no mention of such an exceptional approach, in so far as it only allows prices to be reviewed in specific circumstances (review of null and void acts, or when there are therapeutic, economic, technical or medical changes, etc.). The Interministerial Commission for Medicine Prices is forced to set prices reasonably and according to objective criteria.

Therefore, the regime imposed by the contested additional provision exceeds the scope of its role in developing the aforementioned Law, as it establishes a system for fixing and revising the reference prices exclusively in light of a lower price in a Member State of the EU, which is not contemplated at all under the provisions of the law. In any event, the adoption of a resolution cannot rely exclusively on a fact that the law does not provide, particularly taking into account that it is required to be reasonable and objective.

The judgment concludes that “it is arithmetically inadmissible to transfer the industrial price at which the presentation is sold in another European Union country to our system without considering all the circumstances and specificities of the various countries involved, and without even contemplating parameters such as per capita income, the nature of the relevant public health system, or potential currency fluctuations. These aspects are far from being trivial”. As a result, the Spanish Supreme Court fully upheld the allegations made by Farmaindustria in its appeal.

Changes in reference prices and the dispensation of medicinal products will enter into force

The Spanish Congress has approved Law 48/2015 of 29 October, on the Budget (“Law 48/2015”), which amends Legislative Royal Decree 1/2015 of 24 July, approving the revised text of Law 29/2006 of 26 July, on Guarantees and Rational Use of Medicinal Products and Medical Devices (“LRD 1/2015”) and Royal Decree 177/2014 of 21 March, regulating the reference price system and the system of homogeneous groups of medicinal products in the National Health System as well ascertain information systems on reimbursement and prices of medicinal products and medical devices (“RD 177/2014”). These amendments will enter into force on 1 January 2016.

Regarding the amendments of RD 1/2015, the key articles involved are Articles 87.4 and 89.5. The new wording of these articles establishes that, when a medical prescription is issued for an active substance or under a commercial or brand name and there are several medicinal products available with the same price, the pharmacist will no longer be obliged to dispense the generic medicinal product. He or she will need to dispense the medicine with the lowest price, whether or not this is generic.

Article 4.6 of LRD 1/2015 has also been amended. The amendment removes the 10 percent limit established for the permitted discounts that distributors can apply to pharmacies in relation to medicinal products funded by the National Health System (Sistema Nacional de Salud or SNS) based on prompt payment or large volume orders. Furthermore, these discounts will now need to be registered every month by the marketing authorisation holders and distributors in an electronic system interconnected with the Ministry of Health. This electronic system has yet to be developed.

The amended Article 14.2 of LRD 1/2015 also establishes the obligation to identify all generic medicinal products with the acronym “EFG” (Equivalente Farmacéutico Genérico) to indicate generics.

In addition, the Article 94.7 of LRD 1/2015 establishes that the funded SNS price shall be lower than or equal to the industrial price when dispensed outside the SNS. The previous Article 94.7 stated that the funded price shall always be lower than the industrial price dispensed outside the SNS.

Likewise, the new wording of Article 94.7 of LRD 1/2015 establishes that the provision of the required information to cash in the reimbursement owed by pharmacies to pharmaceutical laboratories and distribution entities for the medicinal products dispensed outside of the Spanish SNS shall be carried out by means of a system, which will be determined later on.

Furthermore, the new Article 102.2 of LRD 1/2015 establishes that only outpatient pharmacy dispensations by medical prescription or pharmacies’ dispensation orders will be subject to payment by the user. The current wording establishes that pharmaceutical products dispensed to the patient by health institutions are subject to payment by the user.

Finally, Law 48/2015 has updated some of the taxes of Group VII of “Certifications and Reports” and Group IX of “Medicinal Products for Veterinary Use” established in RD 1/2015.

Law 48/2015 amends Article 5.1 of RD 177/2014. According to the new wording, the report of the government’s Delegate Commission on Economic Affairs (Comisión Delegada del Gobierno para Asuntos Económicos), which was made before the publication of the Ministry Order on reference price updates, shall explicitly include the methodology indicated by the Order for the preparation of the reference prices and, in particular, shall include the criteria to be applied to the prices for special medicinal products, as provided in Article 4.4 of RD 177/2014; which are:

  1. medicinal products with special active ingredient doses;
  2. medicinal products for severe illnesses; or
  3. medicinal products whose prices have been reviewed during the last two years immediately before 1 April by the Interministerial Committee on Medicinal Product Prices (Comisión Interministerial de Precios de los Medicamentos) because of their lack of profitability.

UAE

UAE’s Pearl Initiative will develop an integrity index with Siemens funding

The Pearl Initiative is a GCC-wide business initiative aimed at enhancing transparency and anti-corruption practices in the region. It was established under the patronage of Dr. Sheikh Sultan Bin Mohammed Al Qasimi, ruler of Sharjah, in 2011 and operates in cooperation with the United Nations Office for Partnerships. At the end of October 2015, the Pearl Initiative won a USD880,000 grant from the Siemens Integrity Initiative for a new regional programme aimed at increasing corporate transparency and fighting corruption. As part of the programme, the initiative will develop an integrity index that can be used by corporates and government institutions to help evaluate company practices when awarding contracts.

United Kingdom

High Court holds re-branding by parallel importer to infringe Flynn Pharma’s trade mark

The High Court has ruled on issues of trade mark infringement and exhaustion, in relation to pharmaceutical parallel imports, in the recent case of Flynn Pharma Ltd v Drugsrus Ltd and another [2015] EWHC 2759.

The facts

The dispute related to the importation of phenytoin sodium (an anti-epileptic drug). The claimant (Flynn Pharma) entered into an agreement with Pfizer (the originator of the now off-patented drug, which it branded EPANUTIN) in 2012 to acquire marketing authorisation to re-brand and sell the drug in the UK, carrying the FLYNN name and logo (a registered CTM and UK trade mark for pharmaceutical substances).

The defendants (Drugsrus and Tenelol) sought to import the same substance into the UK, having purchased it in other Member States under the original EPANUTIN brand name. On import, the defendants planned to affix “Phenytoin Sodium Flynn” to the packaging, being the name used for the product in the UK, which had the benefit of matching prescriptions being written by doctors (UK doctors do not write prescriptions specifying EPANUTIN anymore).

On being notified of the defendants’ intention, the claimant issued proceedings for trade mark infringement. In their defence, the defendants asserted that the affixation was merely descriptive and did not constitute “trade mark use”. Furthermore, they claimed that they had fulfilled the conditions for a parallel importer to avoid trade mark infringement set out in Bristol-Myers Squibb v Paranova AS, joined cases C-427/93, C-429/93 and C-436/93 (the “BMS criteria”), having notified the claimant in advance. They argued that the claimant’s proceedings amounted to a disguised restriction on trade.

The decision

The High Court ruled that the defendants’ proposed use was “trade mark use”. Use of the word FLYNN was not associated with medicines, and it indicated origin rather than being merely descriptive.

Furthermore, even though the re-branding was necessary in order for the defendants to compete in the UK market, the High Court held that the BMS criteria were not fulfilled. The defendants needed to show that the product it sought to import had been placed on the market in the EEA by or with the consent of the same entity that was trying to prevent its import. While the claimant was responsible for placing “Phenytoin Sodium Flynn” on the market in the UK, it was Pfizer that was responsible for placing EPANUTIN on the market in other Member States.

The judgment contains a thorough and interesting analysis of whether the contractual arrangements between Pfizer and the claimant rendered these parties the same entity for the purpose of exhaustion of trade mark rights. Ultimately, the High Court held that they were separate entities for this purpose because none of the agreements granted the claimant control over Pfizer’s EPANUTIN product quality or trade marks. Consequently, the claimant’s trade mark rights were not exhausted under section 11(2)(b) of the Trade Marks Act 1994, and the claimant was entitled to prevent the re-labelling of the defendants’ parallel imports.

Hospitals, the National Health Service and Competition Law in the UK

Brussels’ Bill Bachelor and London’s Victoria Yuan published “Hospitals, the National Health Service and Competition Law in the UK” in the latest issue of “Antitrust Health Care Chronicle”, the publication of the Health Care and Pharmaceuticals Committee of the Antitrust Section of the American Bar Association. The article provides an overview of the application of competition law to the UK’s National Health Service and summarises the first enforcement efforts by UK healthcare regulator Monitor.

Modern Slavery Act guidance published

On 29 October 2015, the UK Government published its guidance on the transparency in supply chains provision in section 54 of the Modern Slavery Act 2015: "Transparency in Supply Chains etc. A practical guide for organisations". Transitional provisions have been introduced to give businesses sufficient time to prepare a "credible and accurate" slavery and human trafficking statement and confirm that organisations with a financial year ending on or after 31 March 2016 will be the first required to comply. As well as setting out the timing for implementation, the Guidance also sets out details of which organisations are required to comply, where the statement must be published and gives content suggestions.

Actions that organisations should be taking now include:

  • looking at the group structure and determining which entities in the group are caught by the legislation;
  • reviewing what steps the organisation currently takes within its own business and through the supply chain to ensure slavery and human trafficking does not take place;
  • considering whether there are further steps the organisation wants to take so that they can be included in the first statement;
  • ensuring all supply and other contracts adequately deal with these issues; and
  • thinking about the contents of the statement, where it will be published and the process for getting its approval within the required timescale.

Changes to ABPI Code agreed

The Association of the British Pharmaceutical Industry (ABPI) has agreed upon amendments to amend the ABPI Code of Practice for the Pharmaceutical Industry and the Prescription Medicines Code of Practice Authority (PMCPA) Constitution and Procedure.

The changes to the ABPI Code will into force on 1 January 2016 but, during the period 1 January to 30 April, no material or activity will be regarded as being in breach if it fails to comply with its provisions only because of newly introduced requirements.

The ABPI Code 2016 has not yet been published.