We bring together life sciences experts from England and Belgium who discuss regulatory changes, potential conflicts of interest as the industry evolves and emerging markets.
Covington & Burling LLP
Who’s Who Legal: What do you consider to be the most significant regulatory change that has taken place this year, or due to take place? How are these changes affecting your life sciences practice? How is the level of regulation impacting foreign investment interest?
Peter Bogaert: The significant progress made by the EU on the adoption of two of the three components of the pharmaceutical package is a major development. The pharmacovigilance rules were published on the last day of the year, and a first reading agreement was reached between the Parliament, Council and Commission on the falsified medicines Directive. Not surprisingly, the last part of the pharmaceutical package, dealing with information to patients, has proven to be the most difficult and controversial.
The new pieces of legislation not only contain important new regulatory principles, but they also illustrate a trend that has become clear over the last decade. The regulatory system is considering approved medicines less as commercial assets owned by pharmaceutical companies, but more as public health tools that are co-managed by regulators in the public interest. The new pharmacovigilance rules, for instance, enable authorities to impose post-authorisation safety studies outside the approved label as well as post-authorisation efficacy studies, thus steering the development of the product. In addition, the health and consumer division of the European Commission now has responsibility for pharmaceuticals and the role of patients and patient associations has increased in general in the regulatory system.
The new legislation will require a stronger focus on regulatory compliance and controls and will also further increase interaction with authorities. The rules offer additional opportunities for constructive collaboration and building of trust, especially in an environment where purchasers and payers are increasingly looking for additional value in the supply chain. They will also result in an augmentation of administrative procedures that have important legal aspects and will thus make the pharmaceutical legal practice more complex and strategic in nature.
The new rules will probably not have a significant direct impact on foreign investment interest. Although they may increase the uncertainty of the regulatory and commercial environment for companies, the main elements affecting investment interest still are the constant pressure on prices and reimbursement (illustrated by the new pricing rules in Germany) and the remaining fragmentation of the European market because of the national nature of these measures.
Who’s Who Legal: As the life cycle of a number of big name patents are due to expire in the next few years it has been reported that a growing number of innovator companies are operating corporate arms in the generics industry as well as the innovator market. Do you think there is a potential for a few big firms to unfairly dominate the markets? Do you think it is inevitable that eventually law firms act for both innovator and generic clients as the gap between the industries close?
Brian Cordery: Most of the larger innovative pharmaceutical companies now operate a generics division as well. This enables them to maximise their opportunities in this highly competitive field. In the UK, fewer and fewer law firms are choosing to act only for innovators. Most firms will take work from either side subject to legal and commercial conflicts. Several pharmaceutical companies prefer to have different representation for their innovative and generic divisions. Others prefer to have one firm acting on both sides of the debate. It is really a choice for the legal and commercial representatives within the pharmaceutical company. Over the next few years it is likely that even fewer firms will decline instructions from generics in the UK.
Peter Bogaert: It is to be expected that the generic sector will remain a highly competitive area, and will become even more competitive. The Pharmaceutical Sector Inquiry has clearly shown that important gains can be obtained from more competitive pricing in this sector.
Specific attention will, however, be needed to maintain adequate public health standards. Possible measures inspired by the sector inquiry to further stimulate the generic industry, such as the proposed automatic pricing and reimbursement, should not result in a laxer approach to quality, safety and efficacy.
Biosimilars will probably remain an exception to the general trend and will show more the characteristics of a “me-too”. Strong price competition is, however, possible, notwithstanding the high investment hurdle.
Finally, each law firm should determine its own approach in the changing environment. Some have traditionally had very mixed practices, while others have chosen a specific side, with various nuances in between.
Who’s Who Legal: Lawyers we spoke to noted that medical devices and biosimilars are gaining interest and attracting investment. Is this the case in your jurisdiction? What do you consider to be the emerging markets and products at the moment?
Peter Bogaert: Medical devices and biosimilars are indeed attracting a lot of attention. This fits in a broader trend towards diversification, moving away from marketing products to providing therapeutic solutions. The latter increasingly encompass a combination of medicines with medical devices and IVDs (such as for personalised medicine) as well as services.
Emerging markets will keep growing in importance. In addition to the well known examples of China, India, Latin America, Russia and Turkey, jurisdictions like Ukraine, South Africa, Egypt, Saudi Arabia, Indonesia, Thailand and others will come to the forefront.
Brian Cordery: I agree with Peter. A lot of attention is being devoted to medical devices and biosimilars. With regard to the latter, it seems likely that the traditional battle lines between innovator and generic will have to be re-drawn simply because of the significantly increased investment that will be required to market a “me-too” biosimilar.
In the next two to three years, the arena of Supplementary Protection Certificates is likely to receive a great deal of attention. The SPC Regime is supposed to provide a uniform landscape for the granting and enforcement of these rights across Europe. The present uncertain and divergent situation is unsatisfactory. The UK courts made no fewer than five references to the CJEU in 2010 and it is probable that more cases will be referred.