Law360 Article - U.S. and French Sunshine Laws Present Compliance Challenges for Manufacturers

In “From Sea to Shining Sea: French and US Sunshine Laws,” (Law360 subscription required), Reed Smith attorneys Elizabeth Carder-Thompson and Daniel Kadar discuss recent legislation from both sides of the Atlantic designed to increase the transparency of relationships between drug and medical device manufacturers on one hand and physicians and teaching hospitals on the other. While both the U.S. and French Sunshine Acts are intended to address the same general issue, there are several key differences between the two resulting from the respective environments in which they were passed. In addition to providing an overview of the legislation and its immediate effects, the article also discusses some of the compliance issues that have resulted from these laws, including determination of the extent to which non-U.S. headquartered entities or non-U.S. based physicians are subject to U.S. Sunshine Act requirements, and regulation of the amount, organization, and frequency of data disclosure required under the French Sunshine Act.

French Class Actions: How potentially dangerous will they be?

This post was written by Daniel Kadar

I.
Since the entry into force of the new Law on Consumer Protection 17 March 2014 – also known as “Hamon Law” – France now has its own version of a class action, different by many ways from its American counterpart.

To prevent any of what are considered as abuses on the Eastern side of the Atlantic, the French legislator has framed this legal action in several limits, which in turn seems to call in question the effectiveness of the mechanism.

II.
Pursuant to article L. 423-1 of French Consumer Code, officially recognised national consumer protection associations are now allowed to seek damages before civil courts, in order to obtain compensation for the individual and material losses suffered by consumers placed in a similar or identical situation. The harm must have its common cause in a breach by one or several same professionals of their legal or contractual obligations in the context of a sale of goods or provision of services, or when the harm derives from a breach of competition law.

Therefore, the French class action is restricted by four means:

  1. Only individuals can be provided with some compensation through this action since the Hamon Law, for the first time, also defined the consumer as a natural person acting for non-work-related purposes, excluding legal persons from its scope.
  2. Officially recognised associations of national dimension – only 15 to date – are granted an exclusive right to initiate the proceedings, which puts an important limitation to the role of legal counsels in this field, as opposed to the American class action.
  3. These associations can only seek to obtain damages to compensate losses resulting from material or financial damage suffered by the consumers. Such a limitation excludes moral harm or physical injuries, which may be of particularly great importance in many cases (sale of defective or spoiled goods, for instance). Punitive damages are also excluded so far.
  4. As its place in the French Consumer Code clearly indicates, the scope of this mechanism is limited to consumer claims. The legislator’s purpose here was to avoid class actions in sensitive areas, such as public health and environmental damage. However, the legislator has inserted an unusual provision according to which the exclusion of health and environmental damages shall be reconsidered within 30 months after passing the regulation. In fact, discussions have already started with professional health organisations.

III.
The procedure has been broken down in a three-step process:

  • A judgment must find that the conditions for admissibility are fulfilled, rule on the professional’s liability in relation to the individual cases presented by the association, define the concerned group of consumers, and determine which criteria consumers must meet in order to join the group of consumers to whom the professional is liable.
  • The adhesion of consumers to the class action is based on an “opt-in” system: it is subject to a positive expression of the victim’s will. To make the proceeding operational, the judgment must therefore order publicity measures intended for consumers most likely to belong to the group. The decision also states by which means consumers may join the group (by approaching the professional directly or the association), and in which delay (no less than two months and no more than six months after the publicity measures are taken).
  • Regarding the effective compensation of the consumers, the judgment must fix the timeframe within which the damages have to be paid by the professional and, in the event of a dispute over payment, the judge is required to give its decision in the same ruling.

When “the identity and the number of consumers having suffered harm are known” and “when these consumers have suffered the same loss, or loss of an identical value for a given service or over a given period of time or duration," a simplified procedure is provided, through which the judge may rule on the liability and may order the professional to compensate victims directly and individually, within a fixed delay.

Class actions related to anticompetitive practices suffer a last limitation, since a “follow on” rule is applied in those cases: professionals may only be held liable on the basis of a definitive decision made by competent national or EU authorities or jurisdictions.

Innovative, this class action surely is; its numerous safeguards appear, however, as important obstacles to its success to-date.

An extension to health-related litigation is to be monitored closely.

China's Medical Device Regulations Receive Notable Revisions

Significant Revisions to China's Regulations on the Supervision and Administration of Medical Devices (State Council Order No. 650)

China’s State Council released its new Administrative Regulation on the Supervision and Administration of Medical Devices March 7, 2014, which will be effective June 1, 2014 (the New Regulation).

The State Council Legislative Affairs Office worked more than six years revising the predecessor of the New Regulation (the Old Regulation), which had been effective since 2000. The revisions are intended to establish a more efficient and scientific regulatory regime for supervision and administration of medical devices. The New Regulation addresses research and development, clinical trials, product approvals, manufacturing, business operations, sales, and advertising. Generally, the New Regulation moderates the oversight of low-risk medical devices and strengthens the supervision on high-risk devices. The New Regulation, summarized in a full client alert written by Reed Smith attorneys Jay Yan, Gordon Schatz, Mao Rong, and Liu Yang, will have a significant impact on all medical device enterprises.

Revised Administrative Measures on Medical Device Quality – CFDA Seeks Comments by June 15

On May 15, CFDA released its Measures on the Supervision and Administration of the Quality of Medical Devices in Use for public comment. Under the measures, medical device operators will be required to establish a quality management system especially for Class III devices. Features of this proposed system cover the purchase of medical devices, an incoming stock inspection and recording system, an inbound and outbound management system, a daily maintenance and recording system, a quality traceability recording system, a management system for disposable medical devices, and a management system for contracts and technical documents for products. Comments are due to CFDA by June 15, 2014 at: 26 Xuanwumen West Street, Beijing, China 100053, and email: xuxy@sda.gov.cn. The proposal can be viewed here.

The French Sunshine Act: Towards simplification and new deadlines?

This post was written by Daniel Kadar

Similar to the U.S. Sunshine Act (as has been explored before on this blog), the French Sunshine Act (“Loi Bertrand”) made mandatory the publication of benefits (in kind or in cash) granted by pharmaceutical laboratories to health professionals, as soon as they reach a certain amount.

An implementing decree published 21 May 2013 has set out in detail its conditions, quickly followed, in December, by a second regulatory text regarding the unique website where those benefits are supposed to be published.

Nevertheless, this body of rules might be amended again soon, with a new draft order released recently by the Ministry of Social Affairs and Healthcare. In view of the modifications it proposes, the regulation of these issues seems to be moving in three different directions:

  1. Simplification in both the form and substance of the applicable regulation, which concerns, essentially, the health care providers (HCPs) whose agreement(s) with a health care company have to be published: the new text shall simply refer to the current article L.1453-1 of the French Public Health Code, which provides a list substantially similar to the existing one. It also plans to remove some pieces of the information the laboratories are required to make public (qualification, title, college register number, event’s schedule…). In other words, same substance but less detail. It is important to keep in mind that the amount of the payments made to HCPs through these agreements does not need to be disclosed under French law.
  2. Regarding the website where the declaration of interests should be made, the Sunshine Act sets forth that personal data of the HCPs (data that would allow, according to EU regulation, the identification of HCPs either directly or indirectly) is to be protected against indexing on search engines. The draft order reduces the scope of such protection, maintaining only protections of the “directly identifying data” against this type of indexing.
  3. Last but not least, the main purpose of the draft is obviously to change the schedule initially set up to declare the benefits and the conventions: it removes the existing 15-day deadline after the signature of the convention, and allows the advent of a biannual schedule. The draft order goes even further by postponing the declarations regarding the benefits granted in 2012 and 2013 to August 2015, and its publication on the unique website to October 2015. In the meantime, rules are drafted to organize a publication on the personal websites of the companies.

Setting up the new transparency requirements in France obviously takes more time than expected…

Do You Know Where Your Pharmaceuticals Are From? Navigating the "Country of Origin" Question for Pharmaceutical Products

Drug and medical device manufacturers are often faced with difficult — and sometimes unexpected — challenges in sorting out the country of origin for their products, which are often sourced, processed and manufactured in multiple countries.

One would think it would be easy to answer the question, “What is a pharmaceutical product’s ‘country of origin’?” Unfortunately, as Jeffrey Orenstein and Lorraine Campos point out in “Origin of the Pieces: How to Determine a Pharmaceutical Product’s ‘Country of Origin,’” the answer to this question is not as simple as many would think – and the correct answer can depend on who is asking. Jeff and Lorraine’s article is published in the Spring 2014 edition of the Public Contract Law Journal.

UK Government Addresses Lack of Regulation and Legislation in Cosmetics Industry

In April 2013, an independent review of the regulation of cosmetic interventions in the UK was published, highlighting an insufficient amount of regulation in this industry by the UK government, due in part to the rapid growth of cosmetic procedures in the United Kingdom. Cases such as unauthorized (and potentially defective) materials being used in procedures has forced the UK government to acknowledge that the level of regulation of cosmetic procedures must increase. The UK government responded to this review in February 2014 by unveiling a set of actions that will be taken to address the current dearth of cosmetic regulation and legislation, and ensure that the quality of care is improved. Among these actions are the introduction of a code of conduct, an ombudsman, and accredited qualification of practitioners. Some of these actions have already been initiated.

For more information on the government’s response and proposed changes, read the full alert written by Reed Smith lawyers John Wilkinson, Nicola Maguire, and Adam Lewington, and trainee Daryl Cue.

A Comparison of the U.S. and French Sunshine Reporting Requirements

This past year both the U.S. and France enacted substantial new reporting and disclosure requirements under their respective Sunshine Acts, which were designed to increase the transparency of the financial relationships between manufacturers and health care professionals and to allow patients to make more informed decisions regarding their health treatments. The U.S. and French Sunshine Acts are not identical, however, as indicated in this alert written by Reed Smith lawyers Elizabeth Carder-Thompson and Daniel Kadar. Their side-by-side review illustrates that the scope and focus of transparency differs between the U.S. and France. This alert includes a summary chart comparing and contrasting the differences in Sunshine Act reporting requirements in a number of areas including effective dates, who must report, what information must be reported, payment thresholds and categories of payments that must be reported as well as those that can be excluded. This information is especially relevant to global manufacturers working to comply with these provisions.

A copy of the full alert and comparison chart is available here.

EU Research Group Condemns EU Regulation for Restricting Growth in Life Sciences Sector; NHS Advocates Selling Confidential Patient Data For Secondary Purposes

Reed Smith’s Global Regulatory Enforcement Law blog features two posts of interest to those in the life sciences industry, both written by Reed Smith partner Cynthia O’Donoghue. “EU Research Group Condemns EU Regulation for Restricting Growth in Life Sciences Sector” discusses the opposition of a lobbying group, led by the Wellcome Trust, to amendments to the proposed General Data Protection Regulation – amendments that they believe could severely inhibit future growth of the life sciences sector in the European Union. “NHS Advocates Selling Confidential Patient Data For Secondary Purposes” discusses the criticism of the UK’s Health and Social Care Information Centre and NHS England’s new initiative known as ‘care.data,' which involves the extraction, anonymization, and aggregation of patient data from GP practices in a central database for sale to third parties such as drug and insurance companies.

New UK Pharmaceutical Packaging Warnings: Lucy in the Sky with Directions for Marketing Authorisation Holders

The UK Medicines and Healthcare Products Regulatory Agency has directed Marketing Authorisation Holders (MAHs) for medicines containing specified controlled drugs to update their Summary of Product Characteristics, patient information leaflets, and product labeling. These new warnings are designed to make it easier for the government to enforce a new law prohibiting driving under the influence of drugs, to take effect later this year. For more information, read the full alert written by Reed Smith lawyers John Wilkinson, Nicola Maguire and Adam Lewington.

China Issues New Regulations Prohibiting Commercial Bribery in the Health Care Industry

This post was written by John Tan, Amy Yang, and Crystal Xu.

In late December, China’s National Health and Family Planning Commission (NHFPC), the successor organization to the Ministry of Health, issued two sets of anti-corruption regulations for the health care industry: the 2013 Regulations on the Establishment of a Commercial Bribery Blacklist for the Purchase and Sale of Medicines (关于建立医药购销领域商业贿赂不良记录的规定) (2013 Blacklist Regulations), and The 9 Prohibitions for Building a Healthy Medical Industry (加强医疗卫生行风建设"九不准) (The 9 Prohibitions). The 2013 Blacklist Regulations target pharmaceutical and medical device manufacturers and distributors. These regulations revise and update earlier blacklist regulations issued in 2007 (2007 Blacklist Regulations). In contrast, The 9 Prohibitions focus on health care providers and institutions, providing general principles for eliminating corruption in the Chinese health care industry.

These new regulations are part of the Chinese government’s ongoing focus on corruption in the health care industry, and significantly increase the risks faced by pharmaceutical and medical device manufacturers and distributors.

Continue Reading...

Launch of the New French State Portal Allows for Electronic Information Disclosure by Health Care Companies

Reed Smith’s Global Regulatory Enforcement Law blog features a post on the recent launch of the new state portal in France. "The implementation of the French transparency regulation: first good news?," written by Reed Smith partner Daniel Kadar, discusses how the portal will allow health care companies to more easily disclose transparency information to the French government as required by the French Sunshine Act. The portal is thought to be “more customer friendly” for health care companies in that it provides three possible methods for the disclosure and transfer of information.

Planes, Trains and Over-the-Counter Pills

This post was written by John Wilkinson, Nicola Maguire and Adam Lewington.

In November 2013, the Human Medicines (Amendment) (No.2) Regulations 2013 (the “Amendment”) came into effect, amending the Human Medicines Regulations 2012, which set out a "comprehensive regime for the authorisation of medicinal products for human use; for the manufacture, import, distribution, sale and supply of those products; for their labelling and advertising; and for pharmacovigilance." The Amendment implements Directive 2012/26/EU and Regulation (EU) No 1027/2012 setting out changes to the licence notifications that holders of marketing authorisations must give and changes to pharmacovigilance monitoring systems. The Amendment allows General Sale List (“GSL”) medicines (often referred to as over-the-counter medicines) to be sold on trains and aeroplanes in the United Kingdom.

To learn more about the recent amendments, read the full alert.

Long Delays Still Expected for TSRA License Applications

Reed Smith’s Global Regulatory Enforcement Law Blog recently featured a post about the U.S. Treasury Department’s Office of Foreign Assets Control’s review of applications filed under the Trade Sanctions Reform and Export Enhancement Act of 2000. Although restrictions on the export and re-export of some medical devices and medicines were lifted a year ago, license processing times still remain long, limiting companies’ ability to take advantage of these changes. To learn more about the license applications and potential enforcement actions for non-compliance, read the full alert.

China's Life Sciences Regulatory Crackdown: September 10 Update

The regulatory enforcement environment in China remains tense, as both the Chinese government and media bring new actions and allegations against life sciences manufacturers in both the pharmaceutical and device sectors. We are seeing:

  • Increased attention to medical device sector
  • Enforcement actions spreading to smaller cities
  • Continued pressure on pharmaceutical sector
  • Reports of misconduct by local manufacturers
  • Questionable vendors named

Reed Smith continues to monitor the life sciences regulatory and media environment in China and has prepared a summary of recent developments. For additional information, please contact Reed Smith lawyer John Tan at jtan@reedsmith.com.

China: Life Sciences Regulatory Crackdown Spreads to Medical Device Sector

This post was written by John Tan and Crystal Xu.

On August 15, 2013, the local Beijing office of the Ministry of Health (MOH) of the People's Republic of China announced (Chinese link) that it has started a three-month review of the use of high-value medical consumables and large-scale medical equipment in Beijing. In its announcement, the Beijing MOH noted that prior inspections of hospitals had found continuing problems with the misuse and overuse of medical devices to increase profits. The investigation is intended to strengthen hospitals’ management of the use of medical devices and to regulate the use of high value medical consumables.

In addition to this investigation, the Beijing MOH will also develop a database that will track the price and model of devices implanted in each patient, require hospitals to improve their purchasing management systems, and conduct periodic inspections of hospitals’ purchasing and management of medical consumables.

This latest investigation follows on increased regulatory enforcement actions throughout China's life sciences industry. In the last two months, there have been criminal and administrative enforcement actions targeting the pharmaceutical sector and a pricing investigation by the National Development and Reform Commission (NDRC) into the infant formula sector that culminated in the largest fine in the history of China's enforcement of its anti-monopoly law. The NDRC is also conducting an ongoing investigation of pharmaceutical industry pricing practices and considering systemic revisions to China's drug pricing system. Additionally, on August 14, 2013 the State Administration for Industry and Commerce (SAIC) announced a new three-month-long investigation into the pharmaceutical and medical services sectors, targeting bribery, fraud and anti-competitive practices.

The August 15th announcement by the Beijing MOH appears to signal the first recent enforcement action to specifically target the medical device sector.

In the run up to these enforcement actions, Chinese authorities issued a number of administrative regulations targeting the life sciences industry, including a new code of conduct for HCPs, and new guidance on strengthening anti-bribery controls in public medical institutions. Authorities also issued regulations on the centralized purchasing of medical consumables and large scale medical equipment containing provisions that would exclude companies found to have engaged in commercial bribery from participation in centralized purchasing.

At the end of 2012, China's Supreme People's Court, in conjunction with the Supreme People's Procuratorate, issued a new judicial interpretation of China's criminal law prohibiting bribery. This interpretation was widely viewed as signaling a new emphasis by Chinese authorities on prosecuting not just officials who accept bribes, but those who pay bribes as well.

China Life Sciences and Health Industry Client Briefing - May/June 2013 (July 12, 2013)

This post was written by Katherine Yang, Amy Yin, Vicki Lung, Gordon B. Schatz, Jay J. Yan, John J. Tan, Mao Rong and May Wong.

Reed Smith’s China Life Sciences and Health Industry Client Briefing provides a summary of the monthly news and legal developments relating to China's Pharmaceutical, Medical Device, and Life Sciences/ Health Care Industries.

  • Provincial FDAs to Approve Certain Changes to Medical Device Registration Certificates
  • CFDA Issues Acceptance Standards for Distributors of In Vitro Diagnostic Reagents
  • CFDA Solicits Public Comments on the Catalogue of Class II Medical Devices Exempted from Requirement for Clinical Test Materials
  • China Tightens Supervision Over Drug Advertising
  • Major International Drug Firm is Investigated in China; CFDA Issues Notice on Implementation of New GSP Standards
  • Zhejiang Beta Pharma and Amgen Form Joint Venture
  • Shanghai’s Biopharmaceutical Sector is a Star in Slow Economy
  • Chinese Pharma Companies Look West
  • Drug Distributors 'Need to Consolidate'
  • China's Pharma Distribution Sales Exceed $181b
  • Chinese and U.S. Researchers Study Tibetan Medicines
  • TCM Scrutinized for False Advertising
  • China Streamlines Health-Related Approval Procedures
  • Cross-Species Liver Transplant Succeeds
  • China Launches Anti-Trust Investigation into Baby Formula
  • Registry to Open for Organ Donors
  • China's Health Care Costs Increase: Official Data

To read the full briefing by Reed Smith China team members, click here.

France: All Bodies Hosting Personal Medical Data Must Apply for Official Accreditation or Work With An Officially Accredited Data Host

This post was written by Daniel Kadar.

As a champion for the protection of personally identifiable information and with broad definitions for the concepts of personal and medical data, France has established a very specific set of policies requiring that all bodies hosting medical data must apply for official accreditation or work with an accredited medical data host. When medical data is hosted during a prevention, diagnosis or treatment activity – the scope of which covers most of the activities of the health care industry, which is experiencing and will experience a considerable development with telemedicine in the broad sense – the issue of the accreditation of the hosting services will be raised. To learn more about situations requiring the use of authorized hosting services in France, read our client alert.

French Ministry of Health Publishes Application Decree for "French Sunshine Act"; Requires Disclosure of Agreements With and Payments to Health Care Practitioners Dating Back to January 1, 2012

Reed Smith’s Global Regulatory Enforcement Law blog features a post on the recent publication of the application decree to the “French Sunshine Act” by the French Ministry of Health.  “A Brave New World? The ‘French Sunshine Act’ imposes online disclosure of contracts with HCPs, as well as of payments of ‘advantages’ to HCPs, dating back to 01 January 2012,” written by Daniel Kadar, discusses the specific ways and means that health care companies must disclose agreements with and “advantages” (payment or hospitality, including payment of a contractual fee) provided to health care practitioners ("HCPs") in order to comply with the application decree.  Information to be disclosed dates back 18 months, to January 1, 2012, and the first disclosure requirement is set for June 1, 2013.  According to Mr. Kadar, this tight timeframe raises compliance issues and has industry calling for reconsideration.

China Life Sciences and Health Industry Client Briefing - April 2013 (May 15, 2013)

This post was written by Katherine Yang, Amy Yin, Vicki Lung, Gordon B. Schatz, Jay J. Yan, John J. Tan, Mao Rong and May Wong.

Reed Smith’s China Life Sciences and Health Industry Client Briefing provides a summary of the monthly news and legal developments relating to China's Pharmaceutical, Medical Device, and Life Sciences/ Health Care Industries.

  • Approval of Innovative Drugs and Key Sector Generic Drugs to be Expedited
  • Guangzhou Pharma Case
  • Fosun Pharma to Acquire Israel-Based Medical Device Manufacturer
  • Beijing Hosts Traditional Chinese Medicine ("TCM") Training Program
  • Ministry of Industry and Information Technology ("MIIT") Supports Development of Medical Devices
  • Changes in the Healthcare Industry
  • Medical Reforms in China Attract Pharma Giants
  • State Council Issues Guiding Opinions on the Reform and Improvement of Local Food and Drug Supervision and Management
  • Healthcare Companies Promote Internet-Based Medical Services

To read the full briefing by Reed Smith China team members, click here.

China Life Sciences and Health Industry Client Briefing - March 2013 (April 26, 2013)

This post was written by Katherine Yang, Amy Yin, Vicki Lung, Gordon B. Schatz, Jay J. Yan, John J. Tan, Mao Rong and May Wong.

Reed Smith’s China Life Sciences and Health Industry Client Briefing provides a summary of the monthly news and legal developments relating to China's Pharmaceutical, Medical Device, and Life Sciences/ Health Care Industries.

Some important developments during March include:

  • CFDA Seeks Public Comment on Special Approval Procedures for Innovative Medical Devices
  • CFDA Allows Manufacturers to Confirm Medical Device Classes
  • ETView Medical, Ltd. Announces CFDA Clearance of Pre-Marketing Notification Application for the VivaSight-SL Line of Innovative Airway Devices
  • Executives Call for Pharmaceutical Reform
  • 213 New Varieties of Drugs Added into National Essential Drug Catalogue
  • MOH and CFDA Solicit Public Comments on Clinical Research on Stem Cells
  • Govt. to Increase Funding for Medical Reform
  • Advisers Seeking a Remedy for Private Hospitals
  • Xiamen Encourages Medical Cooperation
  • Online Outpatient Appointments to End Misery of Queuing for Hours
  • China to Clean Up Grassroots Medical Institutions
  • Clearbridge BioMedics Raises $7.2 Million Funding

To read the full briefing by Reed Smith China team members, click here.

France: Code of Conduct Compliance Breach Not Automatically a Sufficient Reason for Employee Termination - Employers Should be Cautious of Proper Local Implementation of Compliance Guidelines

Reed Smith's Global Regulatory Enforcement blog features a post on a December 2012 French Supreme Court ruling in a case involving a French Director in a health care company who had been dismissed on the grounds of a clear breach of health care compliance obligations as set forth in the French Public Health Code. The outcome: even though a company is acting in a highly regulated environment such as health care, compliance breaches must be integrated in the employer-employee relationship if they are to justify termination in France. As Reed Smith Partner Daniel Kadar notes, this case serves as a reminder to any international health care organization that the worldwide adoption of compliance guidelines and of a Code of Conduct is not in itself a sufficient protection against compliance breaches – everything depends on how these tools are implemented locally.

China Life Sciences and Health Industry Client Briefing - February 2013 (March 11, 2013)

This post was written by Jay J. Yan, John J. Tan, Mao Rong, Katherine Yang, Amy Yin, Vicki Lung, May Wong and Gordon B. Schatz.

Reed Smith’s China Life Sciences and Health Industry Client Briefing provides a summary of the monthly news and legal developments relating to China's Pharmaceutical, Medical Device, and Life Sciences/ Health Care Industries.

Some important developments during February include:

  • New Drug GSP Issued: Supervision on Drug Distribution to be Enhanced
  • China to Encourage Innovative Drug Development
  • Baidu, SFDA, Team Up on Drug Search
  • TCM Manufacturer Urged to Raise Awareness of Drug Side Effects
  • Favorable Policies Support Biopharmaceutical Stocks
  • Medical Firms See Healthy Foreign Trade Growth
  • China's Medical Device Market to Grow Rapidly
  • Implementing Programs for Serious Illness Health Insurance Issued in Several Provinces
  • China Forbids Linking Doctors’ Incomes with Patient Medical Expenses
  • Provinces Urged to Buy Insurance

To read the full briefing by Reed Smith China team members, click here.

China's MOH Issues New Trial Regulations on Centralized Procurement of High-Value Consumable Medical Supplies

This post was written by John Tan, Christine Liu and Gordon Schatz.

On December 17, 2012, Trial Regulations on Centralized Procurement of High-Value Consumable Medical Supplies were issued by China’s Ministry of Health (MOH) and five other government agencies. Immediately taking effect upon issuance, these regulations implemented procedures for the centralized purchasing of medical devices ranging from cardiac catheters to dental fillings to intracranial implants. These regulations represent the latest step in China's continuing efforts to improve the process of how medical products are bid for and purchased.

Please click here to read the issued Client Alert.

China Life Sciences and Health Industry Client Briefing - January 2013 (February 21, 2013)

This post was written by Jay J. Yan, John J. Tan, Mao Rong, Katherine Yang, May Wong, Amy Yin, Vicki Lung and Gordon B. Schatz.

Reed Smith’s China Life Sciences and Health Industry Client Briefing provides a summary of the monthly news and legal developments relating to China's Pharmaceutical, Medical Device, and Life Sciences/ Health Care Industries.

Some important developments during January include:

  • Li Keqiang Comments from the 12th Plenary Meeting of the Medical Reform Leading Group
  • MOH Announces Roadmap for Medical Reform
  • MOH Highlights Local Medical Reforms
  • More Cities in Jiangsu to Pilot Public Hospital Reform Program
  • MOH to Release New National Essential-Medicine List Soon
  • Price Cut for 20 Types of Drugs
  • Only 597 Drug Manufacturers Have Obtained New GMP Certification by the End of 2012
  • China Orders Chemical Pharmaceutical Exports Survey
  • Output Value of Yunnan’s Biological Industry to Exceed RMB 1.2 Trillion (US$193.1 billion) by 2020
  • Biopharma Firms Boosted by Policy Support
  • Health Insurance to Cover 95% of Rural Residents
  • Actis Invests in Nanjing Medical Equipment Producer
  • Stryker to Buy Firm to Expand in China
  • China to Speed up TCM Standardization
  • Q&A re Adjustment of Occupational Disease Classification and Catalogue

To read the full briefing by Reed Smith China team members, click here.

China Life Sciences and Health Industry Client Briefing - December 2012 (January 18, 2013)

This post was written by Jay J. Yan, John J. Tan, Mao Rong, Katherine Yang, May Wong, Vicki Lung and Gordon B. Schatz.

Reed Smith’s China Life Sciences and Health Industry Client Briefing provides a summary of the monthly news and legal developments relating to China's Pharmaceutical, Medical Device, and Life Sciences/ Health Care Industries.

Some important developments during December include:

  • Industry Calls for Reform of Lagging Drug Review System
  • Four Governmental Authorities to Take Measures to Upgrade Good Manufacturing Practices (GMPs)
  • Chinese Manufacturers of Sterile Drugs Struggling to Meet New GMP Deadline
  • Pharmaceutical Market to Hit 2.3 trillion Yuan by '20
  • China Announces 17 New Device Classifications
  • Hong Kong, Macao Health Providers Allowed to Set Up Mainland Health Institutions
  • Smaller Hospitals "Offer Huge Opportunities"
  • White Paper on Medical and Health Services in China
  • Reed Smith’s China Device Regulatory Briefing

To read the full briefing by Reed Smith China team members, click here.

China Life Sciences and Health Industry Client Briefing - November 2012 (December 13, 2012)

This post was written by Jay J. Yan, Hugh T. Scogin, Jr., John J. Tan, Mao Rong, Katherine Yang, May Wong, Amy Yin and Gordon B. Schatz.

Reed Smith’s China Life Sciences and Health Industry Client Briefing provides a summary of the monthly news and legal developments relating to China's Pharmaceutical, Medical Device, and Life Sciences/ Health Care Industries.

Some important developments during November include:

  • Priorities, Practical Tips and Lessons Learned from Reed Smith’s China Device Regulatory Briefing on December 4, 2012
  • Drug Firms Pursue Joint R&D
  • Drug Makers and the Unpredictability of Drug Development; New Draft Regulations on Stem Cell Industry to be Issued
  • SFDA Approval concerning Drug Registration and Appraisal Reform on Pilot Basis in Guangdong Food and Drug Administration
  • MOH Stresses Monitoring Medical Costs in New Announcement; PRC to Allocate RMB 27.26 Billion to Support Public Health Services for 2013
  • Nestlé in Chinese Medicine Deal with Li Ka-Shing's Firm

To read the full briefing by Reed Smith China team members, click here.

China Life Sciences and Health Industry Client Briefing - October 2012 (November 16, 2012)

This post was written by Jay J. Yan, Hugh T. Scogin, Jr., John J. Tan, Mao Rong, Katherine Yang, May Wong, Amy Yin and Gordon B. Schatz.

Reed Smith’s China Life Sciences and Health Industry Client Briefing provides a summary of the monthly news and legal developments relating to China's Pharmaceutical, Medical Device, and Life Sciences/ Health Care Industries.

Some important developments during October include:

  • China Becoming a Healthcare R&D Hub
  • Imported Drugs to Go on China's Electronic Monitoring Network
  • Guangxi to Build Pharmaceuticals as a Pillar Industry
  • China to Set Up Database for Organ Transplants
  • Private Medical Care Gets Boost
  • State Council Issues the 12th FYP for Public Health Services Development

To read the full briefing by Reed Smith China team members, click here.

China Life Sciences and Health Industry Client Briefing - August 2012 (September 18, 2012)

This post was written by Jay J. Yan, Hugh T. Scogin, Jr., John J. Tan, Mao Rong, Katherine Yang, May Wong, Amy Yin and Gordon B. Schatz.

Reed Smith’s Life Sciences Health Industry China Briefing provides a summary of the monthly news and legal developments relating to China's Pharmaceutical, Medical Device, and Life Sciences/ Health Care Industries.

Some important developments during August include:

  • New Regulations Concerning Hospital Procurement of Class-A Large-Scale Medical Equipment
  • MOH to Investigate Infection Events in Hospitals
  • Wenzhou Develops New Plans to Attract Private Medical Investors
  • Notice Concerning Public Hospital Reform in 2012
  • MOH to Establish EDLs for Secondary and Tertiary Hospitals
  • Pricing Developments for Drugs of Foreign Companies
  • Revised Regulations on Criminal Prosecutions for Leaks of Confidential Patient Information
  • State Council to Release Regulation Permitting Local Governments to Buy Commercial Insurance on for Serious Illnesses

To read the full briefing by Reed Smith China team members, click here.

China Life Sciences and Health Industry Client Briefing - July 2012 (August 8, 2012)

This post was written by Jay J. Yan, Hugh T. Scogin, Jr., John J. Tan, Katherine Yang, May Wong and Gordon B. Schatz.

Reed Smith’s Life Sciences Health Industry China Briefing provides a summary of the monthly news and legal developments relating to China's Pharmaceutical, Medical Device, and Life Sciences/ Health Care Industries

Some important developments during July include:

  • Counterfeit Drug Crackdown in China
  • China Agencies Drafting Policies to Accelerate Development of Medical Devices
  • Mindray Medical Completes Acquisition of Dragonbio's Orthopedics Business
  • Multinational Medical Device Companies Focus on Grassroots Market
  • J&J Plans Training Center in China
  • New Round of Drug Price Cuts Expected
  • MOH Enhances Planning of Private Medical Institutions and Further Relaxes Threshold for Private Investors

To read the full briefing by Reed Smith China team members, click here.
 

Understanding of Global Data Privacy Regulations Helps Avoid Conflicts in Cross-Border Discovery Disputes

InsideCounsel recently published, "E-discovery: The need for a transnational approach to cross-border discovery disputes," an article on international discovery issues and the benefit of a respectful approach to document productions outside of the U.S.  Written by Reed Smith Records & E-Discovery Group members David R. Cohen, Regis W. Stafford, Jr. and Caitlin R. Gifford, the piece notes that proposed EU Data Protection Directive regulations have the potential to subject multinational companies to sanctions of up to two percent of annual worldwide revenue for serious breaches, including unlawful data transfers to the U.S.  In addition, although not binding on U.S. courts, the ABA recently issued a resolution and recommendation that states in part that U.S. courts should “consider and respect the data protection and privacy laws of any foreign sovereign..."  This article underscores the importance of a comprehensive global approach to document production in cross-border litigation.

To be invited to future Reed Smith trainings on cross-border e-Discovery issues, please click here.

Life Sciences Health Industry China Briefing - June 2012 (July 20, 2012)

This post was written by John Tan, Jay J. Yan, Mao Rong, Katherine Yang, and Gordon B. Schatz.

Reed Smith’s Life Sciences Health Industry China Briefing provides a summary of the monthly news and legal developments relating to China's Pharmaceutical, Medical Device, and Life Sciences/ Health Care Industries.

Pharmaceuticals, Medical Devices, Health Care & Life Sciences 

News

  • China's Compulsory License Rule Has Drug Companies On Edge (Law360 2012-06 12) — June 14, 2012

China's new patent regulations allowing the government to force drug companies to grant compulsory licenses for generic versions of their products if it is deemed to be in the "public interest" has the pharmaceutical industry worried about where China will draw the line, attorneys said. The new regulations issued by China's State Intellectual Property Office last month say the government can order compulsory licenses for generic drugs when there is a "national emergency or any extraordinary circumstances, or for public interest purposes." What constitutes the public interest is very much open to interpretation and appears to give the Chinese government broad leeway to order drug companies to allow generic versions of drugs that are still covered by patents.

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Lessons for Life Sciences Companies With Global Operations that include Countries Sanctioned by the U.S.

This post was written by Michael J. Lowell.

On July 10, 2012, the U.S. Department of the Treasury, Office of Foreign Assets Control (“OFAC”) announced that Great Western Malting Co. (“Great Western”), a U.S. company, had agreed to pay $1.35 million to settle apparent violations of the Cuban Assets Control Regulations, 31 C.F.R. Part 515 (“Cuba sanctions”).  The Cuba sanctions generally prohibit U.S. persons and companies (and their foreign subsidiaries) from engaging in any transaction in which Cuba or a Cuban national has any interest whatsoever, direct or indirect.  These sanctions also prohibit U.S. persons from aiding or facilitating a foreign person’s transactions in Cuba.  Criminal penalties for violating the Cuba sanctions range up to 10 years in prison, $1,000,000 in corporate fines, and $250,000 in individual fines, per violation, and civil penalties may also be imposed.

Great Western is a U.S.-based company producing malt for the brewing, distilling and food markets. OFAC’s settlement announcement indicates that Great Western’s U.S.-based personnel provided back-office support for a foreign affiliate’s sales of foreign-origin barley malt to Cuba.  This case is noteworthy because the liability appears to be based solely on Great Western’s facilitation of its foreign affiliate's sales of foreign products.

This case also demonstrates the real value of OFAC’s voluntary disclosure process and the risk of discovery for violations that are often perceived as difficult to detect.  OFAC imposed the $1.35 million penalty despite the fact that the goods involved were foreign-origin, the primary activity was by a foreign person, and OFAC licenses were available for this activity.  In many cases, similar violations have been closed with a warning only on the basis of a voluntary disclosure.  OFAC’s discovery of these violations, which would not typically be easily discovered, since it is back-office support, should cause some caution in future decision-making on whether or not to file a voluntary disclosure.  It should also be noted that the penalty reflects significant mitigation (total possible base penalty of $5.9 million) due at least in part to Great Western’s substantial cooperation with OFAC after discovery of the violation, including entering into a statute of limitations tolling agreement.   

This enforcement action is a warning to companies operating globally with business in the United States and in U.S.-sanctioned countries -- particularly U.S.-based companies whose foreign affiliates and subsidiaries conduct business in Cuba, Iran, Sudan or Syria.  Companies should consider whether they have sufficient internal controls in place to prevent inadvertent back-office support or other forms of facilitation of their related companies’ sales in sanctioned countries. 

Clients working in the health care industry, including pharmaceutical and medical device companies, can face the same challenge posed by Great Western:  how to ensure that support of a foreign affiliate’s operations does not implicate U.S. sanctions.  This issue comes up in a variety of contexts.  Some recent examples where we have seen this issue arise for our pharmaceutical clients include:

•    Global Product Launch and Registration – the involvement of U.S. citizens or U.S. subsidiaries (legal, marketing, product, manufacturing) in a European-based pharmaceutical company’s global launches of new medicines

•    Marketing – the reliance on U.S.-based marketing support for European-headquartered pharmaceutical companies’ sales in Cuba, Iran, and Syria

•    Conference Arrangement and Attendees – the involvement of U.S. personnel in organizing, managing, or supporting conferences in Iran and Cuba in addition to issues associated with assisting the attendance of Iranian and Cuban doctors at conferences outside the United States

•    R&D and Production
– U.S. citizen expertise being provided to support the operations of affiliated companies primarily supporting development or sales in sanctioned countries

•    Legal and Compliance – counseling in-house lawyers and compliance officers on the “fine line” between advising foreign affiliates on the legality of a chosen course of action and approving or facilitating the course of action (which would be prohibited)

•    Sales – U.S. back office support for a foreign affiliate’s sales in sanctioned countries 

Our recent experience with global clients with headquarters in Europe and operations in the United States and Iran has demonstrated the importance of minimizing risks with proactive OFAC licenses and implementing internal controls or, failing that, voluntary disclosure, which can allow for resolution of the matter with OFAC with no penalty.

There also can be myriad other sanctions issues different from those raised by the Great Western settlement, including export control requirements relating to exports of lab equipment, medical devices, chemicals, unfinished and finished goods, foreign national employee or visitor licensing requirements (so-called, deemed exports), and issues relating to the corresponding financial transactions.  Fortunately, OFAC provides exceptions (general licenses) and generally has a favorable licensing policy where a specific license is necessary for exports of medicines to sanctioned countries, so there are a number of possible solutions. 

Please contact Mike Lowell or your usual Reed Smith contact for further information.  You may also visit the Global Regulatory Enforcement blog for updates and information on OFAC sanctions.

Life Sciences Health Industry China Briefing - May 2012 (June 14, 2012)

This post was written by John Tan, Jay J. Yan, Mao Rong, Katherine Yang, and Gordon B. Schatz.

Reed Smith’s Life Sciences Health Industry China Briefing provides a summary of the monthly news and legal developments relating to China's Pharmaceutical, Medical Device, and Life Sciences/ Health Care Industries.

Some important developments during May include:

  • Introduction of Administrative Measures on Clinical Application of Antimicrobial Drugs
  • Two Agencies Crack Down on Violent Crime Against Medical Personnel
  • Medical Insurance Reimbursement for Hospitalization to Reach 75% of Total Expenses During 12th Five-Year Plan
  • Foreign Medical Workers to Receive TCM Training in Shanxi 
  • MOH Requires Class B and Higher Hospitals to Establish Security Offices
  • China to Expand Medical Payment Reform
  • SFDA Campaign to Regulate TCM Raw Material Market
To read the full briefing by Reed Smith China team members, click here.

 

Life Sciences Health Industry China Briefing - April 2012 (May 21, 2012)

Reed Smith’s Life Sciences Health Industry China Briefing provides a summary of the monthly news and legal developments relating to China's Pharmaceutical, Medical Device, and Life Sciences/ Health Care Industries.  Some developments during April include:

  • Chinese Government to Review Drug Pricing Differences Between Ex-factory and Bid Prices
  • Heightened Attention to Hospital Mark-ups of Drug Prices
  • State Council to Cancel Drug Price Addition and Raise Medical and Surgery Fees
  • Cessation Drugs to be Included in Medical Insurance: Multinational Pharmaceutical Companies Play a Large Role in Government Procurement
  • 13 Products of 9 Pharmaceutical Companies Using Capsules Suspected of Excessive Chromium Contamination
  • Growth in Home Care Medical Devices

To read the full briefing by Reed Smith China team members, click here.

Life Sciences Health Industry China Briefing - March 2012 (April 13, 2012)

Reed Smith’s Life Sciences Health Industry China Briefing provides a summary of the monthly news and legal developments relating to China's Pharmaceutical, Medical Device, and Life Sciences/ Health Care Industries.  Some developments during March include:

  • American Medical Device Maker Accused of Bribery to Doctors in China and other Countries
  • Qiagen Inks HPV Screening Deal with China's KingMed Diagnostics
  • Medical Care Administration to Improve through Health Cards
  • Cuts in Drug Prices
  • Notice Concerning Registration after Adjustment of Classification of Medical Devices
  • MOH Encourages Private Capital into Medical Rehabilitation Services

To read the full briefing by Reed Smith China team members, click here.
 

Life Sciences Health Industry China Briefing - February 2012 (March 13, 2012)

This post was written by Jay J. Yan, Mao Rong, Zack Dong, Katherine Yang, Joyce Sun, Sara Lai and Gordon B. Schatz.

Reed Smith’s Life Sciences Health Industry China Briefing provides a summary of the monthly news and legal developments relating to China's Pharmaceutical, Medical Device, and Life Sciences/ Health Care Industries.

Some important developments during February include:

  • Release of the 12th Five-Year Plan on Drug Safety and Standards
  • SFDA: Concentrated Rectification Action in National Drug Manufacturing and Distribution Sectors
  • Twelve Ministries: Crackdown on Serious Illegal Advertisement Broadcasting
  • SFDA: Electronic Drug Supervision Plan from 2011 – 2015
  • MOH: Administrative Measures on Health Card for Residents (for Trial Implementation)
  • MOH: Revised Diseases Classification and Code

To read the full briefing by Reed Smith China team members, click here.
 

Life Sciences Health Industry China Briefing - January 2012 (February 13, 2012)

This post was written by Jay J. Yan, Mao Rong, Zack Dong, Katherine Yang, Joyce Sun, Sara Lai and Gordon B. Schatz.

Reed Smith’s Life Sciences Health Industry China Briefing provides a summary of the monthly news and legal developments relating to China's Pharmaceutical, Medical Device, and Life Sciences/ Health Care Industries.

Some important developments during January include:

  • Outline of China's Nursing Development Plan from 2011 to 2015
  • Promulgation of Eight Recommended Medical Product Industry Standards
  • Strengthening Implementation of 2010 GMP Amendment
  • Circulation of the 12th Five-Year Plan for Medical Device Technology Industry

To read the full briefing by Reed Smith China team members, click here.
 

Life Sciences Health Industry China Briefing - December 2011 (January 12, 2012)

This post was written by Jay Yan, Mao Rong, Zack Dong, Gordon Schatz, and Katherine Yang.

Reed Smith’s Life Sciences Health Industry China Briefing provides a summary of the monthly news and legal developments relating to China's Pharmaceutical, Medical Device, and Life Sciences/ Health Care Industries.

Some important developments during December include:

  • SFDA Issues Catalogue of Class II Medical Devices Exempted from Submitting Clinical Trial Materials
  • SFDA Issues Notice Concerning Circulation of Guiding Principles of Phase I Clinical Trial Management of Drugs
  • SFDA Issues Notice on Soliciting Comments on Revisions of the Good Supply Practice for Pharmaceutical Products
  • China Adopts Drug Safety Plan: All Drugs to be Qualified by 2015
  • NDRC Issues Rules on Drug Price Parity to Prevent Disguised Price Hikes
  • Guangdong Issues Drug Price Adjustment Program: 307 Western Drugs’ Price have a 22 percent Reduction in Average
  • Shenzhen Public Hospitals to Revoke Drug Price Addition by the End of 2012

To read the full briefing by Reed Smith China team members, click here.

Health Care Companies Operating in France to be Subject to New Sunshine/Transparency Rules

This post was written by Marina Cousté, Benoît Charot, François Jonquères and Daniel Kadar.

Health care and cosmetic companies operating in France are subject to new transparency requirements, comparable to the U.S. "Sunshine Act," that were adopted in December 2011. As discussed in a recent posting on Reed Smith's Global Regulatory Enforcement Law Blog, in addition to imposing a general disclosure obligation on any company manufacturing or commercializing products with a medical or cosmetic purpose, the new law sets forth new pharmacovigilance requirements and provides more stringent rules concerning the advertisement of drugs and medical and diagnostics devices.
 

Life Sciences Health Industry China Briefing - November 2011 (December 6, 2011)

This post was written by Jay Yan, Mao Rong, Zack Dong, Zhao Hong, Gordon Schatz, Dr. David Kan and Katherine Yang.

Reed Smith’s Life Sciences Health Industry China Briefing provides a summary of the monthly news and legal developments relating to China's Pharmaceutical, Medical Device, and Life Sciences/ Health Care Industries.

Some important developments during November include:

  • Beijing Hospital Requirements: Overuse of Antibiotics
  • SFDA Issues Second Batch of Class II Medical Devices, For Which Distributors Do Not Need to Apply for Medical Devices Distribution License
  • Interim Measures on Appraisal of Traditional Chinese Medicine Hospitals: Request for Comments 
  • Two Pharmaceutical Companies Fined for Monopolizing Compound Reserpine API
  • China to Build ADR Monitoring System
  • NDRC to Investigate Ex-factory Prices of Drugs
  • China Finalizes Healthcare Reform 12th FYP
  • China to Launch Massive Survey on TCM Resources
  • Notice Concerning Circulation of the 12th Five-year Plan of Biotechnology Development

To read the full briefing by Reed Smith China team members, click here.

Life Sciences Health Industry China Briefing

This post was written by Jay Yan, Mao Rong, Zack Dong, Zhao Hong, Gordon Schatz, Dr. David Kan and Katherine Yang.

Reed Smith’s Life Sciences Health Industry China Briefing provides a summary of the monthly news and legal developments relating to China's Pharmaceutical, Medical Device, and Life Sciences/ Health Care Industries.

Some important developments during October include:

  • SFDA Issues 2010 Annual Report on Drug Registration and Approval
  • CCTV to Restrict Advertisement of Alcohol, Medical Institutions
  • MOH Requires Improvement of the Reward and Penalty System for Antibacterial Drug Administration
  • Draft Mental Health Law Submitted to NPC Standing Committee for First Deliberation
  • SFDA: All Drugs on Market to Have E-ID by End of 2015
  • SFDA Releases 3rd Batch of Illegal Drugs, Medical Devices and Health Food Advertisements in 2011
  • SFDA issues Notice on Release and Delivery of GMP Certification Announcement
  • SFDA issues Notice concerning Circulation of the Administrative Measures on Drug Supervision in Medical Institutions
  • Detailed Summary of SFDA 2010 Annual Report on Drug Registration and Approval

To read the full briefing by Reed Smith China team members, click here.

Life Sciences Health Industry China Briefing

This post was written by Jay Yan, Mao Rong, Zack Dong, Zhao Hong, and Gordon Schatz.

Reed Smith’s Life Sciences Health Industry China Briefing provides a summary of the monthly news and legal developments relating to China's Pharmaceutical, Medical Device, and Life Sciences/ Health Care Industries.

Some important developments during September include:

  • SFDA Circulates Guidelines for Monitoring Adverse Events Involving Medical Devices
  • SFDA Issues Letter Soliciting Public Comments on Communication Methods for Responsible Food and Drug Safety
  • Swiss Drugmaker Novartis Expands in China
  • China to Divide Emergency Patients into Four Classes for Medical Treatment
  • China’s Biopharmaceutical Industry to Accelerate Internationalization
  • MOH surveys Clinical Application of Antimicrobials
  • Medtronic Opens Orthopedic R&D Center with Weigao
  • DHL Establishes Second Life Science and Health Care Logistics Center in Beijing

To read the full briefing by Reed Smith China team members, click here.

Life Sciences Health Industry China Briefing

This post was written by Jay Yan, Mao Rong, Gordon Schatz and Abraham Sorock.

Reed Smith’s Life Sciences Health Industry China Briefing provides a summary of the monthly news and legal developments relating to China's Pharmaceutical, Food & Health Care Industries.
Some important developments during June include:

  • Chinese drug company to build production and training center in U.S.
  • Drug company challenged for environmental contamination in China
  • China's national biomedical plan to be released soon
  • Issuance of administrative measures for device recalls
  • Designation of four professional associations to examine Class III medical technology
  • Extension of Drug GMP certificates
  • Recall of an antibiotic

To read the full briefing by Reed Smith China team members, click here.

Recent Developments in Tort Litigation

Law360.com recently published two articles on decisions involving issues with potential to have long-term effects on tort litigation.

In the June 2, 2011 article, "Case Study: Bauman V. DaimlerChrysler Corp.," Mildred Segura and Nabil Bisharat discuss Bauman v. DaimlerChrysler Corp., a case that expands the use of "agency theory" to impose general jurisdiction over foreign corporations that do business in the U.S. solely through their U.S. subsidiaries. The Ninth Circuit's recent decision in Bauman holds that personal jurisdiction existed over DaimlerChrysler Aktiengellschaft (DCAG), a German company, because DCAG maintained the right to control its wholly owned U.S. subsidiary, Mercedes-Benz USA LLC (MBUSA), such that DCAG could be haled into court in California due to MBUSA’s contacts with that state. Bauman increases the likelihood that foreign corporations will be sued in American courts based on the activities of their U.S. subsidiaries. This opinion — if it stands — has the potential to affect any foreign company that does business in the U.S. through subsidiaries regardless of whether those subsidiaries have anything to do with the parent’s alleged actions giving rise to the lawsuit. To read this article, you may download a .PDF or view on Law360.com (subscription required).

In "Reading Between The Lines: Pooshs V. Philip Morris," published in May, Eric Buhr and Kasey Curtis analyze the California Supreme Court's May 5th decision in Pooshs v. Philip Morris USA Inc., the latest California case addressing how statutes of limitations should apply in cases where a plaintiff alleges delayed discovery of only one of multiple claims or injuries. The background issue that appears to be guiding the Supreme Court’s decisions is the little used doctrine of "primary rights." A close reading of the opinions reveals the court’s careful effort to reach an arguably fair result while avoiding issues that could have a larger and devastating effect on tort litigation. To read this article, you may download a .PDF or view on Law360.com (subscription required).

Mexico's Senate Passes Federal Law for Protection of Personal Data

This post was written by Mark S. Melodia, Cynthia O'Donoghue and Anthony S. Traymore

On April 27, 2010, the Mexican Senate passed Ley Federal de Protección de Datos Personales en Posesión de los Particulares (the Federal Law for Protection of Personal Data (FLPPA)).  President Felipe Calderon is expected to sign the FLPPA into law soon, and thereafter, the FLPPA will be published and its regulatory provisions enacted. The objective of the FLPPA is to provide regulatory mechanisms for the newly established replacement agency, Instituto Federal de Acceso a la Información y Protección de Datos (the Federal Institute of Information Access and Data Protection (FIIADP), to enforce the FLPPA in relation to any individual or entity engaging in the collection, storage and/or transfer of personal data, including life sciences and health care clients.

To read the full alert, click here.

FDLI Publishes New Guide to International Prescription Product Recalls

Recent events highlight the importance of having a plan for product recalls. The Food and Drug Law Institute's recent monograph entitled, "International Prescription Product Recalls: A Practical Guide, Volume 1, Number 4," provides comprehensive guidance and practical recommendations on dealing with recalls internationally as well as a checklist and valuable "dos and don'ts" for manufacturers facing product recalls. Written by Reed Smith partners James M. Wood and Areta L. Kupchyk, the publication is available for download by series and individual issue subscribers.

For more information or to order, see www.fdli.org.

China's New Tort Liability Law Takes Effect on July 1, 2010

China's long-awaited Tort Liability Law, passed on December 26, 2009 by the Standing Committee of the National People’s Congress of China, will take effect on July 1, 2010. The law, which serves to provide a stronger basis for the development of tort law and practice in China, offers standard guidance on issues ranging from product liability, environmental pollution, medical malpractice to employee-related liabilities. For example, prior to the enactment of the law, defective product recall obligations were only applied to a limited number of products, including medicine, food, toys and automotive products. The new law, however, expands the recall system to cover all products manufactured or sold in China.

Reed Smith Beijing Counsel Mao Rong and Michael H. Dardzinski and Consultant Joyce Sun recently drafted a brief summary of China's new tort law provisions regarding product liability, medical-related damages and environmental pollution. Read the full summary here.

China Launching National Essential Drug System

This post was written by Hugh T. Scogin, Gordon B. Schatz, Amanda Tao and Amanda Yang .

The Chinese government officially launched the National Essential Drug System (NEDS) Aug. 18, 2009 at a press conference held by the State Council, during which it explained the concentration of specific drug purchases in urban and county grass-roots health institutions as the first step in the implementation of NEDS. By 2009, NEDS will be implemented in 30 percent of government-run urban and county health care institutions in each province, region, or municipality. NEDS could have significant implications for the marketing, sale, distribution, and pricing of drugs by multinational and Chinese pharmaceutical companies in China.

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Chinese Regulations on Medical Device Advertisements

This post was written by Hugh Scogin, Gordon Schatz, Amanda Tao and Amanda Yang.

On May 20, 2009, China's State Administration of Industry and Commerce, the Ministry of Health, and the State Food & Drug Administration together issued new regulations for medical device manufacturers and distributors who advertise medical devices and diagnostic products, entitled, "Measures for the Examination of Medical Device Advertisements" and "Standards for the Examination and Release of Medical Device Advertisements." To read a summary of key points contained in the regulations, click here.

The EU's REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals) Regulations: The Next Steps

The REACH Regulations established a new system for the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) in the European Union when implemented on June 1, 2007. With phased implementation over an 11-year period, REACH covers chemicals, and substance mixtures, and articles that contain substances that are manufactured or imported into the EU in certain minimum quantities.

Statistics on the pre-registration phase give a clear indication that REACH's reach has been longer than expected: The European Chemical Agency (ECHA) anticipated that approximately 30,000 chemical substances would be pre-registered, but in the end closer to 150,000 substances were pre-registered.

Nick Elliott's article, "The Next Steps," published in a recent edition of Hazardous Cargo Bulletin, discusses this new EU chemical regime, what companies need to do next, and some of the pitfalls to be avoided. The first registration deadline, applicable to high-volume and high-risk chemical substances, is only 18 months away – November 30, 2010. As Elliott explains, potential registrants have no time to waste in order to ensure compliance with the REACH registration obligations. REACH potentially impacts not only the EU chemical industry but also any entity, such as those operating in the life sciences industry, that manufactures in or imports substances/products into the EU.

Posner on Forum Non Conveniens

Over the centuries, many have sought better opportunities in the United States. For the last few years, tort plaintiffs have been among them. Companies in many industries have been the target of lawsuits filed by plaintiffs who live outside the United States, over injuries that also allegedly occurred elsewhere, whether because of perceived advantages in substantive law within the United States, or access to procedural devices in U.S. courts that are not widely available in the rest of the world (such as the class action device).

In a May 1 opinion by Judge Posner filed in two consolidated appeals, Abad v. Bayer Corp. and Pastor v. Bridgestone/Firestone North American Tire, LLC, the Seventh Circuit affirmed dismissal of two cases on grounds of forum non conveniens. In both cases, the plaintiffs are Argentine citizens who live in Argentina and allegedly were injured there, but filed product liability lawsuits against American manufacturers in U.S. district courts. Under the familiar forum non conveniens doctrine, the district courts had weighed various factors and concluded in both cases that Argentina was better-suited to decide plaintiffs' lawsuits -- Abad being a 600-plaintiff class action in which hemophiliacs contended they contracted the AIDS virus from the defendant's clotting factor, and Pastor an auto accident rollover case involving allegedly defective tires.

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Advertising of medicinal products versus freedom of expression of a journalist - European Court of Justice Decision dated 2 April 2009 (C-421/07) "Frede Damgaard"

The European Court of Justice ("ECJ") recently had the opportunity to opine on limits on the scope of advertising for medical products in the European Union, when a journalist who had reprinted factual information about a pain medication sold in Norway but prohibited in Denmark, was made an example under Danish legal provisions prohibiting advertising for medicinal products that are not lawfully marketed in Denmark. As exmplained by Paule Drouault-Gardrat, Julie Gottenberg and Juliette Peterka in "Advertising of medicinal products versus freedom of expression of a journalist - European Court of Justice Decision dated 2 April 2009 (C-421/07) 'Frede Damgaard' " (available also in French), the ECJ concluded the issue was a matter for the national court in the first instance, relying in part on a line of French cases holding that any publication praising the merits of a medicinal product must be considered as advertising whomever its author, regardless of whether the manufacturer sought or paid for publication.

FCC Allocates More Spectrum to Wireless Medical Devices and Proposes Even More Spectrum for Implanted Neuromuscular Stimulators

This post was written by Judith L. Harris and Amy S. Mushahwar.

The Federal Communications Commission (“FCC”) recently released an Order allocating 2 MHz of new spectrum for advanced wireless implanted devices, which may enable the certification of new devices by the FCC’s Office of Engineering and Technology.

The FCC also seeks comment on a proposal to allocate up to 20 MHz of spectrum for implanted neuromuscular micro stimulators. This additional allotment for electronic stimulation technologies could be used to develop devices for the medical treatment for millions of people living with brain and spinal cord injuries and neuromuscular disorders.

Parties interested in registering new devices under the FCC’s Order or in commenting on the additional spectrum allotment for electronic stimulation technologies are encouraged to contact Judith L. Harris or Amy S. Mushahwar.

For additional information, please see Reed Smith's full alert.

China's Premier Wen Jiabao Confirms Major Healthcare Reform

This post was written by Sharon J. Mann, Hugh Scogin, Gordon B. Schatz and Amanda Yang.

At the 2nd Session of the 11th National People’s Congress (NPC) convened on March 5, 2009, China’ Premier Wen Jiabao confirmed the major contents of the healthcare reform in the 2009 Government Work Report. On January 21, 2009, the State Council approved the Opinions on Advancing Healthcare Reform and the Implementation Plan on Advancing Healthcare Reform 2009-2011 in principle. The opinions and the plan are expected to be published after the NPC session, with the Government Work Report representing the first government document that confirms work focuses in the coming healthcare reform program.

According to the Work Report, the Chinese government will spend US$124 billion (850 billion RMB) on healthcare reform between 2009 and 2011, including 331.8 billion RMB from the central government. The funds will be used in five primary areas 1) medical insurance, 2) essential medications, 3) basic healthcare service systems, 4) equal access to basic public health services, and 5) reform of public hospitals.

For additional information, please see Reed Smith’s full alert.

Pharmaceutical Package: Safe, Innovative and Accessible Medicines and A Renewed Vision For the Pharmaceutical Sector

This post was written by Paule Droualt-Gardrat, Juliette Peterka and Julie Gottenberg.

On December 10, 2008, the European Commission published a series of political measures and legislative proposals, the so-called “Pharmaceutical Package.” This series included the “Communication on a renewed vision for the pharmaceutical sector,” which reflected on ways to improve market access and develop initiatives to boost European Union (“EU”) pharmaceutical research. Through the Pharmaceutical Package, the European Commission aims to make pricing and reimbursement more transparent, increase the development of pharmaceutical research within the EU, improve the safety of medicines worldwide, and reinforce cooperation with international partners.

The European Commission has published three separate sets of proposals amending Directive 2001/83/EC on the Community Code of medicinal products and Regulation 726/2004 on medicinal products obtained through centralized procedures:

1.  A proposal amending Directive 2001/83 as “regards information to the general public on medicinal products subject to medical prescription” (Information to patient);
2.  A proposal amending Directive 2001/83 and a proposal amending Regulation 726/2004 as “regards pharmacovigilance” (The EU pharmacovigilance system); and,
3.  A proposal amending Directive 2001/83 as “regards the prevention of the entry into the legal supply chain of medicinal products which are falsified in relation to their identity, history or source” (Counterfeit Medicines).

Read Reed Smith's full alert outlining proposed amendments to Directive 2001/83/EC and Regulation 726/2004.

Data Protection Within the Framework of the Regulation No. 1924/2006 on Nutrition and Health Claims Made on Foods of 20 December 2006

This article, written by Reed Smith attorneys Paule Drouault-Gardrat and Juliette Peterka, was first published in Insights, the conference bleue newsletter.  Reprinted with permission.

Article 21 of the Regulation No. 1924/2006 on nutrition and health claims made on foods of 20 December 2006 provides data protection for applicants who wish to register a nutritional or health claim not included in the Community list. The Community list of authorized health or nutrition claims will be established on the basis of proposals made by Member States with the assent of the Commission before 31 January 2010.

 

The difficulty is that if a manufacturer wants to use a claim which is not listed, it will have to proceed to a scientific evaluation of the claim. This raises two types of issues. Firstly, this is quite expensive. Consequently, this will cause small and middle sized companies to increase their costs every time they consider using a new claim. The second issue relates to the protection of the company’s private data. The Commission thus decides to provide data protection to new applicants, under Article 21 of the Regulation No. 1924/2006.

 

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Pharmaceutical Parallel Trade Ruling in the European Court of Justice and Pharmaceutical Product Liability Rulings in France

Markets outside the United States are increasingly important for life sciences companies, and this post includes articles by Reed Smith lawyers regarding two developments in Europe. 

The first is by Edward Miller, entitled "Sidestepping the Issue", republished with permission from the International Clinical Trials e-book (registration required).  This article discusses a ruling by the European Court of Justice, holding that pharmaceutical companies can refuse to fill "unusual" orders from distributors who seek to profit by buying drugs for countries with low reimbursement prices, and shipping them for sale in countries with high prices - but falling short of the standard advocated by the pharmaceutical company defendant in that case. 

The second article is by Paule Drouault-Gardrat and Julie Gottenberg regarding French Supreme Court rulings earlier this year on causation in product liability cases.  First published in the August edition of Insights, the conference bleue newsletter, the article is reprinted with permission here:

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GAO Report on Drug Safety/Foreign Drug Inspections

On October 22, 2008, the Government Accountability Office (GAO) issued a report entitled "Drug Safety: Better Data Management and More Inspections Are Needed to Strengthen FDA's Foreign Drug Inspection Program." Among other things, the GAO found that: FDA databases contain inaccurate information on foreign establishments subject to inspection; FDA inspects relatively few foreign establishments each year to assess the manufacturing of drugs currently marketed in the United States; and FDA’s identification of serious deficiencies has led foreign establishments to take corrective actions, but inspections to determine continued compliance are not always timely. The GAO recommends that FDA improve the data that it uses to manage its foreign inspection program, conduct more inspections of foreign establishments, and ensure more timely inspection of foreign establishments where FDA has identified serious deficiencies. HHS agreed that FDA should conduct more foreign inspections, and discussed other FDA oversight initiatives, such as database improvements.

A Media Campaign Questions the French Monopolistic Sale of Pharmaceutical Products

This post was written by Paule Drouault-Gardrat and Julie Gottenberg.

Under French Law, pharmacies benefit from a monopoly on the sale of medicinal products. This monopoly covers reimbursed and non-reimbursed pharmaceutical products. Once they are de-reimbursed, the price setting is free. This is indeed a very important market for the approximately 23,000 French pharmacies, as the current government follows a policy of dereimbursement.

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Faster to Market in Europe: Different Routes Explained for Early Access to the Market for Human Medicines

At EU level, there are essentially two routes to obtaining an authorization from the EMEA to place a product on the market more quickly than through the usual marketing authorization route. The first is an application for a conditional authorization that is available where clinical trials have not been fully completed. This is not a full marketing authorization, but, as its name suggests, has conditions attached. The intention is that once the conditions are fulfilled, the authorization can become a full and unconditional marketing authorization. The other route is through an application to the EMEA for an accelerated or exceptional authorization. For this application, full data is available and a full marketing authorization is obtained, but the decision-making process occurs more quickly. In addition to these EU routes, some individual member states have their own legislation allowing products, subject to controls, to be marketed without a full marketing authorization in specified circumstances. This national legislation is the subject of a harmonizing guideline issued by the EME1, although significant differences still remain in how the member states operate these compassionate-use programmes.

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FDA to Open Offices in the People's Republic of China

On March 14, 2008, the U.S. Food and Drug Administration (“FDA”) received approval from the U.S. State Department to place eight full-time, permanent FDA employees at U.S. diplomatic posts in the People’s Republic of China, pending authorization from the Chinese government. The FDA will also be hiring five local Chinese nationals to work with the new FDA staff at the U.S. Embassy in Beijing and the U.S. Consulates General in Shanghai and Guangzhou. The FDA expects to be fully staffed in China within 18 months.

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Who Pays the Bill for Asbestos Claims: Recent Developments in Asbestos-Related Disease Liability in the UK

This post was written by Darren Smith, Julia Dodds, and Claire Hamm.

The UK has an estimated 3,000 deaths per year from mesothelioma, the lung cancer caused by inhalation of asbestos fibres. This rate of incidence shows no signs of slackening, a result of the historic exposure of the UK workforce to asbestos, and is not expected to peak until 2018. With the average award of damages for mesothelioma currently around £150,000 ($300,000), defendants and their insurers are already paying out close to $1 billion a year to settle mesothelioma claims alone; and to this must be added the cost of claims for non-fatal asbestos-related diseases.

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California Assemblyman Introduces Legislation to Require Notice of Defective Foreign Products

It seems like a rare day when there is not a notice of a foreign-made defective product being recalled in the United States. In recent months, there have been more than 500 recalls of a variety of products including millions of toys coated with lead paint, thousands of illegal fireworks, contaminated meats, and tainted medicines.

The issue has become so enormous that the U.S. Government has created a website—www.recalls.gov—that provides information about recalls coordinated by a variety of agencies including the Consumer Product Safety Commission, the Food and Drug Administration, U.S. Department of Agriculture, the Environmental Protection Agency, and others.

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