The German Constitutional Court issued a landmark decision with implications for many companies doing business in Europe on July 9, 2021. For decades, the European Commission and EU member states strived to create a pan-European Unified Patent Court (UPC). After overcoming many hurdles, any sensible commentator will be cautious in making statements about the future of the UPC. That said, for the first time in years it now appears that the pan-European patent litigation system may finally come into being. This is particularly relevant for companies from the life sciences sector that tend to enforce their blockbuster patents in parallel proceedings in the most relevant jurisdictions. The new system and the availability of pan-European injunctions means that claimants will be able to move from five parallel cases to one. However, the new system also comes with disadvantages such as pan-European invalidation proceedings. Nobody can predict the quality of judgments issued by the future court. For owners of European patents who are concerned about losing their IP rights, now is the time to identify the crown jewels and to make an informed decision about opting out.
Germany recently passed a reform bill for the Patent Act (PatG) and its new provisions will likely be coming into force sooner rather than later. The reform is particularly relevant for companies from the life sciences sector, which often litigate in this pro-patentee jurisdiction. The modifications to PatG address:
- Confidentiality concerns. New section 145a PatG states the relevant provisions of the Trade Secrets Act will also now apply in patent infringement cases. In short, Germany extends the confidentiality club to patent proceedings.
- Codification of the principle of proportionality, which currently leaves significant room for interpretation.
- Implications. The reference to “third party interests” in the context of proportionality is not a welcome development, because it may limit the availability of preliminary and permanent injunctions. That said, we are yet to see how the courts will interpret the codified principle, and the open wording of the new provisions may enable judges to decide cases in a more flexible manner than is currently possible. The extension of the confidentiality club definitely is a step in the right direction, because it addresses potential concerns of litigants, which otherwise would not be prepared to disclose commercially sensitive information or technical know-how in court.
A task force, composed of key antitrust enforcement agencies including the Federal Trade Commission (FTC), and the Canadian Competition Bureau, is seeking information from the public regarding the effects of pharmaceutical mergers. This information will be used to update the practices for future pharmaceutical mergers by the task force’s constituent agencies.
Following concerns within the agencies that their current practice of reviewing pharmaceutical mergers ignores the competitive landscape in the sector, the new information collected from the public will better address all anticompetitive effects from pharmaceutical mergers and acquisitions. The task force will use these new ideas to understand when concerns are likely to arise and when to challenge and oppose problematic mergers.
Reed Smith is pleased to present a virtual life sciences CLE week from November 9 – 13, covering hot litigation and regulatory topics of interest to our pharmaceutical, biotech, and medical device clients. Sessions include:
- The ABCs of an MDL: Lessons learned through the lens of a case
- The benefits of arbitration for life sciences and health care industry disputes
- Albrecht and implied preemption – Is there any clear evidence where we go from here?
- Best practices and war stories from remote litigation and arbitration
- Pharma’s evolving relationship with telehealth
- Current trends in False Claims Act and antitrust enforcement
Each webinar in this series is presumptively approved for CLE credit in California, Connecticut, Illinois, New Jersey, New York, Pennsylvania, Texas and West Virginia. Applications for CLE credit will be filed in Delaware, Florida, Ohio, and Virginia. Attendees who are licensed in other jurisdictions will receive a uniform certificate of attendance but Reed Smith only provides credit for the states listed. For more detailed information on the credit offered for each session, please visit the registration page and click on the session of interest.
As part of the Greater Philadelphia chapter of the Association of Corporate Counsel’s Litigation Law CLE Week, I am pleased to be joining my Reed Smith colleague Jim Beck and Endo Pharmaceuticals’ Vice President and Assistant General Counsel – Litigation and Risk Jobina Jones-McDonnell to present a 12 p.m. ET webinar tomorrow on “Out of the Shadows: Strategies for Addressing Common, But Seldom Discussed, Mass Tort Litigation Irritants.”
Discovery abuse abounds in mass tort litigation. We will be discussing aspects that often fly under the radar, including:
- Expert depositions. These are routine in high-stakes litigation, but the process is disrupted by exorbitant fee demands by opposing experts, often exceeding $1,000 per hour. We will discuss how to resist and overcome such demands.
- Third parties being targets of discovery abuse in complex litigation and receiving extravagant document subpoenas, compliance with which would disrupt their document retention policies. We will address how non-parties can quash or narrow such fishing expeditions.
- Third Party Payor litigation, which also follows mass tort litigation as night follows day. We will discuss recent trends and developments.
CLE credit can be earned for PA, NJ and DE. The webinar is free for chapter members, is $25 for in-house counsel non-members, and is $225 for outside counsel non-members. To register, please visit this link, click the “register now” button, and select the “2020 Virtual Litigation Week” program.
The CARES Act funding was a lifeline for many health care organizations and life sciences companies, but came with significant attached strings. Related fraud charges are already making headlines and bring with them the serious risk of False Claims Act litigation, which can have bet-the-company implications for companies.
Please join us this Wednesday, August 5 at 2 p.m. ET for a CLE webinar on “Preparing for the inevitable: FCA investigations in a post-COVID world” presented by our Life Sciences Health Industry Group partners Rick Robinson and Sarah Cummings.
This webinar will help companies understand the False Claims Act enforcement risks stemming from CARES Act funds, along with other enforcement risks stemming from COVID-related developments. Rick and Sarah will also provide an overview of recent key False Claims Act enforcement developments pre-COVID to set the stage for the discussion.
For more information, or to register, please click here.
This program is presumptively approved for 1.0 CLE credit in California, Connecticut, Illinois, New Jersey, New York, Pennsylvania, Texas and West Virginia. Applications for CLE credit will be filed in Delaware, Florida, Ohio, and Virginia. Attendees who are licensed in other jurisdictions will receive a uniform certificate of attendance but Reed Smith only provides credit for the states listed.
While the life sciences sector has proven more resilient than most, COVID-19 has undoubtedly caused a dramatic slowdown in deal activity globally across industries. Please join Reed Smith and a panel of strategic, private equity, and venture capital leading deal makers for an engaging discussion on the impact COVID-19 has had on deal making in the life sciences sector, lessons learned, and their perspectives on deal making and deal trends in the sector in a post-COVID-19 world.
Our speakers include:
- Iqbal Hussain, Life Sciences Transactional Partner, Reed Smith
- A. Maria Dahl, Head of Transactions: Oncology Business Development & Licensing, AstraZeneca
- Edward de Nor, Executive Parter, GHO Capital
- Johan Verbeeck, Vice President Business Development, Immunology, Janssen Pharmaceutical Companies of Johnson & Johnson
- Laurence Barker, Partner and CBO, Dementia Discovery Fund SV Heath Investors
- James West, Director, Results Healthcare
You can register for the roundtable by clicking here.
The German Federal Ministry for Economic Affairs and Energy implemented further amendments to the Foreign Trade and Payments Ordinance (Außenwirtschaftsverordnung – AWV) due to the COVID-19 pandemic to prevent the buyout of German companies active in the life sciences and infection protection sectors by investors from outside the EU (or EFTA). The amendment entered into force on 3 June 2020.
The amendment broadens the scope of application of cross-sector reviews. In particular, the development and manufacture of the following products are covered by the cross-sectoral reviews:
- personal protective equipment, such as face masks;
- essential medicines such as vaccines (and including raw materials and active ingredients);
- medical products used for diagnosing, preventing, monitoring, predicting, forecasting, treating, or alleviating life-threatening and highly contagious infectious diseases; or
- in vitro diagnostics that are used to provide information on physiological or pathological processes or conditions, or for determining or monitoring therapeutic measures in connection with life-threatening and highly contagious infectious diseases.
Companies active in these sectors should be aware of the amendments implemented by the German government when planning and structuring such a transaction involving an investor from outside the EU (or EFTA) and a German business. For more information, please read our post on Reed Smith’s Antitrust and Competition Report blog.
On 2 June, the European Commission (Commission) published a roadmap (Roadmap) that will pave the way for the Commission’s communication on the EU pharmaceutical strategy, which is now due in the last quarter of 2020. The Roadmap should be read together with the Commission’s proposal for a recovery of the EU’s economy (Next Generation EU), which was published on 27 May and which includes a section on lessons learned from the COVID-19 pandemic for European health systems, governments, and pharmaceutical companies.
Key points of the Roadmap are:
1. Competing goals. The Roadmap builds further on the Commission’s existing rhetoric to ensure the access, affordability, and availability of medicines against the backdrop of an aging population, constrained healthcare budgets, increased R&D costs, the need for patient-centricity, and market access challenges for pharmaceutical companies. The unknown impact of a global pandemic can now be added to that.
Whilst the EU often advocates a holistic approach in its policy developments, it is to be seen if all of these objectives can be matched in a way that makes sense for the different stakeholders across the life sciences and health care sector. Different departments within the Commission will also not necessarily act in tandem when developing the EU pharmaceutical strategy. DG Sante is in the lead, but other Commission Directorate Generals (specifically DG RTD, DG GROW, DG Trade, and DG COMP) will be closely involved and will want to make their mark too.
2. Strategic autonomy. Considerable emphasis in the Roadmap is placed on securing the pharmaceutical supply chain and ensuring the EU’s strategic autonomy by reducing Europe’s dependency on imports of medicines and active pharmaceutical ingredients (APIs). This is not surprising in light of trade restrictions on medical supplies imposed by some EU countries as well as by third countries to deal with the COVID-19 pandemic. However, the outsourcing of the production of APIs to contract manufacturers located all over the world, most of them in India and China, had already been widely discussed in Commission circles (in particular the EU’s pharmaceutical committee) before the pandemic outbreak. The pandemic merely highlights the international dimension of the pharmaceutical manufacturing and supply activities and associated risks if there is a (serious) hitch in the supply chain. To that end, the Roadmap points out the need for EU manufacturing capacity for APIs and starting materials (though not specifying if this only concerns highly potent APIs, for example). In addition, existing work to ensure the security of drug and ingredient supply chains (e.g., through good manufacturing practice standards and on-site inspections) will continue.
3. Digital disruption. The Roadmap acknowledges the transformative impact of technology on the healthcare and life sciences sector, in particular AI and real-world evidence. However, the regulatory frameworks are lagging behind, resulting in possible barriers to value-based contracting and patient access to innovative products. The Roadmap mentions, by way of example, the support for such breakthrough innovation and emerging technology through “innovative procurement.”
4. Sustainability. Sustainability is a key EU objective across all sectors and policy areas and features prominently in the EU Green Deal, the Industrial Strategy, and the recovery plans as part of Next Generation EU. Adopting a full life-cycle approach, the Roadmap underlines the need for rational use of medicines with less resources, emissions, and pollution.
5. Market access. The Roadmap recognizes that pricing and reimbursement are Member States’ prerogatives, though emphasizes the need for more coordination and collaboration between countries on issues such as cost effectiveness and measuring added therapeutic value, including on health technology assessment. Drug pricing will be looked at too (and has been already by DG COMP) and the emphasis on “need-driven innovation” in the Roadmap is telling in that respect. The Roadmap further emphasizes the importance of the sound functioning of the internal market for generics and biosimilars.
6. EU funds. To assist companies and governments to implement the above objectives, EU funds will be made available (e.g., Horizon Europe, InvestEU, and Digital Europe Programs). Note that as part of its recovery plan, the Commission is also proposing to create a new standalone EU4Health program, with a budget of €9.4 billion.
The deadline for providing feedback on the Roadmap is 7 July 2020.
Reed Smith’s lawyers are ready to support companies and organizations in preparing their submissions to the consultation.
For further information, please contact me.
Reed Smith partner Kevin Madagan and associate Julia Lake will return for a second year to help lead a four-hour “Ad Promo Primer” at the Drug Information Association (DIA)’s “Advertising and Promotion Regulatory Affairs Conference,” which will be held virtually May 18-20, 2020. In addition, Kevin, a member of this year’s planning committee, will be leading a DIA discussion about pricing disclosures and communications.