Brexit and the Pharmaceuticals Sector: The Key Issues

The United Kingdom (UK) is scheduled to leave the European Union on 29 March 2019. Certain key aspects of the Brexit deal now seem to have been agreed upon, including a 21 month “transitional period” after the UK’s exit, but the full agreement has not yet been finalized and there is currently a risk of no deal being reached. The UK pharmaceuticals sector is a key industry seeking clarity, particularly on the following important areas:

  • Continued membership of the UK in the European Medicines Agency (EMA) regime. The EMA is the European Union (EU) body responsible for the regulation of medicines supplied in EU territories (currently situated in London; scheduled to relocate to Amsterdam next year). It is also responsible for the market authorization of pharmaceuticals across the EU and EEA-EFTA states. If the UK leaves the EMA regime on Brexit, the regulation and authorization process will likely become more costly and time-consuming because pharma companies may need to submit a separate application to gain approval for a product to reach the UK (as opposed to EU) market. Last month, the government voted on this issue and confirmed that the UK’s continued membership of the EMA should be a key priority in ongoing negotiations with the EU;
  • The status of the EU Clinical Trials Regulation. This Regulation is currently scheduled to be implemented from 2020 (i.e., during the UK’s transitional period). It will promote a uniform framework for the authorization of clinical trials across EU member states, with all applications and communications to be submitted via a single online portal (currently, clinical trials are authorized nationally, meaning that clinical trial sponsors must apply for authorization to conduct trials in each separate country). If the Regulation does not apply in the UK post-Brexit, pharma companies will need a separate UK authorization for trials they intend to progress in the jurisdiction. The government has confirmed its commitment to implement this Regulation into English law as far as possible post-Brexit;
  • The future of the Unitary Patent and the Unitary Patents Court. In April 2018, the UK government ratified the Unified Patent Court Agreement, an EU initiative aimed at developing a single European patent that would be enforceable across the different EU jurisdictions and subject to the jurisdiction of one EU led entity. In a white paper published last month, the government confirmed its intention to explore implementing the unitary patent system after its leaves the EU;
  • Continued rights of EU citizens to live and work in the UK. The pharmaceuticals industry is powered by its talented workforce, particularly in the research and development sphere, and research by recruiter DHR International published in January of this year suggests that senior applicants for pharmaceutical roles from outside the UK have dropped from 40 percent to 15 percent since the referendum due to uncertainty around Brexit. Life sciences companies will want to see a commitment by the government to ensure that this skilled workforce remain welcome in the UK post-Brexit.

On 23 August, the UK government also issued contingency guidance in the event of a “no deal” scenario. Notably, the government wrote to pharmaceutical companies that supply medicines to the National Health Service asking them to ensure they have a six week “buffer” of additional medical supplies in place before Brexit. It also issued six technical notices dealing with specific life sciences issues, confirming for example that new medicines and other medical products will have to go through separate national assessment before they can receive market authorization to be sold in the UK (meaning that companies will need to seek double approval from both the UK and the EU).

As is clear from the above, the road to Brexit is by no means smooth and these issues will be thrashed out with intensity in the coming months to try and avoid the no-deal scenario.

It is also clear, however, that the government understands how important the pharmaceuticals industry is to the UK as a whole. The industry in the UK is worth circa £42 billion and employs around 113,000 people, many in the research and development sphere where the UK has a prestigious reputation. In 2016, current UK Prime Minister Theresa May even said that “it is hard to think of an industry of greater strategic importance to Britain.”

Equally, the industry itself continues to show commitment to the UK. Soon after the Brexit vote, GSK invested £275 million to expand its manufacturing sites. And in December 2017, the government announced its Life Sciences Sector Deal, which saw 25 global life sciences organizations pledge future investment in the UK to facilitate continued research and development and strengthen the environment for clinical trials.

The UK, it seems, remains an attractive prospect for the pharmaceuticals industry (inside or outside the EU) – and the UK government seems committed to ensuring that Brexit is as smooth and painless for the industry as possible, even if that means seeking a higher level of cooperation with the EU than it might do in other areas.

Major Medical Device Changes In China Introduced by the 2018 Draft Amendment to the “Regulations on the Supervision and Administration of Medical Device”*

Following the issuance of the “Opinions on Deepening the Reform of Examination and Approval System and Encouraging Innovation in the Industries of Pharmaceuticals and Medical Devices” by the Central Office of the Communist Party of China and the Office of the State Council on October 1, 2017, the former China Food and Drug Administration** formulated and published the Amendment to the “Regulations on the Supervision and Administration of Medical Device” (Draft for Public Comments) in October 2017, upon which a further revised draft amendment was announced for public comments from June 26, 2018 to July 24, 2018 (the 2018 Draft Amendment). The 2018 Draft Amendment is believed to be very close to its final version and will have a significant impact on all market players in the medical device industry. The major changes introduced by the 2018 Draft Amendment are summarized as follows:

  • Improve the Market Authorization Holder (MAH) Mechanism

Prior to the 2018 Draft Amendment, the term “MAH” was adopted and used in the 2016 “Notice of the General Office of the State Council on the Pilot Plan of the Drug Market Authorization Holder System.” The 2018 Draft Amendment provides for a clear definition of MAH, the entity that obtains from the competent drug supervision authority a medical device filing receipt or registration certificate for sale of the medical device into markets. In addition, the 2018 Draft Amendment adds specific provisions on MAH’s rights and obligations. For instance, MAHs may produce or sell their products or entrust others to do the same; MAHs shall ensure that their quality systems operate effectively and their products satisfy the relevant requirements; MAHs shall submit self-inspection reports to the relevant supervision authority every year; MAHs shall establish a medical device adverse event monitoring system and assume responsibility for the recalling of defective products. In addition, the 2018 Draft Amendment imposes detailed obligations on foreign MAHs’ agents in China.

  • Reform Clinical Trial Management System

Pursuant to the 2018 Draft Amendment, “medical device clinical evaluation” refers to a process where an applicant, through clinical literature, clinical experience and data, clinical trials, etc., verifies whether a medical device satisfies the relevant clinical uses and requirements. The 2018 Draft Amendment clarifies that for the filing of all Category I medical devices, no clinical evaluations are required; for registration of Category II medical devices, in principle, no clinical evaluations are required; and for registration of Category III medical devices, clinical evaluations are required unless the devices have a proven record of safety. For the purpose of making clinical evaluations, subject to any implementing rules to be promulgated along with or after the promulgation of the 2018 Draft Amendment, it is understood that the 2018 Draft Amendment indicates that foreign clinical study data may be accepted and recognized, except for evaluations of those devices that involve very high risks or are used to support or maintain life.*** This would be one of the most noteworthy changes brought by the 2018 Draft Amendment and would save considerable time for imported medical devices (with low or moderate risks) to enter into Chinese market.

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Little-Known Trap in U.K. Intellectual Property Litigation Could Cost Successful Plaintiffs: What Life Sciences Companies Need to Know

Did you know the U.K. patents system penalizes a failure to record a patent transaction at the Patent Office by depriving a successful plaintiff of its entitlement to recover its full legal costs in any subsequent infringement litigation on that patent?

It’s a little-known trap for the unwary, and the subject of our London partner Jonathan Radcliffe’s recent article, “Unregistered Patent Transaction? Even in Win, That’ll Cost You,” in Bloomberg Law’s World Intellectual Property Report.

The article is a very worthwhile read for multinational pharmaceutical and medical device companies looking to protect their intellectual property in this important jurisdiction. In it, Jonathan discusses how the findings from a recent U.K. Patents Court judgment in a medical devices case have clarified the extent of litigation sanctions imposed when there is a failure to record a patent transaction at the Patent Office. The U.K. patents system may deprive a successful plaintiff of its entitlement to recover its full legal costs in these circumstances.

This case will also affect trademarks and registered designs, as these statutes have identical provisions. This decision will impact potential litigants and future commercial transactions; they must make sure they register an interest, and make sure their due diligence in corporate and commercial transactions consider this potential situation.

To read the full article, please click here.

Join Us for a Webinar on “GDPR: Live”

The Global Data Protection Regulation (GDPR), the new European data privacy regulation that will have world-wide reach, goes into effect on May 25, and will significantly affect life sciences companies.

If you have been wondering what life is going to look like in a GDPR world, please join Reed Smith attorneys Cynthia O’Donoghue, Dr Andreas Splittgerber, Philip Thomas, Daniel Kadar, and Gerry Stegmaier at 9:30 a.m. on May 25 for a CLE webinar on “GDPR: Live.”

Topics covered will include expected developments in the coming months, an update on national legislation implementation, and prioritizing next steps in a GDPR world.

This program is presumptively approved for 1.0 general CLE credit in California, Illinois, New Jersey, Pennsylvania and Texas. For lawyers licensed in New York, this course is eligible for 1.0 credit under New York’s Approved Jurisdiction Policy. The program is also presumptively approved for 1.0 New Jersey CPE credit.

To register for this free webinar, please click here.

Upcoming Free Educational Opportunities for Life Sciences Clients

As the life sciences industry continues to undergo significant changes, Reed Smith is committed to offering high quality, free educational opportunities for its pharmaceutical, medical device, and biotechnology clients. We thus are pleased to shared two upcoming opportunities with you.

First, because the new import tariffs proposed by the current administration could significantly affect life sciences companies, Reed Smith partner Mike Lowell and associate Jeff Orenstein are offering a free CLE webinar that will provide practical information on the new tariffs and what they could mean for your business. This program is presumptively approved for 1.0 general CLE credit in California, Illinois, New Jersey, Pennsylvania, Texas and West Virginia. For lawyers licensed in New York, this course is eligible for 1.0 credit under New York’s Approved Jurisdiction Policy. An application for 1.0 HRCI credit is currently pending. To register for this free CLE webinar, please click here.

Additionally, Reed Smith’s London office will be hosting a distinguished panel to discuss “Equity Capital Markets in the Pharmaceutical and Biotech Industry” on May 22. Speakers include Reed Smith’s James Wilkinson and Fiona McFarlane, as well as Mitesh Patelia of Crowe Clark Whitehill, Vadim Alexandre of Northland Capital Partners, and Dr. Dmitry Kuzmin of 4BIO Capital. To register for the event, please click here.

FDA Announces Plans to Improve Safety and Advance Innovation of Medical Devices

On April 17, 2018, FDA announced its plan to launch the Medical Device Safety Action Plan: Protecting Patients, Promoting Public Health (Action Plan), which aims to support and advance innovation in medical devices while also assuring the safety of the devices throughout their Total Product Life Cycle (TPLC). To that end, FDA intends to focus on the following five major areas:

  • Establish a robust medical device patient safety net in the United States by improving the quality and reliability of real-world evidence that manufacturers assess to support the safety and effectiveness of their products.
  • Explore regulatory options to streamline and modernize timely implementation of post-market mitigations.
  • Spur innovation toward safer medical devices.
  • Advance medical device cybersecurity.
  • Integrate the Center for Devices and Radiological Health’s (CDRH) pre-market and post-market offices and activities to advance the use of a TPLC approach to device safety.

The Action Plan builds upon existing programs that the Agency employs in the regulatory oversight of medical devices, including the Unique Device Identification System, use of real world evidence, and the National Evaluation System for Health Technology (NEST). For example, the Action Plan discusses FDA’s plans to seek additional funding and capabilities of NEST needed to realize its goal of establishing a robust medical device patient safety net.

FDA intends to streamline its process for requesting device manufacturers to implement post-market mitigations (such as, labeling, user training, and device features) by exploring the possibility of issuing umbrella regulations to identify devices that might require additional training or user education. Currently, FDA’s process for implementing mitigations through special controls requires rulemaking, which the Agency identifies as challenging and time consuming.

FDA’s Action Plan describes a multi-factor approach to spurring innovation toward safer medical devices. For example, the Agency plans to create opportunities for increased interactions between FDA staff and the device developers during the development, evaluation, and pre-market review phases of their products or by providing more streamlined pathways for comparative safety claims. Additionally, FDA released a draft guidance document, Expansion of the Abbreviated 510(k) Program: Demonstrating Substantial Equivalence Through Performance Criteria, on April 12, 2018, which establishes a voluntary, 510(k) pathway for demonstrating the safety and effectiveness for certain moderate-risk devices. In this guidance, FDA proposes to expand the 510(k) pathway to allow manufacturers of well-understood moderate-risk devices to use performance criteria to demonstrate substantial equivalence of their device to legally marketed predicate devices. Specifically under this pathway, if a new device meets or exceeds the level of performance relevant to the safety and effectiveness of a legally marketed device, then FDA could find that the new device is as safe and effective as the legally marketed device. Thus, rather than submitting data from direct comparison testing between the new device and the legally marketed predicate device, the manufacturer may establish substantial equivalence by demonstrating conformance to performance criteria established in FDA guidance, FDA-recognized consensus standards, and/or special controls.

In an effort to improve cybersecurity for medical devices, FDA will, among other things, consider seeking new pre-market authorities, such as requiring device manufacturers to build capability to update device security into a product’s design. Further, FDA intends to explore the development of a CyberMed Safety (Expert) Analysis Board (CYMSAB), a public-private partnership, which would assess cybersecurity vulnerabilities and evaluate patient safety risks at FDA or the manufacturer’s request.

Finally, FDA reiterates its previously announced plan to reorganize and streamline the structure of CDRH into one large office responsible for pre-market review, post-market surveillance, manufacturing and device quality, and enforcement actions relating to a device. The Agency believes this approach will enable its employees to have a more universal regulatory view of a device throughout its TPLC rather than at a specific stage of the product’s life cycle.

While it is difficult to gauge the full impact this Action Plan, it is clear that the medical device industry should plan for changes as the Agency further evolves its oversight of medical devices. Although device manufacturers stand to benefit from certain aspects of the Action Plan, particularly with respect to the abbreviated 510(k) pathway, other aspects may result in increased burdens and regulatory obligations. FDA is accepting comments on the Action Plan, which may be submitted through the public docket (FDA-2018-N-1315) at

Upcoming Free Ethics CLE Webinar: “Privilege Protection: Tips for Working with Media Consultants Without Jeopardizing the Attorney-Client Privilege”

Involving any outside consultant in the attorney-client relationship gives rise to risks to the attorney-client privilege. Yet when a PR crisis erupts, good communications advice is essential, and a company’s media strategy can determine whether it is the subject of thoughtful, balanced articles or a maelstrom of misleading headlines – and whether unfair publicity infects any litigation that may occur.

That’s why my colleague Erica Yen and I are pleased to present this free Ethics CLE webinar, designed for in-house counsel at pharmaceutical and medical device companies, on “Privilege Protection: Tips for Working with Media Consultants Without Jeopardizing the Attorney-Client Privilege.”

Through discussion of case law and ethics rules, this webinar will analyze tips for working with media consultants that potentially can mitigate the risk that a company will have been deemed to have waived the attorney-client privilege.

This program is presumptively approved for 1.0 Ethics CLE credit in California, Illinois, New Jersey, Pennsylvania, Texas and West Virginia. For lawyers licensed in New York, this course is eligible for 1.0 Ethics credit under New York’s Approved Jurisdiction Policy.

To register for this free Ethics CLE webinar, please click here.

Analysis of Medicare, Medicaid, and Other Health Policy Provisions in Bipartisan Budget Act

The newly-enacted Bipartisan Budget Act of 2018 includes numerous Medicare, Medicaid, and other policy and payment provisions impacting health providers and manufacturers. Of particular note, the new law:  increases Medicaid rebate obligations with respect to line extension drugs; changes manufacturer discount obligations in the Medicare Part D “donut hole”; repeals the Independent Payment Advisory Board (IPAB); makes Stark Act revisions; and significantly increases penalties for violations of various anti-fraud statutes.  A Reed Smith Client Alert focusing on the major Medicare, Medicaid, and public health provisions of the Act is available here.

Upcoming Free CLE Webinar: “Multidistrict Litigation: What to Expect from JPML Consolidation Through Trial”

With more than half of all cases pending in the federal courts now docketed in multidistrict litigations (MDLs), pharmaceutical and medical device companies facing large-scale litigation should expect to find themselves before the Judicial Panel on Multidistrict Litigation (JPML) with an MDL on the horizon.

That’s why Melissa Geist and Jennifer Eppensteiner are pleased to present a free CLE webinar on “Multidistrict Litigation: What to Expect from JPML Consolidation Through Trial.” This webinar will provide in-house counsel at life sciences companies with an introduction to JPML and MDL procedures, including the latest trends and strategic tips for maximizing efficiencies where possible. You will also learn about the effect MDL litigation can have on pending state court actions, as well as about best practices for coordination among federal and state court actions.

This program is presumptively approved for 1.0 general CLE credit in California, Illinois, New Jersey, Pennsylvania, Texas and West Virginia. For lawyers licensed in New York, this course is eligible for 1.0 credit under New York’s Approved Jurisdiction Policy.

To register for this free webinar, please click here.

Join us for A Webinar on “Global Data Protection Regulation (GDPR) – Three Months to Go”

In three months, the new European data privacy regulation – with a world-wide reach and draconian sanctions for non-compliance – takes effect. Are you ready? Join Reed Smith on Thursday, February 22, 2018 for an informative CLE webinar discussing key priorities and strategies for compliance during the final three months remaining before the GDPR takes effect on May 25, 2018.

For more information, registration and topics of discussion please click here.