This newsletter summarises key regulatory and legal developments in the pharmaceuticals sector and healthcare industry in Europe.

Feature Article: European pharma sector under scrutiny

European Commission investigates the pharmaceutical sector

Europe

Guidance on obtaining 11-year marketing protection

Germany

European Court of Justice: Garlic Preparations in Capsule Form are not Medicinal Products

United Kingdom

UK government seeks 10% cut in drug prices from industry

Feature Article : European pharma sector under scrutiny

European Commission investigates the pharmaceutical sector

On 16 January 2008 the European Commission launched a sector inquiry into the pharmaceutical industry in Europe.  It alleges that fewer medicines are being brought to market in Europe and the launch of generics is delayed.  The inquiry is intended to uncover whether this is as a result of competition law concerns.  At this stage, the inquiry does not allege that any one company has acted unlawfully, but the Commission's practice is to use evidence from these broad inquiries to launch follow-on investigations to prosecute individual companies.  The Commission's first step - conducting surprise inspections at a number of company premises - is unprecedented and suggests that it believes companies would cover up evidence relevant to the inquiry.

As a first step in this inquiry, the Commission has conducted the inspections at the premises only of certain pharmaceutical companies producing innovative medicines and generics.  However, all of Europe's main pharmaceutical companies are likely to be affected by the inquiry, regardless of whether they have been visited yet by the Commission and, in particular, are likely to receive detailed mandatory questionnaires.  Questionnaires are likely to cover multiple European operations.  It is important that companies prepare for any inquiry, assess potential areas of exposure and ensure that responses are coordinated across its corporate group within Europe.

A copy of the Commission's press release on this subject is available here. This link contains information on how we can help and provides you with our contact details.

Please contact Samantha Mobley of the London office or Thilo Räpple of the Frankfurt office if you would like to be introduced to our team.

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Europe

Germany

European Court of Justice: Garlic Preparations in Capsule Form are not Medicinal Products

On 15 November 2007, the European Court of Justice ("ECJ") issued a judgement on case C-319/05 European Commission v. Federal Republic of Germany, pursuant to which Germany had wrongly classified garlic preparations in capsule form as medicinal products, thereby imposing a restriction on the free movement of goods as prohibited by Article 28 of the EC Treaty.

Background

In 2005, the German authorities refused to allow the importation and marketing of "garlic extract powder capsules", i.e. capsules containing pure dried garlic powder, as food supplements, on the ground that they were not regarded as foodstuffs but medicinal products within the meaning of Directive 2001/83/EC on the Community Code relating to Medicinal Products for Human Use ("Medicinal Products Directive").

The European Commission, however, took the view that the garlic preparation in question was not a medicinal product. The Commission stated that the classification as a medicinal product imposed a burden on importers of the product in Germany which constituted an obstacle to the free movement of goods contrary to Article 28 of the EC Treaty.   Hence, the Commission brought an action against the Federal Republic of Germany before the ECJ for failure to fulfill its Treaty obligations concerning the free movement of goods.

Reasoning of the ECJ

The ECJ decided that the garlic preparation in question could not be classified as a medicinal product as it did not fall within one of the two definitions of medicinal products, i.e. by presentation or by function.

A medicinal product by presentation is a product "presented for treating or preventing disease" within the meaning of Medicinal Products Directive "when it is expressly indicated or recommended as such, possibly by means of labels, leaflets or oral representation".  In this case, the ECJ held that no aspect of the packaging of the garlic preparation made the product resemble a medicinal product and the capsule form was not exclusive to medicinal products.

A product can be considered as a medicinal product by function taking into account "all the characteristics of the product, in particular its composition, its pharmacological properties to the extent to which they can be established in the present state of scientific knowledge, the manner in which it is used, the extent of its distribution, its familiarity to consumers and the risks which its use may entail".  In this case, the ECJ stated that the garlic preparation did not contain any substances other than natural garlic and had no additional effects, either positive or negative, compared to those derived from the consumption of garlic in its natural state.  Therefore, the effect of the garlic preparation was no more than the effect of a foodstuff containing garlic consumed in a reasonable quantity.  In contrast, a medicinal product must have the "function of treating or preventing disease". Beneficial effects for health in general, such as those of garlic, are not sufficient.

The ECJ further held that Germany's classification of the garlic preparation created an obstacle to intra-Community trade since garlic products legally marketed as foodstuffs in other Member States could be marketed in Germany only after having been subjected to the authorisation procedure for the placing on the market of a medicinal product.  According to the ECJ, this obstacle could not be justified for reasons relating to the protection of health and life of humans in accordance with Article 30 EC.

As a result, the ECJ held that the Federal Republic of Germany had failed to fulfil its Treaty obligations concerning the free movement of goods under Article 28 EC and Article 30 EC.

Consequences of the judgment

This judgment lays down very specific criteria with respect to the classification of borderline products containing botanicals.  As a consequence, the former practice of some Member States to classify products containing specific botanicals automatically as medicinal products by function becomes obsolete.  As regards pending procedures with respect to the classification of products containing garlic this ruling might be introduced as a basis to reinforce the marketability of the product as a foodstuff.

For further information on this article please contact Judith Barwig of the Frankfurt office.

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United Kingdom

UK government seeks 10% cut in drug prices from industry

Discussions between UK health ministers and the pharmaceutical industry are ongoing as the Pharmaceutical Price Regulation Scheme ("PPRS") is renegotiated.  Representatives of the industry had previously agreed to an average seven per cent cut in the cost of pharmaceutical products in 2005 during the last renegotiation of the PPRS.  The 2005 PPRS was originally planned to run for five years but at the end of 2007 Alan Johnson, the health minister, told the House of Commons health select committee that he had reopened the PPRS negotiations.

Mr Johnson emphasised the influence of the PPRS on the NHS budget as a whole.  He said the negotiations on the PPRS were a: "very big and important part of achieving these flexibilities and achieving these efficiencies."  The Financial Times (7 January 2008) reported that Mr Johnson had told the paper that he planned to generate "substantial savings" in the drugs budget during talks on the PPRS.  The extent of these savings has not been made official yet but it has been widely reported in the UK press that government officials have presented plans to industry to reduce the £11 billion annual medicines bill by at least 10 per cent, at £1 billion. 

The Association of the British Pharmaceutical Industry ("ABPI") and the Department of Health issued a joint press release on 8 January 2008, clarifying that negotiations on a potential new PPRS agreement have begun, but that neither party is commenting on any speculation on the content of the negotiations although any new agreement will be based upon the government's four principles made in response to the 2007 Office of Fair Trading ("OFT") report: value for money, reward for innovation, accelerated uptake of new medicines and sustainability.

As well as the government's desire to cut the UK's drugs bill, there are additional pressures on the PPRS.  One report published by the OFT in February 2007 recommended that the PPRS: "should be reformed, to deliver better value for money from NHS drug spend and to focus business investment on drugs that have the greatest benefits for patients."  In December 2007, the OFT published a further report recommending (as reported in the November / December 2007 edition of this newsletter) that medicines distribution in the UK be reformed, arguing that: "any future widespread use of exclusive distribution arrangements might lead to longer-term competition concerns."  The OFT also concluded that there is a significant risk that the 'direct to pharmacy' arrangements will result in greater costs to the NHS.  Furthermore, the GlaxoSmithKline High Court ruling made in June 2007 held that the PPRS was not an informal agreement but a formal legal contract, prompting calls that this ruling warranted a review of the PPRS.

The negotiations over the PPRS are expected to continue until June 2008.

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Pharmacy Internet Logo

The Royal Pharmaceutical Society of Great Britain ("RPSGB") is introducing a new logo to be shown on the front page of participating pharmacies' online websites.  It will be possible to click on the logo to link to a page on the RPSGB page where checks can be made to ensure the site belongs to a registered pharmacy.  Only retail pharmacies that are registered with the RPSGB offering professional services via the internet can use the new internet pharmacy logo.

It is hoped that the new internet logo will help the confusion that has been reported among the general public in distinguishing between legitimate online pharmacies and other commercial websites.  RPSGB research indicates that two million people in the UK now regularly purchase medicines over the internet.  The RPSGB warns that the safety and quality of products being sold by unqualified internet suppliers cannot be guaranteed, as the medicines may be counterfeit, substandard or unapproved new drugs.

For further information on this article please contact Beatriz Araujo or Julia Gillert of the London office.

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Guidance on the use of stand alone contract laboratories

The Medicines and Healthcare products Regulatory Agency ("MHRA") has issued new guidance for UK Manufacturer's Licence and Authorisation Holders on the use of stand alone contract laboratories. 

According to the MHRA's press release, the guidance note:

• Defines a stand alone contract laboratory in relation to quality control testing of medicinal products.
• Provides guidance as to when a contract laboratory must be named on a manufacturer's licence (including import, export and Specials) for relevant medicinal products for human use and/or a manufacturer's authorisation (including import and export) for investigational medicinal products.
• Provides guidance as to when a contract laboratory is not required to be named on a manufacturer's licence or authorisation.
• Outlines the MHRA's criteria for inspection of contract laboratories.

A copy of the guidance can be obtained from the MHRA's website.

For further information on this article please contact Beatriz Araujo or Julia Gillert of the London office.

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MHRA proposals on enforcement of the European Regulation on medicines for paediatric use

The Medicines and Healthcare products Regulatory Agency ("MHRA") has published its proposals concerning enforcement in the UK of the obligations set out in Regulation (EC) No. 1401/2006 as amended on medicinal products for paediatric use (the "Paediatric Regulation").  The Paediatric Regulation provides a framework to incentivise companies to conduct research into the use of medicines for children.  It came into force in the EU on 26 January 2007 and has direct effect in all Member States.  In the UK, the MHRA is obliged to ensure that the requirements of the Paediatric Regulation can be enforced and to determine the penalties for infringement.  The MHRA's publication is a consultation document concerning these enforcement measures in respect of products that have not been authorised via the EMEA's centralised procedure (the obligations of the Paediatric Regulation in respect of such products are enforced by the European Commission).

The MHRA proposes that the enforcement provisions be implemented by amending the Medicines for Human Use (Marketing Authorisations Etc.) Regulations 1994 (SI 1994/3144) and a draft statutory instrument is provided.  The MHRA has requested comments on the draft statutory instrument and has provided a list of questions to stakeholders that are required to be answered by 18 April 2008. 

A copy of the consultation document can be obtained from the MHRA website.

For further information on this article please contact Paul Hawkins or Beatriz Araujo of the London office.

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BERR consultation on implementation of the Batteries Directive

The Department for Business, Enterprise and Regulatory Reform ("BERR") has published a consultation on implementation of the Batteries and Accumulators and Waste Batteries and Accumulators Directive (2006/66/EC) (the "Batteries Directive").  The new directive is due to be implemented on 26 September 2008.

The Batteries Directive has been extended to cover all types of batteries and accumulators and includes portable batteries.  The new directive could have a number of implications for medical device manufacturers.  In particular, manufacturers will have to ensure that devices are designed in such a way that waste batteries and accumulators can be removed easily.  Instructions will have to be provided to enable the safe removal of batteries and accumulators that are incorporated into appliances.  New labelling obligations are introduced including the crossed-out wheelie bin symbol (similar to WEEE requirements), an indication of the capacity of the battery and chemical symbols in respect of batteries containing more than 0.0005% mercury, more than 0.002% cadmium or more  than 0.004% lead.  Certain classes of manufacturer or importer will also be subject to registration requirements.

A copy of the consultation can be obtained from the BERR website.

For further information on this article please contact Paul Hawkins or Beatriz Araujo of the London office.

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