Canada: Life Sciences Newsletter, April 2009 – Part Three

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CORPORATE FINANCE

Biotech Support

By Fran Boateng-Muhammad

With concerns about the survival of the biotechnology industry growing, calls are now being made for the UK Government to step in and significantly invest in the sector (by establishing a couple of super funds in partnership with the private sector) to ensure its survival. It is feared that a major cash injection is the only hope for the industry's survival. The hope is that a government-industry partnership would encourage private investors.

The Head of Biotech Fund Managers, Excalibur, Sir Christopher Evans, along with 21 other leading figures have put forward to the Prime Minister, Gordon Brown, and Business Secretary, Lord Mandelson, a dossier in which they demand that a national biomedical public-private partnership which involves the Government and UK investors, be set up. Two funds of £500/£750 million each are envisaged with the Government and the private venture capital community equally providing the funding.

A national Biomedical Consolidation Fund, the first investment resource, would aim at encouraging small, sub-optimal UK medical science companies in the UK to partner with similar sized companies, pool knowledge, customers' revenue and resources and present funding proposals. The second, a National Super Grown Biomedical Fund, would invest in the brightest high growth individual prospects.

Comment: It remains to be seen whether the Government will buy into the proposals set out in the Dossier and its recommendations.

REGULATORY

"Essential Similarity" and the Mutual Recognition Procedure

By Fran Boateng-Muhammad

In November 2008 in Synthon v The Licensing Authority of the Department of Health the European Court of Justice (ECJ) was asked to address whether a Member State can refuse an application for mutual recognition on the grounds that the medicinal product is not essentially similar to the reference product.

Under Article 10(1) of the Directive 2001/83/EC ('Directive'), (under the terminology in force before the Directive 2004/27/EC revision) if a medicinal product were essentially similar to another medicinal product authorised within the Community for not less than six or ten years and marketed in the Member State for which the application is made, full toxicological and pharmacological tests and trial data are not required.

The reference to the ECJ arose out of Synthon BV's ("Synthon") action against the MHRA following the MHRA's decision to refuse Synthon's application for mutual recognition of a marketing authorisation for 'Varox'. Varox had already been approved in Denmark by the Danish Medicines Agency ("DMA") under the abridged procedure using GSK's 'Seroxat' as the reference product. Whilst Varox and Seroxat were different salts, they shared paroxetine as the active moiety.

Using the DMA approval, Synthon applied to the MHRA (as a concerned member state) for mutual recognition ('MR') under Article 28 of the Directive requiring concerned member states to recognise the reference member state marketing authorisation unless there is a risk to public health. In the event of such objection the matter is dealt with by way of arbitration under Article 29. The MHRA refused Synthon's application on the basis that medicinal products containing different salts from the same active moiety could not be considered to be essentially similar. The MHRA did not suggest a risk to public health or initiate the arbitration process under Article 29.

Even though the MHRA subsequently changed its policy and deemed products with different salts essentially similar and granted Varox a marketing authorisation considered Synthon continued with its action to determine:

1. Whether Article 28 of the Directive allows a concerned member state considering whether to grant a marketing authorisation granted by a reference member state under the MR procedure to refuse that application on the basis that it is not essentially similar to the reference product?
2. Whether the only two options available to such concerned Member State, would be to (a) recognise the marketing authorisation granted by the or (b) use the Article 29 procedure.
3. Whether a concerned member state's failure to grant a marketing authorisation based on the question of essential similarity or its policy on different salts not being essentially similar gives rise to a claim for damages.

The ECJ held that where an application for mutual recognition meets the requirements of Article 28, it must be held to be valid and that it must either (i) to recognise the marketing authorisation granted by the reference member state or (ii) object to the recognition of a marketing authorisation granted on the sole basis that the product may present a risk to public health. A member state cannot refuse an application for mutual recognition on the grounds that the medicinal product is not essentially similar to the reference product. In addition the Court considered that such a failure to grant a marketing authorisation was capable of rendering that concerned member state liable in damages.

Comment: It is clear from the ECJ decision that only one ground is open to a Concerned Member State to refuse to recognise a marketing authorisation granted by Reference Member State, namely the risk to public health and in relying on this ground, the procedure in Article 29 must be followed. The rationale for this decision in part is that unless marketing authorisation granted by a Reference Member State are recognised in other Member States, the mutual recognition procedure would otherwise be deprived of its role in securing the objectives of the Directive, such as the free movement of medicinal products in the internal market. The ECJ was keen to emphasise that it based its ruling on the principle of mutual recognition and not on the concept of essential similarity.  Consequently, irrespective of whether or not the application has been submitted under the abridged procedure, a concerned Member State will have very little power to depart from the reference Member State's position, save for where there is a risk to public health.

MHRA Guidance for Website Advertising of Medicines

By Tracy Ko

In November 2008, the UK Medicines and Healthcare products Regulatory Agency (MHRA) published guidance relating to the advertising of prescription only medicine (POM) on consumer websites to assist in compliance with the Medicines (Advertising) Regulations 1994.

The guidance is aimed at companies and organisations that provide medical treatment services that may lead to the prescription and supply of a prescription medicine, but is not intended to be for pharmaceutical companies and those who actually hold the marketing authorisations.

It applies to all consumer websites (rather than those aimed towards healthcare professionals) registered in the UK or aimed at the UK audience.

Permitted information includes that relating to:

• promotion of the medical services provided by the company/organisation
• information on a certain medical condition or disease and a balanced and factual overview of the available therapeutic options
• links and navigation aids for certain medical conditions or diseases
• indicative costs of a consultation and course of treatment
• icons to encourage people to undertake a medical consultation

Prohibited information includes:

• direct references to named POMs in relation to a medical condition
• links and navigations aids to specific POMs
• costs of specific POMs, except after a prescription has been issued
• icons or features encouraging the purchase of POMs
• mentions of unlicensed medicines
• using website addresses that name specific POMs in their core URL

A full copy of the MHRA's guidance can be found at the following link:
http://www.mhra.gov.uk/Publications/Regulatoryguidance/Medicines/Guidancenotes/CON020623

New EU Pharma Package

By Yasmina Hadded

In December 2008, the European Commission unveiled the long-awaited pharmaceutical package, consisting of three separate legislative proposals and a political communication, together aiming to improve the safety, innovation and accessibility of prescription medicines within the EU.

The political communication ("the Communication") proposes 25 separate measures on various topics focusing on setting the scene for the three legislative proposals. In addition, the Communication suggests several non-legislative initiatives including pricing/ reimbursement decisions and increased cooperation with current major and future emerging partners. The Communication also recognises that the EU has fallen behind in pharmaceutical innovation and aims to restore the position of the EU as a leader in pharmaceutical excellence.

The legislative proposals to amend Directive 2001/83/EC and Regulation (EC) No 726/2004 comprise three parts.

The first would allow marketing authorisation holders to provide information to patients on prescription-only medicines if rigid criteria are complied with. Currently Member States may establish their own approaches regarding the provision of such information as long as the prohibition on advertising is upheld. The Commission felt that this resulted in disparities in practice amongst Member States and have therefore sought to create uniformity within the community whilst continuing to uphold in principle the ban on advertising. The proposal aims to establish harmonised conditions on the content of information which marketing authorisation holders are able to disseminate. Such information will be subject to strict conditions, ensuring that it is of high - quality and non-promotional. The Commission will both determine authorised channels of communication and establish monitoring rules including imposing an obligation on Member States to establish a monitoring system to ensure that the above mentioned legislative proposals are complied with..

The second proposal addresses the need for improving the EU's system for pharmacovigilance (the safety monitoring of medicines). The current system, which allows for fast removal of any drugs which have been authorised and have later needed to be taken off the market where adverse reaction to the product have associated it with an unacceptable level of risk, is complex and in need of harmonisation. The Commission therefore proposes to simplify the current rules and procedures in order to create better protection of public health. The EMEA's position as the coordinating body is to be "reinforced" by the creation of a new scientific panel called the Pharmacovigilance Risk Assessment Advisory Committee (PRAAC) designed to work alongside the Committee for Medicinal Products for Human Use (CHMP) and representatives from Member States. The Commission have also proposed an overhaul of the Eudravigilance database with the aim for it to be the single point of receipt of pharmacovigilance information and propose the introduction of a dedicated website to communicate safety issues within the EU.

The third of the legislative proposals aims at tightening safeguards for preventing the entry of false medicines which can be unsafe, inefficient or low quality and pose a risk to human health. The Commission proposes to create a number of safety features, including improving control at EU borders, which will allow all high-risk products to be easily traced and further monitor the quality and authenticity of the active pharmaceutical ingredients.

The legislative proposals will now come before the European Parliament and the Council of Ministers under the EU's co-decision procedure where the content and detail of the proposals will be debated.

Comment: The long-awaited package has been positively received by the pharmaceutical industry. Brian Ager, the Director General of EFPIA, said "now the challenge is to make sure that the provisions proceed with no further delays and no dilutions to the measures proposed".

The preemption doctrine and its impact on litigation in the Pharmaceutical industry

By Mathieu Gagné and Pascal Bouchard

The preemption doctrine, a legal theory developed by the American courts, finds its source mainly in the U.S. Constitution.¹ Basically, it leads to the recognition of the supremacy of federal law over state law. Under the doctrine, any state law that conflicts with a federal law is void.

This doctrine takes on a whole new dimension in the area of pharmaceuticals due to the broad spectrum of federally-regulated activities and the vast quantity of state-based suits.

The Supreme Court of the United States recently applied the preemption doctrine in a lawsuit that a patient brought against the manufacturer of a class III medical device – an angioplasty catheter.² The suit, founded on state common law, was dismissed because a pre-market approval system had been implemented under federal law and due to the presence of a clause ensuring the paramountcy of federal over state law.³

But what of health products – like prescription drugs – for which federal legislation does not claim paramountcy over state law? This is the question that the Supreme Court of the United States will hopefully answer in the next few months. In the matter of Wyeth v. Levine⁴ currently in deliberation, the Supreme Court will be determining whether Food & Drug Administration standards governing information that should appear on prescription drug monographs – standards that result from a complex and complete normative set of federal jurisdiction – supersede state standards that impose additional or different risk disclosure requirements and render them inapplicable. If they do, this could result in the dismissal of all suits and actions based on such causes of action. While there are standards that apply to class III medical devices, federal legislation contains no specific provision regarding the paramountcy, over state law, of federal rules applicable to the prescription-drug approval mechanism. The manufacturer is therefore requesting that the action be dismissed on the grounds that there is an implied preemption doctrine.

The Canadian counterpart of the preemption doctrine is the doctrine of federal paramountcy, which holds that a provincial law of general application, like the Consumer Protection Act or the Civil Code of Québec, does not apply if its effects are incompatible with federal legislation and regulations on research, development, commercialisation, marketing, advertising, packaging and drug sale activities that are governed by the Food and Drugs Act and it regulations. However, many actions in the pharmaceutical industry are based on provincial legislation, and seek to guarantee, among other things, a level of quality, safety and information.

Various actions currently pending before the Canadian courts might soon shed new light on the issue.

Footnotes

^{1 U.S. CONST., Art. VI, § 2}

^{2 Reigel v. Medtronic Inc., 128 S.C. t. 999 [2008]}

^{3 Medical Device Amendments (21 U.S.C. § 360 k(a) to the Food & Drug Cosmetic Act (21 U.S.C. § 301)}

^{4 U.S. Supreme Court, No. 06-1249}

Latest news ... On March 4, 2009, the U.S. Supreme Court handed down a 6-3 decision in Wyeth v. Levine.¹ Penned by Justice Stevens, this ruling from the highest court in the United States dismissed Wyeth's argument that the "preemption doctrine" is implied in the sale of prescription drugs. Wyeth was therefore ordered to pay Ms. Levine US$6.7 million. Look for our detailed commentary on this decision in our upcoming Bulletin.

Footnote

^{1 http://www.supremecourtus.gov/opinions/08pdf/06-1249.p}

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