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Focus on Regulation

UK Publishes Draft Legislation Prohibiting the Manufacture and Supply of Cosmetic Products Containing Microbeads

On 11 September 2017, the UK Department for Environment, Food and Rural Affairs (DEFRA) published draft regulations prohibiting the manufacture and supply of rinse-off personal care products containing microbeads. The draft Regulations (available here) are to be laid before the UK Parliament for approval.

Under the draft legislation:

  • companies will be prohibited from manufacturing such products from 1 January 2018, and from supplying such products from 30 June 2018; and
  • failure to comply will be an offence punishable by a fine of up to 10% of annual turnover in England.

Background

The new legislation forms part of the UK’s marine strategy to achieve and maintain clean, healthy and ecologically diverse marine waters by 2020 as part of a wider EU strategy. It is estimated that up to 680 tonnes of plastic microbeads are used in cosmetic products such as face scrubs and toothpastes sold in the UK each year. These microbeads do not biodegrade and can often end up in marine waters, being too small to be completely filtered out in sewage treatment systems. Evidence has shown that such particles absorb toxic chemicals and pathogens and are ingested by marine organisms, damaging their health and thereby entering the food chain. Voluntary measures have already been taken by industry, but the UK Government wishes by introducing these Regulations to ensure consistent compliance across industry.

Several other countries have already implemented, or are seeking to implement, equivalent measures, including in the US, Italy, France, Ireland, South Korea, India and Australia.

New Offences

Under the new Regulations, it will be an offence to manufacture and supply (by way of sale, promotional prize or gift) rinse-off personal care products containing microbeads of 5mm or less in any dimension. “Microbeads” are defined as water-insoluble plastic particles, consisting of a synthetic polymeric substance or a combination of such substances.

Cosmetic products covered by the ban will include products applied to any external part of the human body (including skin, hair, lips and nails), teeth or oral cavity, for the purpose of cleaning, protecting or perfuming, maintaining or restoring the body’s condition or changing its appearance. It will apply to products that are intended to be promptly removed by washing or rinsing with water, rather than left to be absorbed or otherwise worn off.

Sanctions and local authority powers

The Regulations will be enforced by local authorities who will have the power to require the person committing an offence to pay a fine of up to 10% of that person’s annual turnover in England.

Under the Regulations, local enforcement offices will have the power to enter business premises and carry out any necessary investigations to ascertain whether there has been an offence if they have reasonable belief that an offence has been committed. Local authorities will also have the power to issue variable monetary penalties, compliance notices and stop notices, and to accept “enforcement undertakings” signed by the offending company setting out the action it will take to prevent prohibited activities, compensate those affected by the offence, and steps to restore any likely damage to the environment.

The Regulations also provide for the publication of enforcement action taken by local authorities.

The Regulations require local authorities to consult on and publish guidance on the sanctions and penalties available under the Regulations, including the circumstances in which may or may not be imposed, factors to be taken into account in calculating penalties, and the rights to make representations and appeal decisions handed down by the local authorities.

Next steps

The draft Regulations are to be laid before both Houses of Parliament in the UK for approval.

If passed, companies will need to ensure that they stop manufacturing rinse-off personal care products containing microbeads by 1 January 2018 and companies (from manufacturers to distributors and retailers) will no longer be able to supply remaining stock from 30 June 2018. This will need to be factored in to supply chain planning and onward supply agreements.

FCC Launches Proceeding to Examine 911 Capabilities of Enterprise-Based 911 Services on Multi-Line Telephone Systems

The FCC intends to launch a new proceeding to examine issues related to 911 capabilities of enterprise-based 911 services provided over multi-line telephone systems (MLTS) and IP-based systems (collectively referred to as “Enterprise Communications Systems” or “ECS”).

Last week, the FCC released a draft Notice of Inquiry (“NOI”) examining the 911 capabilities of MLTS and IP-based systems such as cloud-based services that support voice communications.  In the NOI, the FCC seeks to “identify the reasons that the 911 capabilities of ECS appear to have lagged behind those of wireless, wireline and interconnected VoIP . . . [and] potential ways to ensure that ECS keep pace with technological developments and meet consumer expectations with respect to 911 access, routing, and location information.”

The NOI asks detailed questions regarding the ECS industry, including questions about vendors, equipment, services, business arrangements and the E911 and Next Generation 911 capabilities of ECS.  The FCC asks commenters to discuss the costs and benefits of “provisioning ECS to support 911 access, routing, and location information.”  Finally, the FCC seeks comment on potential ways to improve ECS support of 911 access, routing and location, including the implementation of industry standards or possible regulatory action.

The FCC will vote on the NOI at its next open meeting, on September 26, 2017.  The NOI does not propose any new obligations or rules but the FCC may do so as this proceeding progresses.  The NOI also indicates that the FCC is taking an enhanced interest in enterprise communications systems’ 911 service obligations.  We will continue to monitor this proceeding.

The life sciences industry under the antitrust spotlight in China: two practical points

The simple fact is that the Chinese antitrust regulators are determined to up their enforcement activities in the life sciences industry. Almost immediately after drug pricing was liberalised in 2015, an antitrust enforcement decision was announced against a government entity, a local health commission, for breaching a number of provisions in the Anti-Monopoly Law (AML). The pace has not let up since then. More cases have since made headlines, including abuse of dominance cases and cartel cases. Last month, draft guidelines were published on pricing conduct by companies for drugs in shortage and API manufacturers. And just a few weeks ago, the spotlight turned to medical device manufacturers. There has now been an official announcement from the regulators that local antitrust agencies will further investigate into the bundling of medical devices as a form of commercial bribery.

As it is in any jurisdiction there is no joy in operating day-to-day with the cloud of a potential investigation looming over the business.  How can companies operating in the life sciences space in China be prepared? Two practical points:

First, know who does what. The AML targets three types of conduct: restrictive agreements, abuse of dominance and anti-competitive mergers. In addition to this, the AML also prohibits so-called “administrative monopolies,” a term used to describe government conduct with anti-competitive effects. The Anti-Monopoly Enforcement Authority oversees the enforcement of China’s antitrust laws. The actual enforcement, however, is carried out by three separate agencies:

  • The National Development and Reform Commission (NDRC) is the regulator responsible for enforcing price-related breaches of the AML. The NDRC has been very active in the life sciences space and last month published its decisions against two local companies for infringing the AML by engaging in excessive pricing and the refusal to supply APIs.
  • The State Administration for Industry and Commerce (SAIC) is the enforcer responsible for non-price related breaches of the AML. The SAIC has previously imposed a fine on a Chinese pharmaceutical company for abusing its dominant position by refusing to deal.
  • The Ministry of Commerce (MOFCOM) reviews and approves mergers. In recent years, several pharmaceutical companies were sanctioned for not notifying their transactions to MOFCOM for prior approval. Fines were imposed on these companies.

Second, know what to expect in the event of an inspection. They are broadly similar to US antitrust or European Commission dawn raids in that the inspectors from the Chinese antitrust agencies have the power to seize electronic and hardcopy evidence. Likewise, obstructing an inspection can attract penalties and inspections can last several days. And as with a number of other jurisdictions, unannounced inspections in China are also becoming increasingly common.

ECJ sides with farmers on genetically modified crops

The European Court of Justice has held that Member States may not adopt emergency measures prohibiting genetically modified food and feed (GMOs) unless there is clear evidence that a particular GMO presents a serious risk to health or the environment in accordance with Article 34 of the GMO Regulation (EC) No 1829/2003.

Ruling in favour of farmers of genetically modified maize, the ECJ held that the precautionary principle, allowing provisional risk management measures where the possibility of harmful effects has been identified (but not conclusively established), should not be interpreted as relaxing the so-called “safeguarding clause” in Article 34. In this case, referred to the ECJ by an Italian District Court, new evidence of potential harm from studies carried out by Italian research institutes was not sufficient to support the requested emergency measures and invalidate the previous authorisation of genetically modified maize by the European Food Safety Authority.

While the majority of EU consumers remain averse to GM crops, this ruling shows that Member States will require conclusive scientific evidence in order to rely on the safeguarding clause which has previously been used to prevent the growth of GMOs.

You can read the full judgment of Fidenato and Others (C-111/16) here.

The responsibility to respect human rights in the banking sector

The question of how the UN Guiding Principles on Business and Human Rights (UNGPs) should apply to the banking and financial services sector is one that is attracting increasing attention. Indeed, the dialogue has intensified in recent months between UN bodies responsible for interpreting and implementing the UNGPs and representatives of the financial community, including the Thun Group (an informal group of bank representatives focused on understanding the application of the UNGPs to the banking sector). Continue Reading

Arbitration: a new forum for business and human rights disputes?

As the international community turns its focus to the third pillar of the UN Guiding Principles on Business and Human Rights – “Access to Effective Remedy” is the central theme of the upcoming 2017 UN Forum on Business and Human Rights – a working group of international law specialists has published a proposal to use arbitration to resolve disputes arising out of human rights abuses involving businesses (“BHR disputes“). Continue Reading

EMA updates guidance concerning medicinal products intended exclusively for non-EU countries

The European Medicines Agency (“EMA”) has updated its guidance (Guidance) regarding procedural advice for medicinal products intended exclusively for markets outside the European Union (“EU”). The Guidance addresses several questions which applicants requesting a scientific opinion as provided in Article 58 of Regulation (EC) No 726/2004 (“Article 58”, the “EMA Regulation”) may have. Article 58 of the EMA Regulation provides that EMA, in co-operation with the Word Health Organisation (WHO), may provide a scientific opinion concerning certain medicinal products for human use. These medicinal products are intended exclusively for markets outside the EU in which population is largely low and middle income.

The Guidance also provides information regarding issues that are commonly discussed during pre-submission meetings related to requests for scientific opinions. Pre-submission meetings provide applicants with the opportunity to obtain regulatory and procedural advice regarding their application in accordance with Article 58 of EMA Regulation. Accordingly, EMA explicitly encourages the establishment of pre-submission meetings with the applicants concerning the evaluation of medicinal products that are intended for non-EU markets.

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Smallsat companies form trade association to address issues facing the smallsat community

At the annual Smallsat conference in Logan, Utah, the Commercial Smallsat Spectrum Management Association (CSSMA) held its first meeting since legally forming earlier this month. A number of well-known smallsat operators and other companies have joined the organization, which seeks to advance a number of goals common to the smallsat community. These goals include creating conditions for a transparent and expedited spectrum coordination process for shared spectrum and advocating CSSMA views on spectrum management and other policy matters affecting the smallsat community.

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Unburden Yourself: FDA Requests Comments on Ways to Implement President Trump’s Regulatory Reform Executive Orders

Earlier this year, in an effort to alleviate unnecessary regulatory burdens, President Trump issued two executive orders, Executive Order 13771, Reducing Regulatory and Controlling Regulatory Costs and Executive Order 13777, Enforcing the Regulatory Reform Agenda. On September 8, 2017, FDA published several notices in the Federal Register, to implement these orders, soliciting comments from the public on ways to modify the agency’s current regulations, while still meeting both the Agency’s public health mission and statutory obligations. Questions FDA hopes the public will consider include:

  • Have advancements and innovations in science or changes in the law resulted in outdated or unnecessary regulations?
  • Are regulations duplicative of FDA or other agency requirements or voluntary or consensus standards from third party organizations?
  • Do regulated entities find compliance with any regulations particularly difficult, and if so, how?
  • Do any regulations require an unnecessary amount of recordkeeping and reporting?
  • Can goals be achieved through less costly means, while still protecting public health?
  • How should FDA prioritize regulations for reform?

FDA has indicated that comments may address considerations beyond the list of questions provided, but that all comments should be as specific as possible, include supporting data or information, and be submitted in the format provided for in the notice.

Yesterday, Deputy Commissioner Anna Abram posted a statement explaining the purpose of the exercise. She stated that “science will remain FDA’s North Star when it comes to our role in devising regulatory policy.” She identified several possible areas of focus, including regulations that “may not adequately reflect advances in science, technology or changes in industry practice.” She also highlighted, as an example, “places where FDA’s rules concerning new drugs are being used in ways that may create obstacles to the timely entry of generic competition.”

Comments are due by December 7, 2017. The agency published seven virtually identical notices—one for each Center and one general notice. The Federal Register Notice for the Center for Drug Evaluation and Research can be accessed here, and the one for the Center for Biologics Evaluation and Research is here.

If you have any questions about these notices or are considering submitting comments, please contact one of the authors of this alert or the Hogan Lovells attorney with whom you regularly work.