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Focus on Regulation

Draft Fee Regulations – Attempts to Address Incentivising Loopholes

Section 18A of the South African Medicines Act (the “Medicines Act“) prohibits the supply of any medicine, medical device or in-vitro diagnostic device, according to a bonus system, rebate system or any other incentive scheme.

Although no definitions in respect of these prohibited activities have been included in the Medicines Act, considerable guidance as to the meaning thereof has previously been sought from a number of court decisions and, during 2014, draft general regulations relating to bonusing and sampling (the “2014 Draft Fee Regulations“) were published under the Medicines Act.

The 2014 Draft Fee Regulations purported to clarify the operation of section 18A of the Medicines Act, and further purported to provide definitions of terms that are mentioned in the Medicines Act, but which are not defined in the Medicines Act.

This led to the view being held by many, that the approach adopted in the 2014 Draft Fee Regulations complicated the interpretive process by stripping the words in section 18A of the Medicines Act of their inherent meaning, and based on existing rules of interpretation.

The 2014 Draft Fee Regulations were never enacted, and have remained in draft form.

Several years down the line, and on 1 December 2017, the Minister of Health published proposed regulations (the “Proposed Fee Regulations“) in terms of the Medicines Act, and which regulations are intended to provide further guidance regarding the prohibited activities included in section 18A.

Should the Proposed Fee Regulations be enacted in their current form, many currently acceptable business activities will be prohibited and, for example, the supply of medical devices or in-vitro diagnostic devices at a reduced or nominal cost will be regarded as being prohibited activities.

More specifically, the Proposed Fee Regulations provide proposed definitions for each of the three prohibited activities, and further propose penalties for the transgression thereof.

Many are concerned regarding the attempts made by virtue of the Proposed Fee Regulations (and previously the 2014 Draft Fee Regulations) to purportedly “clarify” the operation of section 18A of the Medicines Act, as this would mean that the Minister of Health proposes using such regulations to impose an interpretive gloss on what Parliament intended when it enacted section 18A of the Medicines Act, which would mean, in our respectful view, bringing matters such as these in through the “back door”, and accordingly open these Proposed Fee Regulations to Court challenge.

In our view, it would be better for the Minister of Health to rather amend the relevant provisions of the Medicines Act, and to the extent necessary.

Interested persons are invited to provide comments in respect of the Proposed Fee Regulations, by 28 February 2018.

Proposed regulations – bonus system, rebate system and incentive schemes

New Legislation Increases Access to Medical Products for Military Applications

Today, the President signed new legislation that gives the Department of Defense (DoD) new opportunities to advocate to FDA for expedited development, review, and Emergency Use Authorization (EUA) for medical products that could help protect and treat U.S. military forces.  The legislation was developed as an alternative to a provision in the National Defense Authorization Act for Fiscal Year 2018 (NDAA) that would have given DoD new authority to bypass FDA in authorizing certain unapproved medical products for U.S. armed forces.  The new legislation requires greater coordination and collaboration between DoD and FDA and establishes or modifies three FDA programs.

Emergency Use Authorization

First, the legislation would allow DoD to make an emergency determination in support of FDA granting an EUA, even if the source of a heightened risk to U.S. military forces does not emanate from a biological, chemical, radiological or nuclear agent, which is what current law requires.  Now the significant risk of military emergency justifying the determination could come from any source, provided that it is an “imminently life-threatening and specific risk” to U.S. military forces; and the risk need not be specifically linked to an attack but could include, for example, an endemic risk of viral contagion or other health risks associated with military deployment.  In addition, the new provision gives FDA no more than 45 days after DoD’s request to decide whether to issue the EUA.

Expedited Development and Review

Second, and perhaps more significant, the legislation requires FDA to take action to expedite the development and review of a medical product if DoD makes a qualifying request.  A qualifying request is one that is based on at least a “significant potential for a military emergency” involving a “specific and imminently life-threatening risk … of attack” to U.S. military forces.  In addition, the medical product that is the subject of a qualifying request must be “reasonably likely to diagnose, prevent, treat or mitigate” the life-threatening risk.  The statute does not expressly require the product to fulfill an “unmet medical need” to qualify for the program, as required by some other FDA programs for expedited review and development.  However, it may be hard to demonstrate the potential for an emergency with the requisite risk under the new statute if there is already a medical product approved and available to counter it. Continue Reading

EMA published an assessors’ guidance document in connection with explanatory note to GVP module VII

The European Medicines Agency (“EMA”) has released a guidance document for assessors. The guidance document is written in a questions-and-answers form. It should be read in combination with the explanatory note to GVP module VII.

The purpose of this document is to provide guidance concerning certain challenges related to the Periodic Safety Update Report (PSUR) single assessment (PSUSA) procedure. These challenges are specific to the EU single assessment of PSURs of medicinal products approved on national level. EMA has based this guidance document on the experience acquired from the PSUSA procedure since it started in January 2015.

The PSUR is a global document in which information such as product information, description of on-going procedures or risk minimisation activities should be provided. EMA’s guidance document provides that the purpose of the PSUR is to determine whether there are new risks or whether risks have changed and whether there are changes to the benefit/risk balance of the medicinal product. In addition, GVP module II describes the purpose of PSUR as presenting a comprehensive, concise and critical analysis of the benefit/risk balance of the medicinal product. Continue Reading

EMA launched improved version of EudraVigilance

The European Medicines Agency (“EMA”) has launched a new and improved version of EudraVigilance. EudraVigilance is the system for managing and analysing information concerning suspected adverse reactions to medicinal products authorised or being studied in clinical trials in the European Economic Area (“EEA”).

EMA announced that the new and improved version of EudraVigilance would facilitate reports by market authorisation holders and sponsors of suspected adverse reactions. A better process for analysis of information to suspected adverse reactions is provided for the benefit of patient safety in the EEA.

According to the EMA, the new EudraVigilance system has several significant benefits including:

  • Better detection of new or changing safety issues, enabling rapid action to protect public health;
  • Better searchability and more efficient data analysis;
  • Ability to support an increased number of individual case safety reports (“ICSRs”) needed due to the new requirement to report non-serious cases to EudraVigilance;
  • Reduced duplication of efforts;
  • Marketing authorisation holders no longer need to provide ICSRs to national competent authorities, they have to submit these to EudraVigilance only;
  • Enhanced collaboration between EMA and World Health Organisation.

Continue Reading

The Decision Is In, and South Africa Will Soon Tax the Sugar Content of Beverages

Following the 2016 budget speech during which the proposal to tax the sugar content of beverages was first tabled, and after 18 months of vigorous debate, the South African Parliament on Tuesday adopted the taxation of sugary drinks.

According to Treasury, the sugar tax is motivated by the high consumption of sugary beverages in South Africa, and which impact levels of obesity, and further contributes to an increase in non-communicable diseases such as diabetes and hypertension. Continue Reading

Publication of the notified bodies’ designation codes under the MDR and IVDR

The European Commission’s Implementing Regulation concerning the list of codes defining the scope of designation of notified bodies under the Medical Devices Regulation (“MDR”) and In Vitro Diagnostic Regulation (“IVDR”) has been published in the Official Journal of the European Union.

Background

The MDR and IVDR entered into force on 26 May 2017. Both Regulations provided that the European Commission should by 26 November 2017, by means of implementing acts, draw up a list of codes and corresponding types of device. The purpose of the list is specification of the scope of the designation of notified bodies.

The purpose of the codes is to categorise the fields of expertise of the notified bodies and thereby designate their scope. Notified bodies are now able to express their intention concerning the designation they plan to request on the basis of this list of codes.

The published list of codes for designation under the MDR does not vary widely compared to those in the public consultation version published on 27 September 2017. One small but significant difference is that Code 1002 concerns devices manufactured utilising tissues or cells of human origin while Code 1002 of the draft version made reference to devices manufactured using tissues or cells of animal origin. Code 1003 of the final official version relates to devices manufactured using tissues or cells of animal origin. Continue Reading

UK Modern Slavery Act – are tougher disclosure requirements on their way?

Disclosure requirements under the UK Modern Slavery Act 2015 (‘MSA’) have pushed many businesses operating in the UK to gather and interrogate information about human rights risks across their operations and supply chains – but for some advocates of the MSA and campaigners, the new disclosure regime has fallen short.

The shortcomings are addressed to some by updated guidance published by the government, and by a private members’ bill currently in the House of Lords. Even if the bill does not secure government support at this stage, it may still influence the future development and strengthening of the requirements. There remains pressure from civil society and within parliament for more fundamental changes to the disclosure regime.

Experience and shortcomings

Campaigners claim that the disclosure requirement is too weak inherently because it says only that a company ‘may’ disclose six specified categories of information. Monitoring and enforcement mechanisms are said to be inadequate, resulting in low levels of compliance (some reports claim that less than half of all obligated companies have published a statement).

Earlier this year, the UK’s anti-slavery commissioner, Kevin Hyland said that most statements failed to comply with the basic legal requirements and that “even statements that do legally comply have a lot of room for improvement with many simply being reiterations of generic human rights policies.”

In July, the Parliamentary Joint Committee on Human Rights echoed these concerns and said that “many statements do not reveal much, if anything, about the practical steps being taken to tackle modern slavery“. The Committee highlighted the absence of a central repository for reports, and suggested that the scope of the MSA might be broadened to cover other human rights matters.

Updated guidance

In October 2017, the UK Government released updated guidance (available here). Whilst it does not change the legal requirements under the MSA, the new guidance:

  • instead of saying that a statement ‘may’ include six categories of information, says that companies ‘should aim to include’ such information (although the MSA itself still says ‘may’);
  • encourages companies with a turnover of less than £36m to publish a statement (even though they are not legally required to do so);
  • includes a definition of child labour based on that used in ILO conventions (although the guidance adds that ‘child labour will not always constitute modern slavery’); and
  • includes ‘best practice’ guidance in relation to approving and publishing a statement, which says that statements should be published as soon as ‘possible’ (rather than ‘reasonably practicable’) after the financial year end.

Although these changes are not particularly significant, it was difficult for the government to go further without amendment to the MSA itself. However, the updated guidance does not attempt to provide further clarity of the meaning of terms currently used in the MSA, and in particular the meaning of ‘carrying on business’ in the UK, which has probably caused the most confusion and uncertainty for businesses.

Private members’ bill

The Modern Slavery (Transparency in Supply Chains) Bill, introduced by Baroness Young of Hornsey as a private members’ bill, had its first reading in the House of Lords on 12 July 2017, and is awaiting a second reading. The bill would amend the MSA to require:

  • statements to include the categories of information specified in the MSA;
  • a company that has not taken any steps to address slavery and human trafficking risks to explain why it has taken no such steps; and
  • the government to publish a list of all organisations subject to the disclosure requirements.

It is not clear whether the bill has sufficient government support to become law, although it is doubtful how much difference in practice these amendments would make. Most statements published so far include the information that the MSA currently says ‘may’ be included, and few if any have said that no steps to address slavery and human trafficking risks have been taken.

The bill is similar to a bill introduced by Baroness Young in the last parliament which had passed to the House of Commons and was supported by the Parliamentary Joint Committee on Human Rights. Although private members’ bills do not usually become law, it is worth bearing in mind that the current disclosure requirements were first proposed in private members’ bills introduced in the House of Commons in 2010 and 2012, and Baroness Young played an active and influential role in the development of the MSA.

The future

Although both the current bill and the update guidance are less ambitious than they might have been, there remains pressure from civil society and within parliament for more fundamental change. Business should be prepared for further requirements relating to human rights due diligence and disclosure, and the increasing importance of having a full understanding of supply chain risks. Businesses should also be aware that under the existing MSA guidance, there is an expectation for statements to show progress each year.

A number of other jurisdictions have implemented similar disclosure requirements relating to modern slavery and other human rights risks in supply chains (including California, Australia, France, and the Netherlands) and other jurisdictions are thought to be considering similar regimes.

Switzerland: The next frontier for mandatory human rights due diligence?

Proposals are being considered to amend the Swiss constitution to require mandatory human rights due diligence for companies based in Switzerland. This post considers the contents of the amendment, its progress and what Swiss businesses can learn from the experience of their French counterparts in preparing for the “hardening” of the UN Guiding Principles.

The debate around imposing hard edged human rights obligations on corporations is not new. In April 2015, a coalition of Swiss civil society organisations launched the Responsible Business Initiative (“RBI“), to hold Swiss companies to account for human rights abuses committed abroad.

The coalition is led by NGOs, including Greenpeace and Amnesty International, and is supported by 85 organisations working in international aid, women and human rights and environmental protection, as well as churches, unions and shareholders’ associations.

The RBI takes the form of a suggested amendment to the Swiss Federal Constitution, which would result in the introduction of a new Article 101a (« Responsibility of business ») in the Constitution. Under the amendment, Swiss-based companies would be legally obliged to incorporate respect for human rights and the environment in all their business activities, including activities abroad.

Popular initiatives in a nutshell

A popular initiative is a legal mechanism allowing Swiss citizens to request an amendment to the Federal Constitution (of one article or its entirety). If a popular initiative collects 100,000 signatures or more from the Swiss electorate within 18 months, it then progresses to the Federal Council and the Parliament, who can accept the amendment, reject it altogether, or put forward a counter-proposal.

Since 1848, only 22 initiatives have been approved at the ballot box. However, an unsuccessful (or retracted) popular initiative can still shape the political landscape by generating public debate, highlighting specific issues and putting pressure on politicians. Regardless of the legal outcome, it remains a useful tool for civil society organisations looking to lobby on specific topics.

Main elements of the Responsible Business Initiative

Under the RBI amendment, (the English version of which can be found here), companies based in Switzerland will be under an obligation to carry out “appropriate due diligence” to make sure they comply by certain human rights standards. This approach, which is based on the United Nations Guiding Principles on Business and Human Rights (“UNGPs“), requires that: risks must be identified, mitigated, and reported on.

This due diligence requirement would apply to companies that have their registered office, central administration or principal place of business in Switzerland.

The RBI relies primarily on the UNGPs to determine which fundamental principles must be respected abroad. Under the UNGPs, businesses have a responsibility to respect “internationally recognised human rights”, which includes at a minimum the International Bill of Human Rights and the principles concerning fundamental rights contained in the eight International Labour Organization core conventions as set out in the Declaration on Fundamental Principles and Rights at Work. The RBI goes slightly further by including in its mandatory due diligence “international environmental standards” (which, according to the RBI definition, goes so far as to include non-governmental standards such as the ISO standards).

Significantly, the RBI also provides for liability of parent companies for serious human rights violations committed by their subsidiaries or companies under their control.

Current status of the RBI

In September 2017, the Federal Council recommended the rejection of the RBI, on the basis that the proposal was going “too far” by imposing mandatory due diligence and by relying on stricter liability rules than in other legal systems, which could put Switzerland at an economic disadvantage on the global trade scene.

In November 2017, the Council of States issued a counter-proposal  to the initiative. The Council acknowledged that time had come for a hard law version of the UNDPs in Switzerland, but considered the RBI in its current state to be “too vague” and to be going “too far”. The Council therefore decided to submit a counter-proposal to the Legal Affairs Committee for approval.

If the Council’s counter-proposal is approved, both the original RBI and the counter-proposal will be voted on by Swiss voters through a federal referendum, which would take place towards the end of 2018 or the beginning of 2019.

Comment

The Swiss developments reflect the shift in focus from ‘soft’ to ‘hard’ law and highlight the need for responsibility throughout the value chain (see our post on key themes from this year’s BHR Forum). A recent example of that trend was the widely publicised enactment of the French ‘duty of vigilance’ law in 2017.  Experience there shows that businesses which seek voluntarily to comply with the UN Guiding Principles were at a competitive advantage when soft law ‘hardened’.

Sources note that the guidelines provided in the UNGPs are “rapidly becoming the norm in practice”. Swiss businesses wishing to stay ahead of the curve should take note of the proposed initiative, and might want to consider a proactive approach to human rights due diligence.

UK Government Announces Life Sciences Sector Deal

The UK government has published a White Paper setting out its new Industrial Strategy and, as part of that strategy, has agreed a Sector Deal with the UK life sciences sector.

The White Paper covers all industries and identifies the life sciences sector as having particular strategic value in the UK, generating £64 billion of annual turnover and employing more than 230,000 people.

A white paper is a formal statement of government policy. The core theme of the White Paper is creating growth and improving productivity based on five foundations: ideas, people, infrastructure, places and the business environment. Over layering the foundations, the White Paper identifies four areas of innovation, referred to as “Grand Challenges”, where the government believes Britain can lead globally – artificial intelligence and big data, clean growth, the future of mobility, and meeting the needs of an ageing society. The strategy will be supported by investment through a new £725m Industrial Strategy Challenge Fund and commercial funding.

The Industrial Strategy is centred upon collaboration between the government and industry, set out in “Sector Deals”. The Life Sciences Sector Deal is one of the first four to be launched, the other three being artificial intelligence, automotive and construction.

The Life Sciences Sector Deal builds on the recommendations set out in an industry-led UK Life Sciences Industrial Strategy report published in August 2017, and includes government commitments to:

  • reinforce the UK science offering through new collaborations between industry and UK universities, opening of new research facilities and expanding other operations by life sciences companies in the UK;
  • establish a new Health Advanced Research Programme to support the creation of new innovative and high-risk industries and programmes in the life sciences sector;
  • encourage collaboration between the UK’s National Health Service (NHS) and industry, and develop regional Digital Innovation Hubs to support the use of NHS data for research purposes; and
  • grow life sciences manufacturing in the UK.

Other interesting points in the White Paper for life sciences companies include:

  • the government will increase research and development investment to 2.4% of GDP by 2027 and increase the rate of R&D tax credit to 12 per cent;
  • biotechnology, genetics and cell therapies are identified as specific areas of strength to build on;
  • a new programme funded by the Industrial Strategy Challenge Fund will focus on the use of health data for early diagnosis of disease and development of precision medicines;
  • the government has committed to support regional life sciences clusters such as the Oxford-Milton Keynes-Cambridge corridor; and
  • a new Office for Artificial Intelligence will be created and focus on six priority business sectors, one of which is life sciences.

The White Paper leaves little doubt that supporting and growing the life sciences industry in the UK is high on the government’s agenda both now and post-Brexit.

The White Paper is available here.

One step closer to new rules on organic farming

After three years of negotiations, the European Union is nearing the end of a long process to simplify and harmonise the rules for organic food production and the labelling of organic products.

Council Regulation (EC) 834/3007 currently defines the minimum standards for organic products that are produced, manufactured, imported into, sold or traded within the EU, as well as the national inspection and certification systems that ensure that these requirements are met.

However, the past decade has seen a 125% growth in the value of the organic food market, with the amount of land used for organic farming growing at around 400,000 hectares per year. The European Commission has now recognised that the current rules need to be updated to support the long term development of organic production in the EU.

One of the key aims of the new regulations will be to ensure that the EU organic logo offers consumers the same guarantee of quality across Europe, including in respect of products imported from outside the EU.

The new rules will:

  • Create an EU-wide set of rules for all organic producers and products. Any necessary exceptions will be limited in time, regularly assessed and applied to all producers to ensure fair treatment.
  • Apply equally to non-EU farmers who export their goods to the EU, phasing out the 60+ different “equivalence” standards currently applying to imported organic foods and levelling the playing field between EU and non-EU producers.
  • Enable farmers to apply for group certification for their products, thereby reducing costs and making it easier to join the organic scheme.
  • Apply to new products like salt, cork and essential oils and enable further products to be added in response to consumer demand.
  • Allow national authorities the discretion to reduce controls and inspections on farms from every year to every two years for producers with no record of non-compliance after three consecutive controls.
  • Reinforce the rules on precautionary measures to avoid accidental contamination by pesticides, giving consumers confidence that no pesticides have been used in the production of organic foods.

Following the European Parliament’s first reading, the proposed regulations will come into force on 1 January 2021, repealing Council Regulation (EC) 834/3007.

Please see here for more information on the new proposals.