2022 has been a busy year for the life sciences sector, notably marked by Europe's emergence from the restrictions and major effects of the Covid pandemic. 2023 promises to be a similarly busy year as new pharmaceutical regulations are introduced, the new UK medical device regulations are published, AI legislation is expected to come into force and the Unified Patent Court opens its doors. However, many of these initiatives have already experienced delays and there is no guarantee that there will be adherence to the suggested timelines. That said, here are some of the major developments to expect in 2023.
Introduction of new European pharmaceutical regulations
It would be an understatement to say that the world has changed a lot in the last 20 years, and the development of science and technology has been one of the key driving forces behind this change. Despite major advancements in pharmaceuticals, driven by world-changing developments such as digitalisation and human genome sequencing, the current EU pharmaceutical framework is still based on the 2001 Directive and the 2004 Regulation on medicinal products for human use. The clear need for an update has been recognised, as the European Commission is currently working on plans to revise the existing pharmaceutical legislative framework, to ensure it is future-proof and crisis-resistant. The impetus for this change can, in part, be linked to the difficulties experienced during the Covid pandemic, which revealed weaknesses in Europe's current supply systems.
The aim of future-proofing the regulatory system and making it resistant to crises is a challenging ambition which will require legislators to consider and prepare for the unknown. However, drawing lessons from the pandemic will be an important starting point, and has been identified as such by the Commission, which aims for the legislative changes to ensure general access to affordable medicines, improve security of supply and reduce red tape.
In terms of the timeline, delays have meant that the proposals, which were previously expected before the end of 2022, will not now be published by the Commission until 2023. However, this will not be the end of the story as the legislative proposals will have to pass a number of steps, namely adoption by the European Parliament and Council of Ministers, before the proposals can be implemented into EU law. Therefore, though we are unlikely to see any new EU pharmaceutical laws published in the coming year, we can expect to see the proposals take shape, setting out Europe's pathway for the future of pharmaceuticals.
The Unified Patent Court and Unitary Patent begins
For the very first time, after almost 50 years of negotiation and many stops and starts along the way, patent holders in Europe will soon get the option to add unitary patents to their patent portfolios. There is also the addition of a single patent litigation system, covering a major part of the European market – the Unified Patent Court (UPC). This new system is currently expected to begin on 1 April 2023.
The protection of the unitary patent and the decisions of the UPC will affect the whole territory of the participating countries, be it injunctions and damages due to infringement of patents, or patent revocations. In total, the UPC covers a market of approximately 350 million people, comparable to the US. In addition to unitary patents, it will also be possible, subject to their opt-out from the new court, to litigate European patents in the UPC.
The UPC will begin with at least 17 participating countries, including Germany, France, Italy, the Netherlands, Belgium, Denmark and Sweden. However, Spain, Poland, Croatia, the Czech Republic and Hungary will not participate for the foreseeable future. The UK formally left the system in July 2020 after it left the EU.
A ‘sunrise period’, in which proprietors will be able to opt-out of European patents and any supplementary protection certificates based on them from the UPC system, is expected to begin in January 2023.
Consumer Collective Redress Directive's summer arrival
The EU will be implementing a new mechanism from summer 2023, which will allow EU consumers to bring collective redress actions. This development is being implemented in response to the increasing risk of harm to large numbers of consumers that has arisen from globalisation and digitalisation. Many of us have probably felt, at one point or another, a sense of frustration at an online grievance but have felt that, as individuals, we are unable to act. The EU hopes that harmonisation of the procedural mechanisms for representative actions, both for injunctive and redress measures, will boost consumer confidence and empower consumers to exercise their rights. In addition, given that some EU countries already have consumer redress systems to varying degrees, it is hoped that harmonisation will contribute to fairer competition and create a level playing field for traders operating in the internal market.
Although the original EU Directive entered into force in 2020, EU Member States have until 25 December 2022 to transpose the rules into their national laws as they see fit. The measures within these laws with then be applicable from 25 June 2023. Given that each country will have its own method of implementation, the quantity and type of collective redress sought will likely vary between Member States. However, from the second half of 2023 onwards, we can expect to see a rise in the number of collective redress actions brought in the EU.
Developments in AI legislation
Aided by the rise of 'big data', artificial intelligence has been a relentless driver for change within the life sciences sector. It has been used in countless ways across myriad fields. However, the speed of change and development has outpaced regulatory and legislative frameworks.
In response, on 21 April 2021, the European Commission published its draft AI Regulation, with wide-ranging proposals on the regulation of the systems that contain AI, using a risk-classification framework based on proportionate, risk-based rules. The Regulation will have extra-territorial effect, meaning that if an AI system is used or placed on the EU market or its use affects EU-located individuals, the regulatory requirements would be triggered. Non-compliance could result in administrative fines of up to 6% of a company's total worldwide annual turnover. The Regulation is expected to enter into force in 2023, with a transitional period during which standards would be developed.
By way of contrast, the UK has taken a sector-specific approach to AI regulation. The UK government has set out a 10-year plan to ensure the foundations are laid for ethical AI governance and development in its National AI Strategy. This approach to regulating AI technology is less centralised than that of the EU and sets out proposed rules based on six overarching principles. Regulators are expected to apply these flexibly, in order to support innovation while ensuring use of AI is safe and avoids unfair bias. The decentralised approach allows each regulator, such as the CMA, the ICO, the FCA and the MHRA, to take a contextual approach to regulation. Following an interim policy paper and a call for views, which closed in September 2022, an AI White Paper is expected to be published imminently.
Many will be keeping a close eye on the comparative success of the two approaches over the coming years. One thing we can be sure of is that AI's growing use and influence will be a continued theme in the life sciences sector.
UK medical devices legislation delayed
One update which was expected in 2022, but which has recently been delayed, is the publication of the new UK Medical Device Regulations (UK MDR). These are now promised in spring 2023. The MHRA has also delayed the date of application of the UK MDR by one year, until 1 July 2023. Even with this delay, the time for companies to get their systems in order to achieve compliance with the UK MDR is going to be limited.
The UK MDR will require all products placed on the UK market to have the UKCA mark, rather than the EU's CE marking. However, there are to be several routes to achieve that UKCA marking, including by recognition, to a large extent, of the regulatory compliance that is accepted via a CE mark. This is applicable when using the same notified body group and there will also be recognition of other regulatory systems, details of which are expected to be revealed in 2023. Nevertheless, CE markings related to certificates issued by EU-recognised Notified Bodies will continue to be valid in Great Britain until the end of the relevant transition period, which will be until 1 July 2027 for general medical devices certified under the Medical Devices Directive, or 1 July 2029 for IVDs and for general medical devices certified under the EU Medical Devices Regulations. Provisions other than certifications, such as those relating to post market surveillance, vigilance and economic operators, must nevertheless be complied with by 1 July 2024.
Implementation of a new EU clinical trials information system
The EU's Clinical Trials Regulation went live on 31 January 2022 along with its accompanying Clinical Trials Information System (CTIS). From 31 January 2023, applicants must submit new applications for clinical trials using CTIS. By 31 January 2025, all on-going clinical trials must transfer to CTIS. Over time, the intention is for more and more information about clinical trials to be available through public searches.
The EU hopes that such an extensive and centralised database will transform the initiation, design and running of clinical trials, setting a harmonised standard across its Member States. Assuming the implementation process goes smoothly and avoids too many issues, we can expect that the CTIS will overhaul the way in which clinical trial data is recorded and accessed.
Major changes in 2023
We expect 2023 to herald some major legal changes for life sciences products which will set the framework for future regulation. For companies operating in the countries that are members of the UPC, the availability of that court has the potential to change the patent strategy of many companies. Meanwhile in the UK, the new Medical Device Regulations, that will regulate both general medical devices and IVDs, will also be likely to have a major impact and take Great Britain one step further away from the EU.
