Pharma forum 2021

SPCs and data exclusivity – The Northern Ireland Protocol makes an impact

Key takeaways:

• Overall, Brexit hasn't affected patent rights, as they aren't derived from EU laws or institutions. It has, however, had an impact on supplementary protection certificates and regulatory protections derived from EU regulations – valuable rights within the pharmaceutical industry. 
• The way marketing authorisations are granted for the UK – especially where the treatment of Northern Ireland is concerned – also has an impact on obtaining these rights for use in the UK, and their duration. 
• UK legislators now have freedom to make their own SPC law and, in future, the courts may diverge from EU law on the requirements of a valid SPC. This represents an opportunity for reform and improvement, particularly considering recent challenges in national courts around applying the Court of Justice of the European Union (CJEU) authorities' judgments in this field.

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Moving the goalposts? Scoring a preliminary injunction in the UK and EU

Key takeaways:

• Traditionally in Dutch preliminary injunction cases, both infringement and validity/invalidity are considered, leading these trials to be dubbed "mini-trials on the merits". In recent years, however, other factors (like balance of convenience) have made their way into preliminary injunction assessments. 
• Belgian case law on assessing European patent validity in preliminary injunction cases has evolved from a presumption of validity, which was almost impossible to refute, to an actual assessment of validity. This new approach factors in all circumstances of the case, with an emphasis on case law in other jurisdictions that relates to parallel parts of the same European patent. A pending referral before the CJEU might change this approach. 
• Due to the bifurcated system involved, German preliminary injunction courts are generally reluctant to assess the validity of alleged patents in preliminary proceedings. Instead, they tend to rely on the guidance of the technical courts in charge of assessing the invalidity of arguments before granting preliminary injunctions. The pending referral of the Munich court by the CJEU might affect this approach, however. 
• For the UK, it is important to focus on the facts of the case and evidence should be directed to the relevant period.

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Fireside chat with George Moore

Our international co-head of Life Sciences & Healthcare Simon Cohen sits down with Viatris' George Moore to talk about the direction that the pharmaceuticals industries are headed in and the legal issues that could arise along the way.

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Reflections on the Regeneron v Kymab mouse case

Key takeaways:

• Based on section 72(1)(c) of the Patents Act 1977, the skilled person must be able to work the invention disclosed without undue burden, must be able to work the invention across the full extent of the monopoly claimed, and is entitled to make trial and error experiments, using their common general knowledge. A general principle of application may be enough to enable all embodiments across a claim.
• The product claims asserted that all mice contained a reverse chimeric locus, however, even allowing for cgk techniques, only a very small range of the mice could be claimed, and none of the mice contained the entire human variable region.
• The Court of Appeal held that there was a principle of general application (disclosed by the patent) that did cover all the claims, and the inventive concept was using the reverse chimeric locus to prevent immunological sickness.
• The Supreme Court found that the requirement of sufficiency exists to ensure that the extent of the monopoly conferred by the patent corresponds with the extent of the contribution made. In the case of a product claim, contribution to the art is the ability of the skilled person to make the product itself, rather than the invention (if different). Patentees are free to choose how widely to frame the range of products for which they claim protection. But they must make no broader claim than is enabled by their disclosure. The disclosure required – coupled with the cgk that existed at the priority date – must be enough to enable the skilled person to make substantially all the types or embodiments of products claimed.
• The Supreme Court further ruled that a claim which seeks to protect products which cannot be made by the skilled person using the disclosure in the patent will exceed the contribution to the art made by the patent. Patentees may rely (if they can) upon a principle of general application if it would appear reasonably likely to enable the whole range of products within the scope of the claim to be made. But they take the risk that the supposed general principle will not enable a significant, relevant part of the claimed range to be made. 
• Finally, the Supreme Court held that the requirement to show enablement across the whole scope of the claim applies only across a relevant range. Broadly, the range will be relevant if it is denominated by reference to a variable which significantly affects the value or utility of the product in achieving its purpose. Enablement across the scope of a product claim is not established merely by showing that all products within the range will – if and when they can be made – deliver the same general benefit of the invention.

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Enforcement of precision medicine patents – UK challenges ahead

Key takeaways:

• Sub-population patent claims – which affect old drugs for known treatments in a sub-population of people who respond particularly well to them – need to be tested in the English courts.
• These claims will probably be allowed, following EPO cases – but they need to be distinguished from claims that only explain the mechanism for how the drug works.
• Enforcement is a real difficulty and there is currently little sign of how the court would determine infringement.
• One option is to use regulatory change (such as prescribing practice) but this seems unlikely.

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Developments in clinical trials regulation

Key takeaways:

• The EU's Clinical Trial Regulation in the EU is nearly here. It will enhance and hopefully accelerate processes related to the approval and conduction of clinical trials.
• Standard templates for clinical trials are in place in France; it is mandatory to refer to these standards, which are balanced and avoid lengthy negotiations with clinics.
• While remote clinical trials currently a major discussion topic – including how to evolve existing standards accordingly – these trials are not yet common practice.

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AI-enabled drug discovery collaborations

Key takeaways:

• Partnering between big pharma and leading-edge AI developers continues to thrive.
• The increasing specialisation of AI systems means AI developers have unique and valuable intellectual property and seek a more active role in all aspects and stages of pharmaceutical R&D.
• Collaborations need to be structured to protect both parties' valuable intellectual property.
• Insights generated by AI will be know-how at first, but may comprise or lead to patentable inventions.
• Ownership and exploitation rights in the project output need to facilitate exploitation and to ensure an equitable return for the collaborating parties.

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Compulsory licensing in Germany – the coronavirus crisis and beyond

Key takeaways:

• Two types of compulsory licensing exist in Germany: the governmental use license and the compulsory license.
• Although having a license granted under patent law is possible, there are strong regulatory restrictions in place for medicinal products that are newly developed, rely on data or market exclusivity that has expired, or represent a new use of a known medicine.
• Collaboration by patent holder is key.
• Patent law cannot solve capacity issues.
• The waiver of patents will not raise the number of available medicines.

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How to arbitrate a life sciences contract dispute

Key takeaways:

• The intellectual property and regulatory aspects of life sciences commercial disputes favour a mix of skills in your legal team. Ideally, you should recruit arbitration process and strategy experts who draw upon scientific and other industry knowledge to provide a holistic solution.
• Life sciences contract disputes are particularly well suited to arbitration due to its confidentiality, the ability to choose subject matter experts as arbitrators, and its procedural flexibility
• It is always advisable, particularly as the claimant, to front load your evidence gathering for an arbitration. There are some important tactical considerations around how much of your case you reveal early on but knowing the evidence universe allows you to make these decisions.
• Choosing your arbitrator in a life sciences dispute is critical; the governing law, subject experts, and balancing styles/personalities among a tribunal of three all need carefully considered.

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GDPR and AI update – Navigating data transfers restrictions, new AI regulation proposals, cybersecurity risks, personal data ethics and diversity

Key takeaways – data transfers:

• Data transfers beyond the EEA require legal adequacy measures (adequacy decision (which include EU to UK transfers) or standard contractual clauses and supplemental assessments and measures) in place before they can be undertaken.
• The CJEU decision in Schrems II invalidated Privacy Shield, however, Standard Contractual Clauses (SCCs) can remain a valid transfer mechanism when used alongside transfer impact assessments and appropriate supplemental safeguards (where required). Different regulators have adopted different approaches to what constitutes appropriate assessments and safeguards following Schrems II.
• New EC SCCs are modular in format: C2C, C2P, P2P and P2C; there is no additional processor agreement required for C2P and P2P (unless some processing takes place in the EEA). The SCCs offer multi-party possibilities for both data importers and exporters, and the choice of law and jurisdiction within the EU. The ICO is expected to publish UK SCCs later this summer.
• The new EC SCCs include clauses relevant to the law enforcement access concerns central to Schrems II, including that: parties warrant the level of protection in the third country, transparency/information obligations, obligations relevant to official requests for disclosure, and documentation obligations.
• Your next steps should be to start planning and data mapping your transfers, identify the correct SCC modules to use, kick off transfer impact assessment process, and document and constantly re-evaluate the measures you've undertaken. 

Key takeaways – AI regulation:

• AI regulation impacts the entire life cycle of an AI-driven product or system and sits alongside the GDPR. It applies to software, specified techniques and approaches, machine learning/logic/stats-based approaches, and generated outputs.
• AI's potential impact on life sciences is evident in the rise of high-risk AI systems. Looking more broadly, you can see its effect in recent developments in medical devices regulation, and in the huge role AI plays in today's pharmaceuticals industry.
• The new AI regulation framework prohibits practices (dark patterns, micro-targeting) not systems. It breaks AI systems into "high risk" and "low risk" categories. High risk systems are broken down further by classification model and come with a new set of control requirements.
• Enforcement is handled by the European AI Board and National Competent Authorities and involves governance disclosure. Non-compliance carries financial penalties of up to 6% of global annual turnover.

Key takeaways – cybersecurity risks:

• Key cybersecurity threat points to consider are the vendor eco-system, ransomware, phishing attacks, the Internet of Things (IoT), state-sponsored attacks, and employees and insider threats.
• The best defence is preparation. Tools and techniques include data audits, accountability, security frameworks, proper regulator engagement, IT forensics, and understanding how insider threats develop and play out.
• The stakes are high! Potential consequences of cyberattacks include reputation damage and costly group litigation claims.

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Trade marks, border enforcement, and exhaustion after Brexit

Key takeaways:

• Brands play an important role in the pharmaceutical sector – not just in protecting names and logos, but also potentially in protecting the shape of products and their packaging, colours and other non-traditional features of products. Given that a trade mark registration potentially last indefinitely, the advantages of securing such protection for these sorts of features are obvious. However, doing this is not straightforward. For example, signs consisting exclusively of shapes or other characteristics of products are not registrable if they are necessary to perform a technical function. Nevertheless, a number of non-traditional trade marks have been accepted for registration, including the three-dimensional shape of various tablets and capsules, some highly unusual asthma inhaler shapes, and various distinctive perfume bottle shapes. 
• Brexit has had a huge impact on EU trade marks and EU designs as these rights no longer cover the UK. The UK government agreed to separately protect these rights in the UK with the creation of new national trade marks and designs, comparable to the equivalent EU rights. However, new UK rights were not created where an application for the EU right was only pending at the end of the Brexit transition period. If a UK right is required in this circumstance, an application needs to be made directly to the UK IP Office. If that application is filed by 30 September this year, the UK right can claim the same priority/filing date as the corresponding EU right. While this "splitting up" of EU rights into separate UK rights seems relatively straightforward, various consequences flow from it. Specialist advice should be sought.
• Brexit also has an impact on the customs enforcement of IP rights. IP owners will need to remember to refile any applications for action (AFAs) designating the UK (where filed via another EU27 Member State's customs office) or designating any EU27 Member State (where filed via UK customs). Pending this refiling, the relevant customs office will not be able to take enforcement action on the behalf of the IP owner.
• The UK government is consulting on a new exhaustion of rights regime for the UK. This is especially relevant to the pharmaceutical industry since pharmaceutical products are often parallel imported to and from the UK and third countries. The consultation closes on 31 August 2021.

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Key points on medical devices for pharma – MDR and Brexit

Key takeaways:

• MDR is fully in force, including in Northern Ireland for the foreseeable future.
• CE marked products are accepted in GB on a discretionary basis until 30 June 2023; watch out for the new regulations governing the UK CA mark regime.
• Even if you have certificates subject to transitional provisions, there are many MDR provisions that must be complied with now (for example, economic operator obligations and PMS).
• If you're selling combination products (drugs and devices), be aware of the greater complexity of MDR for getting the device part through this new regulatory regime.
• Be aware of the different registration requirements in Great Britain, Northern Ireland and the EU.
• Appoint a UK Responsible Person for GB (if you haven't already done so).
• Dual marking (CE and UKCA) will be permitted in the UK if the requirements of both regimes are met, including labelling requirements.

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Managing a product safety incident

Key takeaways:

• A product safety incident can have significant consequences if not handled well, such as regulatory sanctions, civil claims, and financial and reputational impact. 
• All these risks need to be assessed from the outset – and, ideally, have already been stress tested as part of a product safety incident response plan – so that potentially disastrous consequences can be quickly and efficiently mitigated. 
• It's important to ensure that a full team can be mobilised quickly coordinate a robust response. This includes both internal and external lawyers, to work alongside the regulatory and compliance, testing and quality assurance, and technical teams to deliver an urgent risk assessment and consideration of the most appropriate field safety corrective action.

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Tax developments affecting life sciences businesses

Key takeaways:

• The UK Budget 2021 tried to find a balance between future pain (increased UK corporation tax rate) with short term gains (temporary super deductions for capital expenditure and loss carry-back rules), alongside various programs to incentivise and support vaccine development. 
• Significant tax developments in areas of CGT, EMI and R&D were deferred, pending outcomes of consultations.
• G7 announcements (supported by 130 OECD Member States) mean that a global minimum tax of at least 15% looms on the horizon. We don't yet know the impact this will have on tax incentives such as patent boxes and R&D tax credit.

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Competition update – The European Commission continues scrutiny of life sciences companies

Key takeaways:

• Two key competition issues facing the pharmaceuticals industry are the fallout of the EU Sector Inquiry 2009 (particularly, measures to delay entry of generics) and the recent focus on excessive prices. Other issues include: co-promotion and co-marketing agreements, R&D cooperation, patent pools, the exchange of competitive sensitive information, discussions at trade associations meetings, and vertical price coordination between companies.
• Case Study #1: The Lundbeck "pay for delay" judgment saw Lundbeck fined €93.8 million for paying four generics companies not to compete with it by producing generic versions of its citalopram drug. Lundbeck also bought and destroyed stock of generic medicines and offered guaranteed profits in a distribution agreement. On appeal, the General Court confirmed these agreements constituted market sharing, while a 2021 CJEU judgment confirmed that "pay for "delay" agreements are automatic infringements.
• Case Study #2: The Aspen commitments decision began with a 2017 European Commission investigation into Aspen's pricing behaviour regarding six off-patent cancer medicines. The Commission was concerned that Aspen was engaging in "price gouging", since it had purchased the medicines in 2012 and increased the price across Europe by several hundred percent. Aspen sought to settle the case and offered commitments regarding its behaviour (including price reductions and caps, and supply guarantees) which were accepted in 2021.
• Each jurisdiction has its own merger control regime, thresholds for notification and timetable; within Europe, consider the EU regime first, then that of each individual Member State. There are mandatory and voluntary merger control systems, and authorities can approve (with or without conditions) or prohibit acquisitions. Merger control should be considered early, as there are significant implications on timing and cost if filings are required and there are competition concerns. If you have any issues, it's important that you address these upfront with the regulator and lead the process as much as possible.
• A "killer acquisition" is when an incumbent company acquires another company that has a pipeline product that would be in competition with the acquirer's own product, whether on the market or in the pipeline. The theory of harm involves incumbents acquiring their potential rivals thereby preventing future competition. Often the target is small, so the acquisitions don't hit the merger control thresholds and there is no need to notify for clearance. The products are also so new that targets there may not be reliable data available to assess the transaction.
• In killer acquisitions, the incumbent usually discontinues the new product, and competition is removed. Competition authorities are becoming increasingly concerned with these acquisitions and the effect on innovation.

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Fireside chat with Sir Robin Jacob

Our international co-head of Life Sciences & Healthcare Simon Cohen sits down with Sir Robin Jacob to talk about the direction that the pharmaceuticals industries are headed in and the legal issues that could arise along the way.

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