Life Science regulatory developments

21 July 2016

The JLT Life Science 2016 Conference was our ninth. Held at the Savill Court Hotel & Spa near Windsor, it gave risk managers and chief executives in the industry as well as insurers an experts-eye view into a variety of key topics. Here’s my brief summary of some of the regulation issues raised by our panel of speakers.

The regulatory world evolves. It’s an obvious statement but no insurer nor life science business can afford to lose touch with the rapid changes in legislation and compliance.

Perhaps the most eye-catching recent example is the ruling in the European Court over the the Boston Scientific case where, briefly, it was decided that when a pacemaker had a potential defect, then all models of the same design should be replaced at the manufacturer’s expense. Patients that belong to a vulnerable group, the court added, were entitled to a higher safety level because the potential for damage was greater. This is a decision, equating potential damage with actual damage, which in principle binds all national courts.

The danger, of course, is that any future product recall may create a perception of unacceptable risk. I expect further challenges to medical device manufacturers, who operate in a market less strictly regulated than medical products. We are also likely to see devices going off the market as manufacturers are forced to adjust to these new rules.

On another tack it is now clear that regulation now puts the emphasis squarely on personal liability, many in the industry have arguably failed to recognise that delegating adherence to regulations to others will not protect them. And, as a larger proportion of medicines are approved through the EU’s central system, the penalties that apply (currently providing for fines of upto 5% of a company's EU turnover) could become even more onerous. Of course, it remains to be seen what regulatory arrangements the UK will negotiate with Europe over the next two years or so. 

Trends in the US, where we find three quarters of the world’s legal spend on enforcement and product liability, continue to affect the climate in Europe. One prominent current issue surrounds allegations of kickbacks or bribes which cover undue transfer of value to any person capable of influencing a contract. For example, Olympus, a firm making endoscopes, recently agreed a USD 646 million settlement, after being charged with kickbacks to doctors and hospitals using research grants, consulting deals, luxury trips, and free equipment to influence the market. 

There is intense pressure in the US to harmonise regulation on the basis that it is unjust to have a compliance regime in the US and a light touch elsewhere. So we are likely to see a lot more global scrutiny by the US compliance authorities.

It is also increasingly individuals, not corporations, that are being pursued. There is increased pressure from the Attorney General’s office to target culpable individuals within companies for enforcement action and this is likely to affect employee relationships and the issue of privilege. 

Labelling of medicines is another area where battles continue in the States. While brand companies can change labels in the light of new clinical data, companies making generic copies of the same drugs are exempt. We now have a situation where 80% of drugs prescribed are generic, but nobody can go after manufacturers for not including new data on their labels. The FDA’s attempt at new solutions doesn’t appear to be working in this area. Even more complex considerations apply to biosimilars. How, for instance, should the doctrines that protect generic drugs apply to biosimilars if at all? Currently there are no clear answers. But the evolution of regulation will move on… Watch this space. 

A detailed analysis of regulation and legislation along with other key topics for the industry appear in the recently published reports from the JLT Life Science Conference 2016. To request a copy please email Adrian Donald