February 24, 2014
GLOBAL LIFE SCIENCES UPDATE
Top 10 Steps Global Life Sciences Companies Should Take in
2014
Members of Sidley Austin’s Global Life Sciences team recently reviewed litigation, policy, regulatory, and
enforcement trends on several continents. We recommend that law and policy departments consider the
following actions to manage risks and take advantage of business opportunities in 2014:
1.
Prepare now for difficult-to-defend challenges to biological patents. Most innovative biological
product companies have little experience with the Patent and Trademark Office’s relatively new Inter Partes
Review (IPR) proceedings that can now be used by challengers. The proceedings move very quickly and have
numerous advantages for challengers. Pioneering companies who anticipate biosimilars challenges should
get up to speed now, including by starting the time-consuming process of preparing technical expert
testimony and other necessary evidence and analysis.
2. Anticipate public disclosure of information in CIA reports. A district court recently held that
certain information in company reports to the government of legal violations, required under a corporate
integrity agreement (CIA), could be subject to public disclosure under the Freedom of Information Act
(FOIA). The case, Public Citizen v. HHS, Docket No. 11-1681 (D.D.C.), underscores the need for companies to
preemptively evaluate how they will respond to requests for such information and to anticipate that
significant portions of CIA reports could ultimately be disclosed.
3. Strengthen substantiation of on-label drug and device promotional claims. Enforcement,
litigation, and regulatory scrutiny related to substantiation for “on-label” promotional claims is increasing
for many product categories. Examples include recent marketing investigations initiated by the U.S.
Department of Justice, which focus on “false or misleading” promotional claims. They could represent the
start of a new wave in enforcement that will eventually replace the government’s historical interest in offlabel promotion. Additional examples include the Federal Trade Commission’s increasingly rigid demand for
two adequate and well-controlled studies to support health-related advertising claims for OTC products, and
consumer fraud litigation focused on “natural” claims for foods.
4. Incorporate legal review of country-specific requirements into clinical trial site selection and
development of global clinical trial agreement templates. Clinical trial-related laws differ among
countries in key respects, are rapidly changing, and can have unforeseen consequences. Examples include
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onerous requirements in India and Brazil relating to subject compensation for trial-related injuries, privacy,
and biospecimen retention, which can result in significant costs for unwary companies that initiate trials
there. The EU is also overhauling its entire legal framework governing clinical trials, while distinct
requirements exist in individual EU Member States such as Belgium, Italy, and the United Kingdom, and in
China. Non-compliance with national requirements can lead to penalties or potentially prevent the use of
data in marketing authorization applications.
5. Address potential concerns about healthcare costs in FDA approval strategies. FDA is focusing
on drug prices in a variety of contexts, including by delaying enforcement against manufacturers of cheap,
unapproved versions of drug products for which a competitor has sought approval and by modifying its
approach to risk evaluation and mitigation strategies (REMSs) to address concerns about “burden” on the
healthcare delivery system. Companies should anticipate that FDA’s emphasis on promoting “access” to
drugs and medical devices through regulatory action will continue as the U.S. government continues to
implement the Patient Protection and Affordable Care Act (PPACA).
6. Reinforce compliance procedures to address the proliferation of corruption and
pharmacovigilance investigations in the EU and emerging markets. China recently strengthened
its anti-corruption requirements and launched several investigations in 2013. Raids and local investigations
will likely increase in Asia, especially in Korea, Vietnam, and China where there is intense scrutiny of
healthcare costs. Companies operating in the EU should also expect increased regulatory inspections and
stricter enforcement of pharmacovigilance obligations (including under the EU Penalties Regulation).
7. Reevaluate due diligence checklists for deals in emerging markets. Comprehensive M&A due
diligence will be critical as transactions in the pharmaceutical sector reach an all-time high. It will be
particularly important in deals involving targets in Asia, India, and the Middle East, where marketing
practices adhere to different standards than in the U.S. and EU.
8. Manage fraud and abuse risks in your ACA rollout. HHS has made clear that it has authority to
audit, investigate, and evaluate Exchanges, and that the False Claims Act applies to Exchange payments
involving federal funds. Companies in the U.S. should also expect significant prosecutorial and media
attention to accompany public disclosure of Sunshine Act payment information in September 2014. FDA has
also initiated efforts to access and review available data relating to promotional expenditures, sampling, and
messaging, for purposes of supporting healthcare fraud investigations.
9. Adjust China product development strategies in light of changes to marketing authorization
requirements. The Chinese FDA is changing the rules for marketing authorization for a variety of product
categories, including drugs, medical devices, dietary supplement products, and functional foods. These
changes could ultimately facilitate pre-market licensing agreements, but could also add extra hurdles for
innovative products by encouraging generic filings prior to patent expiration. China is also revising its Patent
Law and the Drug Administration Law, which will have additional effects on innovative companies.
10. Develop clear guidelines for use of social media. Although FDA is finally beginning to publish
guidance on manufacturer use of social media for promotional purposes, it will likely leave many practical
questions unanswered and also raise new ones. Variations in regulatory policy will also persist outside the
U.S., in part because guidance in the EU will continue to be specific to each Member State. Few Member
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States currently have specific guidance, and others are likely to take differing approaches to things like the
extent to which companies are responsible for user-generated content, responsibility for amending
Wikipedia entries, and the minimum information to include on websites. These issues, along with pressing
privacy, pharmacovigilance, and product liability concerns, create a need for each company involved in
digital communications to develop and regularly reevaluate its own well-considered approach.
A separate list of steps focused on EU developments is also available here.
CONTACTS
For more information regarding the content of this Sidley Update, please contact:
Scott Bass
+1.212.839.5613
+1.202.736.8684
[email protected]
James C. Stansel
+1.202.736.8092
Paul E. Kalb, M.D.
+1.202.736.8050
Torrey Cope
+1.202.736.8803
[email protected]
[email protected]
[email protected]
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Sidley Global Life Sciences Practice
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