By Hanna Roos, Oliver Browne and Robbie McLaren
How to thrive amid uncertainty? This was the question we explored at the 35th FT Global Pharmaceutical and Biotechnology Conference. Here are five key industry trends and corresponding practical legal tips to help companies stay protected and seize opportunities.
“Access”, Not “Excess”
The industry is facing pressure on pricing to expand access to crucial therapies in both developed and developing markets. Increasingly, regulators and legislators measure success not only by clinical breakthroughs, but also by how many patients end up receive a treatment. Regulators and legislators have begun to examine how pricing correlates with the cost of R&D, and the value that a treatment delivers. The UK Competition and Markets Authority’s recent £90 million fine for “excessive and unfair” pricing is an example of this increased scrutiny (for more information, please see our blog here). Such pressure has led to streamlined drug development and flexible pricing models linked, for example, to ability to pay. Regulators are adopting conditional approval mechanisms, which revisit therapeutic efficacy to ensure that drugs deliver “bang for the buck” before they are granted long-term marketing authorisation and/or purchase commitment.
→ Some tips: Review existing pricing arrangements under contracts with buyers (such as the NHS) to ensure they are set “fairly” — admittedly a complex question. Review proposed conditional approval agreements to confirm that they are as favourable as possible. Confidentiality may be key, in which case consider including in agreements an arbitration clause, rather than a court litigation clause, to resolve disputes.
Innovate or Perish
Innovation remains a hallmark of this industry, but unmet medical need is still high both in common and rare diseases. M&A, licensing, and joint venture arrangements remain central modes of acquiring and commercialising innovations. Divestments from big pharma will continue, following the significant M&A activity over the last three years. These are joined by alternative ways of risk-sharing, such as a swap of the seller’s mid-stage clinical assets for equity in the buyer who will develop the compounds.
→ Some tips: Ensure intellectual property protection, particularly ahead of the game-changing European Unified Patent System. Monitor the success or achievement of any royalty or milestone targets, and compliance with covenants and representations made at the time of purchase. In joint ventures, audit contract documents to retain control and visibility in key areas: IP, information sharing to ensure oversight, clinical trial integrity, anti-bribery, and competition law compliance, to name a few.
Big Data, Big Risk
Big data and digitalisation are revolutionising the industry, and “Real World Evidence” will benefit R&D, clinical trials, risk and effectiveness assessments, and patient outcomes. There is a trend from data owning to data sharing, and analysis of increasingly complex data sets with the use of artificial intelligence. To this end, the industry will increasingly partner with the technology sector through M&A and joint ventures.
→ Some tips: Check that collection, storage, and analysis complies with data protection regimes, such as the EU General Data Protection Regulation 2016/679. Cyber attacks are now daily news, and could compromise the integrity and confidentiality of the data held. Audit the big data pathway — from generation to harvesting, storage, and use — to ensure the data is secure. For M&A and partnerships between the industry and technology sector, see tips above. Give thought to contractual responsibility for cyber attacks (please see our blog here).
Innovation in Regulation
National and EU regulators are looking to harmonise regimes across the globe. This has operational and cost benefits, but also runs the risk of delivering slow-to-change and cumbersome rules. Faster and more efficient drug approval processes are being explored, and, as noted, regulatory focus on the industry, for example on pricing, is increasing.
→ Some tips: Audit internal compliance, particularly regarding competition, safety, anti-bribery, and clinical trial regimes to ensure no irregularities. Internal investigations are a useful tool for this, and lawyers and forensic experts can help in conducting investigations and unearthing “smoking guns”. Review existing pricing arrangements to try to ensure compliance. Prepare to comply with regulations, such as the EU Clinical Trial Regulation 536/2014 with enhanced transparency requirements.
Sharing Is Caring
The new trend is transformational partnering. This is apparent in the shift from separate camps of actors — industry, regulators, patients, scientists, physicians, and health care providers — to new alliances from bench to bedside. This new activism is key to addressing the seismic industry changes and cushioning the impact of geopolitical developments, such as Brexit.
→ Some tips: Enter into a dialogue on what marketing authorisation, clinical trial, and orphan drug regulation should look like post-Brexit, and in the changing regulatory landscape in the United States. As above, ensure core assets and rights are well protected in new partnerships, such as joint projects between the industry, academia, and regulators.
The information contained in this blog is provided for general informational purposes only and does not constitute legal advice. Transmission of the information is not intended to create, and the receipt does not constitute, attorney-client relationship between the sender and the receiver. No user of this information should act or refrain from acting on the basis of information contained herein without seeking legal advice from counsel in the relevant jurisdiction.
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