Contributed By Baker McKenzie
The legal framework regulating pharmaceuticals and medical devices is largely federal in Mexico, and includes the following laws and regulations:
Decisions from the regulatory bodies that apply and enforce pharmaceutical and medical device regulations may be challenged through the following optional appeal proceedings:
The formal requirements for challenging a decision vary depending on the nature of the decision being challenged, but generally the appeal lawsuit shall include: identification of the affected party; identification of the challenged decision; identification of the authority that issued the decision; a description of the facts; and the available evidence. However, the most important requirement for litigating regulatory decisions is to have an interdisciplinary team of lawyers and pharmaceutical chemists, so that both the science and the law can be properly understood and argued in each case.
There is a general impression that there has been no significant litigation relating to decisions taken by health regulators, but this is not an entirely accurate perception, as litigation has always existed in this area. However, it is true that, as the regulatory framework has evolved into a more complete set of legal rules and as regulatory work is now being undertaken not only by technical professionals such as pharmaceutical chemists, but also by lawyers, companies have felt increasingly confident to challenge regulatory decisions that affect their interests.
It is important to understand the historic context behind those perceptions. On the one hand, given its highly technical content, regulatory work was mainly undertaken by pharmaceutical chemists, both in companies and in regulatory agencies. On the other hand, the law in this area did not evolve as quickly as the science and the market did. Regulatory decisions frequently had to be made not on the basis of existing legal rules, but exclusively upon technical criteria, which led to a highly discretionary system. Although decisions were vulnerable, the concern was that challenging a decision over one product would affect other pending administrative decisions over other products.
Fortunately, the situation has changed in recent years. New administrations have aimed at keeping the legal framework up to date and have brought in more lawyers, in an effort to achieve a Rule of Law in health law and regulation. This means that litigation matters have been increasing, which is reflected in the specialisation of Courts. In fact, the Federal Administrative Tribunal has a Specialised Chamber to appeal decisions made by COFEPRIS.
Now, a clear trend emerged this year. The new federal administration that took office in December 2018 decided that corruption was the main problem in Mexico. With that in mind, they decided to replace the first and second levels of all public agencies, including COFEPRIS, and to forbid direct contact with the users. This resulted in a regulator both unexperienced and unwilling to meet with the industry to understand and discuss the challenges of the sector. This combination quickly led to a sharp increase in litigation of regulatory decisions.
The administrative review, annulment action and amparo trial would also be the applicable appeal proceedings to challenge the decisions of federal regulatory bodies that involve other products, such as foods, beverages and dietary supplements.
There are two basic categories of pharmaceuticals: prescribed and non-prescribed drugs. In addition, controlled substances require a special prescription.
Medical devices are divided into three classes, according to the risk they represent to human health:
The regulation of clinical trials includes the following key instruments:
In general, clinical trials (Phases I-IV) shall be:
In addition, they must obtain the relevant approvals of the Health Institution, the Ethics Committee and COFEPRIS.
Historically, the operation of Ethics Committees was largely self-regulated and based on international best practice. There was also a lack of co-ordination between COFEPRIS and the National Bioethics Commission (ConBioetica). However, the Decree for the Operation of Ethics Committees (2012) provides a clearer legal framework, establishing their structure, their objectives, the role of their members and the requirement to be registered before both ConBioetica and COFEPRIS.
Notably, the Guidelines for Good Clinical Practice (2012) make a clear reference to international best practice, including standards developed by the International Conference on Harmonisation (ICH). It is important to note that these GCPs will be the basis to move towards a certification system, for which COFEPRIS has already started to conduct inspections of research sites.
The operation of Contract Research Organisations (CROs) is not fully regulated, with references only found in the Guidelines, but there are ongoing initiatives to address this.
In addition, other regulatory measures have been introduced to promote Mexico as a place for conducting clinical research, including the following:
The same rules regulate both medical devices and pharmaceuticals.
The procedure for securing authorisation to undertake a clinical trial of a pharmaceutical or medical device is comprised of three basic steps, which are sequential and cannot be applied for in parallel:
Currently, after their protocols have been authorised by COFEPRIS, most trials are recorded in the National Registry of Clinical Trials (RNEC). The information contained in the RNEC is collected by COFEPRIS in collaboration with those responsible for conducting the clinical trial (Sponsor, CRO or healthcare institution). The RNEC publishes an electronic database that includes only general information about the clinical trials. Although limited, this shows significant progress, as until very recently there was almost no local information made publicly available. Confidential information is not included in the RNEC, nor is the health information of patients, which will be regarded as sensitive personal information under Data Protection Laws and will be protected accordingly.
On the other hand, there is no binding provision to disclose or publish the results of clinical trials, but the Code of Ethics of CETIFARMA does contain a specific obligation for Sponsors to disseminate the positive and negative results of the trials, particularly the adverse events.
There are no specific restrictions regarding online clinical trial platforms. However, it would be important for the platform to comply with the regulations regarding recruiting and interaction with patients enrolled in a clinical trial, if those functionalities are included in the platform. Additionally, this platform could involve other regulatory implications, such as the advertising of health inputs, services and privacy protection, so it is important that its content is reviewed on a case-by-case basis.
The resulting data from the clinical trial would be considered as personal if the patients enrolled in the clinical study were identified. If the results of the clinical trial are presented without providing information or images that could lead to the identification of the patients, those results would not be considered as personal data.
It is permitted to transfer the resulting data of the clinical trial to a third party or to an affiliate, as long as the Privacy Notice reveals that a transfer will occur and identifies a justifiable purpose for that transfer. When sensitive personal data is involved, the data controller must obtain the express written consent for processing, through their signature, an electronic signature, or any authentication mechanism established for that purpose.
The creation of databases that contain sensitive personal data must be justified and follow legitimate and concrete purposes that correspond to the activities and explicit objectives of the data controller. These kinds of databases are not subject to authorisation before starting operations.
The GHL provides a general definition for pharmaceuticals. In this respect, any product that falls into such definition should be considered as a pharmaceutical. According to the GHL, a medicine is any substance or mixture of substances of natural or synthetic origin which have any therapeutic, preventative or rehabilitative properties, which is presented under any pharmaceutical form and is identified as such for its pharmacological activity and physical, chemical and biological characteristics.
However, the definition contained in different legal instruments for medical device is as follows: "the substance, material, apparatus, or instrument (including software), used on its own or in combination, for the diagnosis, monitoring or prevention of diseases; or as auxiliaries for the treatment of diseases and disabilities; as well as for the replacing, correction, restoring or modification of the anatomy or physiological processes of humans". Initially, any product that falls into that definition should be considered as a medical device.
It is also important to remember the "List of Products that for its Nature, Characteristics and Uses are not Considered Health Inputs". If the relevant product is found in this List, it will be excluded from the regulation of medical devices.
There are other categories that are recognised in practice (eg, combination products), but these are not formally regulated through mandatory instruments.
In general, there is only one type of marketing authorisation for pharmaceuticals for human health and for medical devices, which is granted by COFEPRIS. The same requirements of quality, safety and efficacy apply, regardless of whether the product is allopathic, homeopathic, herbal or a vitamin pharmaceutical. However, a significant difference would exist between the extent and scope of safety and efficacy data that would be required for an innovator product than for a subsequent product, and the specific requirement for releasing biologic products after importation. Biotech drugs are also subject to a pre-submission regulatory meeting with the New Molecules Committee of COFEPRIS.
The period of validity of any marketing authorisation for pharmaceuticals and medical devices is five years. After this period, marketing authorisations may be renewed every five years. At any time, marketing authorisations may be revoked by COFEPRIS, for instance when a new risk to human health is found, if an infringer repeatedly disregards safety measures or if false information is submitted.
In general, the procedure for obtaining a marketing authorisation for pharmaceuticals includes filing the marketing authorisation application form at COFEPRIS, along with evidence of the following:
In addition, for products manufactured abroad it is necessary to file a representation letter granted to the holder.
The application to obtain a marketing authorisation for medical devices must be submitted with the following:
In addition, for products manufactured abroad it is necessary to file a free sale certificate, a representation letter issued by the manufacturer of the product, a certification of analysis, sanitary notification of the distribution warehouse, and notification of the sanitary official of the distribution warehouse.
Approval times are as follows:
These approval times can be extended if COFEPRIS requires additional information, and can also be reduced significantly if applicants include a prior favourable opinion issued by a Third Authorised Party.
For class I medical devices, the decision must be granted within a term of 30 days; for class II, the decision shall be taken within 35 days; for class III, the decision shall be taken within a maximum term of 60 days. As with pharmaceuticals, these approval times can be extended if COFEPRIS requires additional information, and can also be reduced significantly if applicants include a prior favourable opinion issued by a Third Authorised Party.
There is no mandatory requirement to conduct clinical trials in a paediatric population or to obtain a waiver from this requirement in relation to individual pharmaceuticals. This is completely optional and subject to stricter requirements.
The variation of marketing authorisations is classified under administrative or technical modifications. Technical modifications are those relating to changes in the formulation, indication or manufacturing process. Administrative modifications include variations such as changes to the corporate name or address of the holder, or changes to the Information to Prescribe. An assignment of marketing authorisation is regarded as an administrative modification. Each application to modify a marketing authorisation shall contain the technical and legal documentation supporting the relevant change.
There are a limited number of cases where an unauthorised product can be imported into the country and be supplied to patients, including low prevalence diseases, donations (eg, in natural disasters), personal use, experimental products for clinical research, and medical use.
Additionally, if the relevant product is included in the List of Products that for its Nature, Characteristics and Uses are not Considered Health Inputs, it would not be considered as a pharmaceutical or medical device and consequently would not require a marketing authorisation.
In January 2019, the Ministry of Health issued a Decree that allows the government to take a decision to import medicines without a marketing authorisation if they conclude that existing and approved products have problems of quality, safety and efficacy or GMP issues and there is a need to guarantee supply for the public sector. This has been highly controversial, as the measure includes four different groups of countries, with one including China and India. At the time of submission of this publication, it was not clear whether the industry, both national and transnational, would litigate such Decree.
Holders of marketing authorisations must comply with good manufacturing practices, stability, pharmacovigilance or technovigilance and labelling standards and regulations; they must also comply with advertising regulations applicable to pharmaceuticals or medical devices.
In general, both pharmaceuticals and medical devices are subject to post-approval vigilance. These obligations are developed in Technical Standards, which generally specify rights and obligations for holders of marketing authorisations, distributors, research sites, health institutions, physicians and patients to monitor adverse events or incidents, investigate them, and report them. It is also required to have a pharmacovigilance or technovigilance unit, someone responsible for pharmacovigilance and someone responsible for technovigilance, and a pharmacovigilance or technovigilance manual.
However, Phase IV data is only required for more complex products (eg, complex biologics or biotech drugs), which is decided by the New Molecules Committee.
COFEPRIS has periodically published lists of applications, and of granted or rejected marketing authorisations. However, these lists are not updated regularly, and frequently contain limited information that excludes confidential information. Full access to individual files is only granted to the applicant.
Although third parties have long been able to file Public Information Requests in relation to any file held by COFEPRIS, under the mechanisms overseen by the National Institute for Access to Public Information and Data Protection (INAI), COFEPRIS had historically resisted providing access to most of the files of marketing authorisations, which it regarded as being confidential in their entirety. Nevertheless, through several INAI decisions, an increasing number of data elements can now be accessed. Fortunately, however, COFEPRIS has now begun to populate a public database on its website that displays key data contained in the marketing authorisations for pharmaceuticals.
Confidential information is protected by several special laws, including privacy intellectual property, administrative procedures, labour and criminal law.
Relevant legislation includes a combination of the Health Law, the Federal Consumer Protection Law and the Federal Criminal Code. These legislative bills provide jurisdiction to other government agencies to undertake enforcement actions upon the notice of existence of falsified or illegal goods that could affect healthcare. The action that can be triggered will depend on the specific facts of the case and the illicit goods involved, as it could be within the legal authority of any of the above-mentioned laws.
In essence, the bills provide a legal framework to file and start complaints, through a potential infringement of either the Consumer Protection Law or the Health Law. These investigations shall be based on a hazard against health or a consumer protection liability, rather than intellectual property infringement. Please note that other actions, such as a damages claim for unlawful conduct that affects a company or damages its prestige and reputation, could be explored in a subsequent stage, provided that an infringement is found to have existed, and depending on the direct liability of the offender.
As a general note, it is important to note that the actions available under these bills are not in the title-holder’s control; instead, they are under the control of the relevant agency, such as COFEPRIS, the Federal Attorney General Office (PGR), the Federal Consumer Protection Agency or the Federal Police. In this regard, the title-holder/manufacturer is entitled to present a complaint for the relevant agency to start an investigation, which could be a joint investigation with Law Enforcement Agencies, depending on the facts of the case. The agency will be in control of the investigation, while the title-holder/manufacturer can assist with the investigation and provide relevant information that will help build the case, although they will not be in control of the investigation and its outcome.
As a result of the above, depending on the investigation’s outcome, there can be injunctive relief such as seizure of illicit goods, or temporary closure of the factory or retail store. These options will be taken by the Administrative Agencies or the Law Enforcement Agencies ex officio, as the title-holder is not part of the case. For these situations, it is important that the title-holder follows the official investigation closely to ensure that the Administrative Agencies or the Law Enforcement Agencies will liaise in due course.
A combination of provisions found in international free trade agreements, the Mexican Industrial Property Law and Customs Law provide the possibility of filing border measures against counterfeited pharmaceuticals and medical devices, provided a recognised IP right is at risk, which includes trade marks, patents and industrial designs. The system is operated through detection technology and databases that are built or fed by title-holders, who will be alerted to suspected goods.
A pharmaceutical manufacturing plant is subject to a licence, and a medical device manufacturing plant is subject to submitting a notice of operation. COFEPRIS is the authority responsible for granting the manufacturing licence and receiving the notice of operation.
To obtain the manufacturing licence, a COFEPRIS inspection visit to the manufacturing plant must first be requested, to review whether it complies with the Technical Standard NOM-059-SSA1-2015 of good manufacturing practices of pharmaceuticals. If in the inspection visit COFEPRIS determines that the facility is in compliance, it would grant a certificate, which shall be included in the manufacturing licence application. Once the application is submitted, COFEPRIS shall not take more than 60 business days to grant the manufacturing licence. The activities approved by the manufacturing licence are the manufacture and warehousing of pharmaceuticals in the same facility. The operation licence does not have an expiry date.
The notice of operation for a medical device manufacturing plant needs only to be submitted to COFEPRIS, and becomes valid the moment it is filed. The notice of operation requires the appointment of a sanitary officer, who shall be in charge of the facility. The activities covered by the notice of operation are the manufacture and warehousing of medical devices in the same facility. The notice of operation does not have an expiry date.
As a general rule, the establishments involved in the wholesale of pharmaceuticals and medical devices are only required to submit a notice of operation before COFEPRIS. As mentioned, the notice of operation enters into effect at the moment of filing. The notice of operation does not have an expiry date.
The exception to the general rule is warehouses dedicated to the wholesale of controlled pharmaceuticals (eg, psychotropic and narcotics) and biological products for human use, which are subject to a licence.
As mentioned above, pharmaceuticals are divided into the following six classes in relation to their prescription status:
There is vast body of law, secondary regulations, technical standards and administrative decrees controlling the area of foreign trace and customs law. These are not necessarily co-ordinated with the health regulation, creating frequent issues for companies in the pharma and medical devices sectors.
Depending on the moment and the type of regulation to which the goods are subject, the following authorities could be involved:
Imports must be carried out by an individual or legal entity that is registered in the Importers' Registry, which is administered by the Tax Administration Service.
Depending on their tariff classifications, certain goods – including certain chemical products, radioactive goods, chemical precursors and essential chemical products – may be subject to registration in the Specific Sectors of the Importers' Registry. This registration is subject to additional requirements, which depend on the sector in which the importer is to be registered.
Imports of most pharmaceuticals and some medical devices are subject to the obligation of securing specific import permits.
While they are normally administered by the Ministry of Health through COFEPRIS, depending on the type of products, they may also be subject to other types of import or export permits, including those imposed by the Ministry of Economy, the Ministry of Agriculture, Livestock and Natural Resources, the Ministry of Defence, the Federal Commission of Telecommunications, etc.
Among others, the following exceptions to the obligation of being registered in the Importers' Registry or securing an import or export permit may apply: importing for personal use, importing for donations, importing for experimental use, or importing for low-prevalence diseases.
In Mexico, non-tariff regulations and restrictions, such as import permits, licences, etc, are imposed based on the tariff classification (HTS Code) and the description of the goods to be imported or exported.
Pursuant to the Mexican Constitution, the Executive Power may regulate or restrict the importation or exportation of products, provided that Congress grants it such authority. By the end of each year, the use of that authority needs to be approved by Congress.
In terms of the Foreign Trade Law, Congress grants this authority to the Executive Power, with the condition that, in order for a non-tariff regulation or restriction to be imposed, the corresponding decree or administrative regulation must be published in the Federal Official Gazette (Diario Oficial de la Federación), and the goods subject to such regulation or restriction must be listed both by tariff classification and by description.
Mexico is currently an active party to the Pacific Alliance (along with Chile, Colombia and Peru). The Pacific Alliance and its framework agreement have specific provisions on regulatory co-operation in the cosmetic and pharmaceutical industries, and have a specific agreement for inter-institutional co-operation among the sanitary authorities of the four member states in the latter. This has started a very promising regulatory harmonisation/convergence process in the region.
In addition, Mexico recently signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (the revised Trans-Pacific Partnership Agreement), which also contains promising provisions on the regulatory co-operation side. However, this still requires ratification by the Mexican Senate.
Also, after an additional round of modifications, Mexico and the US ratified the USMCA. As soon as Canada ratifies it, it will soon enter into force. The USMCA contains several regulatory annexes for pharmaceuticals, medical devices, chemical substances, cosmetic products and food products.
In Mexico, the private and public markets for medical products have separate rules depending on whether or not the products are patented. However, this mainly applies to pharmaceuticals and may change during the new federal administration.
The very general legislative bases of the dual system are contained in two laws: the GHL (Article 31) and the Federal Economic Competition Law (Article 9). However, the rest of the rules are largely contained in separate regulatory instruments of lower hierarchy, including the Addendum to the Agreement for Drug Pricing Co-ordination signed in 2004 between the Ministry of Economy and the National Chamber of the Pharmaceutical Industry (CANIFARMA), the Presidential Decree that created the Co-ordinating Commission for Negotiating the Price of Medicines and other Health Inputs (CCPNM), and the Internal Rules of Operation of the CCPNM and the technical standard for labelling of drugs NOM-072-SSA1-2012.
Patented drugs for the private market are subject to a hybrid system that is largely self-regulated and voluntary. Under this system, companies compile their own information about their prices in other jurisdictions and submit that to the authority, which monitors the accuracy of the data.
The manufacturer is required to stamp the price on the label of the product at the end of the manufacturing process. PROFECO (Agency for Consumer Protection) verifies that the prices at the point of sale – ie, at pharmacies – do not exceed that price.
Generic drugs, off-patent products and medical devices in general are not part of this pricing regulation, being subject to direct price competition in the market. Newly launched products are initially exempted, as explained below.
Patented pharmaceuticals for the public market are subject to a different process of annual negotiation. For ten years, such negotiations were held with an entity created in 2008 called the Co-ordinating Commission for Negotiating the Price of Medicines and other Health Inputs (CCPNM), which gathered all major public institutions buying drugs in Mexico, as well as the Ministries of Public Administration, Finance, Economy, and Health. The new federal administration that took office on 1 December 2018 eliminated the CCPNM, gave wide faculties to control public acquisitions, including medicines, to the Ministry of Finances, particularly the Office of Administration. Under the new system, prices are directly negotiated directly with the Office of Administration.
That change eliminated the prior distinction between pricing and acquisition and is now defined in the same process for patented medicines.
The estimated price for generic and off-patent products is initially defined by those public institutions co-ordinating the public procurement exercise, based on their market research. However, the price will be influenced by the discounts offered by the participating bidders, and will ultimately be determined in the acquisition award and contract.
As stated previously, newly launched pharmaceuticals for the private market are initially exempted from the Maximum Retail Price system, given that in principle they would not have a comparator. The manufacturer can initially set the price, subject to a re-evaluation three months after the product launch. The review is conducted to verify whether the product exists in the international market. If this is confirmed, then an RPS and MRP will be estimated. If this occurs, the price of newly launched products will be influenced by prices for the same product in other countries, but not based on a health technology assessment. As mentioned, the price regulations for medicines do not apply to medical devices.
The Mexican system does not operate through a model of reimbursement, but through a model of public procurement of drugs and medical devices.
There is a comprehensive legal regime for public procurement in Mexico that is overseen by the Ministry of Public Administration, in co-ordination with the purchasing entity. However, this may change during the new federal administration. In general, it operates through three different mechanisms: public bidding, with either a national or international scope; invitation to at least three persons; and direct awards.
Whereas public bidding is the general rule, purchasing by invitation or direct award is allowed under certain circumstances, which are listed in the Federal Law for Procurement, Leases and Services of the Public Sector. One of the exemptions refers to the case where there are no substitute products, there is only one possible supplier or the required product is patent protected.
It is worth noting that accessing the public market for pharmaceuticals does not begin directly with public procurement. There are other key regulatory steps to be met before that, given that public procurement works through Product Codes granted by other health authorities.
Until 2019, the GHC administered the Basic Formulary of pharmaceutical products and medical devices, and other individual entities, such as IMSS and ISSSTE, managed separate Institutional Formularies. The process for incorporating a product to the Basic Formulary and then to Institutional Formularies took two to four years. The decision was largely based on economic evaluation. Only after a Code had been allocated to a given product, which in the case of medicines was assigned per active ingredient, could that product be part of a public procurement exercise.
In 2019, the new federal administration eliminated the Basic and Institutional Formularies and created the Single Compendium, which is prepared by a group of experts under the supervision of the GHC. The criteria for addition is not yet clear and not reflected in any legal instrument, but the new federal administration refers to a "triple optimisation", which will take into account the situation of patients (medical), the prevalence of the disease (public health), and the available budget (economic).
Previously, the methodology was quite clear and included cost-benefit analyses. Now it is not clear. Likewise, it is not currently clear whether the new administration will be open to exploring value-based proposals.
The regulatory framework links the rules of prescription and dispensing with those of substitution at the point of sale. There are two different scenarios for the private and public markets.
For the private market, the first rule is that prescribing by the active ingredient or generic name is mandatory, and that the use of the distinctive name or trade mark of the product is optional for the health professional. The second and perhaps most important rule is that if the prescription contains only the generic name, the pharmacists are allowed to substitute the product. Conversely, if the product was prescribed by its distinctive name, then substitution at the point of sale is forbidden.
In contrast, for the public market, although the basic rule structure is the same, there is no reference to the option of prescribing by trade mark, which means that substitution is always allowed. At the same time, it has also became a long-held practice in the public sector to prescribe using the Product Code allocated in the Basic Formulary, which is also based on the active ingredient. There are provisions allowing prescriptions to be made under different conditions, but the respective institution would need to authorise such decisions, which is not commonly used.
No specific regulation has yet been issued establishing clear criteria to determine when the regulations of medical devices should apply to online platforms or apps that have heath-related functionalities. However, in order to determine the regulatory status of the platform or app, it is relevant to assess whether the product:
In order to obtain official confirmation of the regulatory status of the online platform or app, depending on the particular situation, it may be recommended to prepare carefully and obtain a ruling confirmation.
At the same time, it is worth noting that there is a draft technical standard for GMP of medical devices currently under discussion, which incorporates the notion of "Software as a Medical Device" (SaMD), as introduced at the International Medical Device Regulators Forum (IMDRF).
There are no special rules for telemedicine as yet; a technical regulation was drafted at some point but it was withdrawn. That failed attempt did not fully address the physician-to-patient private market interaction, covering only a clinic-to-clinic scenario, mainly to address an urban-to-rural public institutions vision.
The absence of special new rules for telemedicine means that the existing rules and requirements for the provision of health services and the exercise of medicine are applicable, including the existence of a physical consulting room from which the health service is supposedly provided, and the need to be licensed in Mexico in order to practise medicine.
The same legal instruments that are applicable to printed regulated advertising material apply for online content. However, there are additional guidance documents that were produced by the regulator, which include provisions that refer to digital advertising, advertising on social networks and permits for online portals.
Until very recently, electronic prescription was in general only explicitly provided for a small category of medicines: controlled substances. This was introduced to promote the availability of medicines used for palliative care. Only decentralised public institutions, which have greater flexibility to introduce their own rules, have been exploring e-prescription systems for the wider population.
However, the Secondary Regulation for Medical Services was amended in 2018 to allow the prescription of medicines by electronic means. However, this has not yet fully implemented by the rest of the stakeholders involved, particularly pharmacies.
The online sale of medicines and medical devices is closely linked to the issue of whether the retail of a product category is restricted to a particular point of sale.
In that context, there would essentially be three groups of medicines:
In contrast, there would be two groups for medical devices: those that are restricted to specialised shops (ie, orthopaedic devices), and those that can be sold elsewhere, including pharmacies.
From there, it is important to note that there is not yet any regulation addressing the online sale of medicines; the existing rules applicable for physical pharmacies would apply.
Thus, the regulatory set-up to support an online sale of products would have to take into account the existence of a retail control for the relevant medical product and the existing rules for certain specialised retail shops.
There are multiple legal instruments to consider, including technical standard NOM-004-SSA3-2012 on health records and NOM-024-SSA3-2012 on the electronic health record. However, there are still gaps in the regulation, including more flexible mechanisms to account for the electronic signature of such records.
Our jurisdiction provides with a flexible licensing legal framework, allowing the contracting parties to develop a number of creative and progressive deal structures as desired, including the option for licence based on generation of satisfactory data that is sufficient to justify payment of option exercise fee, co-development and licence, co-commercialisation agreements, split territory or split field. Usually, the local license agreements mirror structures created in other jurisdictions, with necessary adaptations to the civil law system that rules in our jurisdiction. As the principle of the free will of the contracting parties prevails for commercial agreements, the transition can be smooth for such structures. In addition to the applicable regulatory and data privacy regulations, the most important caveat for deal structures is that the related provisions do not infringe good customs or the Mexican legal framework.
It is important that the agreement foresees an adequate path for the parties to communicate and foster joint efforts to solve a potential dispute before entering into either litigation or arbitration, which will be more costly, time consuming and uncertain. Typically, it is advisable to create a multi-stage dispute resolution process for the parties to focus on an amicable solution, rather than litigation. For example, the agreement should include a prior notice requirement, as well as a reasonable period to cure, while paving the stage for active discussions to avoid litigation as much as possible. A second stage would be a compelled mediation before raising to arbitration, creating a setting that propitiates negotiation, information exchange, and joint efforts to reach a collaborative solution before engaging in a direct dispute that may drain the parties unnecessarily. Finally, we recommend including an arbitration provision, including appointment of experts and language aimed at having the parties exchange as much information as possible, to facilitate the clear understanding about the potential dispute and increase possibility of an amicable settlement before litigation.
The applicable legal framework, comprised by the Civil Codes, the Commercial Code and the Industrial Property Act do not foresee concepts such as “reasonable efforts” or “commercially reasonable efforts”. Similarly, case law does not provide with clear-cut interpretation of these imported concepts. Given these circumstances, our recommendation is that the parties include obligations and language reflecting that promisor will have to devote all of his efforts, as humanly possible, to comply with the obligation given the specific circumstances, as well as including the specific desired timelines and tasks for each party in extensive detail.
Given the collaborative nature of the license agreement, it should include clear and detailed provisions to navigate such situation, including a distinction between an assignment of rights and changes of control as such. A recommended approach is creating obligations for the parties to inform through written notice the potential change in control before such change in control takes effect, as well as creating a negotiation window to obtain consent, or provide with a right of first refusal. Similarly, the parties can include a compensation clause in exchange for the change, or retaining the right to terminate the agreement if no consent is reached, but it will depend on the specific type of agreement.
The domestic legal framework for licensing does not foresee specific consequences for termination, aside from the general consequences applicable under commercial and civil law (ie: mutual consent, force majeure, end of term, breach), which are not in point for license agreements. For this reason, it is essential that the parties include specific and detailed provisions concerning the consequences derived from termination, for or without cause.
As statutory law is silent on this point, it is essential that the parties explicitly define as many foreseeable consequences as possible, as well as the procedures and timeframes for such consequences. The termination chapter should include potential remedies that the parties may request to avoid losing rights, confidentiality, or valuable information. Generic consequences, as well as relying on statutory law, should be avoided in light of the lack of specific regulation.
Patents are regulated by the Industrial Property Law (IPL), and are granted by the Mexican Institute of Industrial Property (IMPI).
In Mexico, the issues most frequently encountered by companies when trying to apply for patents include the intention of some examiners to try to limit the scope of protection of the subject-matter as exemplified in the specification of the invention. Understanding both the law and the science behind the invention is required to overcome this. This requires having in-house technical expertise.
One of the critical issues with regard to pharmaceutical patents is the need to obtain patent protection for second and subsequent medical uses. This is accepted in Mexico, but there are still some consistency problems. Although Swiss-type claims have traditionally been accepted, now that a new drafting method for second use claims has been introduced in line with developments in Europe, there is still no common application among examiners, which introduces important uncertainties that need to be tackled.
Any activity conducted in relation to the protected second use, without proper consent, will constitute an infringement.
In Mexico there are no patent term extensions based on regulatory delays. However, this may change with the USMCA, which contains provisions in this regard.
The following activities constitute patent administrative infringements:
It is worth noting that, in Mexico, only actual infringement is actionable. The threat of infringement is not considered by the IPL.
The Bolar Exemption was incorporated not in the IP regime, but in the health regime. The Health Supplies Secondary Regulations (HSR) grant this protection to an application of a generic drug that is submitted during the last three years of a patent over an active ingredient, and to an application of a biosimilar drug that is submitted during the last eight years of a patent over the active ingredient.
This is different to the Research Exemption found in the IPL, which stipulates that a patent shall not have effect against any third party who, in the private or academic field, and not for commercial purposes, engages in scientific or technological research for purely experimental, testing or teaching reasons.
Under the Mexican IP regime, compulsory and emergency licences are available.
With regard to compulsory licences, the IPL provides that, three years after the date of the grant of the patent or four years from the filing of the application (whichever happens first), any person may apply for the grant of a compulsory licence to use the invention when it has not been used, unless there are justified reasons for not having used the invention.
However, prior to granting the first compulsory licence, IMPI shall give the patent owner the opportunity to exploit the patent within a period of one year, counted from the date the compulsory licence request was notified. If the patent is not exploited after that year, there will be a hearing, and IMPI will decide whether to grant the compulsory licence. If it decides to do so, IMPI shall specify its duration, terms and scope as well as the royalties payable to the patent-holder.
With regard to emergency licences, the IPL provides that, for emergency reasons or national security, and for as long as the relevant situation continues, including serious diseases designated as such by the General Health Council, IMPI shall publish in the Federal Official Gazette a declaration whereby certain patents can be exploited by means of granting a public use licence. This is for cases where, if such a declaration is not made, the production, supply or distribution of the patented product would be prevented, hindered or made more expensive for the public.
In the case of an emergency caused by serious diseases that may harm national security, the General Health Council shall make a declaration of priority treatment. Once the declaration is published in the Federal Official Gazette, pharmaceutical companies may request from IMPI the right to exploit the corresponding patent. IMPI would then have 90 days to decide whether or not to grant the emergency licence, after hearing the parties and evaluating the circumstances.
The Ministry of Health shall establish the conditions applicable to the production, quality, duration and scope of the emergency licences, as well as the qualification of the technical capacity of the applicant. IMPI shall establish a reasonable amount for the royalties to be paid to the patent-owner.
In relation to important procedural considerations, the following points are worth noting:
The patent infringement procedure is essentially composed of two stages: first, obtaining an infringement declaration through an administrative proceeding before IMPI, and then obtaining damages before a civil court.
An invalidity defence is available in the Mexican IP regime if the patent being enforced was: granted in violation of the provisions on requirements and conditions for the grant of patents; granted in violation of the provisions of the law in force at the time the patent was granted; abandoned as an application during its prosecution; or granted by error or to someone not entitled to it.
In practice, invalidity is invoked by the defendant when answering the infringement complaint.
In Mexico there are no pre-launch declaratory actions, requirements to notify a patent holder, or requirements to clear the way.
Patent linkage was introduced in Mexico in 2003, through a parallel amendment of both the RIS and the Secondary Regulation of the Industrial Property Law (SRIPL).
The amendment to the RIS introduced a patent linkage that excludes process patents and includes explicitly only product patents over the active ingredient. However, through litigation, protection has been extended to patents over formulation, doses and use.
The amendment to the SRIPL created a Special Edition of the Intellectual Property Gazette, issued by IMPI, where all relevant and valid patents for active ingredients are listed.
The trigger for protection is the inclusion of a relevant patent in the Special Gazette. The extended protection mentioned was achieved through litigation aimed at the inclusion of patents over formulation, dosing and use in the Special Gazette.
At the same time, the amendment to RIS mandates all applicants for a marketing authorisation of a drug to submit full information on the status of patent protection relating to its product. Applicants must demonstrate that they are either the owner or the licensee of the relevant patent, if any. For this, applicants must produce and sign a sworn oath that they do not infringe patent rights. Then, when receiving an application for a drug approval, COFEPRIS is obliged to make an internal consultation to IMPI in relation to the patents that may be directly relevant to that product.
However, the provisions are not very clear. The ambiguities have created a system that has led to numerous litigations and to a situation where the burden of proof is essentially carried by users. Patent-holders have to litigate inclusions and, if successful, they have to inform COFEPRIS of the results, in order to have an impact on the drug approval system.
Assuming that a patent infringement action has already been initiated, there are a couple of additional measures that can be taken in order to obtain extra protection against the counterfeit of protected pharmaceuticals and/or medical devices. One of these measures is the seizure of the infringing goods, both in actual commerce and in customs. Alternatively, the confiscation of packaging, stationery, advertisements and similar objects that might be used to infringe the protected rights, as well as the seizure of instruments used for the manufacture and commercialisation of those infringing products, is also possible, according to the Mexican IP Law.
Criminal procedures can be triggered against the following:
Once the trade mark registration has been obtained from the Mexican Trademark Office, no direct restrictions can be actioned against the use of those rights, unless a prior annulment declaration has been issued by the proper authority. However, limitations on the use of a trade mark can be caused by infringement actions against unfair competition practices or trade dress violations. Additionally, parallel importation restrictions could affect the use of brands, but only when the owner of the trade mark abroad is not the same as the one in Mexico, or when both parties do not belong to the same corporate structure. Since prior use rights are recognised under the Mexican IP law, restrictions on the exclusive use of a protected trade mark could be updated as well, as prior users are not regarded as infringers.
Antitrust, consumer welfare and sanitary restrictions could affect the use of trade marks too, although they do not jeopardise the validity of the IP registration. For instance, the name of a pharmaceutical product could first be protected by a registered trade mark, but eventually not be allowed by COFEPRIS to be used as the distinctive name for the approved medicine, due to the different approval criteria (eg, the health law regime forbids names that contain the same three letters in a word, or generally any reference to organs and diseases on the respective product's name).
Trade dress can be indirectly protected through infringement actions against any individual who uses signs, operative elements and image combinations that are employed to identify goods or services that are confusingly similar to previously registered ones, being that such usage deceives consumers, making them believe the existence of a commercial relation between the owner of the rights and the unauthorised user. No "trade dress trade mark" is available in Mexico.
Protection for the design of pharmaceuticals and medical devices, as well as their packaging, can be achieved through the registration of a trade mark (design or 3D) and/or an industrial design (ornamentation arrangements in 2D and 3D).
According to the Mexican IP law, data exclusivity for pharmaceuticals is protected under the terms of the international treaties to which Mexico is a party (ie, NAFTA and G-3 Free Trade Agreement). The protection is granted for five years from the date of the approval, but the regulator as a matter of policy has only recognised it for new chemical entities, excluding orphan drugs, biologics and biotech drugs. However, the protection for these can be obtained through litigation. Although the first USMCA text adopted in 2018 contained stronger provisions on data exclusivity, the final amended protocol of 2019 eliminated them, leaving the protection essentially, as it was before.
Col. Lomas Virreyes
+52 55 4335 6419
+52 5279 2999Magdala.Marcos@bakermckenzie.com www.bakermckenzie.com/en/locations/latin-america/mexico