Life Sciences 2020 covers 16 jurisdictions. This edition covers regulatory frameworks, clinical trials, marketing authorisations, manufacturing of pharmaceutical and medical devices, distribution, import and export, pricing and reimbursement, digital healthcare and intellectual property.
Last Updated: March 18, 2020
Major trends continue to disrupt life sciences and healthcare companies which demand broad legal expertise to assist in-house legal teams in navigating these disruptions. Big data, personal data, digitisation and innovation present related but different issues; the increasing importance of biosimilars has broad reaching effects; compliance and transparency, patient-centric models, pricing pressure and market access, R&D challenges, changing business models, deal trends and the impact of geopolitics and trade all add to the diverse array of issues for which industry clients seek advice.
Big data can increase the efficiency of drug development as well as speed up market approvals, if and when regulatory agencies agree to accept its use. To date, their criteria is vague and inconsistent, but improving. The volume of big data is growing fast and is expected to soon grow at twice the current rate. The challenge is to integrate the data so that it can be valuable. Eventual advantages to the use of big data include increased efficiency for clinical trials, faster access to medicines, faster reimbursement and the optimisation of treatment. Major challenges include legal issues surrounding privacy, consent and data ownership, as well as the control of increasing volumes of data.
As the means to collect personal data increases, so do the legal issues, especially with respect to privacy. A simple list of personal data checkpoints raises numerous red flags: consent, the right to withdraw consent, collection, anonymisation, use, ownership, control, transmission, storage, transfer, sale and destruction. Not to mention the effects and treatment of personal data in the case of sale of the company, partnerships, licences and collaborations. Personal data issues are also becoming increasingly important in M&A deals where the acquirer is a foreign company. Governments are imposing restrictions to ensure that healthcare data is kept secure in-country, and in some cases, are not allowing foreign companies to make acquisitions.
Digitisation of healthcare services has led to new players in telemedicine, online pharmacies and other forms of digital delivery of healthcare, especially those utilising AI. Establishing digital health services is subject to varying degrees of regulation. Questions arise on issues such as permissibility of online services, establishment and licensing requirements and procedures, cross-border health service regulations, data management and ownership, distance selling, consumer protection, marketing approval and advertising rules.
Tech companies are new entrants bringing highly innovative digital health solutions to market, transforming supply chains (eg, through the introduction of the platform economy) and setting up their own healthcare services for employees. New players must be especially aware of regulatory requirements to obtain prior approval of certain digital products and of the regulators' push to ensure these innovative products are safe and effective for their intended use. These products may require pre-market approval and necessitate post-marketing compliance considerations including adverse event reporting and quality systems development and audits.
The effects of innovation on the industry are immeasurable. Regulations cannot keep pace with the developments, so clients need creative, forward-thinking and innovative advice. New frontiers – including precision medicine, biomarkers, omics, and gene and cell therapies – head innovation, followed by drug-device combinations and nanotechnology.
The biosimilars industry enjoys increasing support from governments across the globe who are enacting legislation and policies to promote the development and use of biosimilars. Recent examples of such support can be seen in Germany, Spain, Chile and the USA. The industry is a target for investors and for partnerships in the form of collaboration agreements and licences.
As price pressures push the growth of biosimilars, challenges also appear. Biologic medicines are often covered by a large number of patents. Patents protecting the innovator are a bigger problem for biosimilar launches than they might be for small molecule generics because biosimilar development times are longer and require a larger investment. Considerable losses could be incurred if a company misses one of the many patents protecting a biologic and as a result cannot launch its biosimilar. This is especially important since a number of research-based companies have chosen to develop biosimilars and are known to be on both sides of the biosimilar fight.
Enforcement agencies continue to scrutinise the industry across the globe. The industry poses unique challenges given the role doctors (some of whom are public officials) play in helping companies develop and promote their products and their role as decision makers on treatment options. Another challenge is the need for healthcare professional interaction to ensure scientific communication, education and training for better health outcomes and patient safety.
Patients want to control their health and be involved in their treatment, and governments across the globe are supporting this desire. Patients are also better followed throughout their treatment journey. Pharmaceutical and medical device companies are responding to this trend by developing new products (apps and wearables allowing remote patient monitoring) and methods through direct patient outreach (eg, patient support programs). However, as a traditionally non-customer facing sector, many are finding it challenging to adapt to this new model. Several of the biggest risks in connection with patient support programs are corruption, adverse event reporting obligations, data privacy obligations and regulatory approvals.
The move to patient-centric models also affects how clinical trials are conducted and how the pharmaceutical and biotech sectors are changing their marketing practices (eg, patient advocates, bloggers, influencers), creating new and challenging concerns.
Pricing Pressures and Market Access
The industry consumes a growing percentage of the GDP of most nations, with healthcare costs on the rise because of aging populations and the impact of unhealthy lifestyles. The need for healthcare and life sciences companies to raise prices to cover growing product development costs, and governments' need to implement price cuts to limit growing fiscal deficits is increasing financial and political tensions. Effects of price pressure include:
Life sciences companies remain subject to historic pressures over pricing and reimbursement and, recently, this scrutiny has intensified. As a result, the sector is facing increasing levels of complexity in gaining market access. Different health technology assessment (HTA) methodologies are used in different jurisdictions to inform pricing and reimbursement decisions and to add products to private and public formularies.
As innovation reshapes the pharmaceuticals landscape, pharmaceutical and biotech companies will need to revisit their R&D operating models. The cost of R&D is especially high in biotech due to the rate of product failure. Efforts must be focused on key areas and supported by digitisation while producing evidence that satisfies both health regulators and payers. Specialty products will be key. Oncology, neuroscience, gene therapy, diabetes and autoimmune therapies are projected to be major growth areas for the future.
Changing Business Models
The costs of, and the need for, innovation are important drivers for many changes in business models today. The need for efficiency and cost savings is leading to consolidation in healthcare systems and integrated healthcare models. It is also leading to significant changes on the supplier side, with pharmaceutical, biotech and medical-device companies driving for efficiencies in R&D, supply chain rationalisation and operational excellence, as well as investigating the possibility of direct distribution models and increasingly engaging in the localisation of manufacturing for better market access.
A change in business models can also be witnessed in the medical devices industry's move to managed services, with a view to offering holistic solutions. Some device companies are offering expertise to private and public customers in the finance, design, construction, furnishing, maintenance or even operation of labs, operating rooms and equipment. Managed services are not limited to infrastructure or equipment: they can relate to the provision of medical or administrative staff, stock management or the fulfilment of training needs for healthcare facilities. Strategic partnerships are also considered in instances where not all the necessary skills are available internally. This has effects on both horizontal and vertical relationships and competition law issues will need careful navigation in addition to other areas such as tax, healthcare services regulation, procurement, compliance and liability on a country-by-country basis.
Assets continue to be acquired at earlier stages of development – most obviously because promising late-stage candidates have already been acquired, but also because of the clinical development failures of late-stage candidates, which are not uncommon. Both of these factors increasingly force companies to look earlier in the product pipeline. In addition, the cost of late-stage candidates is increasing. Many early-stage deals are contingency deals to mitigate the buyer's risk, and sellers often accept lower upfront payment in return for larger payments upon the completion of milestones and higher royalties or, in a profit-split structure, a greater percentage of eventual profits.
Conversely, the availability of high-quality early-stage assets is growing, especially with the influence of technology, and may grow further with the anticipated use of artificial intelligence in R&D and the increased availability of big data. The continually increasing cost of bringing new drugs from discovery to market is causing pharmaceutical companies to rationalise their product pipelines along the clinical development pathway. However, in response to this pipeline-pruning, a new source of clinical-development funding has emerged in the form of private equity and venture capital firms, coupled with clinical development expertise. This new form of clinical-development funding presents an opportunity for additional products to reach the market to the benefit of patients worldwide.
Impact of Geopolitics and Trade
The dynamics of geopolitics and trade should not be underestimated. From manufacturing to the conduct of clinical trials, the life sciences industry is increasingly globalised. It is important to understand how geopolitical circumstances like Brexit, trade agreements like the United States–Mexico–Canada Agreement, China's regulatory reforms, and its trade relationship with the USA may act as disruptors to, or facilitators of, the conduct of business in a challenging global environment.
As the 2019 Novel Coronavirus (COVID-19) continues to spread across the world in 2020, and governments and health authorities work tirelessly to defeat it, major economies, including China, are experiencing mounting pressure as consumer spending, production and investment are drastically curtailed due to virus-related risks.
Subsequently many companies are also facing significant and urgent business and legal challenges such as:
While the situation is unprecedented, many of the answers lie in long-standing general laws and regulations, including those related to public health and work safety, as well as emergency measures recently issued by governments to specifically deal with the coronavirus outbreak.
Supporting life sciences and healthcare companies is becoming increasingly more complex. Digitisation and evolving business models are creating opportunities for existing and new corporate players in the industry, notwithstanding the challenges. While regulatory regimes often lag behind innovation, more stringent laws have implications for pharmaceutical, biotech, medical devices and healthcare services companies worldwide. Also, the coronavirus outbreak has emphasised the challenges or our interconnected world. Many of these trends are connected, which not only broadens the scope of corporate in-house legal teams’ involvement with other business divisions, but also requires external legal advisers to provide a combination of interdisciplinary legal expertise and business acumen.