Medical Devices & Consumer Health Products 2021

Last Updated August 31, 2021

Israel

Trends and Developments


Authors



Kennedys Law Firm is a leading global insurance law and disputes firm, with expertise in all lines of business. Kennedys' Israeli office consists of a team of skilled, multilingual lawyers (including Hebrew speakers and Israeli qualified lawyers) who understand and have experience of Israeli business and culture. It aims to give rapid and practical legal advice tailored to the client's needs. The firm provides its London and international insurer clients with insurance and reinsurance coverage advice as well as monitoring, claims administration, management and co-ordination services relating to Israeli risks. The Israeli team's relevant core practice areas include commercial litigation, healthcare and medical malpractice, insurance and reinsurance coverage advice, monitoring and claims co-ordination services, personal injury, and product liability and recalls. Its highly regarded international litigation and arbitration team is also experienced in all forms of commercial disputes relating to Israel, regularly advising clients on jurisdictional, forum and international risk issues.

Introduction

It is not a secret that the global medical device market has been growing rapidly in recent years and is one of the most dynamic markets, bringing in hundreds of billions of dollars every year. With over 1,200 companies operating in the Israeli life sciences industry, this jurisdiction has a proven advantage. Amongst the many life sciences companies are companies developing and exporting medical equipment, biopharma companies developing drugs and vaccines, digital medical services such as remote healthcare and, in recent years, the medical cannabis industry as well.

The life sciences industry in Israel can be broadly divided into two: pharmaceutical companies and medical device companies. However, "medical device" is a very broad concept, which includes many sub-fields. For instance, there are companies which develop medical implants, such as stents and heart valves, orthopaedic screws or joints, dental implants, cosmetic implants, etc. There are also companies which develop tools or equipment for diagnostic purposes, or tools for the aesthetic paramedical field (hair removal, skin care, etc);of late, the cannabis industry has been rapidly increasing, with more growers, manufacturers and distributors. With recent global regulation and legalisation, it is anticipated Israel will continue to see a steep increase in the growth of the cannabis industry.

What unites all these companies is that they are all engaged in technological innovation at the highest level.

COVID-19 as a Technological Accelerator

The COVID-19 pandemic is still ongoing, and it seems that its effects could be with us for quite some time. The almost hermetic closure of the economy in the past eighteen months has led to a general decrease in trade. However, in the shadow of the greatest economic and health crisis for many years, we have also been able to identify opportunities.

It seems the pandemic has presented the world with two main challenges: technological and health. The health challenge is clear – finding a vaccine or cure for COVID-19 and its variants – which means that those companies engaged in the field have significant business opportunities, as it is a solution to a global need.

The second challenge is to enable the world to keep living side-by-side with the virus. Companies that find successful solutions will be able to enjoy breakthroughs on the business side. Credit card companies engaged in no-contact payment technology, artificial intelligence technologies for detection using sensors at airports, and, in the medical device industry, solutions such as rapid body heat detection devices and personal hygiene solutions will all keep gaining momentum and be an increasing part of our lives.

We can anticipate that COVID-19 will eventually pass, as epidemics have previously passed on their own or humankind has found a cure for them. However, COVID-19 will have instilled in us new norms, with a greater degree of caution, increased hygiene and a different sense of physical distance than before. We will also witness technologies whose market penetration may have been slow in the past and will now be promoted rapidly due to the need to adapt to the new situation. Therefore, hi-tech companies, and medical device companies in general, may benefit from the current crisis over time due to the accelerated penetration of the use of new technologies.

Remote Healthcare in the Post-COVID-19 World

One of the recent rapidly growing industries is remote healthcare. In basic terms, this refers to treatments given by a therapist while the patient is not physically in the same place. Although remote medicine is not a new phenomenon, there is no doubt that COVID-19 has accelerated the scope of its use and the post-pandemic medical world is likely to be markedly different than what went before. 

Through the development of thousands of new technologies and applications that reduce the need of any physical encounter between a patient and physician, there are now over half a million mobile phone applications worldwide and there has been a huge investment of resources by governments and health organisations to take advantage of the many opportunities, and at the same to try to minimise the many dangers inherent in remote medicine.

This new age of remote healthcare has certainly not bypassed the medical industry and health organisations in Israel, which is sometimes known as the "Start Up Nation". Its dramatic impact on the local hi-tech industry can be plainly seen. Presently, there are more than 1,500 start-up companies in Israel, with about 250 of those companies in the health field and 100 of them in digital medicine and remote medicine fields.

In the past, Israeli medical start-ups were formed on the basis of adapting developed technologies from other industries for the benefit of the healthcare industry. However, in recent years, as the industry developed, so did customers' demands for the transition to complete, end-to-end solutions.

The Israeli Ministry of Health (MOH) leads the National Digital Health Program, which works to promote remote medicine and health services for the general public. The Program envisions making a leap forward that will enable the health system to become more sustainable, progressive and innovative, while constantly renewing and improving itself.

Israeli Regulation and the Ministry of Health

In Israel, the regulatory body that is responsible for medical device registration, submissions, supervision and control over the manufacture and assembly of medical devices is the Medical Device Division of the Ministry of Health (the AMAR). The Medical Device Division is also responsible for granting various types of import permits, monitoring marketing processes and publishing documents, guidelines and procedures that assist in the importing process of medical devices that are manufactured abroad and imported into Israel.

Furthermore, the Medical Device Division is also the unit concerned with the licensing and supervision process for all types of medical devices, including those for rehabilitation, implants, measuring and monitoring devices, drug injection devices, software, cellular apps, mobility devices and combination products.

The Medical Equipment Act was enacted in 2012 (the "Law" or Act") by the Medical Device Division. This law aims to ensure that medical equipment, of all types and uses, does not harm or pose any danger to the general public. The purpose of the Medical Equipment Act is to define which medical equipment is permitted or prohibited for use, import, marketing and distribution in hospitals or HMOs, and to enforce the prohibition on the use of problematic medical equipment. In addition, the Medical Equipment Act stipulates a criminal prohibition on the manufacture, import, marketing and use of medical equipment that is not registered by the Medical Device Division or approved by the Ministry of Health.

The law also deals with the storage of medical equipment, according to which the Minister of Health may appoint inspectors to supervise the implementation of the required instructions. Supervisors may require a person to provide them with information and documents relating to the provisions of this Act, access to places where medical equipment is manufactured or stored in order to check the efficiency, safety and quality of such medical equipment. Since the enactment of this law, the amount of medical equipment endangering the public has dropped to nearly zero.

Although Israel does not have its own medical device classification system, it recognises the classifications from the following authorities:

  • US FDA 510(k) clearance or PMA approval;
  • CE mark certificate issued by a European Notified Body;
  • Certificate to Foreign Governments (CFG) or Certificate of Free Sale (CFS) from the country of origin.

For companies that have already obtained approval for their medical devices in one of these markets (particularly Europe and the USA), registration will most likely be straightforward.

If the medical device is not registered in one of these jurisdictions, then companies seeking to import and market their devices will need to submit their request to the Medical Device Division and attach the following documentation:

  • risk analysis;
  • clinical evaluation;
  • clinical trial data;
  • expert opinion.

According to the Law, the registration procedure must be carried out by an Israeli Registration Holder (IRH). In many ways, this IRH position reflects the US FDA and EU regulatory models. Foreign companies intending to export their devices to Israel will thus need to assign a third party in Israel with the appropriate knowledge to function as the IRH, who will oversee the medical device registration process and maintain any approvals granted by the Medical Device Division.

Some electromedical devices also require Israel Standard Institute (ISI) validation and certification in order to ensure product quality and safety. To obtain ISI certification, it is necessary to submit a sample of the medical device along with supporting documentation to the ISI for evaluation. The official certification documents do not need to be translated if they are in English. If the medical device is intended for domestic use (in Israel), the labelling and instructions for use must be provided in English, Hebrew and Arabic. However, if the device is intended for professional use only within health facilities, the labelling and instructions for use may be submitted only in English.

International Regulation for Israeli Medical Device Companies

Due to the weight of regulation, the medical device industry differs from other hi-tech industries. Each medical device must have a separate regulatory approval in each registered country. Companies need to comply with many regulations, especially for implanted medical products. Therefore, medical device companies that wish to succeed in the international market need to be prepared. When the average regulatory process takes about a year-and-a-half – the availability of information is important because regulatory bodies usually require responses within 15 days – companies need to be ready for delays in production and loss of money in the early stages.

Medical Cannabis – the Future of Healthcare?

As stated above, one of the most fast-paced developing industries is the medical cannabis industry (differentiated from general wellness products containing cannabis, medical cannabis and cannabinoids that are prescribed by physicians for their patients). Thanks to its significant potential to improve the quality of life of millions of people, medical cannabis has been examined as a relevant treatment option in a wide variety of medical conditions.

Presently in Israel, there are over 50 cannabis start-ups, with new developments worth tens of millions of dollars. Israel holds a central position in this developing industry thanks to the advanced research that has been undertaken in the country. Economists estimate the value of revenues in Israel from the export of medical cannabis and its products to reach the sum of NIS4 billion per year in the next few years.

This fast-developing industry has also brought with it new expertise, and includes not only the final medical product but also the agricultural growers, innovative medical research and development, regulatory experts, investors and entrepreneurs, importers and exporters – not to mention doctors and scientists. As with any new field entering the market, there have been a lot of changes in recent years – both in legislation and, unfortunately, in lawsuits. We will no doubt continue to see many more shifts in the coming years.

As part of Israel's efforts to regulate the cannabis market, in May 2019, it announced the Cannabis Reform (the "Reform") that signalled a massive change in the growth, marketing, supervision and distribution of medical cannabis in the country. The Reform has significantly changed the nature of cannabis acceptance for patients. The MOH adopted a quality standard (called IMC-GMP) and required all medical cannabis growers to adhere to it, in order to make sure that the cannabis marketed is of high quality and meets the necessary standards. The MOH also regulated the distribution of cannabis to patients by licensed pharmacies only.

We can expect many changes in legislation in the near future in order to accommodate the medical cannabis industry. In the past year, the Deputy Health Minister presented a proposal for a new medical cannabis reform, following the relatively high prices of medical cannabis to the end patients.

According to the new proposal, the MOH plans to stop selling cannabis in pharmacies and make the supply of cannabis the responsibility of the country's HMOs. The MOH stressed that after the Reform liaison with the suppliers (factories and growers) will be done by the MOH itself in order to lower costs. This means that the customer of the cannabis companies will be the MOH itself, which will have greater bargaining power and so be able to lower prices.

As a result of the above stated Reform, we have seen many class action lawsuits filed in the Israeli court system.

In 2019, two class action applications were filed by the same claimant. The first application, in the amount of NIS650 million, claimed that cannabis companies operate like a cartel, exploit customers' weaknesses, and do not properly label the products so that it is not possible to know what they contain. The second application, also in the amount of NIS650 million, was filed against the cannabis manufacturing companies and distributing companies, together with the MOH, on behalf of 30,000 patients. It was alleged that thousands of medical cannabis patients were left without medical cannabis supply due to the Cannabis Reform, which stopped the supply of cannabis to the patients and forcibly transferred them to pharmacies. Patients who had to receive their medication from pharmacies encountered a severe shortage.

These claims, and others, are still pending and the court has not yet decided whether to approve them as class actions. The cannabis companies, both manufacturing and supplying companies, are subject to very strict regulations by the MOH and we assume that it will guide the court when determining whether to approve such claims or not.

However, it is anticipated that with the continued growth of the medical cannabis industry, as with other new innovative industries such as remote healthcare, we will witness many adjustments in legislation and regulation, and there are likely to be many lawsuits to come.

Kennedys

2 Hamanofim Street
4672553
Herzliya
Israel

+972 9 9711 111

+972 9 9711 122

TelAviv@kennedyslaw.com https://kennedyslaw.com
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Trends and Development

Authors



Kennedys Law Firm is a leading global insurance law and disputes firm, with expertise in all lines of business. Kennedys' Israeli office consists of a team of skilled, multilingual lawyers (including Hebrew speakers and Israeli qualified lawyers) who understand and have experience of Israeli business and culture. It aims to give rapid and practical legal advice tailored to the client's needs. The firm provides its London and international insurer clients with insurance and reinsurance coverage advice as well as monitoring, claims administration, management and co-ordination services relating to Israeli risks. The Israeli team's relevant core practice areas include commercial litigation, healthcare and medical malpractice, insurance and reinsurance coverage advice, monitoring and claims co-ordination services, personal injury, and product liability and recalls. Its highly regarded international litigation and arbitration team is also experienced in all forms of commercial disputes relating to Israel, regularly advising clients on jurisdictional, forum and international risk issues.

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