Life Sciences: What’s new in France? A legal update on recent developments in the life sciences sector | Dechert LLP
The Administrative Supreme Court upholds decisions restricting the prescription of a treatment against osteoporosis.
Authors: Sophie Pelé, Margaux Lasseigne and Hugo Petit
Upon the assessment of a follow-up study, the French National Authority for Health (“HAS”) recommended that Prolia, marketed by Amgen, be subject to an initial prescription by a doctor specializing in the treatment of osteoporosis and be reimbursed only upon approval of the Social Security doctors. Amgen appealed the decisions limiting the prescription of Prolia to certain specialists, but the Administrative Supreme Court did not identify major breaches in the assessment of the case.
As a reminder:
(i) In France, the reimbursement of a medicinal product when dispensed in a pharmacy or paid for by a hospital is subject to prior registration on specific lists (“retail list” and “hospital list”) following an opinion of the Transparency Commission of the HAS. To ensure quality of care and safety, registration on these lists may be subject to conditions relating to the qualification of the prescribers.
(ii) In addition, for certain particularly expensive medicinal products, inclusion on the retail list may also be subject to the “exception medicine” status, in which case their reimbursement is subject to validation by a Social Security doctor.
The ruling of the Administrative Supreme Court (CE, 17 September 2023, No. 462425) appears quite severe in light of the nature of the medicinal product and pathology at stake, but it serves as a reminder that the court’s control remains limited to sanctioning major breaches, while the health authorities benefit from a wide margin of interpretation on the technical assessment of the case.
First, this is due to the fact that those decisions are regulatory by nature, and thus the Court confirms that their adoption is not subject to the adversarial principle.
In addition, the Court validates the fact that such restrictions imposed on the prescription may be used to address the misuse of a product. This ruling is probably heavily impacted by the fact that Prolia is one of the few monoclonal antibodies amongst other more traditional osteoporosis treatments.
In that respect, Amgen finally challenged the distortion of competition created by the contested decisions, with regards to its competitors. None of the comparators of Prolia identified by the Transparency Commission of the HAS is subject to any such a similar restriction. However, the Administrative Supreme Court ruled that equality of treatment and fair competition should be assessed only among products having the same features and the same position in the therapeutic strategy, thus probably leaving aside treatments less advanced than monoclonal antibodies. Within such a narrow perimeter, the Court did not identify any blatant disproportion, thus reminding that general principles of equality of treatment and fair competition may be subject to certain restrictions provided that they remain proportionate to the general interest pursued.
The ruling of 17 February 2023 shows the broad margin of interpretation that the Administrative Supreme Court leaves to health authorities. It also, more interestingly, demonstrates a very narrow definition of comparators for the purposes of the equality of treatment, which may have interesting repercussions with regards to pricing decisions, for which the definition of comparators plays a key role.
The European Court of Justice broadens the Scope of control over M&A Transactions
Authors: Mélanie Thill-Tayara and Marion Provost
A recent preliminary ruling by the Court of Justice of the European Union (the “Court of Justice“) opens the possibility of an ex-post control, on the basis of Article 102 of the Treaty on the Functioning of the European Union (“TFEU“), of a concentration that has escaped the ex-ante scrutiny of competition authorities in the EU under merger control rules but which threatens competition. This ruling, issued on 16 March 2023, could have a significant impact on the conduct of deals, particularly in the pharmaceutical sector where killer acquisitions and potential restrictions to innovation are closely monitored.
The Court of Justice’s judgment follows a complaint brought before the French Competition Authority (“the FCA“) by Towercast, a provider of digital terrestrial television (“DTT”) broadcasting services in France, against TDF, the leading company in this market, concerning the latter’s acquisition in October 2016 of Itas, also active in the DTT broadcasting sector. This acquisition, which met neither the EU nor the French merger control thresholds, had not been subject to any prior merger control review. Considering that the transaction significantly restricted competition on the upstream and downstream wholesale markets for DTT broadcasting services, Towercast lodged a complaint before the FCA alleging that the acquisition constituted an abuse of dominant position.
However, in a decision dated 16 January 2020, the FCA dismissed the complaint, considering that Article 102 TFEU, which aims to sanction anti-competitive behavior, could not be applied in the context of an acquisition. On the merits, the FCA considered that the principles derived from the old Continental Can Court of Justice’s judgment, invoked by Towercast, according to which a merger can be challenged under abuse of dominance rules, could not apply. According to the FCA, this solution, adopted at a time (in 1973) when there was no merger control regime in place, although never questioned since then, had become obsolete with the adoption of the Merger Control Regulation. The FCA relied on Article 21 of Regulation n°139/2004 of 21 January 2004, which replaced Regulation n°4064/89 of 21 December 1989, and specifically excludes the application of other European regulations to concentrations, including Regulation n°1/2003 of 16 December 2002 on the implementation of the rules on competition against cartels and abuses of dominant positions.
The Paris Court of Appeal, before which an appeal against the FCA’s decision was brought, decided to stay its proceedings and refer a question for a preliminary ruling to the Court of Justice on whether the existence of a European system of prior merger control is incompatible with the examination of a concentration under the prohibition of abuses of dominant position.
Reaffirming the long-established principle in Continental Can, the Court of Justice considers in its judgment that the direct effect of Article 102 TFEU implies that a party cannot be denied the right to invoke this provision before the national courts in order to challenge a conduct, including an acquisition, which it considers anticompetitive. It follows from the foregoing that, although the EU Merger Regulation has introduced an ex-ante control of concentrations having a community dimension, the application of Article 102 TFEU to a concentration is not devoid of purpose: as clearly stated by the Court of Justice, “no exemption may be granted, in any manner whatsoever, in respect of abuse of a dominant position.”
Consequently, when a concentration has escaped ex-ante merger control, it may subsequently be apprehended on the basis of Article 102 TFEU, provided, of course, that an abusive conduct can be characterized. In this respect, the Court of Justice clarifies in its judgment that the simple strengthening of the acquirer’s dominant position through the implementation of the concentration is insufficient to characterize an abuse, and that it must be demonstrated that, by means of the acquisition, the dominant undertaking significantly restricts competition on the market.
This ruling is thus of significant importance for companies insofar as, together with the recent evolution brought by the reinterpretation of the referral mechanism provided for in Article 22 of the EU Merger Regulation, it participates to broadening the scope of intervention of EU competition authorities regarding the control of concentrations between undertakings and achieves the objective of closing the perceived enforcement gap for acquisitions that escape ex-ante merger review despite being likely to substantially harm competition.
Indeed, for many years, the European Commission (the “Commission”) and national competition authorities were looking for ways to amend and modernize merger control rules in order to apprehend certain transactions that, based on existing turnover thresholds, went under the radar. While some Member States, such as Germany or Austria, have chosen to introduce a merger control threshold based on the value of the transaction, thereby making prior notification of transactions of a significant amount mandatory, the Commission has opted for a different solution. In 2021, the Commission indeed announced its intention to revisit its interpretation of Article 22 of Regulation n°139/2004 of 21 January 2004, which organizes a referral mechanism from the competition authorities of the Member States to the European Commission for proposed concentrations that affect trade between Member States and significantly threaten competition in the territory of the Member State(s) making the referral request. While up until 2021 such mechanism was rarely used, the Commission now encourages and accepts referrals made by one or more Member States in relation to mergers and acquisitions which, although not notifiable, including at national level, nonetheless risk having a significant impact on competition and thus warrant an ex ante examination. The pharmaceutical sector is directly in the spotlight, as illustrated by the Illumina/Grail operation, which was the first to be submitted to the Commission’s scrutiny via this referral mechanism, leading to its prohibition by the European regulator in September 2022.
The judgment of the Court of Justice in the Towercast case further expands the toolbox of the Commission and national competition authorities of the Member States by allowing them (as well as the courts) to examine ex post, under the prohibition of abuses of dominant position, mergers which have escaped ex-ante merger control. The pharmaceutical sector is again particularly exposed to this risk: acquisitions of innovative companies, developing promising treatments, or even only of certain assets, such as patents, could in the future give rise to complaints for abuse of dominance. The competition authorities will undoubtedly have an interest in this, particularly if the proposed transaction is likely to reduce innovation in the market, including at a relatively early stage of research and development.
However, aside from introducing legal uncertainty for companies contemplating a deal, this ruling also raises questions, in particular regarding the articulation between, on the one hand, the referral mechanism of Article 22 and, on the other hand, when such mechanism has not been used, the possibility to subsequently challenge a concentration that has been implemented under Article 102 TFEU, exposing the parties to a potential risk of fine for infringement of competition law.
In the meantime, this two-fold development marks an important paradigm shift: merger control in Europe no longer follows a purely mathematical logic. Not only has it become far broader, but it now certainly includes a more contentious dimension, which calls for companies to take into account possible competition issues at a very early stage in their merger operations, regardless of the size of the transaction being considered.
Advertising remains off-limits for health centers
Authors: Sophie Péle and Margaux Lasseigne
On March 8, 2023, the French Cour de cassation issued a final decision in the Addentis litigation, which has pitted dental health centers against dental surgeons’ professional associations for nearly a decade with regards to their promotional activities.
Health centers (centres de santé) are local care structures managed on a non-profit basis aimed at reinforcing access to health care. As they are not themselves registered as health care professionals, health centers were initially not subject to any advertisement prohibition, which gave rise to claims from dental surgeons’ professional associations who were subject to much stricter prohibition from any form of advertising.
On April 26, 2017, in the Addentis case, the French Cour de cassation ruled through a roundabout way that health centers were not allowed to make any commercial advertisement. Such ruling was based on the grounds of unfair competition preventing them from advertising for the services of their employees who are themselves, like independent health care professionals, prevented from making any direct or indirect advertising.
The prohibition of advertising by health centers was added in the Public Health Code shortly after in 2018.
However, in parallel, the Court of Justice of the European Union (“CJEU”) ruled in 2017 and 2018 that EU regulations preclude national legislations from imposing a general and absolute prohibition of any advertising relating to the provision of oral and dental care services, including the creation of a website.
The French provisions were then relaxed by a decree dated December 22, 2020. Dental surgeons are allowed to disseminate objective information related to their skills, professional practices, career paths and the condition of their practice.
This gave Addentis the opportunity to raise the remaining ongoing litigation at the level of the Supreme Court to rule on a priority preliminary constitutionality question as to the compatibility of the general prohibition of advertising for health centers with the Constitution. However, the Supreme Court considered that the protection of public health, as well as the social purpose of health centers, justified that the latter remain subject to a general prohibition of advertising.
Consequently, on March 8, 2023, the French Cour de cassation confirmed that the revocation of the general prohibition of advertising for dental surgeons had no impact on the broader prohibition of advertising applicable to health centers.
Contrary to the initial rulings of 2017, the unfair competition principle was not deemed to be applicable, given that the general prohibition applicable to health centers was based on grounds related to the status of health centers and their non-profit mission, which is not comparable to the situation of other health practitioners.
In addition to this general prohibition, health centers may also be soon subject to stricter rules regarding their communications towards patients. Following various bankruptcy and health scandals involving health centers, a draft bill aims at reinforcing the requirements applicable to health centers.
This saga is illustrative of two features of the French health system, which remains very conservative with regards to the conduct of health activities, both in terms of communication and conduct of business activities.
Unified Patent Court – The clock is ticking
Author: Olivia Bernardeau-Paupe
As of February 2013, 25 EU Member States signed the Unified Patent Court Agreement (“UPCA”) (published in OJ EPO 2013, 287), a treaty that established the Unified Patent Court (“UPC”), and which was subject to ratification in accordance with Member States’ respective constitutional requirements.
The UPCA is the third component of the unitary patent package, together with two EU regulations adopted in December 2012 laying the foundations for unitary patent protection in the EU.
The UPCA is open to accession by any EU Member State. So far, all EU Member States except Croatia, Poland and Spain have signed the UPCA but not all of them have ratified it. Following Brexit, the United Kingdom withdrew its ratification of the UPCA.
On February 17, 2023, Germany was the 17th member state to file its ratification instrument of the UPCA, removing the final procedural obstacle to the start of the UPC and launching the countdown according to which the UPCA will enter into force.
The UPC is a new court that will take effect on June 1st, 2023, and will have exclusive jurisdiction over unitary patents, “classic” European patents and applications, as well as supplementary protection certificates based on “classic” European patents validated in one or more of the contracting states participating in the UPCA.
March 1, 2023 marked the start of the three-month “sunrise period”. From that date until May 31, 2023, the owners of “classic” European patents have the possibility to reject the exclusive jurisdiction of the UPC for lawsuits in connection with their European patents by notifying their decision to the UPC Registry via a so-called “opt-out”.
The opt-out must be made in respect of all states designated by the European patent application or for which it has been granted.
If opt-out is requested, claims for infringement and for validity of the European patent will have to be assessed by the national courts of in each member state separately.
If no opt-out is requested for a European patent, the UPC will have exclusive jurisdiction to rule on infringement and validity of that European patent from June 1, 2023, onwards. This means that a decision of the UPC on a European patent’s infringement or validity will have effect in all 17 member states. Likewise, an injunction obtained before the UPC will also be enforceable in those 17 countries.
Although opting out will remain in principle possible until the end of that transitional period, if a European patent is subject to a lawsuit before the UPC, they will be unable to opt out and request national court jurisdiction at that point.
The UPC has no jurisdiction over national patents, and the possibility of opting out or bringing an action before a national court during the transitional period, i.e., until at least April 30, 2030 (subject to potential additional seven years) is not available for unitary patents.
The choice of opting out or not is not definitive since the UPCA provides that patent owners can withdraw an opt-out at any time during the transitional period. Likewise, it is also possible to correct an opt-out or to file an application to remove an unauthorized application to opt out or unauthorized withdrawal of an opt-out.
The benefits of being subject to the UPC are that patent owners will avoid the costs, risk and complexity associated with multiple disputes in various national jurisdictions.
In addition, UPC first-instance decisions should be issued in a 12-month timeframe, hence faster than most of the national courts. Further, because the same decision would apply across all 17 member states, it would have a broader and more secure enforceability than would be the case for multiple national cases. Finally, UPC preliminary injunctions will, partly due to their large geographic scope, be very powerful.
No doubt the UPC’s highly experienced and qualified multi-national judges, as well as those that are technically qualified in specific relevant areas, will establish harmonized case law and increase legal certainty.
That said, as of today, in view of the lack of precedent, UPC decisions are quite unpredictable, and it remains to be seen how it will rule in the future. The other possible issue is that while the UPC’s decisions offer the security of being applied across all 17 member states, this also means that a decision revoking a patent would be applicable in that same large territory.
It is therefore for the patent owners to decide whether to opt out or not after having conducted an audit of their patent portfolio. The strategy will depend on the strength of such a portfolio. Yet, two trends seem to be emerging: either opting out for the strong patents and thus subjecting weak ones to the UPC to see how it will rule and, in view of the then-to-be-decided precedents of the UPC, eventually withdraw the opt-out later; or opting out for the weak patents only, so as to benefit from the UPC central attack for strong patents.
The UPC will also impact on patent owners’ litigation strategies, since their competitors can monitor opt-out filings on the UPC registry, and conversely, they could use this information to shape their own strategy.
The choice of opting out or not is of particular importance for life sciences and pharmaceutical companies who own not only European patents, but also supplementary protection certificates issued for a product protected by a European patent which will also eventually be subject to the exclusive jurisdiction of the UPC, unless opted-out.
Remote health care monitoring trial leads to health insurance cover
Author: Sophie Péle
In 2018, the Social Security Financing Bill introduced a trial that aimed to encourage and financially support the implementation of remote health care monitoring projects throughout France. The trial focused on five diseases: heart failure, renal failure, respiratory failure, diabetes, and implantable cardiac prostheses. Reimbursement was based on a base rate for each stakeholder: health care professionals in charge of the monitoring and therapeutic support, and the provider of the monitoring device. In addition, a performance premium was granted if certain performance targets were met.
The trial was scheduled to resume on July 1, 2022 when it would transition to a permanent reimbursement scheme. However, due to the complexity of the new reimbursement scheme, an extensive preparation and consultation phase has been put in place. In order to prevent any disruption of care or loss of opportunity for patients, the experimentation deadline was pushed back to December 31, 2022 and, ultimately, to July 1, 2023, but only for devices which are in the process of being covered by the new reimbursement scheme as from January 31, 2023.
By that date, the new reimbursement scheme created by the Social Security Financing Bill for 2022 will go live. Devices that would not be registered on the reimbursement list by July 1, 2023 will no longer be reimbursed.
Reimbursement of remote monitoring will be subject to several criteria:
– Devices must be CE-marked. They must be intended to collect, analyze, transfer data, and emit alerts when necessary. They can only be associated with non-invasive data collection accessories with no therapeutic purposes.
– Digital monitoring devices must be certified by the French Digital Health Agency (“ANS”), so as to ensure their conformity with the interoperability and security repositories that are applicable to health information systems and digital health services.
– Remote monitoring services must be subject to an evaluation by the French Health Authority (“HAS”) and will be eligible to reimbursement if they provide “an improvement of the medical service” compared to existing treatments. Notably, if there is an improvement, the older service will be phased out.
– Remote monitoring services will have to be registered on a reimbursement list that will also set common standards for remote monitoring activities regarding the organization of the activity and the conditions applicable to the device used for the monitoring.
– Remote monitoring will have to be provided by a remote monitoring operator registered with a Regional Health Authority (“ARS”). Remote monitoring operators can be medical professionals or a legal person regrouping at least one medical professional.
Early reimbursement may also be granted for one year while the evaluation and listing process is in place, if the remote monitoring device brings innovation, notably in the organization of care.
In light of the results of the trial, reimbursement will be provided as a package of both a base rate for the operator and the provider of the device, and a modulation depending on the specificity and the volume of the monitoring activity. Patients will not face extra charges.
Reimbursement of the monitoring devices will be subject to the effective transmission of telemonitoring data. In other words, non-activated devices will lose reimbursement.
The next step will be the publication of decrees setting those rates.
