Month: November 2017

In April 2017, a new Medical Devices Regulation (MDR) was published in Europe. The goal was to harmonize conformity assessments and clinical evaluations of medical devices at a European level to insure better safety. From a manufacturer’s point of view, class IIb and class III medical devices will have to undergo special procedures to reach the market. This regulation particularly affects class IIb and III devices.

Since the 90s, three directives regulated medical devices and in vitro diagnostic (IVD) medical devices in Europe. As the directives were open to interpretation, each country could adapt the text, leading to variations in procedures according to each state for a product to obtain a CE mark and reach the market. The European PIP scandal [1] in 2010 triggered a will to improve control of medical devices and their supply with a standardized model closer to the US one. Medical devices and IVD medical devices will now have to comply with MDR and IVD Regulation (IVDR) that will respectively provide a review of a larger proportion of devices and a greater control of diagnostics. The final implementation of regulations will happen in three years for MDR and five years for IVDR. Class IIb and class III medical devices are especially affected by MDR.

The classification of medical devices evolves with MDR

Medical device designation will extend to accessories related to medical devices (such as products used for washing medical devices), implantable non-medical products that may affect the body, and software used for a medical purpose. A larger number of medical devices will be classified as high risk (class III) and will therefore require a more demanding clinical evaluation [2].

A UDI system similar to the United States system will be launched

Medical devices will have to be registered under a Unique Device Identifier (UDI) composed of a constant device identifier, referring to the manufacturer and type of device, and a production identifier, referring to the batch of production. With this system, Europe is getting closer to the United States, where UDI legislation was implemented in 2014. Distributors and importers will then have to update the pathway of products. The UDI database will enable you to trace all medical devices in Europe through each stage in the supply chain until its use. This database is complementary to Eudamed, the transparency database containing all clinical evaluations of medical devices. For patients receiving implantable devices, an implant card will also be provided to allow the patient to have information regarding his device.

Notified Bodies will be reinforced and harmonized for conformity assessment

In order to get a CE mark and be marketed in Europe, medical devices need a conformity assessment based on relevant clinical investigations. With the new MDR, low risk device (class I) conformity is still declared by the manufacturer himself. Class IIa and not implantable class IIb devices need a generic group assessment to get the approval, and implantable class IIb and class III medical devices require a device assessment. Assessment still involves a Notified Body: an entity that can be physically present in every country in Europe. With the reform, Notified Bodies become harmonized between EU countries and will be regularly checked by national authorities to ensure compliance with MDR.

Class IIb and class III medical devices will require further clinical investigation

To be approved in conformity assessments, implantable class IIb and class III devices need a clinical evaluation more demanding than other devices. Before starting the clinical investigation, manufacturers can consult an expert panel at a European level to plan their clinical strategy and know what clinical results will be expected of them to obtain CE marking as fast as possible. In some cases, when an equivalent product is already on the market, and if a contract for sharing technical documentation is signed with the manufacturer of the already marketed device, the manufacturer can avoid clinical investigation and use equivalence for obtaining their CE mark.

In the case of a class IIb or a class III medical device, a scrutiny procedure can be put in place.

When being clinically evaluated, the Notified Body is responsible for writing a clinical evaluation report. However, this report may go through an expert panel to ensure the right level of expertise is used to assess the validity of an innovative product. This scrutiny procedure can delay market entry by 60 days.

The new mandatory post-market surveillance will require a yearly update for class IIb and class III devices

In addition to pre-market clinical evaluation, manufacturers must provide a Post-Market Surveillance plan when applying for CE mark. This plan will result in a Post-Market Clinical Follow-up that will be transcribed in a periodic safety update report. This is one of the major changes to the MDR reform and class IIb and III devices must update this report yearly.

The reform is driving high-risk medical devices closer to reimbursement, a factor of major importance in Europe

Even if, with the previous directives, clinical evaluations were less demanding to get approval for the European market, clinical expectations were high for getting reimbursement in each European country. As reimbursement is a major issue for insuring sales in Europe, a common strategy was to launch the product and then get reimbursement with clinical trials in various countries. As clinical investigation will be needed at a European level with MDR, clinical trials will be assessed in coordination with all countries where it takes place, resulting in an easier and more standardized approach for obtaining reimbursement.

With this new regulation, Europe wants to insure better safety for patients, and the European medical device system will become more structured and easily understandable at both country and European level.

Cepton Strategies will be attending the JP Morgan conference in January. Please click here for more information.

1 – Journal of the Royal Society Medicine “The PIP scandal: an analysis of the process of quality control that failed to safeguard women from the health risks” – 2013

2 – Official Journal of the European Union « Regulations on medical devices » – April 2017 

How will Brexit affect the strategies of US biotechs already in the UK, in Europe, or about to cross the Atlantic?

Dwight D. Eisenhower and Charles de Gaulle didn’t necessarily see eye to eye on many things, but both understood the strategic advantage the UK could provide to the US to set foot in Europe.

What was true from a military or political standpoint in the XXth century was still very relevant from a business point of view in the XXIst century until, on June 23rd, 2016, the UK electorate voted in favour of leaving the European Union, or in short, Brexit. As per the timelines of article 50 of the Lisbon Treaty, describing the procedure to exit the EU, Brexit will become effective on March 29th, 2019.

Current state UK for US biotechs

For the time being, the UK offers a quite favourable environment for US biotech’s: a large English-speaking population (65M+ inhabitants) with access to a performant healthcare system (NHS budget of ~170B€ in 2015-2016 [1]), supported by the lowest Corporate Tax in the G20 (20% [2]) and generous tax deductions on work related to R&D (SME may get up to 230% of R&D expenditure in deduction from their profit [3]). Furthermore, it provides access to the Single Market: 500+ Million people with a 14 Trillion €GDP [4] ($16 Trillion).

The risks and uncertainties that come with Brexit

While Brexit will impact all interactions between the UK and EU, from innovation and its funding to trade and tariffs, four areas of particular relevance for US biotechs will be covered here.

Innovation at risk

The UK is currently the main beneficiary from the European Research Council grants [5], with most projects involving intra-European collaboration [6]. Exiting EU with no deal to maintain participation to European funding would certainly hinder academic research. Interestingly, it would harm also R&D in the private sector, as there is a positive correlation between government and private R&D spending [7]: a poorly negotiated Brexit would reduce the attractiveness of the UK R&D ecosystem.

R&D occurs where ideas, money and talented people meet. The UK currently provides access to high-quality infrastructure, and world-class educational institutes that attract current and future leading scientists: about 16% of STEM academics are non-UK EU nationals [8], and their employment or even stay could be at risk upon Brexit.

Such factors may ultimately impact the decision on where firms will establish their research centres.

Fewer, costlier Clinical Trials

The UK is consistently in the top three countries in Europe for the number of clinical trials in Phase I, II or III and this premium spot could be threatened as the UK leaves the EU: to simplify management and increase efficiency & transparency of clinical trials across Europe, the European Commission has designed the Clinical Trial Regulation (EU No. 536/2014 [9]). As the UK pulls out of the EU, it might be easier for companies to set up clinical trials across Europe and leaving the UK aside.

Trickier Intellectual property protection

The EU is trying to simplify IP protection with unified patents and a unified patent court imposing jurisdiction in all EU member countries (Unified Patent Court Agreement (16351/12) and regulations 1257/2012 and 1260/2012 [10]). Being outside of the EU, the UK would not fall under this court jurisdiction. Whilst the UK may offer easy and quick access for local patent submission, the work to get IP protection in both the UK and EU would still need to be duplicated.

Delays in Drug Approval

At the moment, CE marking for medical device offers marketability across EU, and European Commission marketing authorization, after EMA evaluation, is valid in all countries in the European Economic Area (EEA), which is currently comprised of 28 EU countries, including the UK, plus Norway, Lichtenstein, and Iceland. Approval could become more complex and be delayed depending on the outcome of the ongoing negotiations.

Possible negotiation outcomes

After the June 23rd vote, Theresa May became the new prime Minister and the British Government invoked article 50 of the Lisbon Treaty on the European Union on March 29th, 2017, setting the UK on a course to leave the EU on March 29th, 2019. Since then, negotiations have been afoot and three possible scenarios have been discussed:

EEA membership (like Norway, Lichtenstein, Iceland)

• Enforce the “four freedoms”: Free movement of persons, goods, services and capital within the European Single Market (ESM).
• Contribute financially to access the ESM and to support other EU programs (eg ~800M€ for Norway in 2016 [11]).
• Implement most EU legislations including Marketing Authorization after EMA evaluation, and free marketability of CE labelled medical devices – excluding agriculture and fisheries.

 

This would be the solution with the least impact and most activities would continue as they do now.

Given that Theresa May vowed to exit the Single Market in January 2017, and that this status would not guarantee the UK pays less money to Europe, it would be politically difficult for the current UK government to promote this option. The Association of the British Pharmaceutical Industry however is pushing to reach an agreement to secure the ongoing cooperation between UK and Europe as fast and clearly as possible [12].

EFTA only (like Switzerland)

• Participate with the ESM (four freedoms) but not to the European Union Customs Union
• Switzerland is the only one of four EFTA members that is not an EEA member: instead of using the rules defined under the EEA membership, it has a set of bilateral agreements with the European Union.
• EMA evaluation and EC marketing authorization do not apply here, approval must be obtained from SwissMedic (Swiss Agency for Therapeutic Products) before being commercialized locally.

The UK would retain access to the Single Market.

However, the UK would need to locally approve drugs. This would cause delays as the MHRA is not staffed to handle this extra burden. This would also double the regulatory burden for US companies, as they would need to file once with EMA and once with MHRA, both agencies not having necessarily the same requirement, timelines and dossier format.

WTO (like the rest of the world)

• Default model: need to negotiate bilateral trade agreement on everything including trade and customs.
• EMA evaluation and EC marketing authorization do not apply here, approval must be obtained locally.

The UK would no retain access to the Single Market: trade agreements would have to be negotiated, which would hinder drug movement, both those produced in the UK and exported to continental Europe, and those produced in Europe trying to reach UK patients. Although a 0% tariff on pharmaceuticals is most likely (under the Most Favoured Nation status), other goods could experience tariffs (esp. medical devices). GMP certifications would also be subject to bilateral agreement.

The UK would need to locally approve drugs with the same consequences as the EFTA only scenario.

As negotiations progress at a pace slower than expected, some companies have already activated their contingency plans to mitigate the WTO scenario: Eisai and AstraZeneca have started exploring approval and testing procedures outside of UK. Others, like GSK, are about to invest money to develop their own contingency plans [13].

Conclusion:

While the UK would remain an attractive market, it is currently hard to foresee which version of the three scenarios will materialize: entry to Europe and UK will become a more complicate, prompting for expertise at the regional level to optimize market entry strategies in a timely manner.

As the UK may put some space between itself and the EU, there is hope that ties with the members of the Commonwealth of Nations, (especially Australia, Canada, and India), could be strengthened. In this case, UK could shift from a US foothold in the EU to a US foothold in other high-growth areas of the globe.

References

1° http://www.bbc.com/news/health-38887694, Accessed Nov 08th 2017

2° https://www.gov.uk/government/publications/why-overseas-companies-should-set-up-in-the-uk/why-overseas-companies-should-set-up-in-the-uk, Accessed Nov 08th 2017

3° https://www.gov.uk/guidance/corporation-tax-research-and-development-rd-relief, Accessed Nov 16th 2017

4° https://en.wikipedia.org/wiki/European_Single_Market, Accessed Nov 08th 2017

5° https://ec.europa.eu/unitedkingdom/news/european-research-council-10-%E2%80%93-uk-top-beneficiary_en, Accessed Nov 17th 2017

6° https://royalsociety.org/~/media/policy/projects/eu-uk-funding/phase-2/EU-role-in-international-research-collaboration-and-researcher-mobility.pdf, Accessed Nov 16th 2017

7° https://www.kcl.ac.uk/sspp/policy-institute/publications/SpilloversFINAL.pdf, Accessed Nov 16th 2017

8° http://www.sciencecampaign.org.uk/asset/F50CF4C1-93C7-4F38-89E55D6BDBB70ED6/, Accessed Nov 16th 2017

9° http://www.ema.europa.eu/ema/index.jsp?curl=pages/regulation/general/general_content_000629.jsp, Accessed Nov 08th 2017

10° https://www.unified-patent-court.org/, Accessed Nov 08th 2017

11° https://infacts.org/norwegians-pay-same-brits-eu-access/, Accessed Nov 08th 2017

12° http://www.abpi.org.uk/media-centre/Documents/BARNIER_DAVIS_Joint_Association_Pharma_Letter_12_July_2017.pdf, Accessed Nov 08th 2017

13° https://www.economist.com/news/britain/21731409-industry-long-production-timelines-cannot-afford-wait-any-longer-pharmaceutical-firms Accessed Nov 17th 2017

European biosimilar market: a tremendous opportunity with variable market access constraints

With the recent recommendation of an anti-cancer blockbuster biosimilar by the EMA, the market has the opportunity to soar. Driven by the fierce interest of payors for affordable alternatives to many biologics, national authorities proactively push for biosimilar adoption. To be successful, players must understand the specifics of each market and tailor their strategy accordingly.

The global market opportunity for biosimilars is emerging as a result of three factors. Through 2020, 30 blockbuster biologics, which achieved $109 billion global sales in 2016, face loss of patent exclusivity in at least one major market. In these major markets, regulatory agencies have now defined appropriate regulatory pathways for the approval of new biosimilars. Moreover, the implementation of cost containment practices on the part of governments and insurers has increased demand for such high-quality and less costly versions of blockbuster biologics. Europe dominates the market for biosimilars, but a sharp understanding of specific national attributes is required for players to perform.

EMA has been a pioneer in biosimilars regulation

In the early 2000s, the EMA led the way in establishing regulatory guidelines for the development and assessment of biosimilars, nailing down key principles that have subsequently been adopted worldwide. The EMA regulatory processes’ efficiency is demonstrated by the successful approval of 32 biosimilars already (vs. 10 in the US).

The last update of EMA biosimilar guidelines (2014-2015) attests to its will to evolve in recognition of: technological advances, accumulated experience with marketed products, and availability of new biosimilar targets. The EMA now allows clinical trials conducted outside Europe to be used for biosimilar filing, saving costs of an extra clinical trial for the sponsor. The updated guidance also addresses specific issues to ease the development of complex biosimilars (e.g. monoclonal antibodies), such as the amount of immunogenicity data needed. Furthermore, biosimilar makers can now benefit from EMA’s “Biosimilars Project” which offers free and tailored scientific advice for the development of new targets based on the originators’ data (quality, analytical and functional) in EMA’s possession.

Substitution policies are within the remit of each country

The EMA centralized procedure does not require a switching study to grant approval to biosimilars and substitution policies are within the remit of each European country. Although EMA considers approved biosimilars as equivalent therapeutics alternatives to biologics, automatic substitution is not routinely performed, mainly due to concerns regarding traceability and to the potential impact of repeated switching on immunogenicity. In some countries (UK, Italy, Spain, and Nordics), guidelines or laws prohibit automatic substitution whereas in others (France, Netherlands, Poland, and Baltics), automatic substitution is implemented at the pharmacist or physician level. For biosimilar makers not familiar with European markets, national policies can sometimes be confusing: in Finland and Germany, national authorities (respectively the FIMEA and the Paul-Ehrlich-Institut) consider biosimilars interchangeable with their reference biologicals, however automatic substitution is not included in their current recommendations, which in the end leaves the prescriber with the decision between originator and biosimilar. In this uncertain and quickly evolving environment, biosimilar makers which are able to provide strong switching data have a certain competitive advantage.

Nordic countries are at the forefront of the real-world clinical evidence gathering effort

The initial resistance that followed Europe’s first biosimilar approval in 2006 shows that physicians’ confidence cannot be taken for granted, because of biosimilars’ high complexity and of the stakes for targeted patients. Therefore, payors are aware that forcing biosimilars adoption for cost reasons alone cannot work. Consequently, European countries have been at the forefront of the real-world clinical evidence gathering effort. In Norway, the NOR-SWITCH study has been pivotal in proving biosimilars quality reliability and clinical equivalence with their originators. Funded by the Norwegian Ministry of Health, NOR-SWITCH examined switching from originator infliximab to biosimilar CTP13 in about 500 patients and showed that switching was not inferior to continued treatment with originator. NOR-SWITCH triggered a radical changed in physicians’ perception, spurring the infliximab biosimilar to a market share above 90%.

Policies targeting biologics procurement strongly enhance biosimilars adoption

Backing biosimilars with high quality data is not sufficient to drive uptake. National voluntarist policies are needed at the procurement level. Indeed, despite payors clear benefit from biosimilar usage, there might not be any financial incentives for the hospital, physician or patient to use the biosimilar.

In Nordic countries, the impressive uptake of biosimilars provides sharp insights on the impact of procurement-level strategies. In Norway, epoetins were originally covered by general reimbursement, thus neither the patient nor the physician recognized the biosimilar-associated savings, leading to little switching and low uptake. In 2016, epoetins were transferred to hospital tenders. Two months later, the epoetin biosimilar had gained a 65% market share. This drastic switch was enabled by cost containment awareness among physicians, but also due to an efficient electronic prescription system on which physicians could quickly and massively recall their patients’ prescriptions. In Finland and Denmark, biosimilars also deeply penetrate the biologics market because of strong financial incentives and a management push for biosimilars in hospitals. Opinion leaders often use the NOR-SWITCH study results as a key argument.

Incentives strongly facilitate biosimilars adoption

Tendering at hospital level does not automatically drive biosimilars adoption. Payors must closely monitor the actual adoption at hospital level. For instance, in Ireland and Belgium, although hospitals can procure biologics by competitive tendering, until recently they were indirectly incentivized to purchase the highest price product because they could keep the discount, which are larger for more expensive products. In Spain, some regions such as Madrid have contracts with hospitals to closely monitor the uptake of biosimilars and reward the hospitals that comply with the contract objectives. Prescription quotas can also be installed to force the adoption of biosimilars. In Germany, different prescription minima are set by each regional insurer to promote the use of biosimilars, with physicians being financially threatened for not achieving their objectives. Similar quotas exist in Italy, along with specific education programs designed to foster the use of biosimilars. Consequently, Germany and Italy are now among the top adopters of biosimilars in Europe.

An alignment of positive positions from expert societies, medicine agencies and hospital management, along with financial incentives, is key to fully drive biosimilars adoption. In all countries that enable such collaborations between payors and prescribers, the biosimilars market share is significant. For players, success then strongly depends on their capacity to find the right contracting channel, which is reliant on: the national market structure and clinical practices, and their therapeutic area. Therefore, players must adapt their business models depending on the country-specific market access conditions. But in a market regulated by an agency continually renewing its effort to closely accompany biosimilar makers with an adapted framework, and where 80% of physicians are incentivized to use biosimilars, opportunities cannot be missed.

Information and points of view disclosed in this article are based on Cepton’s knowledge and on the following sources, which we recommend reading:
1. Schiestl M, Zabransky M, Sörgel F. Ten years of biosimilars in Europe: development and evolution of the regulatory pathways. Drug Design, Development and Therapy. 2017;11:1509-1515. doi:10.2147/DDDT.S130318.
2. Scott Morton, Fiona, Ariel Dora Stern, and Scott Stern. “The Impact of the Entry of Biosimilars: Evidence from Europe.” Harvard Business School Working Paper, No. 16-141, June 2016. (Revised July 2017.)
3. Generics and Biosimilars Initiative online resources