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Clinical Trials and the Quest for New Drugs

Liability, competition, and the economic aspects of the changing legal environment

The global quest for effective treatment for the quickly spreading COVID -19 pandemic demands a review and amendment of the regulations on clinical trials carried out on human subjects. To expedite market access to rapid tests, vaccines, and newly developed drugs, both the US FDA and the European Medicines Agency (EMA) have recently published recommendations with a new approach to clinical trials carried out on humans subjects. Also, both national legislators and competition agencies have felt compelled to come out with supportive, fast responses. Hungary was no exception, new rules have been introduced, within the blink of an eye.

From the viewpoint of the pharma sector the amended clinical trial protocols – in response to the epidemic – allow the more effective, fast-paced development of drugs. It is an alluring opportunity for quick (and possibly, profitable) development which at the same time has its downside: despite the pharmaceutical companies’ unsparing costs, time and effort, all research achievements might be claimed for immediate public access upon the request of the competition authorities. Due to the emergency, the compliance with the request of the competition authorities is mandatory even if the pharmaceutical company already claimed patent protection for its new product. The protection of new finds and hitherto achieved market position is a harsh challenge even under normal circumstances – during the pandemic, market leading pharmaceutical companies must face a stricter response of competition authorities, including, in some cases, their intervention to the company’s protection of its new finds. How shall pharma companies avoid a potential loss of profit without bringing upon an undesired penalty, commitments or obligations imposed by the competition authorities?

Pharmaceutical companies in the focus of European competition authorities
The recent proceeding of the Dutch competition authority (Autoriteit Consument en Markt, ACN) initiated in March against Roche Diagnostics and the European Commission’s comments on the case envisage the stricter surveillance of EU member state authorities over pharmaceutical companies developing new COVID-19 products. The Dutch authority inspected Roche for the allegedly unlawful retainment of its newly developed SARS-CoV-2 test components. Roche is considered a dominant market player in the diagnostics sector and according to the ACN, in a period of epidemic and the ensuing shortage of drugs, Roche infringed the law when it retained information on its new finds. The dispute with the competition authority eventually escalated to the Dutch Parliament where the assembly held Roche liable for the shortage of SARS-CoV-2 test components. The assembly submitted a motion to the government to compel Roche to share information on the test components and consent to the production of the rapid test. Roche denied liability for the shortage and highlighted that the first SARS-CoV-2 tests were developed at a record speed in an unprecedented timeframe, therefore the safety and reliability of test results could not be guaranteed if the reagents were to be applied outside of the Roche laboratory setting. Roche highlighted that it did not even claim patent protection for the newly developed components. The dispute, nevertheless, resulted in voluntary commitments by Roche to share information on the test components and consent to the production of the rapid tests. The European Commission, during its collaboration with the ACN, confirmed that several EU member states are facing similar problems and shortage since the past couple pf months of the pandemic.
Several questions emerge with respect to the Roche-ACN case: how the concept of the “shortage of drugs” can be applied to investigational products unknown and not yet authorized? What differentiates a product’s unlawful retainment for mere profit increase — from reasonable care and good clinical practice to retain products whose safety cannot be guaranteed when the hitherto clear, “untouchable” legislation on clinical trials and investigational products are now in the mold? Are the amended recommendations of FDA and EMA – now changed on the fourth occasion – in line with the tightening surveillance by the European competition authorities?

Civil liability in Hungary for the use of investigational products – risks of the amended legislation
The first wave of legislative changes reached Hungary where, in accordance with the EMA recommendations published in March, government decrees on the shortage of medicine components, the modification of clinical trial procedure and investigational products have been issued in response to the COVID-19 pandemic. While the first export bans only impacted authorized drugs that are considered potentially effective in the treatment of virus complications and symptoms, including propofol, hcq, and antibiotics such as augmentine, phentanile – a recent government decree now permits the more lenient application of investigational products. Government Decree No. 99/2020. (IV. 10.) allows for the use of investigational products after the certification of phase 1 trials, (earlier permitted only after phase 2 trials only), without the consent of the sponsor pharmaceutical company responsible for the development. Thus, the investigational product will be made easily available, merely upon request by the patient’s physician or healthcare provider.
These changes in the availability of investigational products then raise questions on liability for any ensuing health risks. If the consent of the pharmaceutical company is not needed for the use of its investigational product, who will be held liable for any possible health damage and related costs? If sponsor companies – such as Roche Diagnostics – can be pressured by the state competition authorities to consent to the immediate use of their investigational products, or the legislation allows for such use even without the companies’ consent, then companies shall not be held liable for any risks that they already indicated. The present legislative changes may impose excessively one-sided expectations on the sponsor pharmaceutical companies, such as self-financed research experiments, voluntary participation in trials, sharing research achievements at no charge, and bearing the expenses of possible risks. New forms of compensation and supportive measures such as Government Decree No. 103/2020. (IV. 10.) are, at the same time, well received to facilitate the continued employment of the R&D sector employees during the harrowing pandemic. The development of new pharmaceutical products in the present situation will be expedited by further incentives such as tax and contribution exemptions and subsidies offered to sponsor pharmaceutical companies, and additional state contributions to hospitals, healthcare providers and their employees whose contribution to the research procedure is as priceless as it is indispensable.

Viktória Villányi is Junior Associate at bpv JÁDI NÉMETH Attorneys at Law

Viktória Villányi

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