TheLife Sciences Law Review

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Editor

Richard Kingham

The Life SciencesLaw Review

Reproduced with permission from Law Business Research Ltd.

This article was first published in The Life Sciences Law Review, 1st edition(published in April 2013 – editor Richard Kingham).

For further information please emailAdam.Sargent@lbresearch.com

The Life Sciences Law Review

EditorRichard Kingham

Law Business Research Ltd

ThE Law REviEwS

ThE MERgERS And AcquiSiTionS REviEw

ThE RESTRucTuRing REviEw

ThE PRivATE coMPETiTion EnFoRcEMEnT REviEw

ThE diSPuTE RESoLuTion REviEw

ThE EMPLoyMEnT LAw REviEw

ThE PuBLic coMPETiTion EnFoRcEMEnT REviEw

ThE BAnKing REguLATion REviEw

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ThE MERgER conTRoL REviEw

ThE TEchnoLogy, MEdiA And

TELEcoMMunicATionS REviEw

ThE inwARd invESTMEnT And

inTERnATionAL TAxATion REviEw

ThE coRPoRATE govERnAncE REviEw

ThE coRPoRATE iMMigRATion REviEw

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PuBLiShER gideon Roberton

BuSinESS dEvELoPMEnT MAnAgERS Adam Sargent, nick Barette

MARKETing MAnAgERS Katherine jablonowska, Thomas Lee, james Spearing

PuBLiShing ASSiSTAnT Lucy Brewer

PRoducTion cooRdinAToR Lydia gerges

hEAd oF EdiToRiAL PRoducTion Adam Myers

chiEF SuBEdiToR jonathan Allen

SuBEdiToR Anna Andreoli

EdiToR-in-chiEF callum campbell

MAnAging diREcToR Richard davey

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Editor’s Preface ..................................................................................................viiRichard Kingham

Chapter 1 AuSTRALiA .............................................................................. 1Bernard O’Shea

Chapter 2 AuSTRiA ................................................................................. 20Karina Hellbert

Chapter 3 BELgiuM ............................................................................... 35Peter Bogaert and Sarah Forest

Chapter 4 BRAziL.................................................................................... 47Beatriz M A Camargo Kestener and Marco Aurélio Antas Torronteguy

Chapter 5 cAnAdA ................................................................................. 60Martha A Healey, Adrienne Blanchard and Jill Daley

Chapter 6 chinA .................................................................................... 73Shaoyu Chen

Chapter 7 dEnMARK ............................................................................. 93Mikkel Vittrup and Mette Hygum Clausen

Chapter 8 EuRoPEAn union ........................................................... 107Grant Castle and Robin Blaney

Chapter 9 FinLAnd.............................................................................. 131Johanna Lilja, Essi Weseri and Mia Eklund

conTEnTS

Contents

iii

Chapter 10 FRAncE ................................................................................ 144Mikael Salmela, Cécile Derycke and Ombline Ancelin

Chapter 11 gERMAny ............................................................................ 156Christian Dierks, Daniel Geiger and Ben Backmann

Chapter 12 indiA .................................................................................... 168Krishna Sarma, Manisha Singh, Riku Sarma and Bhaskar Bhattacharya

Chapter 13 iRELAnd .............................................................................. 179Maree Gallagher

Chapter 14 iTALy ..................................................................................... 196Francesca Rolla and Paola La Licata

Chapter 15 jAPAn .................................................................................... 208Kenji Utsumi and Kensuke Suzuki

Chapter 16 KoREA .................................................................................. 222Jung Min Jo and Eun Soo Lim

Chapter 17 MExico ............................................................................... 236José Alberto Campos-Vargas

Chapter 18 noRwAy .............................................................................. 253Are Stenvik, Beret Sundet, Andreas Bjørnebye and Kirsten Wøien Gilhuus

Chapter 19 PAKiSTAn ............................................................................. 266Zulfiqar Khan

Chapter 20 SouTh AFRicA .................................................................. 277Andrew Parsons, Brian Wimpey, Justin Malherbe, Liesel Kok and Rosalind Lake

Contents

iv

Chapter 21 SPAin .................................................................................... 290Jordi Faus

Chapter 22 SwEdEn .............................................................................. 299Håkan Sterner

Chapter 23 SwiTzERLAnd ................................................................... 312Markus Schott and Markus Wang

Chapter 24 TAiwAn ................................................................................ 324Katherine Y C Juang, Jill Niu and Daisy Wang

Chapter 25 TuRKEy ................................................................................ 337Selma Ünlü

Chapter 26 uniTEd KingdoM .......................................................... 348Grant Castle and Sarah Cowlishaw

Chapter 27 uniTEd STATES ................................................................. 363Richard Kingham

Appendix 1 ABouT ThE AuThoRS .................................................... 396

Appendix 2 conTRiBuTing LAw FiRMS’ conTAcT dETAiLS .... 415

vii

Editor’s prEfacE

It is a pleasure to serve as the editor of the first edition of The Life Sciences Law Review, which aims to provide an overview of legal issues of special interest to pharmaceutical, biotechnology and medical device companies in 27 jurisdictions. The life sciences sector is of vital importance to the health and well-being of persons around the world. Innovative manufacturers play a key role in the discovery and development of new therapies, while generic manufacturers serve an equally important function by ensuring availability of inexpensive products once patents and regulatory exclusivity periods expire. Throughout the lifespan of a drug or device – from the earliest discovery stage, through non-clinical tests and clinical trials, the governmental approval process, and after entry to the market – lawyers play a central role as advisers to the industry.

We have sought to organise the regulatory discussion in each national entry to correspond roughly to the key stages of product development: the regulatory classification of the product, which determines requirements for approval; non-clinical studies and clinical trials; compassionate use prior to approval; product pre-clearance; regulatory incentives for investment in drug development; post-approval controls; manufacturing; promotion; distribution; legal status; imports and exports; special rules on controlled substances; and enforcement.

In addition to product pre-clearance procedures, many jurisdictions impose requirements for approval of pricing or reimbursement of pharmaceuticals and, to a lesser extent, devices. These are addressed in the entry for each country. We also set out basic information on administrative and judicial remedies, controls on financial relationships with prescribers and payors, special liability systems, and transactional and competition issues that are specific to pharmaceuticals and medical devices.

Finally, each chapter identifies issues of current interest in the jurisdiction. These include, for example, plans to increase transparency in the regulatory process without undermining protection of intellectual and industry property; efforts to adapt traditional regulatory systems to new and emerging technologies, such as companion diagnostics, gene therapy and cell processing; and implementation of regulatory pathways for

Editor’s Preface

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‘biosimilars’ as patents expire for the first generation of biotechnology-derived medicinal properties. As these and other issues develop, we expect to devote additional attention to them in future editions.

I wish to thank all of the contributors who have made this publication possible. They are an impressive group, and it is a privilege to be associated with them in this enterprise.

Richard Kingham

Covington & Burling LLPWashington, DCMarch 2013

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Chapter 9

Finland

Johanna Lilja, Essi Weseri and Mia Eklund1

I INTRODUCTION

Finland is a lucrative country for early market entry for generic products. Until recently, most blockbuster drugs on the Finnish market have been protected by analogous process patents instead of product patents. Further, a fast-track process is offered for generic pricing and reimbursement applications. Also, mandatory generic substitution and a reference price system encourage generic entry.

In addition to the subsidiaries of international pharmaceutical companies, there is only one large national player on the market, Orion Oyj. However, a number of biotechnology companies are operating in Finland.

The Finnish Medicines Agency (‘Fimea’) is the national competent authority for supervising medicines. In respect of medical devices, the National Supervisory Authority for Welfare and Health (‘Valvira’) monitors the compliance of medical devices with the legislation and regulations.

II THE REGULATORY REGIME

The legislation applicable to both medicines and medical devices in Finland has been harmonised with EU legislation. The manufacturing, sale, distribution and marketing of medicines is regulated by the Medicines Act (395/1987, as amended) (‘the Medicines Act’) and the Medicines Decree (693/1987, as amended) (‘the Medicines Decree’). The legislation applicable to medicines is complemented by the regulations and guidance issued by Fimea and the Code of Ethics issued by the Pharma Industry Finland (in

1 Johanna Lilja is a partner and Essi Weseri and Mia Eklund are associates at Roschier.

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force since 1 January 2013) (‘the PIF Code’),2 which is the industry organisation for companies operating within the (innovative) pharma industry.3 The PIF Code, which contains detailed provisions especially on the marketing of medicines, is based on the marketing guidelines issued by EFPIA4 and IFPMA.5

The manufacturing, sale, distribution and marketing of medical devices is regulated by the Medical Device Act (629/2010, as amended) (‘the Medical Device Act’). The Medical Device Act is complemented by governmental guidance issued by Valvira and by industry guidelines (i.e., the Code of Ethics (‘Sailab Code’))6 issued by Sailab ry, which is the industry organisation for product suppliers within the hospital and laboratory industry.

On a general level, the Consumer Protection Act (38/1978, as amended), which is applicable to consumer marketing, and the Act on Unfair Business Practices (1061/1978, as amended), which is applicable to business-to-business marketing, may apply to the marketing of both medicines and medical devices.

i Classification

The Medicines Act and the Medical Device Act contain definitions for medicines and medical devices. The Medicines Act defines a medicinal product as ‘a product or substance intended for internal or external use to cure, alleviate or prevent a disease or its symptoms in humans or animals’. The Medical Device Act defines a medical device as:

any instrument, apparatus, appliance, software, material or other article, whether used alone or in combination, intended by the manufacturer to be used for human beings for the purpose of: (i) diagnosis, prevention, monitoring, treatment or alleviation of disease; (ii) diagnosis, monitoring, treatment, alleviation of or compensation for an injury or

handicap;(iii) investigation, replacement or modification of the anatomy or of a physiological

process; or (iv) control of conception.

The borderline between medicines, medical devices and other products such as foods or cosmetics is not always clear. The Medicines Act sets forth that in ambiguous cases where the product may, taking all its properties into account, correspond to the definition of a medicinal product or another product, what has been set forth with respect to medicinal

2 The PIF Code has been drafted and implemented by the representatives of the pharmaceutical industry. All members of PIF (which includes in practice all major players in the innovative pharmaceutical industry in Finland) have undertaken to comply with the PIF Code and therefore it represents the generally accepted code of conduct in the industry. However, it should be noted that the PIF Code is binding only on the members.

3 Rinnakkaislääketeollisuus ry is the corresponding organisation for generic pharma companies in Finland.

4 The European Federation of Pharmaceutical Industries and Associations.5 The International Federation of Pharmaceutical Manufacturers and Associations.6 The Sailab Code is based on and corresponds to the directions of Eucomed.

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products shall apply. Further, the Medical Device Act sets forth that when assessing whether a product is within the scope of the Medical Device Act or the Medicines Act, the primary action of the product must be considered. Fimea has final authority to decide whether a product is to be classified as a medicine.

ii Non-clinical studies

The conduct of pre-clinical safety tests of medicines is regulated by the Medicines Act. Laboratories conducting such tests are subject to Fimea’s approval, which may include laboratory-specific conditions and restrictions. The performance of pre-clinical safety tests of medicines is supervised by Fimea to ensure that these are performed in accordance with good laboratory practice.

The Act on the Use of Animals for Experimental Purposes (62/2006, as amended) applies to the use of vertebrate animals for experimental purposes. The objective of the Act is to ensure that animals are kept and used for experimental purposes only when there are necessary and important reasons for doing so and that such use causes the least possible amount of pain, suffering, distress or lasting harm. In addition, the provisions of the Animal Welfare Act (247/1996, as amended) on the keeping, care, treatment and handling of experimental animals must be complied with. Furthermore, the provisions of the Gene Technology Act (377/1995, as amended) apply to the use of gene technology in the use of animals for experimental purposes. The Ministry of Agriculture and Forestry of Finland is responsible for the general supervision and enforcement of these Acts.

Medical devices do not have to go through non-clinical studies to be sold.

iii Clinical trials

The conduct of clinical trials is regulated in the Medical Research Act (488/1999, as amended), which implements the EU Clinical Trials Directive 2001/20/EC. The Act is applicable to clinical trials of medicines and medical devices. The provisions of the Medical Research Act are complemented by the provisions of the Medicines Act and Medical Device Act. Further guidance on the conduct of clinical trials is issued by Fimea,7 Valvira and the National Committee on Medical Research Ethics (‘TUKIJA’).

Before a clinical trial of a medicine or medical device is commenced, a favourable opinion issued by TUKIJA (with respect to medicines) or a regional ethics committee and the approval of the relevant supervising authority (Fimea or Valvira) is required. The clinical trial must be conducted in accordance with good clinical practice as set forth in the Directive 2005/28/EC and the principles of the Declaration of Helsinki.

Finnish law does not require the sponsor of the clinical trial to be established in Finland. The Medical Research Act sets forth that the sponsor of a clinical trial on a medicine must have an insurance policy or other appropriate guarantee to cover the liability of the sponsor and the researcher. However, there is no similar provision applicable to medical devices. Before medical research is commenced the research subject’s informed consent must be obtained in writing. Adverse events shall be monitored and reported to the relevant supervising authority during the course of the clinical trial.

7 Fimea’s Regulation 2/2012 concerning clinical trials on medicines.

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iv Named-patient and compassionate use procedures

Article 5(1) of EU Medicines Directive 2001/83/EC on compassionate use has been implemented in Finland by virtue of Chapter 4, Section 21(f ) of the Medicines Act and Section 10(b) of the Medicines Decree. Accordingly, the preconditions for use of product pre-launch are that:a no other means are available to treat an individual patient or a treatment already

available would not yield the desired result;b an authorised drug is not available to treat a group of patients or the population

or to prevent an illness, and there are particularly notable reasons for granting the special authorisation; and

c it is subject to any advice issued by the EMA’s Committee for Medicinal Products for Human Use.

Further, when a product is supplied pre-launch, the supplier must, for its part, ensure that the user of the product receives sufficient instructions on the correct and safe use of the product and its storage as well as other necessary instructions. Products that are supplied pre-launch are covered by the safety reporting provisions set forth in the Medicines Act (see Section II, vii infra). Named-patient or compassionate use products are subject to the same pricing and reimbursement provisions as medicines covered by valid marketing authorisations (see Section III).

As opposed to the Medicines Act, the Medical Device Act does not contain provisions concerning named-patient or compassionate use procedures.

v Pre-market clearance

A medicine must have a valid marketing authorisation (‘MA’) granted either nationally by Fimea or centrally by the European Medicines Agency (‘EMA’) before it can be placed on the Finnish market. Compassionate use of a product is, however, allowed under certain circumstances and the EU scheme for licensing parallel imports is also followed. (As for the compassionate use of a product, please see Section II, iv supra). Once an MA has been granted, there are no specific requirements that have to be met before the product is placed on the market. The holder of the MA must, however, file a notification with Fimea upon the launch of the medicine on the Finnish market. A notification concerning the placement on the market must be filed, at the latest, within one week of the beginning of sales.

The manufacturer or an authorised agent with a registered office in Finland as well as an importer of a medical device that may cause a severe health risk must file a notification with Valvira before placing the medical device on the Finnish market. Also, an importer of a medical device meant for self-testing or that contains human tissue or substances derived from human blood or blood plasma must file a notification with Valvira.

Further, before a medical device is placed on the Finnish market it must meet the essential requirements applicable to it under law. The device must also be fit for its intended purpose, and achieve the intended functionality and performance when used for its intended purpose, and must not endanger the health or safety of a patient, user or other person. The manufacturer must prove compliance with the essential requirements by accompanying the medical device with a CE mark.

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vi Regulatory incentives

Pursuant to Council Regulation (EEC) No. 1768/92 of 18 June 1992 concerning the creation of a supplementary protection certificate (‘SPC’) for medicinal products and the Finnish Patents Act (550/1967, as amended), the term of a pharmaceutical patent may be prolonged by an SPC for five years. Based on Regulation (EC) No. 1901/2006 of 12 December 2006, a system of paediatric term extension also exists that can extend the protection for a period of six months.

In addition to Regulation (EC) No. 141/2000, Finland has no legislation expressly concerning orphan medicinal products. Accordingly, companies with an orphan designation for a medicinal product benefit from incentives such as fee waivers and a 10-year market exclusivity period post-authorisation for designated products. If the specified criteria in Regulation (EC) No. 1901/2006 are met, the 10-year period is extended to 12 years.

The data exclusivity provisions set out in Directive 2004/27/EC are implemented in the Medicines Act, and accordingly, generic medicinal products may not be placed on the market until 10 years have elapsed from the initial authorisation of the original product. The 10-year period may be extended to a maximum of 11 years for one or more new therapeutic indications. It should be noted that the previous data exclusivity provisions apply to MAs that were filed prior to 30 October 2005. The data exclusivity for such MAs was six years. This period has been extended to 10 years in case of MAs granted in a centralised authorisation procedure.

No special incentives exist for medical devices.

vii Post-approval controls

The legislation applicable to post-approval controls is in line with the relevant EU legislation, including Directive 2010/84/EU on pharmacovigilance. Accordingly, MA holders are responsible for monitoring the safety of their medicines and for commencing appropriate actions if changes are identified in the benefit-risk balance of such medicines. Pursuant to the Medicines Act, an MA holder must keep a record containing information on, inter alia, all side effects or suspected side effects that have come to its attention. The MA holder must report such information to Fimea. MA holders must also report all product defects as well as serious adverse drug reactions occurring in Finland to Fimea. Fimea oversees and carries out pharmacovigilance nationally and as part of the EU’s agency network.

Fimea may revoke an MA if it is established that the medicine in question no longer fulfils the prerequisites for granting an MA. Also, temporary revocation is possible for the duration of necessary studies, if there is reason to believe that the prerequisites are no longer fulfilled. Fimea may also alter an MA on application. Even though a change to a medicine does not require altering the MA, such change must be reported to Fimea. In addition, Fimea has the right to prohibit the import, manufacture, distribution, sale or other release for consumption of a medicine (see Section II, xiv infra).

Pursuant to the Medical Device Act, the manufacturers of medical devices shall continuously monitor how their devices function in practical use and other information relating to the clinical assessment of the devices. The manufacturers must report any

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incidents caused by a medical device that have or could have endangered the health of a person to Valvira. Valvira maintains a registry on adverse incidents.

viii Manufacturing controls

Under the Medicines Act, medicines may only be manufactured industrially by medicinal product manufacturers that have acceptable production facilities and equipment and a licence (manufacturing licence) granted by Fimea. Further, the manufacturing of medicines for clinical trials also requires a manufacturing licence. A manufacturing licence is granted by Fimea provided that the applicant meets the requirements set forth in the EU Good Manufacturing Practice (‘GMP’) for medicinal product manufacturers and has an accountable director and at least one person who meets the qualification requirements set forth in Directives 2001/82/EC, 2001/20/EC or 2001/83/EC.

As opposed to the manufacturing of medicines, the manufacturing of medical devices and the facilities in which medical devices are manufactured are not subject to any approvals or licences. However, manufacturers of medical devices are obliged to meet a number of other requirements concerning development and manufacturing to ensure that the medical device fulfils the essential requirements applicable to it under law and is suitable for its intended purpose.

ix Advertising and promotion

The marketing of medicines is regulated by the Medicines Act and Medicines Decree. Also the PIF Code of Ethics contains detailed provisions on the marketing of medicines, complementing the legislation. Even though the PIF Code is binding only on the members of the PIF, it provides guidance in interpreting the legislation. The marketing of medical devices is regulated by the Medical Devices Act, whose provisions are complemented by the Sailab Code. On a general level, the Consumer Protection Act and the Act on Unfair Business Practices may apply to the marketing of both medicines and medical devices.

x Distributors and wholesalers

In Finland, the distribution and wholesale of medicines may only be carried out under a licence granted by Fimea (wholesaler licence). In order to obtain a licence, applicants must have appropriate facilities and equipment for storage of medicines and for ensuring operations and the personnel required for operations. Distributors and wholesalers must also have a responsible pharmacist who ensures that all action is taken in line with the applicable legislation. The responsible pharmacist must be a qualified pharmacist. A wholesaler licence is granted within 90 days.8

The wholesale of medicines can be made to pharmaceutical manufacturers, other pharmaceutical wholesalers, pharmacies, subsidiary pharmacies, military pharmacies, hospital pharmacies or dispensaries or to veterinary surgeons for the purposes of veterinary medication. Medicines that have not been restricted to sales to pharmacies

8 The processing time starts to run once the application has been filed with Fimea. If Fimea requires additional information for the application, the processing time is discontinued until the additional information is provided.

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(i.e., nicotine and homeopathic products) may also be sold to retailers of these products. Active pharmaceutical ingredients may also be sold to other businesses for production purposes and for universities, institutions of higher education and other scientific research institutions for research purposes.

It should be noted that in Finland, the distribution of medicines is operated through a ‘single-channel’ system. This means that nearly all pharmaceutical companies make exclusive distribution agreements with only one wholesaler at a time and their products are thus available only through that channel. In the single-channel system, the wholesalers of drugs are mainly responsible for storage and distribution of medicines under their agreements with the pharmaceutical companies, and pharmaceutical companies set the prices of their products to pharmacies.

As for the distribution and wholesale of medical devices, no administrative permit is required in Finland. Further, there are no specific regulations determining the mode of business activity of medical device distributors. Distribution and wholesale of medical devices is, however, subject to compliance with the essential requirements and CE-marking, which indicates that the medical device meets the essential requirements.

xi Classification of products

Pursuant to the Medicines Decree, upon granting an MA, Fimea specifies the classification of the medicinal product into: a a medicinal product subject to medical prescription; or b a medicinal product not subject to medical prescription.

The marketing of prescription-only medicines can only be targeted at individuals authorised to prescribe or dispense medicines, in other words, health-care professionals. Such marketing can only occur at medical sales representations organised for health-care professionals or in publications and electronic media directed at health-care professionals.

Medicines are also classified according to whether they are substitutable or not. Medicines with the same active ingredient may be substitutable if the quantity of the active ingredient is the same and the medicines are considered biologically equivalent.

Medical devices are classified in accordance with Directives 93/42/EEC and 98/79/EC. These classifications determine which procedure the manufacturers shall use to verify that the device complies with applicable requirements.

xii Imports and exports

Both the import and export of medicines require a wholesaler licence (see Section II, x supra). If the importation of medicines is from outside the EEA into Finland, a licence for the industrial manufacture of medicines is required.

The provisions that apply to the distribution and wholesale of medical devices also apply to the import of medical devices (see Section II, x supra). Provided that the medical device subject to export fulfils the essential requirements and is CE-marked, medical devices can be exported freely from Finland to countries within the EEA. However, if medical devices are exported from the EEA to countries outside the EEA, an export certificate might be required in countries outside the EEA. If such certificate is required,

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a request for an export certificate can be filed with Valvira. Valvira charges a fee for issuing an export certificate.

xiii Controlled substances

Under the general prohibition laid down in Section 5 of the Finnish Narcotics Act (373/2008, as amended) (‘the Narcotics Act’), the production, manufacture, import, export, distribution, trade, handling, possession and use of substances classified as narcotic drugs is prohibited. Deviations from the prohibition are, however, allowed in accordance with international conventions. In Finland the licensing and control authority operating in accordance with the narcotics legislation is Fimea. Fimea may grant licences for importing, exporting, producing and handling narcotic drugs for medicinal, scientific and research purposes as well as for the detection of drugs. The detailed requirements for granting such licences are set out in the Narcotics Act.

xiv Enforcement

Non-compliance with the provisions of the Medicines Act relating to, for example, import, storage, sale and distribution of drugs, is punishable by a fine as a medicines infringement. Liability for medicines offence can also follow for mainly intentional misconduct, in which case the penalty is either a fine or a maximum of one year’s imprisonment. Fimea has the right to prohibit the import, manufacture, distribution, sale or other release for consumption of a drug if it becomes apparent that the conditions for granting the MA no longer exist or if the requirements and obligations concerning manufacture or import of the drug are no longer met. Valvira may also prohibit the manufacturing, sales, export and other distribution of medical devices or set conditions for the availability or use of such devices. Both Fimea and Valvira also have the right to conduct inspections and receive any information and documents they request.

In addition, the PIF’s Supervisory Commission for the Marketing of Medicinal Products guides and monitors compliance with the PIF Code. The control system is the primary route among PIF member companies for solving issues relating to the compliance with applicable marketing provisions. The control system is open, and anybody can file a complaint about the marketing of a PIF member company.

III PRICING AND REIMBURSEMENT

A medicine with a valid MA may be marketed without its wholesale price having been accepted by the authorities. However, in order to be eligible for the reimbursement by the Social Insurance Institution (‘Kela’), a medicine must obtain a reasonable wholesale price and what is known as a reimbursement status. An application for the reimbursement status and the reasonable wholesale price is made to the Pharmaceutical Pricing Board, which operates in connection with the Ministry of Social Affairs and Health. Applications for reasonable wholesale prices usually concern prescription medicines but certain self-care products (over-the-counter products) are also eligible for reimbursement when prescribed by a physician.

The medicine prices are in practice affected by generic substitution. According to generic substitution, pharmacies shall replace a prescription medicine with a less expensive

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generic equivalent if there is one included in the list of interchangeable drugs compiled by Fimea, unless either the physician or the consumer specifically prohibits substitution. Further, the law prohibits pharmaceutical companies from granting individual discounts to pharmacies. The wholesale price shall be the same to all pharmacies and it shall include all rebates, refunds and other benefits granted to pharmacies. The prohibition is not applied to medicines qualified for sale also in places other than pharmacies, such as nicotine replacements. However, it is permitted for pharmaceutical companies to grant discounts to individual welfare and health units, such as hospitals.

In addition to the generic substitution, a reference price system for medicines was introduced in Finland in April 2009. The aim of the price reference system is to control the increase in medical costs reimbursed by Kela. The system is based around price reference groups comprised of interchangeable medicines. All of the medicines in a price reference group share the same active ingredient and are equivalent with each other. Interchangeable medicines are eligible for reimbursement by Kela, which is paid according to the reference price of the particular group of medicines confirmed by the Pharmaceutical Pricing Board. If a patient wants to purchase a more expensive medicine prescribed by a doctor, the cost in excess of the reference price is paid by the patient himself or herself.

Unlike medicines, the pricing of medical devices is not regulated. Therefore, the pricing of medical devices is free. With respect to reimbursement, costs related to purchase of medical devices are generally not reimbursed in Finland. However, in certain limited circumstances, a person with an illness or disability that reduces his or her ability to cope with work or study-related demands, may be reimbursed costs incurred by the purchase of assistive devices, such as video magnifiers, Braille displays or other computer equipment by Kela within its vocational rehabilitation programme.

IV ADMINISTRATIVE AND JUDICIAL REMEDIES

Decisions made by Fimea and Valvira may be appealed in accordance with the general provisions concerning appeals in administrative matters. In accordance with the Administrative Judicial Procedure Act (586/1996, as amended), the appeal must be filed at the Administrative Court within 30 days from the date on which the decision was served to the appellant. The decision of the Administrative Court may be appealed to the Supreme Administrative Court subject to the court granting a leave of appeal.

Decisions made by the Pharmaceuticals Pricing Board may be appealed to the Supreme Administrative Court within 30 days from the date of service of the decision.

V FINANCIAL RELATIONSHIPS WITH PRESCRIBERS AND PAYORS

The financial relationship with prescribers and payors is governed by the Medicines Act (and ultimately by the Penal Code (39/1889, as amended) should the financial inducement amount to a bribe either in the public or private sector; however, we are not aware of case law in the pharmaceutical sector in Finland on bribery crimes). In addition,

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the PIF Code and the Sailab Code contain further guidelines on the appropriate types of interaction and financial relationships between the prescribers or physicians and payors.

The starting point of the medicines legislation and industry guidelines is that all benefits and gifts to health-care personnel must be inexpensive and relate to their professional activities. Companies must not offer or otherwise give direct or indirect financial incentives or inducements to health-care professionals. Sales promotions may not be inappropriate or such that they might endanger the belief of the general public that the prescription, use or assignment of drugs is independent. Also, hospitality at meetings with groups of professionals is regulated: it must be reasonable and secondary to the purpose of the event. It should also be noted that benefits and gifts may be considered a bribe if they are significant and may induce the recipient to make such acquisitions that would not otherwise be justifiable for the person or institution in question.

Under the PIF Code, making donations or giving grants to individual health-care professionals is prohibited. As an exception to the aforesaid, grants for investigator-initiated clinical trials with an appropriate study protocol, which have been approved by the regulatory authorities and ethics committee and which otherwise comply with the requirements set in the legislation for clinical trials, are allowed. Companies are nevertheless encouraged (but not required) to publish information on the donations, grants and benefits of this kind.

According to the Medicines Act, the MA holder or the marketer of the medicines shall make an updated list on direct and indirect economic support or corresponding benefit, which it has given to health-care professional groups, publicly available. According to Fimea, such information may, for example, be posted on the company’s website. It is not necessary to disclose information on the amount of the support, but the nature of the support shall be described.

It is possible to enter into consultancy agreements with health-care professionals. The PIF Code stipulates inter alia that such agreements must be made in writing specifying the nature of the services offered and the grounds for the compensation payable. The fee payable for the services must be reasonable and in line with the valid market price of such services. The use of the expert as a service provider may not be an inducement to recommend, prescribe, purchase, dispense, sell or administer a particular medicine.

The Sailab Code includes similar ethical guidelines on the financial relationships between health-care professionals and the industry as listed above.

VI SPECIAL LIABILITY OR COMPENSATION SYSTEMS

In Finland there is no special regulation on damages caused by medicines or medical devices. Instead, the general provisions on damages apply, including the Product Liability Act (694/1990, as amended), the Patient Insurance Act (585/1986, as amended) and the Damages Act (412/1974, as amended).

The Product Liability Act is built upon the principle of strict liability. Compensation is thus paid for an injury or damage sustained or incurred because the product was not as safe as could have been expected, irrespective of whether the producer was or was not acting negligently. However, the burden of proof relating to the defect in the product lies with the injured party.

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As the Product Liability Act and the Patient Insurance Act are mandatory legislation, terms set forth in a contract may not supersede the provisions of the Acts and therefore compensation for injuries in accordance with said Acts may neither be limited nor excluded. However, the compensation for damage may be mitigated if the injured party or an external factor has contributed to the damage.

In addition to the mandatory legislation, a voluntary insurance scheme has been established in Finland for medicines. Pharmaceutical injuries’ insurance covers unexpected adverse effects sustained by users of medicines sold or supplied for consumption in Finland. The insurance covers bodily injuries (pharmaceutical injuries) resulting either from use of a medicine as medication or from an investigational medicine. Before any compensation can be paid, there must be a likely causal connection between the use of the medicine and the adverse effect.

Use of medicines often involves the possibility of adverse effects. An injury is not covered if it results from medically necessary risk-taking in the treatment of a disease or injury which, if left untreated, is life-threatening or may lead to severe physical injuries. Neither is an injury covered if the adverse effect of the medicine is reasonably tolerable in view of:a the nature of the disease or injury that is being treated;b the health of the injured;c specialists’ opportunities to foresee the effects of the pharmaceutical product; andd other similar circumstances.

Insignificant injuries are not covered. Pharmaceutical injuries’ insurance does not cover failure of the medicine to have the intended effect. Pharmaceutical injuries’ insurance only covers adverse effects caused by medication. If a medicine has been incorrectly prescribed or administered, judging by the standard of experienced professionals, or if the injury results from a prescription medicine delivered from the chemist’s contrary to the prescription or applicable regulations, the injury may be compensable under the Patient Injuries Act.

Pharmaceutical injuries’ insurance is taken out by the Finnish Cooperative for the Indemnification of Medicine-Related Injuries. The insurance covers medicines manufactured, imported or marketed by entities who are members of the Cooperative. The insurance also covers investigational medicines used in clinical trials in Finland providing that the trials are conducted or sponsored by signatories to the insurance contract in accordance with legislation governing medical research. Pharmaceutical injuries’ insurance is currently issued by the Finnish Mutual Insurance Company for Pharmaceutical Injury Indemnities, which handles the claims and pays accepted claims. Pharmaceutical injuries’ insurance is a secondary compensation scheme supplementing statutory insurance cover. As a result, claims accepted under pharmaceutical injuries’ insurance are paid only after the deduction of any compensation or benefits due either under statutory insurance schemes or from public funds.

Physicians, hospitals and clinics acting in Finland must take out mandatory patient insurance defined in the Patient Insurance Act. The insurance covers bodily injuries that have been caused to patients in connection with their health-care treatment in accordance with the Patient Injuries Act.

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VII TRANSACTIONAL AND COMPETITION ISSUES

i Competition law

There has not been any recent case law, enforcement actions or specific rules that are of relevance to the life sciences sector in Finland. The issues taken up in the European Commission’s sector inquiry in 2008 are also monitored in Finland, for example, issues relating to inappropriate conduct in connection with regulatory proceedings with the purpose of delaying generic entry and possible pay-for-delay arrangements in connection with settlement agreements between the originators and generic manufacturers. However, there have not been any cases in Finland where the non-compliance with competition law would have been suspected in these areas.

From the attorneys’ perspective the question on the appropriate formulation of settlement agreements is, however, especially relevant in Finland as the market has been relatively litigious during the past 10 years and there have also been quite a few settlements between innovators and generic manufacturers. The number of pharmaceutical patent litigations stems from the fact that Finland’s patent legislation did not provide for the opportunity to apply for product patents for medicines before 1995, the regulatory process for generic products has been very efficient (i.e., fast handling times of generic applications combined with mandatory generic substitution), and Finland has been seen as a lucrative market for early generic entry. The guidance given by the European Court of Justice and the European Commission are closely monitored by the local industry.

The Finnish Competition Authority (‘FCA’) has not, to our knowledge, made any industry-wide investigations during recent years in the sector, but has rather analysed certain individual questions; the FCA has also given statements on the effects of mandatory generic substitution and on the single-channel distribution system of pharmaceuticals.

ii Transactional issues

As the local pharmaceuticals market is relatively small in Finland, there have not been any major transactions involving local entities in recent years. Most of the transactions have related to local implementation of big pharma companies’ international M&A activity, including mergers and divestments. In addition, there is some investment and licensing activity by foreign companies involving global pharma and biotech companies. From a legal perspective, competition and tax law are the major pieces of legislation to be taken into account in transactional activities, but from a practical perspective also the regulatory questions are relevant, especially when planning the timing of the transaction: for example, obtaining a wholesaler licence for a new entity and the transfer of MAs may take months to execute.

VIII CURRENT DEVELOPMENTS

The introduction of the reference price system in Finland in 2009 together with the extension of generic substitution into products that are protected by analogous process patents, has toughened price competition related to the wholesale prices of reimbursable prescription-only medicines. Already in 2010 the price decrease was as drastic as

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6.1 per cent. More recently, the Finnish government has implemented a cost-saving project introducing a general price cut of 5 per cent for all medicines included in the reimbursement system excluding products within the reference price system.

The regulatory changes in the pricing of medicines have drastically changed the scene for pharmaceutical companies and their employees: in 2010 around 300 jobs were lost in the pharmaceutical industry in Finland. The radically decreasing trend has persisted since 2008, the year the decision to introduce the reference price system and extend generic substitution was made. In total, almost 800 jobs have been lost since then. The job reductions have especially affected sales representative activities – this in turn means that the marketing of medicines will take a new form in the future instead of one-on-one activities at clinics.

As a general trend, it seems that pharmaceutical companies seek to diversify their offering by promoting health campaigns that aim to educate the public about good nutrition and encourage a healthy lifestyle, as opposed to focusing solely on advertising medicines.

As to R&D activities Finland has been a leader in health-care technology. In addition, the quality of clinical studies has for decades been very high in Finland. However, during the recent years the number of clinical studies and related investments has decreased. On the other hand, the new legislation on bio banks may again increase research activities in Finland and draw new foreign investors into Finland. The objective of the new legislation, which will enter into force in September 2013 (the Bio Bank Act, 688/2012) is to promote human sample research while securing the rights of individuals. The task of the bio bank is to serve researchers in storing and collecting samples and making them available for future research.

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Appendix 1

about the authors

JohAnnA LiLJARoschierJohanna Lilja, attorney-at-law, is a partner in Roschier’s intellectual property practice in Helsinki witha focus on patent litigation. She also has extensive experience on anti-counterfeiting enforcement cases. In addition to IP work, Johanna Lilja specialises in various industry-specific regulatory issues with a focus on the pharmaceutical and health-care sectors, and she has advised clients in a number of administrative appeal proceedings. She also has experience on various compliance cases and internal investigations relating to anti-bribery (FCPA), marketing and data privacy issues (e.g., employee, consumer and patient data). Johanna Lilja is a board member of the Finnish AIPPI Group and the vice chairperson of the Finnish Anti-Counterfeiting Group.

Essi wEsEriRoschierEssi Weseri is a member of Roschier’s intellectual property practice in Helsinki. She advises clients in relation to the protection, commercialisation and enforcement of intellectual property rights. Essi Weseri has also been involved in various matters related to information and communications technology as well as regulatory and marketing law questions.

MiA EkLundRoschierMia Eklund is a member of Roschier’s intellectual property practice in Helsinki. She advises clients in relation to pharma regulatory, data privacy, consumer and marketing law questions. Mia Eklund also has experience in various trademark law questions. Mia Eklund is a member of the Finnish Anti-Counterfeiting Group.

About the Authors

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roschiErKeskuskatu 7A00100 HelsinkiFinlandTel: +358 20 506 6000Fax: +358 20 506 6100johanna.lilja@roschier.comessi.weseri@roschier.commia.c.eklund@roschier.com

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