ITALY: An Introduction to Life Sciences

CHAMBERS EUROPE 2022 – INDEPTH OVERVIEW – Life Sciences: Italy

(LCA Studio Legale) 

A. Pharma: Repealing of the “patent linkage” 

A draft bill currently pending before Parliament (“Annual law for the market and competition, d.d.l. 2469/2021”) is due to be approved in the next few weeks, within the framework of the National Recovery and Resilience Plan (Piano Nazionale di Ripresa e Resilienza,”PNRR”) as part of the Next Generation EU (“NGEU”) Program.

The bill includes important provisions for the Life Sciences industry, among which the repealing of paragraph 1-bis of Article 11 of Law-Decree 158/2012, in order to promote the development of competition and remove regulatory obstacles.

The current paragraph provides that “generic medicines cannot be classified as medicines reimbursed by the National Health Service, (Servizio Sanitario Nazionale, “SSN”) before the date of expiry of the patent or supplementary protection certificate (“SPC”) of the originator reference medicine”. This legislation has indirectly introduced in the Italian legal framework a form of “patent linkage”, a practice repeatedly blamed by the European Authorities and by the Italian Competition Authority as an obstacle to the market access of generic medicines. A “patent linkage” practice, as provided by the current law, de facto excluded generic products from “Class A” (and reimbursed accordingly by the SSN) until the expiry of the patent or SPC of the reference originator medicine. The Italian regulatory authority (“AIFA”) has always interpreted this rule in a strict sense, taking into consideration the patent of active ingredients only.

A repeal of paragraph 1-bis would mainly respond to the interest of companies marketing generic medicines, to the extent they may avoid delays in marketing their products, pending disputes on industrial property rights. On the other hand, it was stressed that during the procedure for the granting of a marketing authorization (“MA") for a generic medicine, AIFA should only focus on the assessment of the quality, safety and efficacy requirements of the medicines, being released from having to settle controversies related to industrial property (“IP”) rights.

Clearly enough, the abolition of this rule does not affect at all the protection of industrial and commercial property rights, especially in the light of the legal responsibility of the generic MA holder (“MAH") in the event of a violation of the originator’s IP rights. The new law is aimed at avoiding inappropriate limitations to marketing of generic medicines, not at unlimitedly allowing it.

B. Pharma: New criteria for the negotiation of reimbursable medicines’ prices.

Prices of reimbursable medicines are negotiated by AIFA with the respective MAHs under Article 48(33) of Legislative Decree 269/2003. Criteria and procedures AIFA must take into account are now set by a Ministerial Decree dated 2 August 2019 (repealing a prior 2001 resolution).

On 30 December 2020 AIFA issued guidelines making the new criteria and procedures effective. The most important innovations are: the assessment of the “added therapeutic advantage” provided by the new medicine in comparison to those already available on the market; the insertion in the agreement between AIFA and the MAH of conditions for reimbursement, including:
o volume of sales;
o availability of the medicine in the market;
o agreed discount for public entities;
o financial contributions to public research plans.

C. Pharma: the “payback” system in the Italian pharmaceutical sector

The governance of public pharmaceutical expenditure includes actions aimed at adapting reimbursement of medicines supplied by the SSN to the level of financial resources available. Over the years, several measures have been introduced in this respect, the “payback” (actually, a clawback) system being probably the most relevant one.

This system was introduced in 2008 for expenditure incurred through retail distribution, and in 2013 for expenditure borne by hospitals, and was modified over the years. It is based on a maximum annual overall spending limit for medicines administered at the expense of SSN and mandatory payback of any over-run by the pharma companies.

In 2021 the limit was 14.85% of the national healthcare fund, of which 7.85% was for medicines distributed through the retail channel (“spesa convenzionata”), and 7% for medicines purchased by hospitals (“spesa diretta”). In particular, should the “spesa diretta” exceed the national limit in any given year, the Italian MAH must cover 50% of the deficit by making a payback to the Regions “proportionately to the respective market share”, determined on the basis of their turnover. Should the companies not meet their payback obligations, the Regions may withhold the amounts which are due from considerations accrued in supply contracts with local health authorities.

While the “spesa convenzionata” is under control and has never exceeded the limit, in contrast the “spesa diretta” has shown a constant upward trend. It has been recently decided that the limit for the “spesa diretta” will be increased to 8% in 2022 and to 8.3% in 2023, but only MAHs in order with their payback duties for 2019 and 2020 may benefit from said increases: the others are at risk that their medicines not be reimbursed any longer by the SSN.

The system envisages: (i) special safeguards for small companies (not subject to payback obligations if their turnover is below €3 million); (ii) a separate budget for medicinal gases (0.20% of the fund); and (iii) special measures and funds for innovative and orphan drugs.

The Italian payback system for “spesa diretta” has always been strongly challenged in court by most of the Pharma companies operating in Italy. Many procedures (for 2020 payback) are still pending before the Administrative Court of Rome.

D. Pharma: Clinical Trials: change in rules, change(s) of mind needed

The start of the application of EU Regulation 536/2014 (“Regulation”) and its implementation in Italy have been the most important feature of 2021 in the sector of clinical trials. A law (3/2018) had been passed by Parliament to govern the legislative transition, delegating ample powers to the Government for the issuance of several decrees, legislative (primary legislation) and ministerial (secondary legislation).

The instability of the political majority (from the general election of 2018 until February 2021) and the subsequent outbreak of the COVID-19 pandemic explains only in part the delays in the issuance of the implementing regulations. Indeed, within the deadline of 31 January 2022 only one legislative decree (52/2019) and a ministerial decree (30 Nov. 2021, published only on 19 February 2022) were issued, respectively dealing with framework aspects and further (sub)delegating tasks to the Ministry of Health (“MoH”) and AIFA, in the former case, and regulating “not-for-profit” trials/studies (an Italian peculiarity), in the latter. The most crucial points that were capable of making Italy an attractive (and competitive) venue for important trials under the Regulation were substantially missed.

Indeed, the current pipeline of ministerial decrees currently covers (i) the transitional period, during which trial protocols may be submitted in accordance with Directive 2001/20; (ii) a single national tariff for protocol evaluations (the idea of scrapping them altogether was unfortunately unsuccessful); and (iii) the definition of the 40 “new” Ethics Committees charged with the evaluation of protocols under the Regulation (upon agreement with the Regions). All decrees are expected “fairly soon”: a somewhat more complex reorganisation will follow in the coming months also in respect of studies not specifically encompassed by the Regulation, as well as the foreseeable increase in PMCF clinical investigations on devices under Regulation 745/2017.

AIFA proposed (29 January 2022) interim rules for the management of studies pending the issuance of the above decrees. The National Coordinating Centre of Ethics Committees issued (i) a revised format of trial agreement (in Italian and English), and (ii) an Italian version of the Part II forms (Art. 7 of the Regulation) to help sponsors in the transition phase.

Such regulatory effort must now be mirrored by all stakeholders: companies too loyal to their mandatory templates (and of course keen to pursue their legitimate interest); centres, with their IECs, scared of exiting their bureaucratic, local comfort zones; CROs creating more problems than solving existing ones; academics concerned with their careers and remuneration. Legislation is a necessary but not sufficient condition to ensure swifter procedures and reduce the bureaucratic steps needed to set up a trial, while at the same time guaranteeing maintenance of (and reliable controls over) the undoubted, if not always so orderly, qualitative excellencies of the Italian research and clinical trial system.

E. Medical devices: the Italian implementation of regulation 2017/745

From 26 May 2021, EU Regulation 2017/745 on medical devices (“MDR”) applies also in Italy.

The MoH has played an active role to ensure the achievement of common European objectives and proposed solutions compliant with the needs of the SSN and the Italian regulatory and business context.

Firstly, the national classification of medical devices (“CND”) has been acknowledged as a nomenclator at EU level, aimed at guaranteeing uniform availability and market access of devices.

The MoH has also supported the design of the European database (“Eudamed”) and joined the registration system on a voluntary basis. However, at the Italian level it is still mandatory for operators to register also with the national database of medical devices, as clarified by Circular Letter No. 12 of November 2021.

Law no. 53 of 22 April 2021, in force since 8 May 2021, aligned the national legislation to the MDR but kept national provisions in force as far as they are in line with the new European framework, including criminal and administrative penalties for breach of manufacturers’, importers' and distributors’ obligations.

A MoH Circular of 25 May 2021 provided some further clarification for clinical investigations, especially with reference to medical devices with and without CE marking, substantial amendments to clinical investigation protocols, information to be provided by sponsors, requirements for clinics and hospitals, digital ways and devices for applications and submissions.

Finally, MoH Circular 49052 of 8 July 2021 has been directed both to harmonise the MDR reporting scheme with the legal remedies for consumers’ protection and to update the post-marketing surveillance system. In brief, public and private health workers detecting or having reason to fear a serious incident are required to serve a notice onto the MoH. The incident must be reported immediately to the competent authority. The manufacturer or its authorized representative must also be informed in a timely manner.

Any corrective actions on the field must be taken by manufacturers and operators to remove or reduce the risk of death or serious deterioration of health associated with the use of a medical device. The manufacturer is also responsible for the management of all other minor incidents.

Pending the implementation of Eudamed, manufacturers must continue to send incident reports directly to the Italian “General Directorate for Medical Devices and Pharmaceutical Service”. Additionally, the manufacturer must fill in a form – the s.c. FSCA, Field Safety Corrective Action – being compliant with the model provided under Meddev 2.12-1 Rev. 8, January 2013 – “Guidelines on a medical devices vigilance system” and other guidance regarding the vigilance system. The FSCA must be accompanied by the field safety notice sent to the Ministry of Health in Italian language.

MDR implementation is still in progress: therefore, the Italian Ministry of Health is expected to lay down additional guidelines as soon as other provisions will be binding at EU level and new regulatory documents will be enacted.

F. Italian FDI/Golden Power rules: Life Sciences as a strategic sector

Different areas of Life Sciences, including Health, Pharma and Biotech, are qualified as a strategic sector for the purposes of the Italian Foreign Direct Investment (“FDI”) regime resulting from the combination of the Italian Law-Decree 21/2012 (and implementing Decrees, including No. 179/2020) and EU Regulation 452/2019. The aim of this FDI regime is (i) safeguarding ownership structures of companies operating in strategic sectors of national interest, holding critical assets, relationships and/or technologies in the Italian territory, and (ii) monitoring certain operations, acts and activities.

According to the Italian FDI regime, whenever a transaction falls within the scope of its applicability, there is an obligation for the parties (the foreign investor and/or target company, depending on the circumstances) to notify it to the Italian Government (under penalty of a fine), disclosing information about the terms and conditions of the relevant act, agreement or transaction, in order to allow the Government to exercise special powers (“Golden Power”) granted to it by the applicable Law. Such powers can be exercised under certain conditions and may include: (i) vetoing the relevant act and/or transactions, such as acquisition of shareholdings in companies active in strategic sectors or holding critical assets, as well as on the execution of agreements modifying the ownership, availability and control over such strategic assets; as well as (ii) imposing specific conditions or requirements on the transaction; or (iii) giving clearance to the transaction. According to the current status of the legislation (which includes some special rules linked to COVID-19 emergency laws) acquisition of control over Italian companies or assets operating in the Life Sciences sectors by EU and Non-EU entities must be notified. Acquisition of stakes in excess of 10% by non-EU entities is subject to FDI notification as well.

The rules substantiating the Italian FDI regime must be interpreted extensively, given the public (and strategic) interest protected thereby, thus implying the amplest discretion of the Italian Government in their interpretation and application.