View from the Horizon: The regulatory and policy landscape of 2020 and the digital transformation in Silicon Valley

On November 13 the last edition of our global series, Life Sciences and Health Care Horizons, took place in Silicon Valley with discussions focused on the regulatory and policy landscape of 2020 and the digital transformation. We are excited to share the following highlights from Silicon Valley, and we look forward to future discussions as we forecast and help clients prepare for what's to come.

The regulatory and policy landscape of 2020 and its impact on the industry

The year 2020 marks the end of one decade and the beginning of another, often invoking feelings of both nostalgia and hope. Along with the new decade, 2020 marks a number of expected changes that may create unexpected ripples throughout the life sciences industry for the next 10 years and beyond.

Our panelists discussed a number of significant issues in the current state of the life sciences field, as well as events that are expected to occur next year and beyond. Beth Roberts, a Hogan Lovells partner whose experience includes coverage and reimbursement for life sciences companies, moderated a panel of subject matter experts in a lively conversation touching upon industry, trade, and U.S. Food and Drug Administration (FDA) and European Union (EU) regulatory matters to come.

Joshua Ofman, the Chief of Corporate Strategy and External Affairs at GRAIL and a long-time coverage and reimbursement policy expert within the life sciences industry, spoke of the common fault of overestimating the short-term effects of government policies while underestimating long-term effects. Drug pricing policies and legislation are a focus of the current administration and, while certain short-term impacts are contemplated, the long-term effects on industry and the market are largely unknown. The potential fallout from drug pricing policies will of course depend on the policies that are actually implemented, which are still on the horizon at this time.

On issues across the pond, Elisabethann Wright, a partner in Hogan Lovells' Brussels office focusing on EU life sciences regulatory matters, described the complete overhaul on medical device regulation in the EU scheduled for May 25, 2020. In particular, this overhaul is expected to change the entire process for CE-marking of medical devices, potentially causing an influx of new issues and questions among industry and regulators alike. Further down the line, in vitro diagnostic device regulation is also scheduled for a rework in 2022, which will likely subject the vast majority of such diagnostic devices to a new regulatory framework. Given the increasing interaction between drugs and diagnostic devices (i.e., companion diagnostics) in the recent past and with the trend expected to continue, the changes in medical device and in vitro diagnostic device regulations will likely affect many companies beyond companies specializing in devices.

When discussing the EU regulatory landscape, the topics of Brexit and the General Data Protection Regulation (GDPR) are hard to avoid. With a general election scheduled for December in the UK, the future of Brexit is highly speculative at this time. As for the GDPR, various EU member states continue to interpret and implement the GDPR in different ways, and sometimes in ways inconsistent with other legislation such as clinical trial legislation. Reconciliation of inconsistencies across legislative and regulatory frameworks, as well as across EU member states, will continue to be an ongoing process in 2020 and beyond. The breadth of the applicability of the GDPR will also continue to be explored and tested in the years to come.

In the United States (U.S.) life sciences arena, one of the major events is the probable nomination of Dr. Stephen Hahn as the new FDA commissioner. Robert Church, a Hogan Lovells partner in the firm's Pharmaceuticals and Biotechnology Regulatory practice, commented that unlike the previous FDA commissioner Scott Gottlieb, Dr. Hahn has no experience at FDA or related regulatory agencies and is more of an outsider political appointee. Because Dr. Hahn is less experienced with the inner workings of FDA, the transition may be bumpy and could lead to FDA heading in a new direction on any number of issues, and may place the agency under closer management from the Trump administration.

Aside from the new commissioner, a number of ongoing FDA-related issues will likely hold the spotlight in 2020. These issues include the regulation of vaping and tobacco, access to unapproved drugs, and drug reimportation policies and legislation. While various stakeholders have discussed the possibility of using drug reimportation as a way to lower drug prices, many obstacles and considerations stand in the way. For one, the lack of U.S. regulatory oversight over imported drugs is concerning, as problems with manufacturing and quality assurance could lead to ineffective or dangerous drugs entering the U.S. markets. Even if those issues are resolved, there is also the issue of whether other countries have sufficient supply of drugs to reimport to the U.S. such that U.S. drug prices have a noticeable decrease for U.S. patients.

Jared Wessel, a Hogan Lovells counsel who is often at the forefront of new international trade issues, expanded on other trade issues beyond drug reimportation impacting the life sciences sector, now and in the coming years. These other issues, such as the tariffs between the U.S. and China, are currently substantially impacting the life sciences industry. Although Wessel was able to help obtain exceptions for active pharmaceutical ingredients from the U.S. tariffs on Chinese goods, other dealings with China and China's policies will have a number of consequences for industry members. In particular, due to the low cost of manufacturing in China, many U.S. and EU companies outsource their supply chains to China. With the trade war and widespread corporate espionage, companies relying on Chinese manufacturing may be subject to changing Chinese policies and tariffs as well as potential leakage of confidential and proprietary information.

The panel concluded by discussing potential solutions to the sky-high prices for health care in the U.S., as well as consequences to such solutions. While drug pricing reform is one possibility, many expect a dampening effect on innovation if price controls are implemented for drugs. The panel discussed possible changes to the U.S. health care system outside of drug pricing, including reducing drug shortages, improving the U.S. generic drug market, and decreasing the cost for health care beyond drug prices.

As the panel discussion and 2019 come to an end, one thing is certain – only time will tell how these events and their consequences will unfold in 2020 and beyond.

The digital transformation

The conversation surrounding digital health continued with a panel discussion moderated by Jodi Scott, a partner in Hogan Lovells' Medical Device and Technology Regulatory practice, with industry leaders on the key regulatory issues for this maturing industry sector as well as partnerships in the digital health space as well as where those trends are going in the future. The panel featured Megan Doyle, Director of Global Regulatory and R&D Policy at Amgen, Stacy McNabb, Director of Compliance/Research, Medical Device, and FDA at Optum, and Elisabethann Wright, Partner at Hogan Lovells in Brussels, Belgium.

Panelists discussed the different ways companies are engaging with digital health, which is projected to be a US$504 billion market by 2025. For Amgen, Megan described the company's longstanding engagement with digital health through application of data analytics techniques to massive amounts of data, which has enabled the company to identify patients who have been missed or overlooked by the health care system and to develop the right treatment at the right time. Stacy highlighted Optum's broad range of health care and life sciences business across the health care continuum, and described the company's approach to digital transformation as identifying pain points and developing digital tools to alleviate such pain points. Elisabethann concluded by noting an increasing number of digital companies are transforming existing mobile applications or services to cater to a medical need, and cautioned that these companies often do not realize that their digital health product may now be regulated as a medical device in the EU, and the collected data may be personal health data subject to specific regulatory obligations, such as the EU's General Data Protection Regulation.

Jodi posed the important question of what development they thought would be most impactful in the near future. The panel discussed different potentially high impact developments including the decentralization of clinical trials to enable patients to participate in clinical trials from their home by using telehealth and the establishment of clearer regulatory frameworks, particularly for iterating software and algorithms for diagnostic purposes.

Tips for how companies can successfully navigate the FDA regulatory framework and make effective business decisions were also a key discussion. Stacy emphasized that technology develops very quickly, and products may move from one version to the next with added functionalities based in part on customer demand. Thus, the challenge is to look further down the line to where the product may be and what that means in terms of regulatory pathway. Megan added that to help guide the development and regulatory process, it is important to engage with the Agency early on, as such discussions may also help inform later projects.

The panel concluded that health care and life sciences companies are embracing the digital transformation, be it as part of the drug development process or as a platform for delivery of patient care.

Life Sciences and Health Care Horizons – Global Event Series

From spotting trends in digital health innovation to breakthrough cures and navigating fluid regulatory landscapes, the Hogan Lovells' Life Sciences and Health Care Horizons event series spanned three continents and featured cutting-edge analysis, engaging panel discussions, and featured keynote speakers.

Read the highlights

30 April: Boston

16 May: London

27 June: Paris

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