Rival drug mis-classification does not confer right to compensation

Out-Law Legal Update | 27 Feb 2020 | 12:50 pm | 3 min. read

UK pharmaceutical companies are not entitled to damages because of the Medicines and Healthcare products Regulatory Agency (MHRA)'s failure to comply with its obligations under the EU Medicinal Products Directive, the High Court in London has ruled.

The Court ruled that although the Medicinal Products Directive imposed regulatory and supervisory obligations on the MHRA these obligations were not intended to confer rights on individuals or companies that could form the basis of a claim for compensation.

Pharmaceutical companies developing borderline products for which there is no clear guidance on whether or not they will be classified as medicinal products should be aware that if they disagree with the classification of their or a competitor's product, their only remedy is likely to be judicial review of the classification decision. This ruling means that they are unlikely to have any entitlement to damages from the state.

Bioplus Life Sciences, Abba Pharma and Blue Bio Pharmaceuticals argued that they were entitled to damages because of the MHRA's failure to regulate some glucosamine-containing products that were equivalent to their product as medicinal products requiring a marketing authorisation..

Bioplus, Abba and Blue Bio produce and supply Dolenio, a glucosamine-containing product (GCP) to treat the symptoms of osteoarthritis of the knee. This product was classified as a medicinal product by the MHRA, meaning the companies had to comply with the requirements of the EU's Medicinal Products Directive. However other materially identical GCPs available on the UK market were not classified as medicinal products by the MHRA and so did not have to comply with the requirements of the Directive.

In an earlier judicial review hearing before the Court of Appeal the companies successfully challenged the MHRA’s decision not to classify those other GCPs as medicinal products and in July 2018 the MHRA said that all GCPs with a certain level of base glucosamine would be classified as medicinal products.

The pharmaceutical companies then brought a claim against the secretary of state for health, complaining that its failure to comply with its regulatory and supervisory obligations under the Medicinal Products Directive gave each of the pharmaceutical companies an individual right to make a claim for compensation, referred to as 'Francovich' damages.

'Francovich' damages concern state liability for non-compliance with, or breach of, EU law. The dispute centred on three parts of the Medicinal Products Directive.

The Directive says that medicinal products may not be placed on the market unless they have a marketing authorisation; that EU member states must take appropriate action to ensure that only medicinal products with marketing authorisations are distributed, and that the competent authority of the member state concerned must ensure that the legal requirements governing medicinal products are complied with, by means of inspections.

To claim Francovich damages, you must show that the law infringed was intended to confer rights on individuals; that the breach was sufficiently serious, and that there was a direct causal link between the breach of the member state's obligation and the damage sustained by the injured party. This case dealt with the first issue.

The pharmaceutical companies argued that the rights that flow from the entitlement to hold a marketing authorisation can only be meaningful if others are required to seek an authorisation to place materially identical products on the UK market. They argued that these provisions gave them individual rights to seek to claim damages for breach of the Directive's provisions. 

The court disagreed with this, ruling that the claimants merely had an interest in the secretary of state's compliance with its obligations under the Directive and, as had been evidenced by the earlier proceedings, they were able to challenge non-compliance with the Directive through the judicial review process. Having standing to bring a judicial review proceeding did not equate to a right to claim damages for breach of the Directive. 

The court ruled that the purpose of the requirements of the Directive that medicinal products must have a marketing authorisation and that member states must ensure that only medicinal products with marketing authorisations are distributed is to prevent unauthorised medicinal products being placed on, or distributed within, the UK market. Mrs Justice Eady stated that this was achieved by the performance of the member state’s obligations under the Directive; it does not necessitate the conferment of a right on individual suppliers or distributors of authorised medicinal products, in the event of effectively a failure on the part of the MHRA to carry out its duties correctly. 

The court said that the Directive's requirement on inspections is designed to prescribe how a member state ensures compliance with the legal requirements governing medicinal products. Mrs Justice Eady said that individuals in the pharmaceutical companies' position may well benefit from the proper enforcement of this obligation, but the purpose of the provision does not require that they have any direct right to protection against failure of the MHRA to enforce the obligation. 

The claim was dismissed.

Sarah Parkin is a patent litigation and medicines regulation specialist.