Understanding the market

The matter foremost in the minds of the pharmaceutical industry in the UK market at present is that of government reimbursement under the National Health Service (NHS). Several developments and controversies continue to reflect an attempt by the government to take on the politically easy target of the drugs industry, rather than addressing what is by far the major element of NHS cost - that of staffing, management structures, an aging population and increasing expectations.

Recent examples of the reimbursement controversy include:

  • The renegotiation of the Pharmaceutical Price Regulation Scheme (PPRS) and the threat of statutory backing now taken under the Health Act 1999.
  • Continuing controversy over the recently established National Institute of Clinical Excellence (NICE). For example, there was much criticism of its recent decision to delay appraisal of the cost-effectiveness of the wider use of beta-interferon for multiple sclerosis sufferers, until at least July 2001. On the other hand, NICE has endorsed the use of taxanes, derived from yew bark, to treat cancer. This should allow NHS patients to receive potentially life-saving or life-extending treatments they were previously denied. NICE also reviewed its previous refusal to endorse GlaxoWellcome's Relenza antiflu treatment. It went on to approve it for those at high risk of flu complications, on the basis of the new evidence that it works for the elderly.

What is a Medicinal Product?

A medicinal product is defined by Section 130 of the Medicines Act 1968 (as amended) (the Act) as "any substance or article (not being an instrument, apparatus or appliance) which is manufactured, sold, supplied, imported or exported for use wholly or mainly in either or both of the following ways:

  • Use by being administered to one or more human beings or animals for a medicinal purpose.
  • Use, in circumstances to which this paragraph applies (see below), as an ingredient in the preparation of a sub-stance or article which is to be administered to one or more human beings or animals for a medicinal purpose".

A medicinal purpose is further defined in the same section of the Act as any one or more of the following purposes:

  • "Treating or preventing disease.
  • Diagnosing disease or ascertaining the existence, degree or extent of a physiological condition.
  • Contraception.
  • Inducing anaesthesia.
  • Otherwise preventing or interfering with the normal operation of a physiological function, whether permanently or temporarily, and whether by way of terminating, reducing or postponing, or increasing or accelerating, the operation of that function or in any other way".

The "use, in circumstances to which this paragraph applies" includes:

  • Use in a pharmacy or hospital.
  • Use by a practitioner.
  • Use in the course of a business which consists of or includes the retail sale, or supply in circumstances corresponding to retail sale, of herbal remedies.

The definition does not include such things as appliances or devices (for example, pacemakers) or instruments.

The definition now accords with Community law. However, the Medicines Control Agency (MCA) still has substantial discretion as to whether or not a product is to be regarded as a medicinal product (see box, "The regulatory authorities"). It was, for example, the first regulatory authority within the EU to so classify melatonin in view of the medicinal claim made for it. Useful guidance on MCA thinking is available in its 'Guide to what is a Medicinal Product' (MAL, 8th December, 1995).

Marketing Medicinal Products

Companies and individuals wishing to place a medicinal product on the UK market must obtain a marketing authorisation from the MCA. Medicines are authorised for a five-year period, following which a pharmaceutical company must apply to renew the authorisation. The application for renewal will be considered in the context of the experience with the product over the previous five years, including any variations that may have been submitted, and any changes in the state of the art of clinical practice, quality control or manufacture.

The rules and procedure are set out in the Act and in delegated legislation (the Medicines for Human Use (Marketing Authorisations etc) Regulations 1994 (as amended)). These reflect the extensive harmonisation of this aspect of the law at European level under the provisions of Directive 65/65 (as amended).

Mutual Recognition Procedure.
If an authorisation has already been applied for or granted in another member state, the MCA will start a mutual recognition procedure.

Incoming Mutual Recognition (MR) applications are where a marketing authorisation already exists in one or more member states, but not in the UK. The applicant can ask one of the other member states to act as a Reference

Member State (RMS) and it provides information to the MCA to assist it to mutually recognise the application.

Outgoing MR applications occur where a UK marketing authorisation already exists and recognition is sought in another member state. In this case, the MCA acts as the RMS and provides information.

Specific fees have been payable for Outgoing MR applications from 1st December, 2000 (see table "Revised fee structure"), in relation to the "regulatory assistance" provided by the UK as RMS. The level of fee depends on whether the application relates to the first wave (the first application for regulatory assistance in relation to one or more member states) or a subsequent wave.

How to make an application.
An application for marketing authorisation is made by completing the appropriate form and submitting this, together with supporting data, to the Registration Section of the MCA. The type of form will depend upon the sort of application sought (for example, a new registration, or the renewal or variation of an existing registration). The forms are available as electronic templates and may be downloaded from the MCA's website at www.open.gov.uk/mca.

Guidance in completing the application form is also available from the MCA "Notice to Applicants for Marketing Authorisations for Medicinal Products for Human Use in the European Union" and "Notes for Guidance on Completion of Application form for a Marketing Authorisation in the UK".

An application for marketing authorisation must include full details about the product and the research that has been carried out to assess its efficacy, safety and quality.

Such details should include information concerning:

  • Product name.
  • Pharmacotherapeutic classification.
  • Pharmaceutical form, strength and route of administration.
  • Container, closure and administration devices (for example, ampoules, blister packs, inhalers and so on).
  • Pack sizes.
  • Shelf life.
  • Storage conditions.
  • Legal status (dispensing classification, for example, general sale or prescription only).
  • Name and address of applicant.
  • Manufacturer of the finished product.
  • Batch release (for example, details of the person responsible for deciding if any batch of the product is acceptable for release for marketing).
  • Manufacturer of active substance(s).
  • Qualitative and quantitative composition, including:

- a description of the active constituent, including the actual material used in the preparation of the finished product (for example, the salt and also the equivalent base content);
- all excipients, including the grade of material used;
- a pharmacopoeial specification of both the actives and excipients; and
- where colours are used, E numbers.

  • Marketing applications for the product in the EEA.
  • Manufacturer's authorisation.

The application must also be accompanied by a summary of product characteristics, which should include information regarding:

  • Trade name of the medicinal product.
  • Qualitative and quantitative composition.
  • Pharmaceutical form.
  • Clinical particulars.
  • Therapeutic indications.
  • Posology and method of administration.
  • Contra-indications.
  • Special warnings and precautions for use.
  • Interactions with other medicaments and other forms of interaction.
  • Pregnancy and lactation.
  • Effects on ability to drive and use machines.
  • Undesirable effects.
  • Overdose.
  • Pharmacodynamic properties.
  • Pharmacokinetic properties.
  • Pre-clinical safety data.
  • List of excipients.
  • Incompatibilities.
  • Shelf life.
  • Special precautions for storage.
  • Nature and contents of container.
  • Instruction for use/handling.
  • Marketing authorisation holder (if known).
  • Marketing authorisation number (if known).
  • Date of first authorisation/renewal of authorisation (if applicable).
  • Date of (partial) revision of the text (if applicable).

In addition to the above, any of the following additional data should also be submitted:

  • Method of manufacture. Normally, a brief description of the manufacturing method is sufficient. Most detail is required where a process is not widely used in the industry or the product quality is unusually closely related to the detail of the process.
  • Finished product specification. Release and shelf life limits should be provided where these are different. The analytical methods used should be described as, for example, UV, TLC, HPLC.
  • Drug substance specification. This should be the full active ingredient specification.

It is not possible to apply for temporary authorisation.

Application assessment.
The MCA's primary objective is to safeguard public health by ensuring that all medicinal products on the UK market satisfy appropriate requirements for safety, efficacy and quality. Obviously, the detailed criteria by which each application will be assessed will depend upon the particular product for which marketing authorisation is sought.

Since the assessment of medicinal products is a very specialised activity, the MCA uses special committees of experts to advise as to whether the products meet the required standards. Such committees include the Medicines Commission, the Committee on Safety of Medicines and the Advisory Board on the Registration of Homeopathic Products.

Abridged procedure.
Applications for abridged authorisations may be submitted in circumstances where the active ingredient of a product is not new, but is a material which has already been authorised in similar or other pharmaceutical forms and where the clinical profile has been largely established. Examples of this include applications for new strengths of existing products, new formulations (for example, controlled release), new indications for established products and generic versions of proprietary medicines.

An application for a generic product must be on the basis of "essential similarity" to a product on sale in the UK for not less than ten years after the date the product was first authorised in the Community. In the case of a hybrid generic application, however, the comparator product must still be on the market in the UK and have been authorised in the Community for not less than ten years (4.8 (a) (iii), Directive 65/65 (as amended)).

The abridged procedure is also used when submitting an application for the renewal of a marketing authorisation, or the variation of an existing authorisation to allow, for example, for the development or updating of packaging technology or manufacturing procedures.

Practical tips.
A revised fee structure took effect from 1st April, 2000, introducing a 14% increase in fees across the board (see table, 'Revised fee structure').

A further 5% increase in fees is proposed from 1st April, 2001.

Since September 1997 the MCA has allowed on-line subscribers to search licensing information via the internet, enabling subscribers to view confidential information on their own products. Subscribers are usually the applicants for authorisation, namely pharmaceutical companies.

Once initiated, the application process is primarily one of communication between the applicant and the MCA. By virtue of section 44 of the Act, the assessors may request further information or clarification of the data submitted with the application form.

By 1996/7 median approval times for New Chemical Entities (NCEs) were less than a year. The median processing times for abridged applications in 1997/8 fluctuated between 120 and 300 days gross and 50 and 140 days net.

The mean assessment time for new active substances fell to 40 days in 1999.

If an advisory committee is minded to advise the MCA's licensing authority to refuse an application, the applicant has the right to make written submissions to the committee or request a hearing. If, following a hearing, the committee is still of the opinion that the application should be refused, the applicant has the right to appeal to the Medicines Commission. Such an appeal may only be in relation to scientific or technical matters.

As a result of its relatively transparent procedures, the MCA has been the subject of more referrals to the European Court of Justice (ECJ) in the area of medicinal products regulation than all other Community regulatory authorities combined.

Revoking an authorisation.
The MCA has the power to vary, suspend or revoke a marketing authorisation. Such action is usually taken on the grounds of safety. Ordinarily, the MCA will invite the holder to make written or oral representations before any such action is taken. Representations are made to the appropriate advisory committee and the holder has the right to make further representations to the Medicines Commission if the MCA still intends to take action.

If the MCA is of the view that, in the interests of safety, it is necessary to suspend a licence urgently, it may do so with immediate effect and without permitting the authorisation holder to make representations. Such an action is only usually taken when, in the opinion of the MCA, it would not be defensible in terms of patient safety to allow the delay inherent in the standard procedure. In the first instance, the period of suspension in such cases cannot exceed three months.

In order to renew a marketing authorisation, the holder must complete and submit the appropriate form (template available from the MCA website) together with two copies of the Summary of Product Characteristics as filed with the original application, subject to any variations granted during the previous five-year period. There is no fee payable for a renewal of a marketing authorisation, although there are proposals to introduce a specific fee for the renewal of outgoing MR applications.

Procedural variations.
There are no differences in application procedure between prescription only, pharmacy medicines and general sale products.

However, marketing authorisations for medicinal products containing new substances will specify that they are prescription only (in accordance with Directive 92/26).

Biotechnology products.
There are no special rules in relation to biotechnology medicinal products. However, the MCA cannot deal with applications for marketing authorisations or variations of such authorisations as this falls within the exclusive competence of the European Medicines Evaluation Agency (EMEA) (see chapter "Marketing authorisation procedures in Europe").

Orphan medicinal products.
The EMEA is also exclusively responsible for examining applications for orphan medicinal product designation (Regulation (EC) No. 141/2000) (see chapter

"Marketing authorisation procedures in Europe"). Orphan drugs can, however, obtain a marketing authorisation from the MCA provided that authorisation is also sought and obtained throughout the 15 EU member states (there is no provision for withdrawal in one member state).

Changing legal classifications.
It is only with time that the legal classification of a medicine can be changed (often in conjunction with a limitation on pack size). Such a change will have effect for all products of the same pack size which contain that new sub-stance.

Also, a subsequent applicant for an authorisation for a product which has already been reclassified can automatically secure the current classification.

Reclassification is initiated by the applicant, generally by using the variation procedure. However, the legal status of a particular medicinal product is ultimately determined by whether it falls within the scope of either:

  • The Prescription Only Medicines (Human Use) Order 1997 as amended (which lists prescription only drugs).
  • The Medicines (Products other than Veterinary Drugs) (General Sale List) Order 1984 as amended (which lists general sale products).

Pharmacy (effectively over-the-counter) medicines are defined as those which do not fall within the scope of either of the above orders.

Guidance on reclassification can be found in the MCA's "Changing the Legal Classification in the UK of a Medicine for Human Use from Pharmacy to General Sale List" (MAL 82 - March 1996).

A marketing authorisation may be varied by completing the appropriate form (template available from the MCA website) and paying the relevant fee. Variations are divided into two types. Type I variations are relatively minor in nature and range from the purely administrative (for example, a change in address) through to changes in container shape or shelf life.Unless the variation comes within one of the prescribed Type I changes, it will be classed as a Type II variation. These are usually more substantial and involve a change to the regulatory dossier.

The fees payable for an application for variation depend on the category it falls into and on whether the MCA is the reference member state for that marketing authorisation (see table "Variation procedure: fees").

If the MCA, which may seek the advice of an advisory committee, does not agree to the proposed change to the marketing authorisation, the holder does not have the right to make representations to the MCA or to the advisory committee. If the MCA proposes a variation of its own volition, then the holder does have the right to make representations in respect of the proposed change.

Setting up a pharmaceutical establishment

The relevant UK law is set out in the Act and in delegated legislation (the Medicines (Manufacturer's Undertakings for Imported Products) Regulations 1977 as amended).

In accordance with Directive 75/319, the Act requires any manufacturer of a medicinal product to hold a manufacturer's licence. It also requires any wholesale dealer to hold a wholesale dealer's licence (consistent with Directive 92/25).

The activities of importing, storing and distributing medicinal products are classed as wholesale dealing, and therefore require a wholesale dealer's licence.

Applications are made to the MCA, which has published guidance as to the procedure for each licence (MCA Guidance Note No. 5 and No.6 of 1999).

How to make an application.
The information that must be included with an application for a manufacturer's licence relates to:

  • The identity of the applicant.
  • Details of the site of manufacture.
  • The manufacturing and/or assembling operations intended to be carried out.
  • The proposed Production Manager, Quality Controller and Qualified Person (the person nominated to ensure that the manufactured product and the process of manufacture comply with the legal requirements).

The MCA will only issue a manufacturer's licence when it is satisfied, normally following an inspection of the proposed site of manufacture, that the information contained in the application is accurate and in compliance with the requirements of the legislation. The criteria which will be considered by the licensing authority include:

  • The proposed operations.
  • The premises where the operations are to take place.
  • The equipment available to carry out those operations.
  • The qualification and experience of the persons who will supervise those operations.
  • The arrangements made for securing and maintaining accurate records.
  • The availability of a Qualified Person.

A manufacturer's licence is usually granted for a period of five years, although a shorter period can be applied for if required.

If an applicant has already obtained a licence in another member state, he must still apply for a manufacturer's licence, since a manufacturer's licence is site specific and only applies to manufacture in the UK.

Practical tips.
It takes a maximum period of 90 days to obtain a licence. The fees for a standard application are £1,972 (EUR3,115).

If the licensing authority is minded to refuse to grant a manufacturer's licence (or to indicate that it is prepared to grant a licence otherwise than as applied for), it must inform the applicant, who then has 28 days to respond. The applicant may either request a personal hearing or submit written representations. A final decision will then be taken by the licensing authority.

An applicant may apply to the High Court to question the validity of the licensing authority's decision at any time within three months from the date at which notice of a refusal to grant a manufacturer's licence is given.

Revoking a licence.
The MCA may revoke, vary or suspend a licence when a statutory condition of that licence is no longer being complied with. The MCA will notify the licence holder of its proposed course of action and set out the reasons, to which the licence holder has 28 days to respond. In cases where it appears that public safety is at risk, the MCA may suspend a licence with immediate effect for a period of up to three months. Licence holders can appeal to the High Court within three months of the revocation, variation or suspension of a licence.

Licence holders wishing to renew their licence must submit the relevant form to the MCA. There is no fee payable if no variation to the licence is sought. If the renewal is refused, licence holders can appeal to the High Court within three months of the refusal.

Clinical trials

There is currently no harmonisation at European level in relation to clinical trials, although this will start to change once the clinical trials Directive is implemented.

Trials in non-patient human volunteers (which most Phase I trials are) fall outside the scope of the Act. As a result, they are not regulated by any statute. However, the Association for the British Pharmaceutical Industry (ABPI) has issued guidelines, which strongly recommend that such trials be reviewed by independent and properly constituted Ethics Committees.

Phase II and III trials on patients fall within the 1968 Act and require the issue of a Clinical Trial Certificate (CTC), or more usually a Clinical Trial Exemption (CTX), which also assumes that Ethics Committee clearance has been sought.

An application for a CTC is made to the MCA in the same way as applications for marketing authorisations. Supporting data on safety and quality are required and detailed guidelines are issued by the MCA (see MCA Guidance Note No.4, revised 1995). Applications are assessed in the same way as marketing authorisations, with the same legal rights regarding representations to advisory committees and the Medicines Commission being available.

Under the CTX system, the applicant must notify the MCA of his intention to supply investigators (the doctors or dentists who are going to carry out the trial) and support this with a summary of the relevant pharmaceutical data relating to the manufacture and composition of the product and the pre-clinical safety data (results of animal testing). The MCA then has a 35 day period (extendable once by 28 days) within which to object to a proposal. If there is no objection within the deadline the trial can go ahead.

The Medicines (Exemption from Licences) (Clinical Trials) Order 1995 applies to clinical trials on medicinal products that are already authorised (see above "Marketing medicinal products, Practical tips").

The insurance requirements relating to trials are recommended in the ABPI guidelines.


The MCA can revoke, vary or suspend a licence if it finds that a statutory condition is no longer complied with (see above "Revoking a licence").

In addition, the Inspection and Enforcement Groups of the MCA exist to ensure that medicinal products which have a valid marketing authorisation are made and distributed in accordance with Good Manufacturing Practice. During the 12 month period ending in March 1999, the Enforcement Group received 379 allegations that medicines legislation had been breached. In 94% of cases the allegations were found to be made out. In 85% of these cases the MCA halted

non-compliance by advice, warnings or by way of formal cautions, brought prosecutions in 12% and referred the other 3% to other enforcement agencies such as the Police, Customs and Excise and Trading Standards.

The MCA has also powers of inspection. On average, inspections are conducted at least once every two years.

Packaging, labelling and advertising

The UK law in relation to packaging, labelling and advertising is set out in the Act and in delegated legislation (the Medicines (Data Sheet) Regulations 1972, the Medicines (Advertising of Medicinal Products)(No 2) Regulations 1975, the Medicines (Labelling) Regulations 1976, the Medicines (Leaflets) Regulations 1977, the Medicines (Labelling and Advertising to the Public) Regulations 1978, the Medicines (Advertising) Regulations 1994 and the Medicines (Monitoring of Advertising) Regulations 1994; Medicines (Advertising) Amendment Regulations

1996 and the Medicines (Advertising and Monitoring of Advertising) Amendment Regulations 1999).

The UK regulations reflect the extensive harmonisation that has taken place in these areas at a European level (Directives 92/97 and 92/28). The 1976 and 1977 Regulations (as amended in 1992 to accord with Directive 92/97) were the subject of an MCA Guidance Note in September 1993 (Guidance for the Pharmaceutical Industry on the Labelling and Leaflets Regulations).

The following information must appear either on the pack, label, or on an enclosed patient information leaflet:

  • Name of the product.
  • Route of administration.
  • All ingredients.
  • Duration of treatment.
  • Form.
  • Overdose action.
  • Type of activity.
  • Action to be taken if a dose is missed.
  • Marketing authorisation holder and manufacturer.
  • Withdrawal effects.
  • Side effects.
  • Indications.
  • Expiry date.
  • Contra-indications.
  • Special storage instructions.
  • Warnings and precautions.
  • Date of leaflet.
  • Interactions.
  • Dosage.

Marketing authorisations will also include standard terms as to advertising and promotion. In practice, much of the control on advertising in the UK is exercised through the mechanism of self regulatory codes (see also box "Advertising").

These are:

  • The Code of Practice for the Pharmaceutical Industry (as to prescription drugs), which is managed by the ABPI.
  • The Code of Standards of the Proprietary Association of Great Britain (PAGB) (as to pharmacy and general sale medicines), which is managed by the PAGB.


There is no price harmonisation at European level, although Directive 89/105 regulates transparency in pricing. The UK system is relatively transparent by European standards and is intended to encourage local research and development.

The Pharmaceutical Price Regulation Scheme, an agreement between the industry and the government, gives companies a large measure of discretion as to pricing, at least for new products. That said, it only allows them to take a certain return after various deductibles (such as the costs of research) have been taken into account. The scheme has recently been renegotiated and has now been provided with statutory backing under the terms of the Health Act, which received Royal Assent on 30th June, 1999.

Consumer protection and product liability

The Consumer Protection Act 1987 implements the EU Product Liability Directive. It supplements the common law of negligence with a strict basis for liability, which does not depend on showing negligence by the manufacturer.

Claims are usually brought against the manufacturer of the defective product.

However any importer, supplier or anyone that puts its name or mark on the product can also be liable, provided that causation can be established. While a pharmacist is potentially liable as a "supplier", if he in turn can identify his supplier he has a defence to strict liability under the 1987 Act.

Claims can also be brought in tort and contract. Criminal sanctions do not apply.

Product liability claims.
Both negligence and strict liability still require a showing of causation, which remains the main hurdle to be overcome by those seeking to bring product liability actions.

The development risks defence is of special relevence to medicinal products. The manner in which the UK implemented this defence was unsuccessfully challenged by the European Commission before the European Court of Justice (ECJ).

Tortious liability.
Although the implementation of the so-called "strict liability" regime under the Consumer Protection Act 1987 has somewhat eclipsed the provisions of the common law of negligence, there are still some instances where tortious liability may well be relevant. For example, actions may only be brought under the 1987 Act in relation to drug products manufactured after 1st March, 1988.

Under the common law of negligence, a manufacturer owes a duty of care to avoid causing injury to the ultimate consumer of his product. There are three elements to a successful negligence action:

  • Establishing a duty of care.
  • Demonstrating that this duty has been broken.
  • Showing that the breach of duty caused the injury.

The first of these is readily inferred in relation to a drug manufacturer. The second can present difficulties in relation to medicinal products due to the scrutiny they receive from regulatory authorities. However, the evidential burden in such negligence cases will often pass to the defendant under the legal doctrine of res ipsa loquitur, which means that the fact something has happened speaks for itself in establishing negligence. But causation, the third head, remains the major problem, just as it does under the strict liability regime.

It might be that parties other than the manufacturers of pharmaceuticals, for example licensing authorities, may face claims of negligence. While compliance with statutory standards is of course good evidence that proper care has been taken, the courts have held that statutory regulations do not over-ride the common law standard of care (see Bux v Slough Metals [1974] 1 All ER 262). This naturally means that the obtaining of a marketing authorisation for a medicinal product does not affect negligence liability.

Article 9 of EC Directive 65/65/EEC confirms that the grant of a marketing authorisation does not affect the civil and criminal liability of the manufacturer or the person placing the product on the market.

Apart from the 1988 case of Loveday v Renton (The Times, 31st March, 1988), which was litigated on the issue of causation, no pharmaceutical negligence cases have come to final trial, settlement having been made in all cases.

Despite this paucity of cases, it is important to appreciate the principles of negligence. While not requiring absolute product safety, negligence does impose on the manufacturer of medicinal products a very heavy obligation.

In the research, design and marketing of his product, the manufacturer must take all the steps to be expected of a reasonably prudent manufacturer. Where the nature of the risk presented by a particular product is great, courts have held manufacturers to very high standards of scientific and technical knowledge. It should be clear that pharmaceuticals always create risks to health: the function of the law of negligence is to delineate acceptable risks.

One of the key issues in negligence is the extent of the manufacturer's duty to undertake research. One of the criticisms levelled by the pharmaceutical industry at the EC's Product Liability Directive is that it imposes an impossible research burden on companies. In negligence, the exercise of reasonable care, in the form of adhering to industry wide practices, is a defence to liability. The standard of care will depend on all the circumstances, including the nature of the risk presented by a product or activity. As a result, courts have held that the common practice of an industry may not be a sufficiently adequate precaution to prevent foreseeable risks (Marshall v Lindsey County Council [1935] 1 KB 516).

Contractual liability.
Section 2(6) of the 1987 Act makes it clear that the new regime of strict liability which it introduces is without prejudice to existing common law remedies, such as those existing in negligence and the law of contract. However, the relation between the consumer of a pharmaceutical product and its manufacturer is unlikely to be one of contract.

Most pharmaceuticals are prescribed by general practitioners to patients via dispensing pharmacists under the NHS. The courts have held that when a pharmaceutical product is prescribed under the NHS, it is not supplied according to a contract between the patient and the pharmacist. Rather, the pharmacist is under a statutory duty to supply it (Pfizer v Ministry of Health (1965) AC 512).

Without a contract no liability can arise under the sale of goods legislation, which implies certain conditions into contracts of sale. However, medicines which are not only supplied on NHS prescription, for example general sale medicines or pharmacy medicines, may well be supplied under a contract for the sale of goods. This will allow the purchaser (but not the user unless one and the same) to pursue a claim under the sale of goods legislation against the supplier (who will however rarely be the manufacturer) but who in turn may be able to proceed in contract against his supplier and so on back up the chain should the product prove defective.

This in effect imposes strict liability where a product is defective, in the sense of not being fit for its purpose, as those terms are understood in sale of goods law.

Liability is strict as it is not based on the fault of the manufacturer (and not subject, like the EC Product Liability Directive as implemented, to a development risks defence). It might however be argued that since drugs unavoidably have side effects they do not by that fact lack "merchantable quality" under such provisions.

The key to contractual liability is whether the product breaches manufacturers' standards of quality and fitness. It has been said, in one case, that contractual liability makes the manufacturer an "insurer in respect of the defects which he could not prevent and of which he did not know, but it is well settled that the implied condition as to fitness extends to latent defects."

A product supplied under a private prescription will have been supplied under contract, and, where it is defective, a claim will lie against the pharmacist who fills the prescription. In most cases though, the pharmacist will be able to pass on this liability to the supplier or manufacturer, or in certain cases the prescribing doctor, all of who may also have negligence liability to the patient.

Criminal liability.
This does not apply, save that under the Act criminal sanctions do exist for failure to comply with regulatory requirements, but this is by virtue of expressly created "offences" under the Act, rather than the general criminal law.

Intellectual property

Patents and trade marks are vital in the pharmaceutical sector.

Patent protection

The UK law of patents is set out in the Patents Act 1977, which is intended so far as possible to implement the European Patent Convention. In addition, the UK has based much of its law on the substantive law of the Community Patent Convention, even though this is not in force.

Patents effective in the UK are granted by the UK Patent Office or by the European Patent Office, assuming that the applicant for the European patent has designated the UK. UK applications, as with European ones, are fully searched and examined, but the UK procedure is rather quicker.

How to make an application.
To file an application for a patent, a patent specification must be prepared, which should include drawings if useful to describe the invention. It may include claims and an abstract, or these may be supplied later.

The invention will be assessed on the basis of the following criteria:

  • It must be new.
  • It must involve an inventive step.
  • It must be capable of industrial application.
  • It must not come within certain excluded categories, for example, a scientific theory, a literary or musical work or a computer program.

Practical tips.
The length of time taken to obtain a registration depends on the conduct of the applicant, but is subject to a maximum time limit of four and a half years.

The fees payable can be ascertained from the Patent Office website (www.patent.gov.uk).

If the application is rejected, appeal can be made to the Patents Court in the HighCourt.

It is not possible to approach the Patent Office informally to discuss the application.

Revoking a patent.
The European Patent Convention provides a special opposition procedure but there is no equivalent procedure for granted UK patents.

However, the validity of patents granted in the UK (as with the UK designation of European patents) can be challenged in revocation proceedings brought either in the UK Patent Office or in the national courts.

Under UK patent law, there are various grounds upon which a patent may be revoked once it has been granted.

They are:

  • Insufficiency (invention not sufficiently described in the specification).
  • Lack of novelty.Lack of inventive step (obviousness).Not a patentable invention.Unlawful extension of disclosure during application being prosecuted (in other words, disclosure of matters beyond those disclosed in the application as filed).
  • Unlawful extension of protection by amendment (in other words, the patent has been amended in such a way that the scope of the claims has been broadened).

Anyone can bring an action to revoke a patent. If the patent has been revoked by the Patent Office, appeal lies to the High Court. If it has been revoked in the High Court, appeal must be made to the Court of Appeal.

To renew a patent, it is sufficient to pay the relevant fee. The amount of the fee depends on the renewal year, ranging from £50 (EUR79) to renew in the fifth year to £400 (EUR632) to renew in the final (20th) year.

England and Wales is one of the few jurisdictions in Europe to have specialist patent courts. These provide the full range of remedies for patent infringement, namely an injunction, delivery up of infringing products, damages or an account of profits, and reimbursement of a substantial proportion of legal costs. Actions can be brought to trial in about a year. If this delay will cause irreparable harm to the patentee an interim in-junction pending trial can be sought, although this is rarely granted.

Special rules.
It has long been possible to secure patents for pharmaceuticals in the UK. In addition to the usual range of types of product and process patents, the UK Patent Office and the English courts recognise the validity of a patent covering the "second medical use" with claims formulated in the "Swiss style." This kind of patent grants a monopoly for the use of a known compound for a novel purpose (see chapter "Generic pharmaceuticals and parallel importers").

Patents last for 20 years from filing, unless they lapse through failure to pay renewal fees or are revoked. Their effective term in respect of a medicinal product for which a marketing authorisation has been secured can be extended (by the lesser of five years after the patent's expiry or 15 years from the grant of the first marketing authorisation in the Community) by means of a supplementary protection certificate. The certificate must be applied for at the UK Patent Office within six months of the grant of the first UK marketing authorisation, or, if the grant precedes that of a patent effective in the UK, within six months of the grant of the patent.

Trade mark protection

The relevant statute is the Trade Marks Act 1994, which has implemented the Trade Mark Harmonisation Directive. Both Community and national UK trade marks have effect in the UK. However, the validity of a Community trade mark can only be challenged in a UK court (rather than centrally in the Community Trade Mark office) in the context of an attempt to enforce the mark.

National UK marks can be registered either through a national filing with the UK Trade Marks Registry or through the mechanism of the Madrid Protocol (of which the UK is a member).

How to make an application.
Applications must be made on form TM3 and must contain an example of the trade mark and an indication of the goods or services in respect of which it will be used.

To be registrable, a trade mark must:

  • Be distinctive.
  • Not be deceptive.
  • Not conflict with other marks.

The UK national system, unlike the Community system, involves examination not only on absolute grounds of invalidity but also on relative grounds (namely third party rights). However, as with the Community system, third parties can oppose examined marks once they have been published and before they are granted.

Practical tips.
The length of time taken to obtain a registration depends on the conduct of the applicant and on whether or not the application is opposed by a third party.

The fees payable are £200 (EUR316) to apply to register in one class of goods or services, £50 (EUR79) for each additional class. If the application is rejected it is possible to appeal to the High Court or to the "appointed person", a barrister with experience in trade mark law. It is not possible to approach the Trade Marks Registry informally to discuss the application, although proceedings in the Trade Marks Registry are not as formal as those in the High Court.

Revoking a trade mark.
A trade mark can be revoked on the following grounds:

  • The mark has not been put into genuine use for five years, or its use has been suspended for five years, provided that there are no proper reasons for the non-use.
  • The mark has, due to the inactivity of the owner, become the name common in the trade for the goods or services for which it is registered.
  • The use of the mark by the owner has lead to the mark becoming misleading.

A mark can also be declared invalid on the basis that it was registered in breach of the requirements for registrability of trade marks.

The registration is valid for a period of ten years, which can be extended indefinitely every ten years.

The renewal fees are the same as the application fees (see above).

Preventing parallel imports

The MCA is generally sympathetic to parallel imports. Two recent cases referred to the ECJ concerning the grant of marketing authorisations for parallel imports, Smith & Nephew v Prime-crown and Rhone Poulenc Rorer v Prime-crown, have both arisen in the context of challenges to the grant by the MCA of marketing authorisations for parallel imported products (see chapter "Competition law and parallel imports").

Using patents.
Patents cannot be used to prevent the import into the UK of a product first placed on the market elsewhere in the EEA by the patentee or by his licensee. The only exception occurs where the product was placed on the other EEA market under a compulsory patent licence. Under principles established in Pharmon v Hoechst, the UK patentee can use his patent to prevent import of such a product.

Although the issue does not really arise in relation to pharmaceuticals, since regulatory constraints mean that parallel imports from outside the EEA are not a real problem, it can prove difficult to use patents to prevent the import of a product from outside the EEA if it has been first placed on the market by the patentee. This is because the English courts are not prepared to assume a lack of consent on the part of the patentee without the strongest evidence of this, brought to the attention of the purchaser abroad in every case.

It would appear that the situation is different when the product is first placed on the market outside the EEA by a licensee, as the UK courts will less readily infer that a licence lacks any territorial limit, and therefore that a licensee has any power to consent to such import.

Limitations on parallel imports.
Parallel importers in the UK must hold a parallel import marketing authorisation granted by the MCA. Authorisation for a parallel import will only be granted if the importer can show that the product:

  • Has already been licensed in an EEA member state.
  • Has no difference in therapeutic effect from a product licensed in the UK.
  • Is manufactured by the same group of companies (or by another company under licence) as the UK product.
  • Is labelled in English, although additional languages are not prohibited.

E-commerce and mail order

Direct to consumer (DTC) advertising is not permitted in the UK and the rest of Europe. The MCA has taken the view that its primary jurisdiction lies over ".co.uk" top level domains managed from the UK. It has in general been prepared to leave the control of ".com" domains to the Food and Drug Administration in the US, which does permit certain DTC advertising. However, the MCA would no doubt seek to control UK originating advertising directed to a UK audience, even though it might be on a ".com" domain.

Reimbursement issues mean that e-commerce is unlikely to become a significant route for the purchase of medicinal products. As with advertising, the MCA will tend to act against UK based suppliers of products that have no UK approval. However, it will not in general seek to control those based abroad, at least in those cases where the product involved has a local authorisation, even though this might constitute a technical violation of UK law. This position reflects the MCA's policy as to direct sales from abroad of substances which, as in the case of melatonin, have been made through traditional routes.

Written by Trevor Cook and Audrey Horton.

This article first appeared in the European Counsel, Life Sciences Industry Report 2000 and is reproduced with the permission of the publishers, Practical Law Company. For further details visit www.practicallaw.com