2021
HEALTH
REPORT

Key legal and regulatory issue in health and life science transactions by country

• United States: Top 10 List

  1. THE IMPACT OF COVID-19 ON THE PROVISION OF HEALTHCARE AND LIFE SCIENCES

  The response to the COVID-19 pandemic has changed certain aspects of the delivery of healthcare services in the United States, although many of these changes are anticipated to be temporary. Key developments include the following:

  • A significant growth in telehealth adoption rates, particularly among small providers that historically  rovided in-person encounters only, and in patient  populations such as older patients that previously preferred in-person encounters.
  • The Coronavirus Aid, Relief, and Economic Security (CARES) Act, subsequent legislation and regulatory changes supported the use of telehealth services during the pandemic by lowering longstanding barriers to Medicare reimbursement and the use of telehealth in additional care settings.
  • State emergency declarations and orders expanded Medicaid coverage, eased licensure barriers, and generally expanded the ability of healthcare professionals to deliver services via telehealth.
  • The increased availability of telehealth services during the pandemic has prompted further policy discussion around the appropriateness of lasting changes as well as addressing historical barriers to virtual care.
  • Although buoyed by a large influx of cash through Provider Relief Funds (PRF) under the CARES Act, health systems have suffered significant financial losses due to the reductions in elective procedures as a result of state mandated shut-downs and lower consumer demand – and the PRF cash is a temporary fix, as funds provided need to be repaid.
  • Health insurers have benefited financially from the reduction in demand, but the impact of significant unemployment and demand for COVID-related treatments are not yet fully understood.
  • After a period of stagnation during the middle of 2020, investment in the healthcare services sector has picked up, and digital health and life science investing has remained strong.
  • Technology sector interest in healthcare delivery and life sciences has increased.
  • Election year politics diminished the prospect of another round of significant government support prior to the change in administration.

   

  2.  OWNERSHIP OR EQUIVALENT RESTRICTIONS IN RELATION TO THE PROVISION OF HEALTHCARE SERVICES

  There are limited barriers to the ownership and operation of private healthcare services in the United States. Nonetheless, some restrictions do exist at both the federal and state levels. Individual state licensing regimes for health services and healthcare facilities make a national strategy challenging. Participation in government payment systems and private payment systems by healthcare service providers requires enrolling in those systems independent of any applicable state licensure requirements. Moreover, individual US states impose  estrictions on the ability of unlicensed persons to practice medicine or employ medical professionals under a doctrine known as the “corporate practice of medicine” prohibition.

  Investing in healthcare services must also conform to both federal and state fraud and abuse laws, designed to isolate clinical decision-making and patient choice from the financial  incentives associated with care delivery. Because these laws and regulations can exist at both a federal and state level, compliance efforts can be burdensome.

  Strategies exist to  address these hurdles, but the resulting structures can be complex and confusing to those unfamiliar with the US healthcare market. In addition, changes in ownership can trigger notice or consent requirements from the relevant government oversight agency, which present timing issues and additional administrative burden on completing these types of transactions.

  3. REIMBURSEMENT OF PUBLIC OR NATIONAL HEALTHCARE SERVICES AND AWARD OF CONTRACTS

  Unlike European jurisdictions, the United States has a significant market for the private reimbursement of healthcare services, which is generally offered by employers. Public reimbursement is largely limited to Medicare (federal health insurance for seniors and individuals with certain disabilities) and Medicaid (state-run insurance for individuals with low incomes).

  Government Payors

  Medicare is the largest government insurance program, providing insurance for over 59 million people. Medicare-eligible beneficiaries may choose either to receive insurance coverage directly from the federal government under so-called “Original Medicare,” or to enroll in a Medicare Advantage plan, under which their Medicare benefits are administered by a private commercial insurance entity that shares in the risk of the cost of care. Medicare beneficiaries can also choose to purchase a prescription drug plan as part of a Medicare Advantage plan or as a standalone plan, as prescriptions are generally not covered under Original Medicare.

  Original Medicare has typically been paid on a fee-for-service basis, under which providers submit claims for each reimbursable service. Increasingly, however, the federal government is exploring valuebased purchasing programs and other innovative payment models that seek to link payment rates to quality of care, rather than simply volume of services. Shared risk models, such as Medicare Advantage and the Medicare Shared Savings Program, are increasingly popular and, in some instances, are proving to be cost effective.

  Providers of healthcare services must enroll in order to participate in Medicare. Enrollment may also require accreditation by an approved non-government agency or government agency for facilities. Reimbursement from Medicare can be through feefor-service, bundled services, and shared risk models. Appropriate coding of claims for care rendered and compliance with reimbursement requirements are also required.

  Medicaid is administered by the individual states and shares many of the same characteristics as Medicare, although states have additional flexibility with how these programs are implemented and what is paid for.

  Private Payors

  Americans that do not qualify for Medicare or Medicaid largely receive health insurance from commercial health insurance coverage, either through their employer or the private marketplace created by the Affordable Care Act. Federal law sets standards for commercial health insurance coverage, which is often supplemented by state-specific requirements.

  For example, commercial payors may be required to offer coverage and/or payment parity for telehealth services under applicable state law. Coverage parity refers to laws that require private payors to provide the same coverage for services provided via telehealth as is offered when they are provided in person, while payment parity refers to laws that require private payors to offer the same reimbursement rates, regardless if the service is provided in-person or via telehealth. Currently, 43 states and the District of Columbia have private payor laws governing telehealth.

  As with government payment regimes, healthcare service providers that participate in private health payment systems must enroll and comply with the private reimbursement regimes, which are mandated through participation agreements entered by the providers with the payors. While government reimbursement rates are non-negotiable, the reimbursement rates under private payor contracts can be subject to significant negotiation.

  Most healthcare providers participate in Medicare, Medicaid and private payment regimes that are relevant in their markets. Accordingly, they must comply with multiple enrollment and reimbursement regimes, which can place a significant administrative burden on providers.

  4. DRUG APPROVALS AND REIMBURSEMENT

  The US Food and Drug Administration (FDA) evaluates new drugs and biological products before they can be sold in the United States. For novel therapeutic products, the FDA generally requires substantial clinical and non-clinical data before it will approve or license a product for distribution.

  Medicare is the largest third-party payer in the United States. Medicare pays for most outpatient drugs and biological products under Part D, which involves Medicare paying competing private plans to deliver benefits to enrollees, and those plans establishing coverage criteria, formularies, and payment rates for therapeutic products. However, a limited number of drugs are reimbursed under Part B (e.g., certain physician-administered drugs), which allows Medicare to pay providers directly at rates established by statute or regulation.

  Commercial payers may cover drugs or biologics under their pharmacy or medical benefit, depending on the drug and the payer’s preference. Subject to certain federal and state laws, commercial payers generally have substantial flexibility when deciding whether to cover and how much to pay for a drug.

  5. DEVICES CERTIFICATION AND REIMBURSEMENT

  The FDA also regulates the development, manufacturing, and distribution of medical devices in the United States. Depending on the device, a manufacturer may need to obtain premarket approval (PMA), clearance (510(k)), or a de novo classification before offering the product for sale in the United States.

  Medicare is a defined benefit program, which means the program can only pay for items and services if there is a statutorily defined “benefit category” for such items and services. While  there are Medicare benefit categories for certain types of medical devices (e.g., durable medical equipment), there is no general “device” benefit category. As a result, payment for devices is often bundled into the payment for other covered services (e.g., physician office visits, outpatient hospital admissions).

  Commercial payers typically take a similar approach to Medicare, and with certain limited exceptions, consider medical devices an expense incurred by providers when furnished as part of a covered service, as opposed to making separate payment for the device itself.

  6. REGULATION OF AI AND SOFTWARE AS A MEDICAL DEVICE

  Depending on its technological characteristics and the indications for which its developer intends to market the product, an AI-based or software product may be subject to regulation by the FDA as a medical device.

  The FDA’s existing regulatory structure for medical devices was not designed with rapidly-evolving products in mind. However, in 2019 the FDA issued a white paper, announcing plans to consider adapting its existing regulatory framework to promote the development of safe and effective medical devices that use advanced AI algorithms. The FDA’s proposed approach would allow developers to make certain modifications to previously-cleared or previouslyapproved algorithms based on real-world learning and adaptation without requiring a new  clearance or approval for the modified product in many cases. If finalised as outlined in the white paper, the FDA’s plans would attempt to better accommodate the iterative nature of AI products while ensuring that the FDA’s standards for safety and effectiveness are maintained.

  7. TELEMEDICINE AND TELECONSULTATION

  In the United States, telemedicine is regulated at the state and federal level, and by multiple regulatory bodies. At the federal level the Centers for Medicare and Medicaid Services (CMS), the federal agency overseeing federal health reimbursement programs, establishes Medicare reimbursement policies (subject to applicable legislation), and has a certain level of oversight over state Medicaid programs. Many of the reimbursement requirements imposed by these programs have been relaxed during the COVID-19 pandemic. In addition, the federal Drug Enforcement Administration (DEA) plays a role in determining, subject to federal law, whether and how controlled substances may be prescribed via telemedicine.  Historically, federal law requires an inperson examination prior to any such prescribing, but the DEA has temporarily waived this requirement during the COVID-19 pandemic.

  At the state level, state legislatures and professional licensing boards may create telehealth standards of care that govern telehealth practice. Such standards may relate to licensure requirements, the types of modalities are permitted, remote prescribing of controlled and non-controlled substances, informed consent, medical recordkeeping, technology, confidentiality / privacy requirements, and more. In addition, it is essential to understand that telemedicine practitioners are regulated by both the state where the patient is located and the state where the practitioner is located. This typically requires the provider to be licensed within the state where the patient is located, regardless of where the provider is physically located at the time of the encounter.

  Every telemedicine regulatory regime has its own definitions regarding telemedicine. That said, it is typically categorised into three modalities: (1) live, synchronous, audio-visual  interactions (e.g., a patient directly speaking to a provider), (2) store-and-forward technology (e.g., a patient sends an image of a clinical concern to a healthcare professional for review), and (3) remote patient monitoring (e.g., mobile applications that track an individual’s blood pressure and send readings to a healthcare professional).

  There is significant variation in state and federal regimes relative to these modalities. For example, most, if not all, states permit physicians to prescribe non-controlled substances on the basis of a synchronous, audio-visual encounter. Beyond that, there is a significant amount of variation in terms of the types of (a) healthcare professionals that are permitted to provide services via telehealth, (b) modalities deemed sufficient to prescribe, and (c) healthcare professionals permitted to use telehealth to prescribe when prescribing is otherwise within the professionals’ scope of practice.

  These variations make national telemedicine programs challenging to implement. Further, as we see telemedicine evolve with the utilisation of more technology, including artificial intelligence, these variations can multiply along with the many use cases being developed.

  8. ANTI-KICKBACK RULES AND INCENTIVES TO DOCTORS

  The healthcare industry is subject to a number of fraud and abuse laws. Most notably, this includes federal statutes known commonly as the Anti-Kickback Statute and the Stark Law, which regulate financial relationships within and among healthcare stakeholders, and the False Claims Act, which prohibits providers from submitting false or fraudulent claims to  government payment programs. The Anti-Kickback Statute is a criminal law that prohibits the knowing and willful payment of remuneration to induce or reward patient referrals, while the Stark Law prevents healthcare providers from referring patients for certain services to entities in which they have a financial interest. In addition, states have their own fraud and abuse laws, which often mirror – and sometimes extend beyond – federal law.

  The Department of Justice (DOJ) has long played a significant role in bringing enforcement actions against healthcare providers for fraud and abuse violations. As we have highlighted in prior editions of the Healthcare Enforcement Quarterly Roundup (see here and here), the DOJ is  increasingly bringing enforcement actions against telemedicine providers. Recently, in October 2020, it brought charges against 345 defendants for, among other things, paying healthcare providers to order over $4.5 billion dollars’ worth of unnecessary durable medical equipment, genetic testing, and pain medications either without a patient interaction or based upon a brief telephone encounter. The DOJ said that this is its largest healthcare fraud enforcement action taken to date.

  9. MERGER AND FOREIGN INVESTMENT CONTROL

  Investment in the healthcare and life sciences industries in the United States is not subject to specific foreign investment protocols or specific merger or acquisition controls outside of those related to licensure requirements for healthcare facilities and professionals and regulated insurers. Some of these regimes can be burdensome, and are generally state-based. Participation in public and private reimbursement regimes also includes following specific protocols related to change in control transactions.

  Some states are more active in overseeing the availability of healthcare resources and require approval of expansions or changes in the control of healthcare services through “certificate of need” laws, which in addition to other regulatory approvals require independent government agency approval over a transaction. Like every industry in the United States, healthcare and life sciences transactions are subject to antitrust laws, the enforcement of which has increased in recent years with respect to hospital and physician markets. While state antitrust regimes can also play a role, federal antitrust enforcement generally takes precedent.

  In recent years, the role of the Committee on Foreign Investment in the United States (CFIUS) has expanded through legislation, regulation and high-profile action. The focus of CFIUS is on transactions that could impact the national security of the United States, but the broad scope of concern – ranging from critical technologies to critical information – and the increased utilisation of technology in the healthcare and life sciences sectors has made CFIUS much more relevant now than it has been in past years. Compliance with CFIUS requires a  careful review of transaction structure and assets and a determination whether a pre-closing filing may be required.

  10. FORTHCOMING AND ANTICIPATED CHANGES IN HEALTHCARE AND LIFE SCIENCES LAW

  The results of the 2020 presidential and congressional elections are now finally known, and the Democrats control both the legislative and executive branches of government. The Democratic majorities in the House and Senate, however, are slim and include moderates, who are not likely to go along with the more extreme proposals that may emanate from the progressive wing of the party. In addition, a Senate rule provides Republicans with the power to prevent the body from voting on legislation unless 60 of the 100 Senators vote in favour of moving forward. While this tool cannot stop all legislation, it can limit what Democrats are able to pass. Traditionally, the party in control of the Presidency loses seats in the legislative branch in midterm elections, and while the dynamics may be unusual, there will be pressure for the Biden administration to move quickly.

  While pandemic response will be the most public area of focus for the Biden administration in healthcare, there are other areas where the administration is already acting or signalling  its attention to act. The Biden administration is likely to reverse a series of Trump administration executive actions to limit or roll-back aspects of insurance coverage under the Affordable Care Act. In other areas, the Biden administration is likely to review or reduce enforcement prioritization of Trump administration rules for which there is general support.

  The failure of the Republicans to repeal the Affordable Care Act means that it is unlikely the Biden administration will propose broad-based legislative change. Instead, we should expect to see efforts to modify aspects of the existing legal and regulatory infrastructure. Enforcement priorities may change as well, although it is still too early to predict with certainty in what ways.

• France: Top 10 List

  1. THE IMPACT OF COVID-19 ON THE PROVISION OF HEALTHCARE AND LIFE SCIENCES

  The pandemic has affected all aspects of the French healthcare system, including:

  • Telemedicine has grown exponentially during the COVID-19 crisis. Teleconsultations will be fully reimbursed by the French statutory health insurance scheme (SHI) until the end of 2020, a measure which will likely be extended to the end of 2021 at least (see section 6 below).
  • The e-health sector, including digital health, medtech, and biotechnology start-ups have emerged and investment in the field is expected to increase significantly. France has amended its foreign investment control framework accordingly by extending the scope of its screening to the biotechnology industry (see section 8 below).
  • The pandemic emphasised the need for simplified administrative approval for health products. As a result, a bill for SHI  financing for 2021 (projet de loi de financement de la sécurité sociale pour 2021), has been adopted by the National Assembly but is still under review by the Senate. The bill aims to simplify the fast-track procedure for medicinal products and will replace the procedure for exceptional use of unauthorised medicine (authorisations temporaire d’utilisation) and off-label use of medicine (recommendations temporaire d’utilisation) with two regimes: early access authorisation (for innovative products) and compassionate access authorisation (for therapeutic needs not yet covered).
  • The levels of care for non-communicable diseases and non-COVID-19-related diagnoses have plummeted and Healthcare Professionals (HCPs) have expressed their concerns regarding the lack of early screening and missed opportunities to treat potentially deadly diseases.
  • Transitional measures that have been implemented for ongoing and COVID-19 related clinical trials during the first wave of the pandemic to enable the conduct of such trials (e.g.,  elivery of experimental drugs at home, collection of data via teleconsultations) could be reactivated following the announcement of the second lockdown.

  2. OWNERSHIP OR EQUIVALENT RESTRICTIONS REGARDING THE PROVISION OF HEALTHCARE SERVICES

  Healthcare services in France can be provided either by independent physicians through their private practices (outpatients) or during a hospitalisation in public or private healthcare facilities (inpatients).

  There is no restriction applicable to the operation of private healthcare facilities. Such facilities are often constituted in legal form as limited liability companies and  can be operated by physicians or non-physicians. Subject to the grant of administrative permits, these facilities do not differ from commercial companies.

  3. AWARD OF PUBLIC CONTRACTS AND REIMBURSEMENT

  Every person born in France, working in France or regularly living in France can benefit from SHI. SHI provides reimbursement of outpatient and inpatient treatments.

  Physicians: Prices are fixed by the national physician agreement (between SHI and physicians’ associations). Physicians can apply higher prices under specific conditions. If a physician is not part of the national physician agreement, he or she can set prices freely. National reimbursement rates apply to services provided by physicians except when the physician is not part of the national physician agreement, in which case lower rates apply. Healthcare services are reimbursed at more favourable rates if provided within the mandatory care pathway (parcours de soin).

  Public healthcare facilities: Applicable prices are fixed annually by the Ministry of Health. SHI reimburses 80 percent of the applicable fees. The remaining 20 percent can be covered by private insurance.

  Private healthcare facilities: There are two types of private facilities:

  • Private facilities under contracts: most private healthcare facilities enter into contracts with the Local Health Agency (Agence Régionale de Santé or ARS), and health services are  reimbursed as if they were performed in a public facility.
  • Other private facilities: for the few facilities that do not enter into contracts with ARS, prices are not fixed. For these facilities, the applicable 80 percent reimbursement rate will be based on the prices fixed by the Ministry of Health rather than the price allocated by the private facility.

  4. DRUG APPROVALS AND REIMBURSEMENT

  Medicinal products cannot be placed on the market if they have not received a prior French or centralised marketing authorisation (MA). French MAs are granted by the French Medicine Agency (Agence Nationale de Securité du Médicament, or ANSM). MAs are granted upon demonstration of quality, safety and efficacy. Any variation to the terms of the MA must be notified to or approved by the ANSM, depending on the nature and importance of the variation.

  Whether the SHI reimburses a medicinal product depends on its degree of efficacy (Service Médical Rendu), which is evaluated by the High Health Authority (Haute Autorité de Santé or HAS).

  The General Director of the French National Union of Health Insurance (Union Nationale des Caisses d’Assurance Maladie) decides the reimbursement rate (from 15 percent to 65 percent, or in certain circumstances, 100 percent), depending on the drug’s efficacy compared with other therapies that are already on the market.

  5. PAYMENTS TO HEALTHCARE PROFESSIONALS AND INCENTIVES

  Anti-kickback rules currently prohibit companies that manufacture or market health products reimbursed by SHI from directly or indirectly offering any benefits in cash or in kind to healthcare practitioners. Healthcare practitioners are also prohibited from receiving such benefits.

  The law of 24 July 2019 expanded the scope of this prohibition to any companies manufacturing or marketing health products (regardless of their reimbursement status) or providing health services. Exceptions to this prohibition include: remuneration for research activities, grants in cash or in kind that are allocated to research activities, and hospitality offered at promotional, professional and scientific events to HCPs by companies operating in the health sector. Such companies will ask the relevant professional association for authorisation to offer any benefit (other than for negligible value) to a HCP for implementing any contract exceeding a specific threshold with a HCP. Below this threshold, a declaration will be sufficient. In August 2020, two ministerial orders set the thresholds, which vary depending on the categories of activities concerned (e.g., research grants above 5 000 EUR or hospitality above 2 000 EUR must be authorised). These amounts were eagerly awaited and they facilitated the full application of the updated version of the anti-kickback regulation, which came into force on 1 October, 2020. A failure to comply with such regulation can lead to criminal sanctions.

  6. REGULATION OF AI AND SOFTWARE AS A MEDICAL DEVICE

  The use of medical devices, regardless of whether they involve artificial intelligence (AI), is substantially regulated by EU law. Medical devices must be CE marked prior to placement on the market. As AIpowered medical devices are built on the basis of experiences and accumulation of observations, the quality and quantity of the incoming data and the learning ability of the AI software are crucial elements for the device’s operation. Therefore, the actual CE marking process of certifying the conformity of a medical device prior to its placement on the market seems incompatible with the reality of AI-powered devices. The permanent evolution of said devices due to their ability to learn would in theory require a continuous evaluation in order to assess the service provided. The HAS published a press release in October 2020 disclosing a new assessment scheme for AI-powered medical devices, which sets out a roadmap to adapt to these specificities. Companies operating medical devices are required, amongst others, to provide detailed information on the incoming data used to develop the learning ability of the software. The next step for the HAS is publication of a functional classification chart for software according to its use (screening function, diagnosis, prevention, aid in understanding hygieno-dietary measures, etc.). This classification chart should be finalised by the end of 2020.

  7. TELEMEDICINE AND TELECONSULTATION

  Compared to other European states, the French legal framework for telemedicine is relatively advanced. After a period of experimentation, telemedicine is now fully integrated in the practice of medicine. Telemedicine includes six type of activities, ranging from teleconsultation (i.e., remote consultation between patient and physician) to tele-expertise (i.e., remote solicitation by a medical professional of the opinion of colleagues with particular skills), and preliminary medical reviews conducted by emergency services. Tele-care was added in July 2019, to connect pharmacists or paramedics with patients (e.g., to enable remote nurse care). Teleconsultation must be carried out by video transmission (as opposed to a telephone call). However, during the pandemic, teleconsultations by phone have been permitted in specific cases (e.g., no access to internet). Since September 2019, teleconsultation can also be performed in pharmacies at booths that may be connected to medical devices.

  Teleconsultation became eligible for SHI reimbursement on September 2018. To be reimbursable, the teleconsultation must be performed under specific conditions: it must be conducted within the mandatory care pathway and the physician must be an independent doctor adhering to the national physician agreement who already knows the patient (i.e., a physical consultation must have been performed in the 12 months preceding the teleconsultation). Teleconsultations may, in certain cases be reimbursed when conducted outside the mandatory care pathway, provided that they are performed in a local organisation such as a care home (centre de santé). Due to COVID-19, all teleconsultations are now fully reimbursed by SHI following an ordinance dated 18 June 2020 and such reimbursement scheme will apply until 31 December, 2020. The bill for SHI financing (see section 1 above) plans to extend this to the end of 2021.

  8. FOREIGN INVESTMENT CONTROL

  Under current law, foreign investments in relation to activities “in the protection of public health” and AI are considered strategic or sensitive and may require prior governmental authorisation. Recent changes to the law entered into force in April and July 2020 and extended the activities that are considered strategic or sensitive to activities relating, inter alia, to biotechnologies, food safety and additive manufacturing. In addition, such changes resulted in increased sanctions for non-compliance with foreign investment regulations. In July 2020, a decree also lowered the threshold of control applying to non-EEA entities’ investment in public corporations transacting in those sensitive sectors, from 25 percent to 10 percent.

  9. FORTHCOMING CHANGES IN HEALTHCARE AND LIFE SCIENCES LAW

  Advertising by healthcare practitioners: Advertising by physicians is prohibited in France. Recent rulings from the European Court of Justice (Luc Vanderborght, C-339/15 dated 4 May 2017 and Cabinet dentaire du docteur RG, C-296/18 dated 23 October 2018) found that such prohibition conflicts with EU law. Thus, in two rulings dated 6 November 2019, the Conseil d’Etat invalidated the decision of the Government to refuse to repeal the prohibition of advertising. However, the prohibition on advertising is still currently applicable as the rulings have only invalidated a governmental decision refusing to repeal such prohibition. Therefore, physicians advertising their activities could in theory be sanctioned by the National Board of Physicians or in the course of judicial proceedings. Nevertheless, any such sanction could be challenged, as it would be based on a statutory provision ruled illegal as contrary to EU law.

  Compared to other European states, the French legal framework for telemedicine is relatively advanced.

• Germany: Top 10 List

  1. THE IMPACT OF COVID-19 ON THE PROVISION OF HEALTHCARE AND LIFE SCIENCES

  COVID-19 has had a significant impact on the healthcare sector worldwide.

  In Germany, the implementation of telemedicine and other digital health services or applications by the general healthcare system has increased. German legislators both on federal and on state level, as well as medical professional associations have acted promptly and implemented measures to facilitate the use of telemedicine services within a very short timeframe. In particular, the legal options for remote medical treatment and consultation have been extended, including the option to prescribe drugs and provide certificates for sick leave in online consultations. Pilot projects for digital healthcare services have been transferred into the general statutory healthcare insurance (SHI) payment system and thus, digital healthcare services are now fully reimbursed.

  Other measures to alleviate the impact of the pandemic in Germany have included the granting of emergency powers to governmental authorities to enable them to act more quickly and to set up an emergency plan for face-masks, sanitisers and other required medical equipment. Furthermore, healthcare providers, in particular care home facilities and hospitals, have been provided with additional funds.

  2. OWNERSHIP OR EQUIVALENT RESTRICTIONS IN RELATION TO THE PROVISION OF HEALTHCARE SERVICES

  There are no ownership restrictions for hospitals as the German hospital market consists of public community or state hospitals, private not-for-profit hospitals and private for private hospitals alike. But there are some ownership restrictions in the outpatient health services sector. Prior to 2004, physicians were only allowed to render outpatient services when working in their own practice or clinic or in partnership with other physicians. No investor was entitled to directly or indirectly own shares in those clinics or partnerships. Now, utpatient physician services can also be rendered in so –called Medizinische Versorgungszentren (MVZ), i.e., Medical Care Centers. MVZ are often established in the legal form of limited liability companies and operating with employed physicians. MVZ needn’t necessarily be owned by physicians. Rather, they can also be owned by hospitals, local communities, not-for-profit organisations and – under certain conditions – so- called non-physician dialysis services providers. Investors who want to own MVZs usually choose hospitals as their preferred vehicle. Since 2019, particular local market share restrictions (far below any antitrust threshold) have applied to hospitalowned MVZs rendering dental care services. No other ownership  estrictions apply in the German health and care market.

  3. REIMBURSEMENT OF PUBLIC OR NATIONAL HEALTHCARE SERVICES AND AWARD OF CONTRACTS

  Around 90 percent of the German population are covered by public health insurance (Gesetzliche Krankenversicherung, i.e., the so- called Statutory Health Insurance (SHI system)). To provide medical or other healthcare services to SHI patients, the following requirements must be met:

  • Physicians (or MVZ, see section 2 above) providing outpatient services must be admitted to practice under a certain regulatory regime which only applies to the outpatient sector, i.e., the Zulassungsausschüsse of the Kassenärztliche Vereinigungen (“Admission Boards” of Panel Doctors Associations). In addition to medical qualification a strict needs assessment applies. As most German regions are considered to have an oversupply of physician services, a physician or MVZ aiming at rendering services to SHI patients, usually needs to buy a retiring physician’s practice in order to be eligible to treat SHI patients.
  • Hospitals must be included in the so-called hospital plan of the relevant German federal state in order to be entitled to accept and treat SHI patients.
  • All other care service providers (e.g., nursing care facilities) must enter into care agreements with the SHI funds.

  In most healthcare sectors there are no public procurement proceedings for awarding permissions or entering into agreements with SHI funds. Generally any provider who meets the legal requirements is admitted, yet subject to the same conditions as any other comparable provider in the relevant region. Formal public procurement tenders usually only take place  here there is no free choice of providers, e.g., for certain drugs, such as drugs intended for use in surgeries.

  4. DRUG APPROVALS AND REIMBURSEMENT

  Marketing authorisation for drugs is substantially regulated by EU law. Under certain conditions, drugs may be authorised in a centralised EU procedure handled by the European Medicines Agency (EMA), e.g., orphan drugs and most biologics. The EU marketing authorisation is valid throughout the EU. Drugs can also be authorised by the competent national  authority if the drug is only to be authorised in one member state, or if several EU member states work together to grant authorisations.

  Most marketing authorisations for drugs require preclinical and clinical testing, but there are exemptions to this rule (e.g., bibliographic authorisation). Expedited approval procedures are also available, such as Conditional Approval or the PRIME procedure.

  Like most EU member states, Germany regulates drug distribution and pricing to a certain extent. Pharmacy-only drugs are not allowed to be dispensed outside a licensed pharmacy, prescription-only drugs are subject to a statutory pricing scheme.

  The reimbursement of drugs within SHI and the private insurance system differs to some extent. SHI funds generally only reimburse prescription-only drugs, but there are exceptions to this rule.

  5. DEVICES CERTIFICATION AND REIMBURSEMENT

  Medical devices law in the EU is currently governed by three directives (Medical Devices Directive (MDD), In Vitro Diagnostic Medical Devices Directive (IVDD) and Active Implant Medical Devices Directive (AIMDD) that are not directly applicable in the Member States and that have been transposed into Member States national law. Medical devices do not require a genuine marketing authorisation comparable to drugs in the EU but are subject to a certification procedure. Before being placed on the market, a medical device has to undergo a conformity assessment procedure in order to confirm that it complies with the essential requirements under the MDD. The type of conformity assessment procedure to be used depends on the medical device’s risk class. Medical devices of risk Class I are subject to a basic conformity assessment procedure that does not require the involvement of a notified body. Medical Devices of higher risk classes are required to have aspects certified by a notified body, which is a private entity vested with certain regulatory competencies.

  After successful completion of the conformity assessment, the manufacturer affixes the CE mark to the product. The CE mark entitles the manufacturer to place the product on the market in the CE zone, which currently covers the EEA (the EU plus EFTA-countries Norway, Liechtenstein and Iceland), as well as Turkey and Switzerland.

  In 2017, new EU regulations on medical devices were adopted. The new regime will become applicable on 26 May 2021 (for medical devices – after a postponement of one year due to the COVID-19 pandemic) and on 26 May 2022 (for in vitro diagnostic medical devices), respectively. The new legal framework modifies the risk classification system, resulting in many devices being classified in higher risk classes. Due to this up-classification, but also as a result of increased requirements in the conformity assessment procedure, placing medical devices on the market in the EU will become more difficult. However, as the certification system is maintained and no genuine authorisation procedure is introduced, market clearance of medical devices will continue to be significantly less challenging than placing a drug on the market.

  6. REGULATION OF AI AND SOFTWARE AS A MEDICAL DEVICE

  Medical software is in certain conditions considered a medical device and therefore subject to the requirements of EU medical devices directives and the related Member State laws implementing it.

  Currently, medical software is often classified as medical device of risk Class I and therefore can be certified under the most basic conformity assessment procedure without involvement of a notified body.

  When the MDR becomes applicable on 26 May 2021, many medical software products will be classified in higher risk classes, and therefore, manufacturers of medical software will often need CE certificates issued by notified bodies. The transition provision under the MDR allows for manufacturers of Class I medical devices to benefit from a grace period that enables them to continue to market their products under the conditions of the MDD until 2024.

  7. TELEMEDICINE AND TELECONSULTATION

  For a long time, the German market lagged behind in the teleconsultation sector because of restrictive and/or inconsistent regulations. Physicians and their professional associations were still very reluctant to accept legalisation of telehealth services and/or the use of digital devices.

  Since 2019, this has dramatically changed. Pre-COVID-19, various laws and other regulatory acts were adopted to allow telemedicine services, including physician videoconsultation, and their coverage by private and public payers. Likewise, public licensing of medical apps was anticipated to allow SHI to cover licensed medical apps prescribed by a doctor. Even though the laws were already been adopted in 2019, their implementation sharply accelerated under COVID-19.

  As a consequence of this regulatory change, the number of video-consultations, online prescriptions and other kinds of remote treatment and consultation are rapidly increasing. Correspondingly, restrictions once in place on the advertisement of remote consultation and treatment have to some extent been lifted.

  8. ANTI-KICKBACK RULES AND INCENTIVES TO DOCTORS

  Professional and social security law rules ban kickbacks and incentives to physicians and other healthcare professionals for referrals or prescriptions. Any such incentives are unlawful and from 2016 may be subject to criminal sanctions.

  Cooperation among players in the healthcare sector is not generally prohibited, but has to comply with the requirements of various provisions under public health insurance law, advertising law, professional codes and criminal law. Cooperation agreements between different health providers and public payors are exempt from those rules to encourage cooperation.

  9. MERGER AND FOREIGN INVESTMENT CONTROL

  If a non-EU acquirer obtains at least 25 percent of the voting rights in a German healthcare company, such acquisition is subject to German foreign investment control (FIC). The parties may on a voluntary basis pass through the applicable FIC proceedings in order to obtain deal certainty. In specific cases, where domestic target companies qualify as operators of critical infrastructure, the relevant threshold is 10 percent only and clearance by the Federal Ministry of Economic Affairs and Energy (BMWi) is mandatory, i.e., the acquisition only becomes effective if and when BMWi has cleared the acquisition without conditions.

  In FIC proceedings, BMWi investigates whether and to what extent foreign investments might pose a threat to Germany’s public order or security. If BMWi has concerns in this regard, it may restrict or, in particularly critical cases prohibit foreign investments. Currently, in light of the COVID-19 pandemic, foreign investments in the German healthcare sector are subject to particular scrutiny by the German government.

  10. FORTHCOMING AND ANTICIPATED CHANGES IN HEALTHCARE AND LIFE SCIENCES LAW

  Recently, a law was adopted that restricts the scope of activities of pharmacies that are located outside of Germany and are therefore not bound by the German statutory pricing scheme for drugs. The law is ambiguous in several aspects which will likely trigger related litigation in the near future.

  Further amendments are also expected regarding the German telematics infrastructure, nursing care homes and digital apps for home care services, as well as for use of personal health data for scientific health research purposes.

  Numerous laws have been adopted in the course of the COVID-19 pandemic and will likely be subject to further discussion and amendment. On an EU level, plans are in place to establish a new Health Emergency Response Agency (HERA) in order to facilitate future measures relating to the pandemic.

• Italy: Top 10 List

  1. THE IMPACT OF COVID-19 ON THE PROVISION OF HEALTHCARE AND LIFE SCIENCES

  The COVID-19 emergency has had a deep impact on the healthcare sector in Italy including:

  • Increased use of digitalisation, in particular, the spread of telemedicine and the digitalisation of prescriptions for medicines and services to be supplied and paid for by the National Health Service (NHS).
  • Introduction of certain derogations to the requirements for placing certain medical devices onto the market.
  • Provision of special rules concerning the performance of clinical trials for medicines to be used to treat COVID-19 and all other medicines, in particular aimed at implementing digital services and remote clinical trials.
  • Simplification and acceleration of procurement rules governing the purchase of goods and services, including public healthcare facilities, by public entities.

  2. OWNERSHIP OR EQUIVALENT RESTRICTIONS IN RELATION TO THE PROVISION OF HEALTHCARE SERVICES

  In Italy, there are no specific ownership or equivalent restrictions in relation to the provision of healthcare services.

  Healthcare facilities, including hospitals, may be owned by public or private investors.

  Healthcare facilities must meet specific requirements to be authorised to operate and must fulfil additional conditions to operate within the NHS and treat patients at the NHS’s expense.

  3. REIMBURSEMENT OF PUBLIC OR NATIONAL HEALTHCARE SERVICES AND AWARD OF CONTRACTS

  The Italian healthcare system is mainly public. The NHS was created to provide universal and uniform healthcare coverage to the entire Italian population and it is financed by general taxation. The relevant responsibilities and powers are shared between the central government (the Ministry of Health) and the Italian regions.

  In December each year, the Italian Parliament approves the annual Budget Law (Legge Finanziaria), which determines the amount of financing for the NHS. This health funding is then allocated among the regions, mostly on an age-adjusted capitation basis, which finances the Regional Health System (RHS) of each region. Thanks to this financing system, most healthcare services are provided free of charge to patients, and the regions reimburse the cost to the healthcare facilities. Healthcare facilities that intend to operate within the NHS/RHS must be accredited by the competent Italian region, and must enter into agreements with the local health authorities specifying the terms and conditions of the provision of healthcare services to patients at the RHS’s expense.

  Public healthcare facilities must tender for the procurement of medicines and services. Exceptionally, under certain conditions, direct negotiation of agreements with private parties is also permitted.

  4. DRUG APPROVALS AND REIMBURSEMENT

  No medicines may be placed on the Italian market without a marketing authorisation (MA) from the Italian Medicines Agency (AIFA) or the European Medicines Agency (EMA), according to the centralised procedure provided for by Regulation (EC) No. 726/2004. To receive an MA in Italy, the applicant must be established in the European Union and have an appointed representative in Italy. Under the national MA procedure, the AIFA issues its decision on the authorisation within 210 days of the application being filed (although this period is suspended if additional documents are required). In exceptional circumstances, the authorisation may be granted on the condition that the applicant fulfils additional obligations (often related to the safety of the medicine), which are then assessed annually.

  For certain categories of products, such as certain homeopathic medicines, herbal medicines and follow-on products (generic and biosimilar medicinal products), the authorisation procedure is simplified. For example, if the request for MA concerns a generic version of a reference medicine  hich has been authorised for at least eight years in Italy or the European Union, the applicant is not required to provide the results of the pre-clinical and clinical trials. In the case of biosimilar medicines, the applicant is required to provide the results of preclinical or clinical trials related to the aspects that, for the peculiar characteristics of these products, vary compared to the reference medicine (e.g., raw materials or production processes). The results of other tests contained in the reference medicine’s dossier are not required.

  The MA is valid for five years from its publication in the Official Gazette and can be renewed following a re-evaluation of the risk-benefit balance. After the first renewal, the MA is valid for an unlimited period unless the AIFA/EMA decides, on justified pharmacovigilance grounds, to proceed with one additional five-year renewal. The MA will lose its efficacy if the medicine is not placed on the market within three years of the MA issuance, and if the medicine has not been marketed for three consecutive years (sunset clause).

  Following the issue of the MA, and upon the request of the MA holder, negotiations start with AIFA to assess whether the medicine can be reimbursed by the NHS, and if it can, to set the relevant price. In certain cases, the negotiation procedure may be launched by AIFA. Negotiations between the MA holder and AIFA shall be conducted according to criteria set out by law, which include (inter alia) the added therapeutic value and therapy costs of the new medicine compared to medicines those already distributed for the same indication. The last step to allow a medicine to be supplied at the RHS’s expense is the inclusion of such medicine onto the “Prontuario Terapeutico” of each region.

  5. DEVICES CERTIFICATION AND REIMBURSEMENT

  The placing of medical devices on the market in Italy is permitted only for devices bearing the CE mark. The procedure and requirements for obtaining the CE mark vary depending on the class of the relevant device and are set out in the EU Medical Devices Regulation 2017/745 (MDR), that will become applicable on 26 May 2021 and replace the national legislation implementing the Directive 93/42/EEC.

  In addition, all medical devices to be placed on the Italian market shall be notified to the Ministry of Health and reported in a dedicated register (Banca dati dei dispositivi medici) that is publicly available. Finally, to be purchased by public entities (i.e., at the NHS’s expenses) medical devices must also be included in another register, called the Repertorio generale dei dispositivi medici, governed under Ministerial Decrees 21 December 2009 and 23 December 2013 (for IVDMD).

  There is no statutory reimbursement scheme for medical devices in Italy. Only medical devices purchased by public healthcare facilities (following tender) and provided to patients by  such facilities are re-imbursed by the RHS. To be purchased by public healthcare facilities at the RHS’s expense, medical devices are allocated to certain existing categories of homogeneous products. If they do not fall within existing categories, specific “Health Technology Assessment Procedures” are performed to prove their additional value for patients.

  6. REGULATION OF AI AND SOFTWARE AS A MEDICAL DEVICE

  There are no specific laws in Italy applicable to artificial intelligence. The use of artificial intelligence in healthcare raises many issues, including classification of the relevant application as a medical device, data protection and responsibility issues that are currently regulated according to the general principles of Italian/EU law.

  The MDR, under Rule 11, provides new  classification rules for “software as a medical device”. Under the MDR, software as medical device is generally assigned a higher class of risk.

  In order to provide clarifications and examples to manufacturers, the European Commission’s Medical Devices Coordination Group published new guidance in October 2019 on the qualification and classification of software as a medical device under the MDR.

  7. TELEMEDICINE AND TELECONSULTATION

  Italian law does not specifically regulate telemedicine and teleconsultation.

  In 2012, the Ministry of Health issued the National Guidelines on Telemedicine (endorsed in 2014 by the regions’ representatives), which provides for the main regulatory framework for the provision of such services.

  Moreover, in the last few months several Italian regions have enacted specific resolutions to regulate the requirements and conditions allowing for the provision of certain telemedicine services (especially tele-visits) at the RHS’s expense.

  8. ANTI-KICKBACK RULES AND INCENTIVES TO DOCTORS

  Both the applicable law and the professional codes of conduct of pharmaceutical industry associations forbid kickbacks and incentives to physicians and other healthcare professionals (HCPs). Such actions are subject to criminal sanctions.

  Cooperation between HCPs and pharmaceutical companies is, however, permitted in compliance with applicable legal and ethical regulations.

  The Italian Parliament is discussing a bill which requires pharmaceutical and medical device manufacturers to publicly disclose all payments to, or agreements with, HCPs (called the “Sunshine Act”). However, the legislative procedure has not been finalised to date.

  9. MERGER AND FOREIGN INVESTMENT CONTROL

  Foreign investment control regulations were introduced in Italy for the first time in 2012, and granted the Italian Government authority to impose conditions on, or veto, transactions involving Italian companies carrying out strategic business, regardless of state interest in such business.

  The healthcare sector was drawn into the abovementioned regulations for the first time in 2019, when, “critical infrastructure, whether physical or virtual, including … health” and “critical technologies and dual-use items, including artificial intelligence, robotics, semiconductors, cybersecurity, aerospace, defense, energy storage, quantum and nuclear technologies, as well as nanotechnologies and biotechnologies” were mentioned (via citation of Art. 4, letters a) and b) of EU Regulation 2019/452) amongst sectors subject to foreign investment control.

  Recently, based on certain measures issued during  the COVID-19 outbreak, the foreign investment control regime in the healthcare sector has been further expanded to include Italian target companies operating in the field of manufacturing, import, and wholesale distribution of medical, medical-surgical, and individual protection devices.

  In Italy, the control of the concentration of undertakings for competition purposes is enforced by the Italian Competition Authority (Autorità Garante della Concorrenza e del Mercato) according to Law no. 287/1990. In particular, a proposed concentration of undertakings must be notified to the ICA prior to its implementation if certain thresholds concerning the annual turnover achieved in Italy are exceeded by the undertakings concerned in the transaction.

  10. FORTHCOMING AND ANTICIPATED CHANGES IN HEALTHCARE AND LIFE SCIENCES LAW

  Recent changes in policy and legislation that may affect investments in the healthcare and life sciences sectors focus on the following areas:

  • Negotiation of medicine prices. The Ministry of Health set out new criteria for the price negotiation between MA holders and AIFA on 1 August 2019. This was published in the Italian Official Gazette and became applicable on 24 July 2020, replacing the previous regulation.
  • Introduction of the payback mechanism in the medical devices sector. The payback is a mechanism applied by Italian law requiring companies to refund to the NHS certain sums proportional to the quantity of products sold to the NHS. In 2015, this mechanism, (originally concerned with pharmaceutical products only), was extended to medical devices, but  it has not yet been applied, because certain implementing measures are still outstanding. Last year, some of these measures were taken and the application of the payback mechanism to the medical devices sector is expected in the near future.
• United Kingdom: Top 10 List

  1. THE IMPACT OF COVID-19 ON THE PROVISION OF HEALTHCARE AND LIFE SCIENCES

  The pandemic has affected all aspects of the UK healthcare system including:

  • Adoption of technology at an accelerated rate, including greater use of telemedicine, precipitating a fall in the number of face-to-face appointments and a rise in appointments  conducted remotely by telephone, email and video.
  • The introduction of a fast-track certification and authorisation process for medical devices and medicines accelerating the route to market for manufacturers and distributors. A new regulatory framework came into force on 1 January 2021 following the conclusion of the EU-UK Trade and Cooperation Agreement with respect to the UK’s withdrawal from the EU (Brexit).
  • A reduction in levels of elective care, cancer care and levels of non-COVID-related diagnosis and care throughout the pandemic.
  • During the initial pandemic phase, the public sector purchasing capacity from across private sector hospitals.
  • Rapid re-purposing of large non-healthcare venues to provide additional capacity, although new venues have, so far, seen limited use.
  • An impact on clinical trials and possible delay to development of other medicines.
  • Urgent authorisation of vaccines and the implementation of a mass vaccine roll-out programme.
  • The adoption of urgent/emergency procurement procedures to ensure rapid letting of contracts to source essential supplies and equipment (for example, to source PPE for the medical workforce).

  2. OWNERSHIP OR EQUIVALENT RESTRICTIONS IN RELATION TO THE PROVISION OF HEALTHCARE SERVICES

  There are limited barriers to the ownership and/or operation of private healthcare facilities in England. Any provider is able to operate healthcare facilities if the provider is registered with the Care Quality Commission (CQC) and holds relevant registrations.

  Most NHS contracts may be awarded to and/or held by any provider, and current rules prevent discrimination on the basis of ownership.

  There are, however, some restrictions on the entities and persons that may hold NHS primary care contracts. Under legislation, certain of these contracts may only be held by general practitioners or other healthcare professionals (or by companies wholly owned by these individuals). In addition, for certain elective and other services, patients are entitled to choose providers that are authorised to provide these services by commissioners (“patient choice”).

  3. REIMBURSEMENT OF PUBLIC OR NATIONAL HEALTHCARE SERVICES AND AWARD OF CONTRACTS

  The United Kingdom’s national healthcare system is the NHS. The NHS is funded through general taxation, and healthcare is provided free at the point of use and without co-payment. Privately purchased healthcare (through insurance or self-paying patients) accounts for about 11 per cent of the market.

  The NHS marketplace is underpinned by legislation, with national and local payor bodies (NHS England and clinical commissioning groups) which commission and contract for healthcare services.

  All NHS contracts are currently subject to EU, UK and NHS procurement rules, which require that contracts are subject to a tendering regime. Changes are proposed to procurement rules following Brexit and the UK government is currently consulting on changes to the procurement regime.

  In practice, many contracts held by NHS hospitals are not tendered. Private providers commonly provide non-urgent and non-emergency care including elective, mental health, dental, primary care, diagnostics, pharmacy and community services contracts.

  In general, NHS services are reimbursed at rates set out in a statutory mechanism known as the NHS tariff, although the NHS tariff allows for local modifications and variations, which have been used more frequently in recent years including in relation to NHS systemwide payments. Under the NHS constitution, patients may exercise “patient choice” when choosing a provider for elective services provided that the “choice” provider meets commissioner standards for those services.

  The NHS Long Term Plan proposes changes in NHS law. It is anticipated that in 2021 the government will introduce legislation that may affect the structure of NHS bodies and the future NHS market place.

  4. DRUG APPROVALS AND REIMBURSEMENT

  Marketing authorisation for drugs is substantially regulated by UK law. Prior to Brexit, the procedure for marketing authorisations was regulated by both EU and UK law. As a consequence of Brexit, a separate marketing authorisation is required in the UK. As part of the UK’s post Brexit regulatory system, community marketing authorisations will be converted to UK marketing authorisations and there are transitional provisions allowing (inter alia) the UK to authorise medicines on a fast track process in reliance upon decisions of the European Medicines Agency (EMA). The EU-UK Trade and Co-operation Agreement includes certain co-operation and facilitation arrangements with respect to medicinal products.

  The NHS is the largest purchaser of drugs in the United Kingdom. A range of policies and statutory mechanisms regulate the prices payable by the NHS for drugs. There is no statutory regime for the drug prices payable by private providers.

  For branded medicines, the main mechanism for pricing drugs and controlling medicines spend is a voluntary scheme known as the Pharmaceutical Price Regulation Scheme (PPRS). The PPRS sets out permitted growth of the NHS branded medicines spend (set at two percent per year for the period 2019 to 2023). The scheme requires the industry to make rebate payments if NHS expenditure exceeds the permitted growth. Any company that is not a member of the PPRS is automatically subject to statutory regulations (the Statutory Scheme)  under which the Department of Health and Social Care (DHSC) may limit prices and profits of NHS medicines. In practice, most large companies participate in the PPRS. Generic (unbranded, out-of-patent medicines) are covered by the Drug Tariff (produced by an executive arm of the DHSC).

  New medicines and technologies are assessed by the National Institute for Health and Care Excellence (NICE) on the basis of clinical and economic evidence. While NICE’s role is to make availability decisions, in practice it also influences product prices through cost effectiveness thresholds. The NHS is legally obliged to fund and resource medicines and treatments recommended by NICE. If NICE is unlikely to recommend a drug for use, then drug prices and access to the market may be agreed with NHS England (as part of a patient access scheme or commercial agreement).

  5. DEVICES CERTIFICATION AND REIMBURSEMENT

  From 1 January 2021 and following Brexit, the Medicines and Healthcare Products Regulatory Agency (MHRA) will be the regulator of medical devices in the United Kingdom and will undertake responsibilities currently managed through the EU system, including vigilance reporting. For a transitional period (up until 30 June 2023), CE marking will continue to be recognised in the United Kingdom and certificates issued by EU notified bodies will continue to be valid. In addition, there will be a new certification route from 1 January 2021 (known as UK Conformity Assessed marking). In the United Kingdom, there are proposed legislative changes to the medicines and medical devices regulatory framework through the Medicines and Medical Devices Bill.

  There is no statutory reimbursement scheme for medical devices in the United Kingdom. Medical devices purchased by NHS providers are subject to procurement law. The NHS operates a centralised procurement and purchasing system for medical devices and other supplies to NHS providers. NHS providers are reimbursed for health services they provide through the NHS tariff. The NHS tariff includes the cost of most medical devices although in certain cases, high cost devices are excluded from the NHS tariff and reimbursed separately. As with medicines (see section 4 above), NICE appraises certain devices which meet its criteria and evaluates clinical effectiveness and budget impact. NHS commissioners are legally obliged to fund treatments which are recommended by NICE.

  Separately, the CQC regulates all healthcare, including online healthcare and telemedicine (to the extent this is not software as a medical device).

  6. REGULATION OF AI AND SOFTWARE AS A MEDICAL DEVICE

  The MHRA regulates medical technology software and artificial intelligence (AI) tools as medical devices under medical device legislation. Online software tools, such as symptom checkers, are typically regulated as Class I medical devices. However, if the device allows for diagnosis, it may be a Class II medical device or higher. If the software is only a reference or decision support tool, and the healthcare professional is required to use his or her own knowledge for the care, the tool may not be a device.

  In the European Union, the Medical Device Regulation 2017 (which comes into force on 26 May 2021) will change certain classifications for medical devices. In the United Kingdom, there are proposed legislative changes to the medicines and medical devices regulatory framework through the Medicines and Medical Devices Bill. In addition, software provided to NHS organisations must also meet certain mandatory standards published by NHS Digital.

  In 2019 and 2020, the DHSC published various guidance and codes of practice in relation to AI and digital health services which set out principles and expectations for the use and purchase of AI in healthcare in the United Kingdom. It also sets out principles in relation to the use of and access to data.

  7. TELEMEDICINE AND TELECONSULTATION

  Telemedicine and teleconsultation, including remote, online and digital health services (which are not medical devices) located in England, are regulated by the CQC and providers of these services must register with the CQC. Services are assessed through investigations and other regulatory interventions to check that they are safe, effective, caring, responsive and well-led.

  8. ANTI-KICKBACK RULES AND INCENTIVES TO DOCTORS

  In the United Kingdom, financial relationships between pharmaceutical companies and healthcare professionals are governed by the Human Medicines Regulations and related  uidance, which prohibit the use of inducements in connection with the promotion of medicinal products to healthcare professionals. The legislation is supplemented by the UK regulatory guidance published by the MHRA and industry codes which set out detailed guidance about payments to healthcare professionals.

  Professional rules (for example, issued by the General Medical Council) also prohibit doctors from accepting any inducement or gift that may affect or be seen to affect the way the doctor treats patients.

  Bribery legislation also applies to payments to doctors and other healthcare professionals.

  There are currently no legislative requirements to disclose financial relationships with healthcare professionals, although there are disclosure obligations in medicine and medical device codes of practice. NHS contracts and guidance include an obligation to disclose and publish all financial interests, including gifts and hospitality received by staff.

  A Competition and Markets Authority Order also sets out rules about certain payments and share-ownership by doctors in relation to private patient services where such payments and interests may operate as incentive arrangements to influence referrals and care.

  9. MERGER AND FOREIGN INVESTMENT CONTROL

  The Competition and Markets Authority oversees merger control in the United Kingdom. From 1 January 2021, the CMA has jurisdiction to review the effects of certain mergers previously reviewed by the European Commission, although certain transitional provisions will apply.

  The United Kingdom presently operates a generally liberal approach to foreign investment. The UK government has some powers to intervene under merger controls in relation to mergers that are against the public interest for national security reasons. This power has been exercised on rare occasions and never in relation to healthcare.

  Recent developments, however, suggest that there will be increasing intervention from government. On 23 June 2020, in response to COVID-19, the government introduced a new public interest ground on which it can intervene in mergers in order to maintain the United Kingdom’s capability to combat and mitigate public health emergencies. Furthermore, a draft National Security and Investment bill was recently put before parliament and is expected to establish a new mandatory foreign direct investment regime for the United Kingdom. The bill has a focus on particular industry sectors, including: advanced robotics, AI, critical suppliers to government, critical suppliers to emergency services and engineering biology. Should it  ecome law, this is likely to have an impact on certain healthcare and life sciences investments in the United Kingdom.

  10. FORTHCOMING AND ANTICIPATED CHANGES IN HEALTHCARE AND LIFE SCIENCES LAW

  The NHS Long Term Plan and consultation documents published in 2019 set out certain proposals for legislative change to the NHS. The proposals included changes to procurement and competition rules and provided for certain structural changes to the NHS. The adoption of the proposals is subject to the full legislative process and parliamentary approval, and it is not clear if or when the proposals will be implemented.

  Changes in law, including some mentioned above, will arise as a consequence of the United Kingdom formally leaving the European Union following the end of the Brexit transition period.