20 Years of Swiss life sciences - a look into the past and the future

The two Swissmedic alumnis Andreas Balsiger Betts, former general counsel of Swissmedic and Eva von Mühlenen, former deputy head of the Legal Advice Department of the agency - now both senior advisor and advisor in Sidley’s Geneva office - look back at the developments in the Swiss life sciences sector since 2002 and look at current and future megatrends - highlighting, in particular, the growth of digital health - that will shape this industry in the next decade and how the regulatory challenges that can be expected can be navigated.

2002

It just so happens that this year we are not only celebrating the 20th anniversary of the Sidley Geneva office with its Life Sciences Practice - but that twenty years ago, various significant milestones in the Swiss life sciences regulatory history took place.  

Swissmedic and Swiss regulation of therapeutic products

On 1 January 2002, Swissmedic, the Swiss Agency for Therapeutic Products, was established by a merger between the Intercantonal Office for the Control of Medicines (IOCM) with the Therapeutic Products Section of the Federal Office of Public Health (FOPH). On the same date, the first federal law regulating this sector, the Act on Medicinal Products and Medical Devices (Therapeutic Products Act, TPA) and the associated ordinances entered into force.  

Swiss/EU relationship

In the same year, on 1 June 2002, a Mutual Recognition Agreement (MRA) between the Swiss Confederation and the European Community (now the European Union, EU) became applicable which allowed for the mutual recognition in relation to conformity assessments in twenty industry sectors, including medical devices, thus creating a common EU/Swiss market for medical devices. At the time no one would have guessed that the EU Commission, 19 years later, from one day to another, would unilaterally declare the MRA no longer applicable to medical devices.[1] To the contrary, at the turn of the century, the Swiss Federal Council[2] and the industry expected that the TPA would only be a first step to a Swiss/EU bilateral agreement on pharmaceuticals that was perceived to be on the horizon – but, in the end, proved to have been a fata morgana.

Paper galore

For more than 15 years, applications had to be submitted to Swissmedic in paper (and in two copies). This meant that an application for a marketing authorisation for a medicinal product with a new active ingredient, comprising 2000 to 3000 binders, had to be delivered by several trucks. And it also led to Swissmedic’s archives to have shelves of more than 35 kilometers - or half the volume of the Swiss Federal Archives at the time.

2022 and Beyond

Goodbye paper 

Tying in with the paper: In 2015, Swissmedic started to accept applications for establishment licenses and marketing authorisation in electronic form – either in eCTD format or in pdf. Over the years, an application portal was set up and today, the electronic application is the normal way. Swissmedic was the first Swiss authority to enable full electronic submission of applications via its own eGovernment portal.  In the future, applications will increasingly be submitted via cross-agency platforms, and Swissmedic does well to engage in collaborative approval processes like Project Orbis and the Access Consortium.

Revision of Swiss regulation on therapeutic products

In 2019, a comprehensive revision of the Swiss regulation of medicinal products became applicable. In this revision, the Swiss Federal Council, but mostly the Swiss Parliament during its debates on the draft of the revision, deviated from the intention of the legislator issuing the initial TPA, i.e. the objective to streamline the Swiss regulation to the EU regulation on human medicinal products, not least in view of a possible bilateral agreement on the mutual recognition of Good Manufacturing and Distribution Practices as well as marketing authorisations. The revised TPA not only contains several provisions allowing a unilateral, albeit only partial, reliance of Swissmedic on marketing authorisations issued in the EU/EEC, it also excludes the concept of marketing exclusivity rights and, most importantly, grants regulatory protection rights that go beyond their EU analogons.

Swiss/EU ice age: medical devices as the first victim

As mentioned above, there has been a rift in the relations between Switzerland and the EU. This is mostly due to fundamental differences between the two parties in agreeing on a bilateral treaty on an institutional framework (Institutional Frameworks Agreement, IFA) governing the plethora of bilateral agreements signed between the EU and Switzerland. The negotiations for the IFA took more than four years, but in May 2021, the Swiss Federal Council declared that Switzerland was neither willing to sign the initialed treaty nor to continue negotiations for a modified IFA.

The consequence of this step by the Swiss was the refusal of the EU to adapt any of the bilateral agreements, much less negotiate new agreements, as long as the institutional questions were not resolved.

The first victim of this development was the MRA on medical devices. The EU Commission’s Notice to Stakeholders of 26 May 2021 put a factual end[3] to the common EU/Swiss market for medical devices.

This exclusion poses a challenge for Switzerland, whose consequences still seem not to have been fully realised by politics and part of the markets (notably by hospitals and other users of medical devices) on either side of the border. Due to its small size, often the Swiss market is simply not attractive enough for ex-Swiss manufacturers. A threatening shortage of important medical products on the Swiss market is to be expected. This fear of future shortages of essential products recently led to interventions in the Swiss Parliament, requesting that the Swiss Federal Council adapts the Swiss regulation on medical devices to allow the Swiss recognition of marketing authorisations for medical devices issued by regulatory bodies outside of the EU/EEC.[4] This would be a first step to facilitate market access - as nothing less than the adequate supply of the Swiss market with innovative medical devices is at stake. 

Digitalisation: opportunities and challenges of new technologies

The EU is striding ahead with seven league boots with its digital strategy. Through the European Health Data Space(EHDS), electronic health records (EHR) are to be made available and a broad ecosystem of European health data is to be created. This wealth of data is to form the necessary basis for the application of artificial intelligence (AI)/ machine learning (ML) - based systems. Inter alia, clinical decision support software (CDS) will be taken to a next level. CDS are computer based tools which combine general medical information databases and algorithms with patient-specific data. They are intended to provide healthcare professionals and/or users with recommendations for diagnosis, prognosis, monitoring and treatment of individual patients (see p. 19, MDCG 2019-11 Guidance on Qualification and Classification of Software in Regulation (EU) 2017/745 – MDR and Regulation (EU) 2017/746 – IVDR).  Now, not only will they be able to act on medical guidelines as before, but, augmented by AI, they will also be able to assist medical professionals by leveraging a wealth of medical expertise and an overwhelming amount of patient data.

How will Switzerland position itself in this new regulatory and technological landscape? Has the time come to leave the previous principle of the Swiss legislator of voluntary alignment to EU Regulations, using the newly "won" freedom for innovative and independent regulations? The example of Germany shows that innovative regulations may, e.g., simplify the reimbursement of digital health apps and thus support the digital transformation from a regulatory perspective (see our article on fast-track reimbursement of medical apps in Germany: Germany’s “DiGA” Digital Health Fast Track Process Is Modeling a New Way To Regulate Market Access and Reimbursement). In the near future, these digital health apps and also interconnected medical devices will be able to feed data directly into the German EHR-system.

Will Switzerland be able to keep pace with a harmonised digitalisation in Europe? Will the lack of access to linked European health data be a non-compensable disadvantage? And will regulators be able to keep up with the digitalisation of frauds? With new technologies will come new forms of fraud. Looking across the pond, we can only guess at the new forms of fraud that digitalisation will bring. A recent $145 million settlement in the US concerned a CDS that was integrated within EHR systems and abusively drove up opioid prescriptions in return for kickbacks from a pharmaceutical company. 

Traditionally, the medical devices industry has developed mechanical products – but as it is now moving more and more in the direction of medicine technology and digital products or software there is no need to discuss the necessity of a new adequate regulatory framework. With the current evolving flood of EU regulations in the digital field, medical devices manufacturers are confronted with many and often overlapping regulations. By way of example, the proposed EU AI Act adopts - as horizontal regulation - the procedural instruments of the sectoral regulation of the MDR, which inevitably leads to an overlapping of the procedural requirements (e.g., conformity assessment, technical documentation, etc.). It is vital to reconcile these overlaps.

Despite these regulatory challenges for medtech companies - current developments in the US clearly demonstrate the fundamental impact that trust-building regulations can have on the adoption of new technologies.  As demanding as compliance with the requirements of the GDPR is, it ensures the protection of personal data and thus the uptake of technologies. What woman in the US is still going to use menstrual tracking systems if she has to be afraid, that such data could be subpoenaed by the courts of anti-abortion states or simply bought by the police from data brokers? 

Switzerland’s digital health sector is flourishing and transitional governmental measures as the Swiss Accelerator of the Swiss Innovation Agency, Innosuisse seek to compensate for Switzerland's exclusion from the EU's Horizon Europe framework program.  However, a recent study found that “despite the hundreds of digital health companies targeting the myriad of needs across the care continuum, clinical robustness remains low across much of the sector”. The Swiss Medtech industry, and in particular the startup sector, should therefore monitor and embrace the emerging and evolving frameworks as a pillar of trust in digital tools and thus drive compliant developments with and for the benefit of the patients.

[1] Notice to Stakeholders: Status of the EU-Switzerland Mutual Recognition Agreement (MRA) for medical devices (https://health.ec.europa.eu/latest-updates/notice-stakeholders-status-eu-switzerland-mutual-recognition-agreement-mra-medical-devices-2021-05-26_en).

[2] See Swiss Federal Council’s Dispatch on the draft TPA, BBl 1999 3463.

[3] As dubitable as the legal grounds for the Notice to Stakeholders are; see: Maarten Meulenbelt, Nicolas J.S. Lockhart, Deepak Raju, Andreas Balsiger Betts, “Swiss access to EU market - protected by law, endangered by politics?” Life Science Recht - Journal No. 4/2021, 4 November 2021, p. 245 ss.; and Memorandum of 2 July 2021 by Sidley Austin LLP on behalf of Medtech Europe “EU/EEA Market Access for “Swiss Legacy Devices”

Post Abandonment of Swiss-EU MRA (https://www.medtecheurope.org/resource-library/eu-eea-market-access-for-swiss-legacy-devices-following-entry-into-application-of-the-mdr/).

[4] Motion Albert Rösti, MP, “Approval of medical devices according to non-European

regulatory systems” (https://www.parlament.ch/en/ratsbetrieb/amtliches-bulletin/amtliches-bulletin-die-verhandlungen?SubjectId=56940).