Briefing: The EU Japan EPA and the European medical device market

Transcription

1 Briefing: The EU Japan EPA and the European medical device market In 2017 the EU and Japan signed the EU-Japan Economic Partnership Agreement. This trade agreement, which is expected to become effective in 2019, will create export opportunities for medical device and IVD manufacturers. With a value of over 100bn. the European medical device market represents 30% of the world market. Europe has a single CE mark regulatory system, but with 28 different national-based health systems finding the right market access and commercial partners requires time, energy and expert advice. This briefing paper provides a short introduction to the European market. Background - The EU and The EU-Japan Economic Partnership Agreement The European Union (EU) is a political and economic union of 28 member states. It has an estimated population of over 510 million and has developed an internal market through a standardised system of laws that apply in all member states. EU policies aim to ensure the free movement of people, goods, services and capital within the internal market and maintain common policies on trade. A monetary union came into force in 2002 and 19 EU member states use the Euro currency. The legal requirement to place a medical device on the market is the CE mark, which applies to all countries within the EU. Japan is the EU's second biggest trading partner in Asia after China and between them the EU and Japan account for more than one-third of the world's GDP. Imports from Japan to the EU are mainly of machinery, motor vehicles, optical and medical instruments, and chemicals, with similar products - plus pharmaceuticals - flowing from EU to Japan. The aim of the EU- Japan Economic Partnership Agreement/Free Trade Agreement (EPA/FTA) is to promote trade and investment by eliminating tariffs and harmonising legislation. This is intended to bolster economic growth, create employment and strengthen business competitiveness. At the EU-Japan summit in July 2017 a political agreement on the main principles of the EU- Japan Economic Partnership Agreement (EPA) was announced. The agreement is expected to become effective in early 2019 and it is estimated that the value of Japanese exports to the EU could increase by up to 30%. The main industry sector to gain is expected to be computers and electronics. EU exports to Japan are expected to increase by almost 50 % if the cost of non-tariff barriers (NTBs) in Japan are reduced to the maximum proposed. The industry sectors most likely to benefit are expected to be chemicals (including pharmaceuticals), followed by motor vehicles and medical equipment. November

2 For medical devices, the most important driver to improve trade opportunities in recent years was a non-tariff measure (NTM), when Japan adopted the international standard on quality systems in November This is the same system on which the EU Quality Management System (QMS) is based and will help reduce the costs of certification for exported medical devices. Medical Device Regulations and Certification Before medical devices can be sold to any countries within the European Union (EU) the manufacturer must first satisfy the requirements for CE Marking. This is a conformity mark that signifies a product has met all criteria of the relevant EU directives, especially in the areas of safety and performance. This is the single regulatory requirement for selling a medical device within all EU countries. In May 2017, after a 5-year review process, the final text of the new European Medical Devices Regulation (MDR) covering the approval for sale of medical devices and in vitro diagnostic products was published in the Official Journal of the European Union. This new MDR replaced the Medical Devices Directive (93/42/EEC) and Active Implantable Medical Devices Directive (90/385/EEC) and has a transition period of three years. Manufacturers have to update their technical documentation and processes to meet the new requirements during this transition period. This new regulation brings in more scrutiny of technical documentation and addresses concerns over the assessment of product safety and performance. There are stricter requirements on clinical evaluation and post-market clinical follow-up, as well as improved requirements for traceability of devices throughout the supply chain. There are 5 main steps to be completed to get CE mark approval: 1/ Categorise your product into a class. Classification is based on levels of risk and this increases from I, IIa, IIb, III for medical devices and List A or B for IVD. Other directives may also apply, for example for human blood products or devices with electrical elements. 2/ The product must demonstrate compliance with the essential requirements: appropriate for intended use safety acceptable risk versus benefit effect of transport and/or storage labelling and other device-specific requirements 3/ The technical documentation (technical file) must demonstrate the conformity of the product to criteria and standards. This can include: product description/specifications November

3 manufacturing information risk management design verification and test reports clinical evaluations labelling 4/ Conformity Assessment The assessment route taken for CE mark will depend on the classification of the medical device (I, II, III) or IVD (A or B list). The choice of classification determines the scope and level of complexity of the assessment route, which is why correct classification is so important. Assessment will involve some or all of: full quality assurance system type/design examination European Commission (EC) verification QA system for production QA system for product (not applicable for IVD and AIMD devices) declaration of conformity batch release (IVD-specific) 5/ Declaration of conformity In this final step the manufacturer affirms that the product meets all the essential requirements, has completed the required conformity assessment and is designed, manufactured and tested in accordance with the technical documentation. Health Systems in Europe Healthcare in European countries is provided through a wide range of different systems operating at the national level. In general, the healthcare systems are publically funded through taxation (universal healthcare system). Private funding may represent a personal contribution toward meeting the non-taxpayer funded portion of healthcare costs. This portion may be paid directly by the patient or through some form of personal or employerfunded insurance. There are a variety of schemes for universal health insurance in Europe and most countries fall somewhere in or between the three outlined below: 1/ The government takes responsibility for health insurance and provision of care by employing doctors and running hospitals. This is the system used in the UK, Italy, Spain and Sweden. Everyone is enrolled in a national government-run system and most care is paid for by the government. Private insurers and private hospitals operate alongside the state system and offer healthcare to those individual who are able and wish to pay. November

4 2/ The government provides universal health insurance but leaves provision of care to the private sector. This is the system used in France. Doctors are mostly private/self-employed, but the basic insurance schemes that provide universal coverage are government funded. Most French people top up their state health cover with private insurance (the mutuelle ). 3/ The government leaves insurance and care to the private sector and uses regulation, government subsidies and an individual purchase mandate to ensure everyone is covered. This is the system used in the Netherlands and Switzerland. Health insurance and hospitals are private, but coverage is universal because citizens are legally obliged to purchase insurance. This ensures healthy people stay in the system and helps keep insurance costs down. In Germany, the system falls somewhere between schemes 2 and 3. Most citizens are covered by government-regulated insurance schemes, but those earning above a certain threshold can choose to opt out of the state scheme and buy private health insurance. European Medical Device Market The EU medical device market is growing at about 4% per year. The market encompasses technologies from sticking plasters and wheel chairs through to pacemakers and replacement joints. Life expectancy in EU countries is improving and life expectancy at birth in EU countries has increased by over 6 years since 1980, reaching 79 years in At the same time, healthcare expenditure has also risen and in 2010 EU countries spent on average 9.0% of their GDP on health. Across the EU, health spending per capita increased by 4.6% per year in real terms between 2000 and 2009, followed by a slight fall of 0.6% in In common with all developed markets the aging population and increasing incidence of chronic conditions, such as obesity and diabetes, is putting pressure on Europe s healthcare systems. By 2030, over 25% of the European population will be aged over 60 years. Countries are increasingly finding ways to reduce the length of hospital stays by, for example, increasing the use of day care and minimally invasive surgical procedures, whilst providing an increasing quantity and more complex health care procedures at home. Hospital systems use diagnostic related groups (DRG) to establish national tariffs for procedures and administer funding. It may be very important, especially for innovative devices, that they fit into a DRG category, in order for them to become utilised in a hospital system. November

5 In the same way a product, which has significant usage in the home care sector, will need approval by the reimbursement system in order to be prescribed for patients at home. Reimbursement systems (for example the UK Drug Tariff and the French LPPR) differ in the range of products included, the reimbursement level for those products and the information required for registration and approval. The most important European markets for medical devices and in vitro diagnostics are: population (million) share EU medical device market 1 share EU in in vitro diagnostic market 1 Germany 82 28% 21% France 67 15% 13% UK 65 13% 8% Italy 60 10% 16% Spain 46 6% 9% Netherlands 17 4% 3% Switzerland 8 4% 3% Belgium 11 3% 3% Austria 8 2% 2% Others % 22% ( data www. medtecheurope.org) Useful contacts Eucomed represents the medical technology industry in Europe. Members include both national and pan-european trade and product associations as well as medical technology manufacturers. Medica is the largest medical device exhibition in Europe and takes place in Dusseldorf, Germany in November each year. About ConAlliance ConAlliance is one of the leading healthcare sector Merger, Acquisition and Strategy advisory firms with expertise in market entry strategies for innovative technologies. ConAlliance UK concentrates solely on the global healthcare industry, with particular focus on the Japanese and European markets. We cover all of the major sectors, including: medical November

6 devices, pharmaceuticals, IVD, nursing and hospital services and service companies to the healthcare industry. ConAlliance is a blend of specialist M&A advisors and industry specialists, providing our clients with an in-depth knowledge and a network of healthcare business leaders at the highest level, using our knowledge to deliver the highest value for our clients. The European headquarters in Munich, Germany is responsible for German speaking markets. From its London office ConAlliance UK focuses on the Japanese and European markets. Mr Tom Hayashida-san, is our local representative in Japan, and has an in-depth knowledge of the Japanese healthcare market. Tom-san is based in Tokyo, and has been very active in developing our footprint in Japan. We are primarily focused on companies actively searching for acquisitions or in identifying technology that is appropriate for the Japanese market. Our clients include blue chip organisations and smaller technology orientated companies looking to place their technology with a strategic partner. We operate to maximize the value of any transaction for our client whilst maintaining discretion, high levels of commitment and no conflicts of interest. More information at: For regular news and updates sign up to our blog at: If you would like to discuss opportunities in Europe or Japan, please contact: Cliff Murphy, Managing Partner ConAlliance UK Ltd. c.murphy@conalliance.com, +44 (0) November