Procedural fairness and the Penalties Regulation: R(Roche) v Secretary of State for Health
This is the second report covering Monckton Chambers' seminar last Wednesday (see previous report on the Lundbeck decision here).
The latter part of the presentation covered recent cases on medicines regulation, focussing on R(Roche Registration Ltd) v Secretary of State for Health [2015] EWCA Civ 1311 (although this English Court of Appeal decision was handed down on 21 December 2015, it may have escaped your radar due to seasonal festivities and/or the mad rush to tie up loose ends before the Christmas vacation...) The judgment considered issues of procedural fairness in the context of Commission Regulation EC No 658/2007 concerning financial penalties for infringement of certain obligations in connection with marketing authorisations (known as the Penalties Regulation) - the first case where the Penalties Regulation has been addressed by the English Courts.
Context
The Penalties Regulation provides for penalties for breach of certain requirements, including pharmacovigilance obligations. For readers not familiar with the term, pharmacovigilance can be described as the ongoing monitoring and reporting obligations of pharmaceutical companies concerning the detection, assessment, and prevention of adverse effects or any other drug related problem. It addresses product safety and efficacy concerns for public safety and health purposes.The Penalties Regulation allows the Commission to impose substantial fines of up to 5% of EU turnover of the MA holder, provided that there is an intentional or negligent infringement.
During the course of routine inspections in 2012 by the Medicines & Healthcare products and Regulatory Agency (the MHRA - the UK regulator), certain 'critical' pharmacovigilance issues were identified at Roche. The MHRA decided that there should be no criminal investigation in the UK, but the European Medicines Agency (the EMA) informed Roche that it was being investigated under the Penalties Regulation. In 2013, the EMA asked the MHRA to reinspect facilities at Roche in the UK and at its subsidiary, Genentech Inc., in the US. Roche was informed that the scope of this inspection was to assess whether it was implementing the correction plan to address the deficiencies identified during the 2012 inspection. The EMA also asked the MHRA for information under Article 8(3) of the Penalties Regulation, which provides that the agency may ask any natural or legal persons to provide information relating to an alleged infringement. Roche was not specifically informed of this Article 8(3) request. The MHRA reinspected Roche, and information concerning that inspection was passed to the EMA.
Public law proceedings
Roche brought public law proceedings seeking declaratory relief, articulating its legal case on the basis that: (i) the MHRA had acted outside the scope of its powers (ultra vires) by responding to the EMA's request, because Article 8(3) did not cover a reference from the EMA to the MHRA - instead, such a request should have been made under Article 8(2) which explicitly refers to requests made by the EMA to national competent authorities; (ii) the MHRA had breached common law requirements of procedural fairness by not properly explaining to Roche at the time of the 2013 reinspection that material would be passed on to the EMA for potential use in a quasi-criminal investigation; and (iii) the material which the MHRA had passed to the EMA contained a number of fundamental errors of law - namely (a) the MHRA had wrongly assumed that Roche was responsible for a default by its subsidiary company, and (b) the Commission's 'initiation notice' provided to Roche in 2012 referred to standards that had not come into force until later.
Judgment
Sales LJ was unsympathetic to Roche's position. On the first point, there was no reason why the EMA could not make a request to the MHRA under Article 8(3) - the language was clear enough to cover natural and legal persons of any kind, including national competent authorities. Secondly, in terms of procedural fairness, Article 18(2)(c) of the Penalties Regulation makes clear that information regarding the approach of a MA holder to an inspection or reinspection will be relevant information to which the EMA is highly likely to have regard for the purpose of carrying out its functions under that regulation. Roche was therefore on fair notice of the potential for use of information from the 2013 reinspection in the infringement investigation without the MHRA needing to say anything more. Roche pointed out that it did not have any lawyers present during the reinspection, but the Court of Appeal noted that it did have two attendees present who were experienced in pharmacovigilance matters. Furthermore, Roche was a sophisticated and informed client. Thirdly, in relation to the alleged fundamental errors of law, the Court of Appeal refused to grant a negative declaration or refer the issue to the CJEU for interpretation. The views of the MHRA were advisory in this context, and were not binding on the EMA. Essentially, the information that formed the subject of Roche's complaint simply consisted of communication between two public agencies. A request to the CJEU would be premature. It would be open to Roche to raise these arguments in the context of an investigation under the Penalties Regulation, and a CJEU reference at this earlier stage would not be helpful.
This case demonstrates the reluctance of the English Courts to read additional procedural fairness into European regulation which already contains certain procedural protections. Arden LJ summed up her concerns with the following observation: "When the framers of the Penalties Regulation formulated the scheme of procedural guarantees as they did, they may well have had in mind a wide range of considerations that are not known to us. Moreover, that point reinforces the conclusion that the question of whether the law should imply any procedural guarantees into the Penalties Regulation, in addition to those expressly given, should primarily be a matter for the courts of the European Union. In those circumstances, this Court should not lightly find a breach of the common law duty of fairness (by the failure to give notice before inspecting the premises and records of Roche) which would in effect introduce restrictions on what the EMA or MHRA could do under the Penalties Regulation. "
The latter part of the presentation covered recent cases on medicines regulation, focussing on R(Roche Registration Ltd) v Secretary of State for Health [2015] EWCA Civ 1311 (although this English Court of Appeal decision was handed down on 21 December 2015, it may have escaped your radar due to seasonal festivities and/or the mad rush to tie up loose ends before the Christmas vacation...) The judgment considered issues of procedural fairness in the context of Commission Regulation EC No 658/2007 concerning financial penalties for infringement of certain obligations in connection with marketing authorisations (known as the Penalties Regulation) - the first case where the Penalties Regulation has been addressed by the English Courts.
The Penalties Regulation provides for penalties for breach of certain requirements, including pharmacovigilance obligations. For readers not familiar with the term, pharmacovigilance can be described as the ongoing monitoring and reporting obligations of pharmaceutical companies concerning the detection, assessment, and prevention of adverse effects or any other drug related problem. It addresses product safety and efficacy concerns for public safety and health purposes.The Penalties Regulation allows the Commission to impose substantial fines of up to 5% of EU turnover of the MA holder, provided that there is an intentional or negligent infringement.
During the course of routine inspections in 2012 by the Medicines & Healthcare products and Regulatory Agency (the MHRA - the UK regulator), certain 'critical' pharmacovigilance issues were identified at Roche. The MHRA decided that there should be no criminal investigation in the UK, but the European Medicines Agency (the EMA) informed Roche that it was being investigated under the Penalties Regulation. In 2013, the EMA asked the MHRA to reinspect facilities at Roche in the UK and at its subsidiary, Genentech Inc., in the US. Roche was informed that the scope of this inspection was to assess whether it was implementing the correction plan to address the deficiencies identified during the 2012 inspection. The EMA also asked the MHRA for information under Article 8(3) of the Penalties Regulation, which provides that the agency may ask any natural or legal persons to provide information relating to an alleged infringement. Roche was not specifically informed of this Article 8(3) request. The MHRA reinspected Roche, and information concerning that inspection was passed to the EMA.
Public law proceedings
Roche brought public law proceedings seeking declaratory relief, articulating its legal case on the basis that: (i) the MHRA had acted outside the scope of its powers (ultra vires) by responding to the EMA's request, because Article 8(3) did not cover a reference from the EMA to the MHRA - instead, such a request should have been made under Article 8(2) which explicitly refers to requests made by the EMA to national competent authorities; (ii) the MHRA had breached common law requirements of procedural fairness by not properly explaining to Roche at the time of the 2013 reinspection that material would be passed on to the EMA for potential use in a quasi-criminal investigation; and (iii) the material which the MHRA had passed to the EMA contained a number of fundamental errors of law - namely (a) the MHRA had wrongly assumed that Roche was responsible for a default by its subsidiary company, and (b) the Commission's 'initiation notice' provided to Roche in 2012 referred to standards that had not come into force until later.
Judgment
Sales LJ was unsympathetic to Roche's position. On the first point, there was no reason why the EMA could not make a request to the MHRA under Article 8(3) - the language was clear enough to cover natural and legal persons of any kind, including national competent authorities. Secondly, in terms of procedural fairness, Article 18(2)(c) of the Penalties Regulation makes clear that information regarding the approach of a MA holder to an inspection or reinspection will be relevant information to which the EMA is highly likely to have regard for the purpose of carrying out its functions under that regulation. Roche was therefore on fair notice of the potential for use of information from the 2013 reinspection in the infringement investigation without the MHRA needing to say anything more. Roche pointed out that it did not have any lawyers present during the reinspection, but the Court of Appeal noted that it did have two attendees present who were experienced in pharmacovigilance matters. Furthermore, Roche was a sophisticated and informed client. Thirdly, in relation to the alleged fundamental errors of law, the Court of Appeal refused to grant a negative declaration or refer the issue to the CJEU for interpretation. The views of the MHRA were advisory in this context, and were not binding on the EMA. Essentially, the information that formed the subject of Roche's complaint simply consisted of communication between two public agencies. A request to the CJEU would be premature. It would be open to Roche to raise these arguments in the context of an investigation under the Penalties Regulation, and a CJEU reference at this earlier stage would not be helpful.
This case demonstrates the reluctance of the English Courts to read additional procedural fairness into European regulation which already contains certain procedural protections. Arden LJ summed up her concerns with the following observation: "When the framers of the Penalties Regulation formulated the scheme of procedural guarantees as they did, they may well have had in mind a wide range of considerations that are not known to us. Moreover, that point reinforces the conclusion that the question of whether the law should imply any procedural guarantees into the Penalties Regulation, in addition to those expressly given, should primarily be a matter for the courts of the European Union. In those circumstances, this Court should not lightly find a breach of the common law duty of fairness (by the failure to give notice before inspecting the premises and records of Roche) which would in effect introduce restrictions on what the EMA or MHRA could do under the Penalties Regulation. "
