This article was originally posted on our sister blog Inside Medical Devices

The term “industrial scale” appears twice in the draft EU Medical Devices Regulation (“MD Regulation”) in relation to so-called “in-house devices.” The term equally appears in the draft in-vitro diagnostic medical devices (“IVD”) Regulation.

To provide perspective on the meaning of “industrial scale” and how the draft MD Regulation’s use of the term may be interpreted, this post looks at two recent judgments pertaining to medicinal products before the EU Court of Justice: Joined Cases C-544/13 and C-545/13 Abcur (link here) and Case C-276/15 Hecht-Pharma (link here). Although there are evidently major differences between the medical device and medicines regulatory regimes, these judgments nevertheless provide useful guidance to interpret the notion “(non-)industrial scale” under the draft MD Regulation.

Why the Definition Matters

In the October 2016 draft of the MD Regulation, recital 30 reads: “Health institutions should have the possibility of manufacturing, modifying and using devices in-house and thereby address, on a non-industrial scale, the specific needs of target patient groups which cannot be met at the appropriate level of performance by an equivalent device available on the market” (emphasis added). According to the draft MD Regulation, in those circumstances, an exemption from “certain rules” is appropriate since the aims of this regulation would still be met in a proportionate manner.

Article 5 in the draft MD Regulation is entitled “Placing on the market and putting in the service.” The concept of “industrial scale” is a criterion as to when an exemption from certain obligations of the MD Regulation will apply.  According to Article 5(5), with the exception of the general safety and performance requirements set out in Annex I, the requirements of the regulation shall not apply to devices that are manufactured and used only within health institutions established within the Union, provided that eight cumulative conditions are met.  Essentially, these eight conditions are obligations through which the health institution justifies, documents, publishes, reviews and ensures the quality of its activity pertaining to the device.  The last sentence of article 5(5) of the draft MD Regulation confirms that “[t]his paragraph shall not apply to devices which are manufactured on an industrial scale” (emphasis added).

Separately, it is significant that “custom-made” devices are not the same as devices produced on a “non-industrial scale.” Rather, “custom-made” devices, which are also treated distinctly by the draft MD Regulation, are those that are “mass-produced medical devices or accessories for medical devices which need to be adapted to meet the specific requirements of any professional user and medical devices or accessories for medical devices which are mass-produced by means of industrial manufacturing processes in accordance with the written prescriptions of any authorised person” (emphasis added).

Questions Posed to the CJEU in Abcur and Hecht-Pharma

In Abcur, the EU Court of Justice (CJEU or “the Court”) was asked the following question: Can Noradrenalin APL and Metadon APL which was sold by the Swedish state-owned company Apoteket, be covered by the exclusion of magistral and officinal formulae from the scope of Directive 83/2001 (articles 3(1) and 3(2) of Directive 2001/83), when another medicinal product is simultaneously marketed (on the basis of an authorization held by Abcur), with the same active substance, same dosage and same pharmaceutical form?

In Hecht-Pharma, the Court was asked whether a pharmacy that produces “incense extract capsules” as part its normal pharmacy business, but without a marketing authorization, would fall within the scope of the same exception(s) of Article 3 Directive 2001/83.

In both cases, as a prelude to applying Article 3, the Court first ruled on whether the products are subject to Article 2(1) of Directive 2001/83, which provides that “[t]his Directive shall apply to medicinal products for human use intended to be placed on the market in Member States and either prepared industrially or manufactured by a method involving an industrial process” (emphasis added).

CJEU’s Interpretation of “Industrial” Preparation or Process under Directive 2001/83

The draft MD Regulation uses the word industrial “scale,” thus implying a certain threshold of magnitude, whereas the wording of Article 2(1) of Directive 2001/83 focuses on industrial “preparation” and “process,” thus implying a certain method of manufacturing to fall within its scope.  This distinction must be kept in mind when applying the Court’s Judgment to the draft MD Regulation.

In Abcur, at paragraph 50, the CJEU referred to the protection of public health pursued by Directive 2001/83 to conclude that the terms industrial preparation or process cannot be interpreted narrowly.  The Court thus sought to ensure that more, rather than fewer, medicinal products would be subject to the requirements of the Directive.  The Court also provided at paragraph 51 a description of an industrial process: “Such a process is characterised in general by a succession of operations, which may, in particular, be mechanical or chemical, in order to obtain a significant quantity of a standardised product.”

The CJEU then looked at the facts in the Abcur case, namely the way in which Noradrenalin APL and Metadon APL were manufactured by the Swedish state-owned company.  The Court held that “the standardised production of significant quantities of a medicinal product to be stocked and sold wholesale and the large-scale or serial production of magistral formulae in batches are characteristic of industrial preparation or manufacture by a method involving an industrial process”  Even though Directive 2001/83 does not refer to scale, the Court thus decided that both (i) the manufacturing method, and (ii) the order of magnitude are the criteria against which to judge the “industrial” nature of an activity.

The Court’s judgment in Hecht-Pharma confirms this reading.  The CJEU stated in that case that “an industrial process differs from an artisanal process in the means of production used and, consequently, in the quantities produced.”  It then reiterated the definition of paragraph 50-51 in the Abcur ruling to apply the facts before it.  The defendant pharmacy had produced 213 packages of incense-tablets in 2015, while German law permits the production of officinal formulae to 100 packages per day.  The CJEU found that this limit in German law, in itself, precluded a finding that the production of officinal formulae would reach “a sufficient scale to be considered significant and to come within the concept of industrial process” within the meaning of Article 2(1) Directive 2001/83.

Conclusion: Application to the MD Regulation

In Abcur the Court referred to the need for a uniform application of EU law requiring an independent and uniform interpretation of the notion “industrial” throughout the EU.  In line with consistently-applied case-law, an interpretation of the term in a particular circumstance must also take into account the wording, context and objectives pursued by the rules of which the interpreted provision is part.

In light of the Abcur and Hecht-Pharma Judgments, the approach of looking at (i) the manufacturing method, and (ii) the order of magnitude, can arguably be used to decide whether a process attains “industrial scale” under the MD (and IVD) Regulations.  However, a number of factors are medtech-specific, including: (i) the institutional (e.g. hospital) setting for manufacturing and using the device(s), and (ii) the fact that the institution must justify that there is a “target patient group” whose “specific needs cannot be met, or cannot be met at the appropriate level of performance by an equivalent device already on the market.” (article 5(5)(c) draft MD Regulation).  The meaning of specific needs of the target patient group will be subject of a later post on this blog.

Overall, should the CJEU ever be called upon to interpret the concept of “industrial scale” in the forthcoming MD Regulation, it is likely that the manufacturing method and order of magnitude as described in Abcur and Hecht-Pharma will play a substantial role.

Photo of Bart Van Vooren Bart Van Vooren

Bart Van Vooren has a broad life sciences practice supporting innovative pharmaceutical, food, medtech and biotech companies on EU regulatory, commercial and strategic policy assignments. He is widely recognized for his expertise on general EU law and procedure, as well as his extensive…

Bart Van Vooren has a broad life sciences practice supporting innovative pharmaceutical, food, medtech and biotech companies on EU regulatory, commercial and strategic policy assignments. He is widely recognized for his expertise on general EU law and procedure, as well as his extensive litigation experience before the EU Court of Justice in dozens of cases.

Over the past seven years, Mr. Van Vooren has developed a niche practice on compliance with the Biodiversity Convention and the Nagoya Protocol, a set of rules to combat bio-piracy worldwide. He has accumulated unique, practical experience in dozens of jurisdictions around the world, and has handled everything from benefit-sharing negotiations, over compliance programs, to inspections by authorities.

Finally, Mr. Van Vooren has an active pro bono practice assisting NGOs defending the human rights of persons with a disability through strategic litigation.