A bill in the French upper house of parliament, the Senate, aimed at averting conflicts of interest in the pharmaceutical sector now has a section that could in fact encourage conflict by creating potentially painful class action cases against firms.

The bill already places significant burdens on national regulators and healthcare personnel in terms of declaring any links they may have with the drugs industry, but it now carries a sting in the tail for manufacturers: the prospect of class actions permitted solely for the pharmaceutical sector.

The new class action aspect - or more accurately the permissibility of application for collective redress - will be applicable in cases where patients suffer damage as a result of a pharmaceutical company's or negligence non-compliance with the law.

"You would need to show wrong-doing on the part of the company," explains Genevieve Michaux, from international law firm Covington & Burling. "If there is no infringement of the law or regulations, then the class action would not apply."

The conflicts of interest legislation as a whole, and this amendment in particular, are intended to prevent another scandal similar to that involving Servier's diabetes drug, Mediator (benfluorex), which was last year suspected of having contributed to the deaths of some 500 people (Also see "Mediator Scandal Provokes Flurry of French Health Reforms But Impact Is Hard To Gauge Until The Dust Settles" - Pink Sheet, 1 August, 2011.).

A 50% Penalty

Under the proposals, any legal action will have to be started by an association that is recognized by the national authorities. If a court judgment on liability is obtained, the pharmaceutical manufacturer would be obliged to publish this and affected patients would then be permitted to apply directly to the company for damages.

The company would be required to make an offer within an as yet unspecified period of time, but if this is not made, or is delayed, then the patients may return to court to demand that damages be awarded. But the real blow to the industry comes after this, says Michaux: "At that stage, if there is no offer at all, or if it insufficient, the judge is able to apply a penalty on top of the damages of up to 50 per cent."

The French proposal is, however, unique in the EU, specifically because it targets a particular area, namely pharmaceutical sector and so companies in this area can feel somewhat hard done by.

Moreover, given that the sector has already been hard hit with the tightening of pharmacovigilance requirements and the banning of one-to-one visits by pharma reps and hospital personnel, this proposal, promoted by the Senate as a means of creating greater patient protection, might be viewed as hitting the industry while it is down an eroding further public confidence in drug manufacturers.

Prospects For the Provision

The collective redress proposal was mainly put together by left-leaning and centrist members of the Senate, where they enjoy a majority. In contrast, the right-of-center UMP party of the government still controls the lower house, in which the conflicts of interest legislation was first debated.

The bill as a whole will now go before a special commission, which will arbitrate between the two sides, to see which parts of the law can be retained and which will be discarded. French commentators are split on whether collective redress will survive this process.

The pharmaceutical industry is also remaining tight-lipped on the issue, with the industry association LEEM saying in an emailed response, that it is simply "too early" to comment whilst discussion are still ongoing.

In 2007, a bill on collective redress for all consumers was withdrawn by the French government at the request of then health minister Xavier Bertrand. Bertrand is now health minister once more, but it is likely that he would oppose a bill directed solely at the pharmaceutical industry, if only because it may complicate future efforts to introduce a more comprehensive bill that would cover more industry sectors.

Class Action Law In the EU

The prospect of introducing collective address legislation in Europe - based to some extent on the class action legislation in the US - has been ongoing for a number of years.

In April 2011, the European Commission closed its last consultation aimed at exploring how common principles for collective redress in the area of consumer affairs could fit into the EU legal system and the legal orders of the 27 EU Member States.

Some countries In the EU do already permit collective redress in certain cases. For example, the Act on Pursuing Claims in Group Proceedings was introduced in Poland in 2010. International law firm Allen & Overy note that Italy launched a mechanism for collective redress in January 2010, and earlier, in 2005, Germany introduced a class action experiment limited to certain capital markets disputes.

- Faraz Kermani (f.kermani@elsevier.com)

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