Healthcare Litigation Update

Simone Peek & Nienke de Bruijn
26 mei 2021

Today, 26 May 2021, is an important day for the medical technology sector, as the new European regulation on medical devices comes into force. This Healthcare Litigation Update sets out these and other regulatory and enforcement developments that may impact healthcare and life sciences business in the Netherlands. In addition to the MDR, we discuss topical subjects such as actions against COVID-19 related off-label prescriptions, a proposal to lay down the Healthcare Transparency Register in an Act, and the setting of fines by the Dutch Healthcare Authority.

Entry into force of European regulation on medical devices

On 5 May 2017 the new European Regulations on Medical Devices (Regulation (EU) 2017/745) and In-Vitro Diagnostics (Regulation (EU) 2017/746) were published. Both regulations entered into force on 25 May 2017. The transitional period of the Regulation on In-Vitro Diagnostics ends next year on 26 May 2022. The transitional period of the Regulation on Medical Devices ends today on 26 May 2021 and the new rules will enter into force.

The new rules will affect manufacturers, importers and distributors of medical devices but also healthcare institutions, healthcare providers and (indirectly) patients.

Together with the new Regulations, the European resource database EUDAMED will be expanded. Manufacturers, importers and other market participants must register with EUDAMED in order to receive a unique registration number (SRN). This SRN number is required for example request a conformity assessment from a notified body or to make mandatory reports of incidents or corrective actions on.

The Regulations will have direct effect in the Netherlands. Additional rules such as those regulating enforcement authority will be laid down in the Medical Devices Act (Wet medische hulpmiddelen) that replaces the old Medical Devices Act (Wet op de medische hulpmiddelen) and also enters into force today, on 26 May 2021.

The Inspectorate for Health and Youth Care (Inspectie Gezondsheidszorg en Jeugd ‘IGJ’) is appointed as the regulatory authority to supervise the Medical Devices Act. The IGJ is authorized to impose fines up to an amount of € 870.000 or if higher max. 10% of the company’s revenue in the previous year for non-compliance with the regulations on medical devices. The actual amount of a fine will be based on different factors, such as the nature of the product/risk class of the medical device or IVD, severity, duration and scope of the violation and whether or not inducements were involved.

One of the subjects that is not regulated as such in the new European Medical Devices Regulation, but for which the Dutch legislator has determined to lay down rules, concerns the improper influence of healthcare professionals, or in other words inducements. These rules on gifts, hospitality, bonuses, contributions to meetings and remuneration of services were already part of the old Medical Devices Act and will also remain anchored under the new (and now present) Dutch Medical Devices Act.

In addition a Dutch Regulation on Medical Devices will be implemented, containing i.a. rules about the language used in certain documents, the cost of an export declaration and the requirement for manufacturers of custom-made devices to submit a list of the types of custom-made devices they provide.

Fines for treating Covid-19 with hydroxylchloroquine and ivermectin

Since the start of the pandemic, the Inspectorate for Health and Youth Care (Inspectie Gezondheidszorg en Jeugd “IGJ”) that supervises the quality and safety of the healthcare market continues to receive notifications about medical practitioners who prescribe hydroxychloroquine and ivermectin, medicinal products for i.a. malaria and rheumatism.

The IGJ intends to impose administrative fines on these practitioners as these medicines are considered to be ineffective against Covid-19 and can cause serious side effects such as cardiac arrhythmias. Such fines can amount to a maximum of € 150,000.

In principle, medicines may only be prescribed for the condition for which they have been authorized or for scientific clinical research. Any off-label prescription of medicines is pursuant to the Medicines Act (Geneesmiddelenwet) only allowed if provided for by professional guidelines and must meet a number of strict requirements.

According to the IGJ, a medical practitioner:

  • must prescribe for an individual patient;
  • must follow the clinical practice guidelines of the profession. If there is no guideline, the medical practitioner must consult with the pharmacist about prescribing the medicine off-label;
  • must determine whether another acceptable treatment is possible with a medicine that is registered for the specific complaints;
  • must make a good assessment between any risks and the usefulness of the off-label medicine;
  • must inform the patient that he is being prescribed an off-label treatment. The patient must also consent to this treatment, and
  • the prescribing medical practitioner should also consult with the primary doctor before prescribing off-label.

It is expected that fines will be imposed in relation to (hydroxy)chloroquine and ivermectin to treat Covid-19, as the IGJ finds that these medicinal products do not meet the conditions for off-label prescription.

An Act on the Healthcare Transparency Register?

On 9 February 2021, the Dutch Council of State (Raad van State) published a critical opinion on the legislative proposal to lay down the Healthcare Transparency Register by law. This proposal was submitted to the House of Representatives in 2020.

The Healthcare Transparency Register that is currently based on self-regulation of the pharmaceutical and medical device industry, collects information on payments that healthcare providers, healthcare institutions and patient organizations receive from suppliers of medicines and medical devices. This concerns, for example, reimbursements for knowledge input in specific care questions or care projects. If as supplier pays more than €500 to a healthcare provider or healthcare institution in a year, the supplier must report this to the Register.

The legislative proposal provides for more information to be included in the Register and more financial relationships to be reported including all transactions over € 50. The Central Information Unit on Healthcare Professions (Centraal Informatiepunt Beroepen Gezondheidszorg ‘CIBG’) is to manage the Register and the Inspectorate for Health and Youth Care (Inspectie Gezondsheidszorg en Jeugd ‘IGJ’) will enforce it.

According to the Council of State’s opinion, the proposal provides insufficient justification why it is necessary to lay down the self-regulatory register by law. Furthermore, it doubts the usefulness of the obligation to notify all transactions over € 50, because there will be such a large increase in information that there will be actually less insight into the transactions that do pose a considerable risk of undesirable influence. Also sufficiently substantiated regulation for the processing of personal data is missing according to the Council of State.

Only after consultation and adjustment of the legislative proposal, the Council of State advises to discuss the proposal in the House of Representatives. So for now, the industry is to provide transparency on financial relations through the self-regulatory register.

Dutch Healthcare Authority imposes € 270,000 fine

The number of regulatory measures that the Dutch Healthcare Authority (Nederlandse Zorg autoriteit) imposes is relatively limited. The first measure of this year is a fine of € 270,000 for a healthcare provider in Utrecht for incomplete administration and thus a breach of the Health Care Market Regulation Act (Wet marktordening gezondheidszorg).

The fine was solely imposed on the actual director of the care provider (100% owner and sole shareholder), because the care provider and the holding company were dissolved by the director two days after he became aware of the unannounced investigation of the NZa.

Administrative fines in the medical sector are set with a view to the statutory maximum, fining policy rules and the general principles of good governance.

Based on the policy rules, the amount of the fine will relate to a few factors:

  • Gravity of the offence (i.a. extent, duration, scope);
  • Context of the offence (i.a. economic context, significant market power, irreversibility of the consequences, damages consumer);
  • Financial capacity of the offender.

Also potential fine-reducing or fine-increasing circumstances will be taken into consideration.

  • Fine-reducing circumstances can among other things be:
    • Ending of the offence on the offender’s own accord (especially before announced investigation);
    • Report of the offence on the offender’s own initiative;
    • Offer compensation to the injured party on the offender’s own initiative;
    • Extensive cooperation with investigation of the authority.
  • Fine-increasing circumstances can among other things be:
    • Repetition of an offence by the same offender;
    • Incitement to an offence;
    • Obstruction of the investigation.

Whether or not the NZa imposed the fine with good reason and correctly applied these various factors in determining the fine, may be submitted to a court to review.