Life Sciences: What's new in France?

April 16, 2018

Read more about the recent developments in the life sciences sector in France.


  • Trade secrets in the life sciences sector
  • French competition authority fines Janssen-Cilag for abuse of
    dominant position
  • New restrictions from the French Medicines Agency on the choice
    of the name of medicines
  • A new incentive to encourage the prescription of biosimilars
  • The future of France is innovation! 


Trade secrets in the life sciences sector

By Marie Fillon

The context: the EU trade secrets directive to be soon implemented in France

Before 9 June 2018, France shall implement the EU trade secrets directive of 8 June 2016. A law proposal was published on 19 February 2018 and was strongly debated before the French parliament on 27 March 2018. The EU trade secrets directive relates to the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure. The purpose of the directive is to provide effective and comparative legal means for protecting and defending trade secrets throughout the EU. The objectives are notably to encourage innovation-related cross-border activity within the EU, and to protect the confidentiality of litigated trade secrets in the course of legal proceedings instituted for their defense.

Trade secrets are important for the life sciences sector

Behind every patent there is a trade secret. Furthermore, part of the data resulting from R&D is not patentable or, for some data, patents are difficult to file or to enforce. And, of course, patent protection is limited in time.

This is why secrecy is interesting, in a sector in which companies are amongst the most research-intensive companies in the world, and trade secrets should be part of a balanced IP portfolio.

Examples of data that should be considered and protected as trade secrets are: strategic business plans, data resulting from early-stage research, chemical formulae, clinical trial data (methods, results, etc.), bioprocesses to manufacture biologic or biosimilar, analytical software and proprietary biological databases, etc.

Therefore the protection of trade secrets is crucial for the life sciences sector

Many pharmaceutical and biotechnology companies outsource some of their R&D and/or manufacturing, which requires the transfer of sensitive information which may qualify as trade secrets. Likewise, in the context of strategic deals (collaborations, joint ventures, licensing and acquisitions), trade secrets may be shared during the diligence process or the implementation of the deal.

Therefore, it is crucial that the exchanges of such information are appropriately controlled, especially when the deal fails or when a collaboration lasts for years and is not successful.  

What is at stake for the life sciences sector?

First, the directive provides that alleged unauthorized disclosure of a trade secret shall be exempted from civil remedies (in other words, authorized), if the use or disclosure of the trade secret was carried out for exercising the right of freedom of expression and information or for revealing misconduct, wrongdoing or illegal activity in the name of public interest. This exemption is included within the French law proposal. One of the main issue here is to determine whether clinical trial data (especially negative data) would fall into that scope of exemption. One can also hope that the EMA and national medicines agencies will take a safe course of action in their interpretation of what constitutes a commercially confidential information and become less inclined to disclose information – such as clinical trial data – that is in the public interest.

Second, within the context of collaboration between pharmaceutical or biotechnology companies and universities or research centers, and beyond the collaboration agreement entered into by the parties, the directive should ensure that a researcher cannot use or publish any information provided or generated by the company under the research collaboration. This greater protection should have a positive impact on research and innovation.

To conclude, a few recommendations

Internally, especially in case of high staff-turnover or partnership for research and/or production processes: be vigilant and proactive about maintaining secrecy of your trade secrets, strengthen the measures protecting all information considered as trade secrets in order to increase the chances to obtain the qualification of unlawful for acquisition, use and disclosure of your trade secrets by employees or partners.

When negotiating collaboration agreements: precisely identify all parties’ trade secrets and their authorized holders.

When performing collaboration agreements: be cautious about overstepping the boundaries and making yourselves the targets of misappropriation accusations. Implementation of firewalls and/or clear rooms could help to ensure that those with knowledge of the partner’s trade secrets are not tasked with developing substantially similar products.

Finally, even though the directive provides for legal means to protect trade secrets in the course of legal proceedings, include an arbitration clause in your strategic deals and agreements.


French Competition Authority fines Janssen-Cilag for abuse of dominant position

By Mélanie Thill-Tayara, Marion Provost and Simon Hetsch

The French Competition Authority (“FCA”) issued a decision on 20 December 2017 sanctioning Janssen-Cilag (“Janssen”), a subsidiary of the Johnson & Johnson group, with a fine of 25 million euros for abusing its dominant position (“Decision”). The FCA found that Janssen had improperly delayed and restricted access to the French market of generic versions of its drug Durogesic®, an opioid with the active ingredient fentanyl used for pain relief, implementing a global communications strategy directed at health authorities and health professionals. Janssen has appealed the decision.

The case was initially raised with the FCA in 2009, by means of a complaint from Ratiopharm (now Teva). This led to an initial decision from the FCA on 31 July 2009, in which it refused to grant interim measures but decided to pursue its investigation on the merits.

Two separate practices sanctioned as a single and continuous infringement 

First, the FCA relied on various communications made by Janssen to health professionals to support the claim that the former had engaged into a vast campaign disparaging generic versions of its drug, questioning their bioequivalence, effectiveness and safety for patients previously treated with Durogesic®.

The FCA concluded that Janssen notably misused a warning message issued by the French health authority (“ANSM”, formerly AFSSAPS) concerning the risk in switching between fentanyl specialties for certain categories of patients (notably children and the elderly) to provide inaccurate and incomplete information to doctors and pharmacists. More specifically, according to the FCA, Janssen slightly modified the language of the ANSM’s statement by only emphasizing the risks associated with switching from Durogesic® to a generic version, leading professionals to believe (in the FCA’s view) that only substitution of the originator drug by a generic was dangerous and thus not recommended. In analyzing this behavior, the FCA confirmed the approach it had taken in previous cases, in particular the Plavix (Sanofi) case, in which it considered that the truncated presentation of objective elements altering the reality qualified as disparagement under French competition law.

The FCA also paid particular attention to the language used by Janssen in its written communications, both internal and external. For example, terms such as “team ANTI-génériques” or wording repeatedly used in communications such as “risk”, “concern”, “adverse effects”, “accident” were specifically relied upon by the FCA to establish that Janssen had developed a global anticompetitive strategy against generics.

Secondly, and for the first time, the FCA targeted the repeated intervention of Janssen before the ANSM as an anticompetitive practice. The FCA characterized this as an attempt to delay the granting of the marketing authorization of generics in France. In doing this, the FCA has moved into the sphere of health authorities’ prerogatives. In the past, pharmaceutical companies have been able to engage in fairly open discussions with health authorities.

These two practices, which were implemented over several months before and on arrival of the generic versions of Durogesic® on the French market, were considered by the FCA as part of a global strategy aimed at restricting competition by preventing competitors from entering the market for fentanyl.

An unprecedented extension of the FCA’s intervention within the natural sphere of competence of health authorities

The second infringement, in which Janssen was found to have exerted unlawful pressure on the ANSM to delay generic entry, is totally unprecedented.

In its 2009 decision refusing to grant interim measures to Ratiopharm, the FCA expressly said that the ANSM has an exclusive prerogative to decide whether Janssen’s arguments questioning the bioequivalence of generic drugs were well-founded. Surprisingly, the FCA has taken a completely new approach in its decision of 20 December 2017. This will be a concern for originator pharmaceutical companies facing competition from generic (or biosimilar) entry as it raises a number of legal and practical questions.

By way of background, following the grant in Germany of a marketing authorization to Ratiopharm in April 2006 for a generic version of Durogesic®, Ratiopharm initiated a mutual recognition procedure with a view to obtaining a marketing authorization in several EU Member States, including France. But it was not until December 2008 that Ratiopharm finally obtained the right to place its generic product on the French market.

The FCA considered that the delay in the granting of the marketing authorization in France was the result of Janssen’s lobbying actions against the approval of the generics, using alarmist and unfounded arguments. All the studies showing the bioequivalence of the products had already been conducted, approved and the ANSM had received an injunction from the European Commission (“Commission”) at the end of 2007, following an arbitration procedure, to grant a marketing authorization.

In practice, Janssen sent several letters to the ANSM and met with its representatives in 2008, challenging the bioequivalence of generics, arguing that Ratiopharm’s product was not “exactly the same”, and warning on the potential risks for patients in using this generic instead of Durogesic® given the narrow therapeutic margin of the product. The FCA concluded that Janssen also encouraged the ANSM to deviate from the Commission’s injunction and refuse to grant a marketing authorization to Ratiopharm.

This led the ANSM to initially block the grant of the marketing authorization. It then issued a warning statement to health professionals about the substitution of Durogesic® by a generic drug for certain particularly sensitive categories of patients, which Janssen used to its advantage.

However, according to the FCA, not only were these allegations not supported by any solid scientific evidence, but the ANSM had in fact no choice, under the European legal framework, but to grant the marketing authorization.

In this context, the FCA reached the view that Janssen’s intervention was unlawful and had a major impact on the market since the actual entry onto the market by Ratiopharm was delayed for a period of about 13 months (between late November 2007 and December 2008).

It is interesting to note that in its decision the FCA fails to address the fundamental difference between the marketing authorization, which the ANSM clearly had to deliver, and registration on the generics’ list, which was mandatory for Ratiopharm’s drug to obtain the status of generic but required an individual assessment by the ANSM. Thus, it might be asked whether the FCA’s legal assessment would apply in circumstances in which the ANSM was in fact not bound by any obligation to grant generic status to Ratiopharm’s drug, without that decision preventing its commercialization on the French market.

As mentioned, this Decision has been appealed by Janssen, and it will be interesting to see how the Paris Court of Appeal will approach the issue.

Takeaways and open questions

The Decision is very instructive in many respects:

  • It is a reminder that pharmaceutical companies with a dominant position need to be extremely prudent in the messages they convey before, upon or just after the arrival of competition on the market for a given drug. Particular attention should be paid to the language used in written communications as the FCA will not hesitate to extrapolate an anticompetitive strategy based on a consistent body of language suggesting an intention to instill a doubt as to the bioequivalence and delay generic (or biosimilar) entry.

  • It creates a new infringement, consisting of improperly intervening before health authorities to delay generic entry or make it more difficult. More particularly, the FCA now distinguishes two situations. On the one hand, a pharmaceutical company holding a dominant position cannot interfere with the decision-making process of the ANSM with the objective of convincing it to adopt a decision contrary to the applicable legal framework. On the other hand, a pharmaceutical company is free to objectively share its views on potential public health risks before the health authorities.

  • It raises the issue as to the appropriate dividing line between an improper intervention and a lawful one, as there is a fine line between what can now be argued and what cannot. In practice, it seems that the scope of intervention of dominant firms vis-a-vis health authorities is now restricted to the presentation of objective arguments only, supported by reliable scientific evidence. Challenging the legal framework that constrains health authorities would not be acceptable from a competition law standpoint.

New restrictions from the French Medicines Agency on the choice of the name of medicines

By Sophie Pelé and Jessica Garestier

The French National Agency for Medicines and Health Products Safety (Agence nationale de sécurité du medicament et des produits de santé, the “ANSM”) published on 22 February 2018 on its website its final recommendations for applicants and marketing authorization holders on the choice of the name of medicines (the “Recommendations”).

The Recommendations result from a consultation process held since the end of 2016 both towards the public and ANSM’s relevant consultative commissions.

They are intended to guide marketing authorization holders and applicants in the choice of the name of medicines in the framework of a national procedure, a European mutual recognition or a decentralized procedure. The European Medicines Agency’s (the “EMA”) recommendations remain applicable to any centralized procedure.

The ANSM recently faced misuse of medicines that it attributed to confusions created by umbrella brands.

French law requires that the name of medicines, which shall be approved by the ANSM, be either an invented name, or a common or scientific name together with a brand name or the name of the marketing authorization holder or the operator. Any invented name must not cause confusion with other medicines and must not be misleading with respect to the medicine’s quality or characteristics.

In this context, the ANSM has decided to prohibit the use of umbrella brands for certain products (I) and provides a number of other recommendations (II). Concerned companies should therefore integrate a rather restricted regulatory framework in their development plans (III).

I. The Recommendations significantly restricts the use of umbrella brands

Given public health concerns arising from the risk of confusion on the therapeutic action of those products, the ANSM merely prohibits the use of:

  • “the same invented name for several non-prescription medicines whose marketing authorizations are held by the same holder, with a different active substance composition and different therapeutic indications; and
  • umbrella brands that would cover both medicines and products of other regulatory status (i.e. “multi-status” products).

In other words, the use of umbrella brands, or the same brand, is limited to medicines with the same regulatory status, and using the same active substance.

In other words, the use of umbrella brands, or the same brand, is limited to medicines with the same regulatory status, and using the same active substance.

II. Medicines denominations are subject to an updated set of rules

The ANSM has taken the opportunity of the Recommendations to update its general requirements on the construction of invented names, on the basis of which the following do’s and dont’s can be summarized:


  • Create a fantasy name
    • use a single word without including any confusing isolated number, abbreviation, hyphen, or isolated letter,
    • use a name which is different from the name of already authorized medicines when the holder or operator, as well as its composition, are different.
  • Or use a non-proprietary name:
    • use the exact common name, without omission or abbreviation; 
    • use the name of the marketing authorization holder or the operator;
    • use the non-proprietary name, together with a brand or the name of the marketing authorization holder or the operator, for generics;
    • provide evidence of the brand registration with the appropriate authority.
  • In any case:
    • refer to the Recommendations for the conditions applicable to referring to an aroma in the name of the medicine;
    • check in the Recommendations the list of some additional terms which may be used in the name of a medicine.


  • create confusion with other medicines, health products (such as medical devices), cosmetic products, or foodstuff (especially food supplements). The ANSM will consider in particular any potential similarity in print or speech. In addition, invented names must not lead to a commoditization of the medicine and must not convey misleading clarification;
  • be misleading as to the quality, characteristics or composition of the medicine, in particular by avoiding names too close to terms referring to any disease;
  • convey a promotional message, in print or speech, with respect to therapeutic and/or pharmaceutical characteristics or the composition of the medicine, especially by avoiding the use of superlatives, anglicisms with a promotional message (e.g. "best") the language, "Duo", or even common or exiting names;
  • use standard terms defined in the European pharmacopeia (relating in particular to the pharmaceutical form). In any case, such terms must always be placed after the name;
  • use international non-proprietary name;
  • be the same for a prescription and a non-prescription medicine.

III. Take aways

The Recommendations make clear that compliance with the ANSM’s guidelines will be taken into account by the ANSM during the evaluation process. The new restrictions arising from the Recommendations create further challenges for companies who must strictly comply with them when choosing the name of a medicine, in order to increase the chances of getting a positive assessment from the ANSM and to avoid any risk of non-compliance with the applicable regulations. We expect that the publication of the Recommendations will reduce the number of name requests rejected and will expedite the evaluation process.

While the Recommendations do not compromise the brand registration process with the appropriate authority, the ANSM ultimately discharges its own functions by ruling on the use of brands in the name of products subject to marketing authorizations or registrations, in accordance with its mission to safeguard public health.


A new incentive to encourage the prescription of biosimilars

By Sophie Pelé and  Jessica Garestier

The Directorate General of Health Care Supply (Direction Générale de l’Offre de Soins, the “DGOS”) and the Directorate General of Social Security (Direction Générale de la Sécurité Sociale, the “DSS”) published a ministerial direction (the “Text”) on 19 February 2018 introducing a new incentive mechanism to encourage healthcare establishments to prescribe certain biosimilars when the hospital prescription may be dispensed in the community (prescription hospitalière exécutée en ville). The Text adds to another set of rather similar measures implemented at the beginning of the year (see our newsletter of January), this time targeting high volumes of prescriptions.

This time, the mechanism only covers certain groups of medicines whose biosimilars have been recently eligible for reimbursement and whose prescription is, at least in part, a hospital prescription dispensed in the community, namely:

  • anti-TNF-alpha products from the etanercept group whose reference biological medicine is Enbrel (Pfizer), and
  • the insulin glargine from the insulin glargine group whose reference biological medicine is Lantus (Sanofi-Aventis).

The reason for this measure lies in the pricing characteristics of these products: while they have the same list price in hospitals, as the net price will be set through a public tender, the reimbursement price in dispensing pharmacies is different.

The Text therefore aims at making hospitals aware of the financial consequences of their choice even when it is not on their own budget. However, the Text should also have direct consequences on the purchasing processes of hospitals.

I. The creation of specific financial incentives

In order to increase the penetration rate of biosimilars, which remains insufficient according to French authorities, the Text establishes two specific financial incentives to encourage the prescription of biosimilars in the abovementioned group of medicines. 

The incentive is calculated on the basis of the whole patient pathway in each hospital who has entered into a CAQES with the HAS and is proportional, on the one hand, to the prescription rate of a biosimilar and, on the other hand, to the marginal compensation related to the prescription of a biosimilar of a particular group in place of the reference medicine (remunération marginale, the “RM”), calculated on the basis of the difference of the reimbursement prices of both products.

The first incentive directly applies to all healthcare establishments that entered into a CAQES for 2018. The RM taken into account when calculating their incentive corresponds to 20% of the reimbursed price difference between a biosimilar and its reference biological medicine. The RM is currently of EUR 30 for the etanercept group and EUR 1.75 for the insulin glargine group and is subject to change. .

Second, the Text introduces the possibility to experiment a strengthened incentive scheme which would provide for a direct financial incentive for hospital units (instead of healthcare establishments) concerned by the prescription of the aforementioned medicines (especially rheumatology, gastroenterology or diabetes & endocrinology units). This second scheme, providing for a RM of about 30%, will be subject to the prior conclusion of an action plan between the involved units and the hospital, to be approved by the competent ARS. Thus, the involved units will directly receive a financial incentive whose aggregate amount should correspond to the major part of the compensation paid to hospitals. The payment of such incentive could be made on a semi-annual basis but the specific modalities are yet to be determined.

II. A new fostering of biosimilars’ use

This Text is in line with the policy of French health Authorities supporting the substitution of biosimilars at any time during the course of patients’ treatment, already initiated with the last ministerial order of 12 October 2017 assigning quantitative targets for the prescription of biosimilars by hospitals.

The Text presents the greater use of biosimilars as a way for improving prescribing practices and securing the supply of medicines by increasing the number of available therapeutic alternatives, and specifies that it should generate efficiency margins for the reimbursement of innovative medicines, thus underlying the financial interest of the measure.

Once again, French authorities strongly foster the prescription and use of biosimilars, by providing this time for a compensation to hospitals which is directly proportionate to the rate of biosimilars’ prescription. However, one may wonder how this Text will articulate with the existing public tender rules applicable in public hospitals: the latter might take this financial incentive into account when deciding on the number of products to purchase within a group; moreover, one may wonder if and how the hospitals will take this incentive into account in the financial assessment of the offers, especially in light of the general principle of equality of treatment that should prevail.

It is very likely that similar texts will be adopted for other class of medicines once their biosimilars will be marketed. We therefore recommend to closely monitor future developments in this sector.


The future of France is innovation!

By Anne-Charlotte Rivière and  Kristopher D. Brown 

Emmanuel Macron may have used wine, cheese and other traditional French produce to lure more than 140 global executives to a pre-Davos “Choose France” summit in January, but it is the myriad of pro-investment legal and business measures that the French president has pushed for in his first half year in office that are encouraging more and more businesses to open up shop in France.

Initiatives and legislation to cut red tape, reduce taxes and loosen labor laws have caught investors’ attention, highlighting a shift in French business culture that has brought a new energy to innovation-dependent sectors such as life sciences and software.

At the same time, new legal and market practices aimed at providing strong, attractive legal terms and incentives for investments in France have made potential investors question their traditional uncertainties over investments, such as French legal constraints around investing in earlier-stage companies, concerns around management and employee retention and termination, and uncertainty as to how best to achieve efficient liquidity.

As a result, business innovation in France is booming, and the rapid creation and growth of new companies offers tremendous opportunities to investors globally.

It is Macron’s determination to liberalize the rules for investing in France that underpins his efforts to court global tech and life sciences leaders like Alphabet (Google), Siemens and even Chinese e-commerce leader Alibaba.

Macron has already helped to foster a large number of private initiatives such as Station F, a mega-campus for startups in Paris, which is being funded by French billionaire Xavier Niel. Indeed, the president reportedly told all invitees to the Versailles summit that they would be invited only if they promised new investment projects in France. Among the many executives who attended was Sheryl Sandberg, Facebook’s Chief Operating Officer, who pledged to add 60 researchers to the company’s artificial intelligence lab in France, complementing a startup incubator opened earlier in Paris, the company’s first in France.

Macron has already helped to foster a large number of private initiatives such as Station F, a mega-campus for startups in Paris, which is being funded by French billionaire Xavier Niel. Indeed, the president reportedly told all invitees to the Versailles summit that they would be invited only if they promised new investment projects in France. Among the many executives who attended was Sheryl Sandberg, Facebook’s Chief Operating Officer, who pledged to add 60 researchers to the company’s artificial intelligence lab in France, complementing a startup incubator opened earlier in Paris, the company’s first in France.

Instead of multiple investment documents such as stockholders agreements, investor rights agreements and co-sale agreements, a single shareholders agreement is generally employed in French investment transactions, covering all of the voting rights, covenants among investors, access to information and management rights. In addition, following amendments to French contractual law made in 2016, the general enforceability and interpretation of such agreements has been significantly strengthened. And whereas under French law, breaches of shareholders agreements traditionally needed to be resolved through complex court action and damages, the new regime permits more equitable forms of relief through the enforcement of obligations.

Additionally, since 2004 the French Commercial Code has enabled companies to issue preferred shares with rights (particularly financial rights) whose structures can be highly flexible. The rights attached to preferred shares have been extended even further and standardized in the past decade.

It is common practice today, for example, to provide for standardized anti-dilution protection—weighted-average or full ratchet—through the conversion ratio of the preferred shares, as is customary in the United States. Previously, such protections needed to be implemented through the issuance to investors of specialized and complex warrants that investors had to exercise—and pay—in order to implement their protections.

France’s tax and social environments have also undergone significant shifts that have benefited innovative young companies, especially startups. Earlier-stage companies, especially those with significant research and development (R&D) costs that were established within the previous eight years, are eligible under certain conditions to a specific French tax regime called “Jeune Entreprise Innovante.” Under this program, companies benefit from tax breaks and incentives, as well as contributions to French social programs on behalf of their R&D employees and personnel. Many of these companies are also entitled, under special criteria, to a tax refund for up to 30% of their R&D expenses (“Crédit d’Impôt Recherche”).

And while changes to France’s tax regime have helped foster and stimulate earlier-stage and innovative R&D activity, other factors, too, help explain why the country has seen so much disruptive innovation by startups in recent years. In parallel to French legal and tax reforms, the general public’s mindset has also evolved in favor of spinning off the R&D units of academic and other public institutions into private companies. Popular opinion has swung, too, in favor of allowing government money to be used in the form of subsidies, grants, loans and all stages of equity investments to stimulate innovation at private companies.

Even the traditional restrictions around hiring and firing personnel contained within French employment law have finally begun to weaken, in part through Macron’s recent prodding.

He and others in France realize that young companies and their investors need to take risks. After all, many young companies may not succeed in the long term, once the immediate business need has focused and matured. It is no accident that reform of French employment law was a key Macron campaign promise and one of the first he has striven to implement.

No doubt, in the future, France’s wines and cheeses will continue to draw tourists to the country. But it is not hard to foresee a day when investors will flock to the country with equal enthusiasm, drawn by France’s many “unicorns”.


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