I INTRODUCTION

The life sciences industry is a dynamic and ever-growing industry that evolves in tandem with developments in the fields of science and technology. It consists of various disciplines, such as medicinal preparations, medical devices and biotechnology, and includes, inter alia, leading international companies (e.g., the world’s largest generic pharmaceutical company and one of the 10 largest global pharmaceutical companies).

The life sciences industry is highly regulated. Medicinal preparations (preparations) are mainly regulated by the Pharmacists Ordinance,2 corresponding regulations,3 procedures and guidelines issued by the Ministry of Health (MOH).

The Pharmacists Ordinance underwent extensive amendment in 2016. The initial and main object of the amendment was to introduce punitive sanctions against the phenomenon of pharmaceutical crime and, particularly, counterfeit, theft and use of defective preparations. In addition, a specific provision was incorporated to define activities that may amount to consumers being misled within the context of the Pharmacists Ordinance (which may also serve as a basis for civil and criminal liability). During the legislative process, the scope of the amendment was extended to incorporate provisions and requirements previously included in regulations or MOH guidelines. As a consequence of the amendment, the Pharmacists Ordinance now includes not only a comprehensive punitive chapter, but also additional chapters dealing with the imposition of administrative sanctions and the regulation of supervisory authorities.

The Israeli regulatory regime of medical devices (devices) is currently under development. The Medical Devices Law was enacted in 2012, and the MOH is in the process of drafting various regulations and guidelines.4

The regulatory authorities for preparations and devices are the Pharmacy Department and the Medical Devices Department, within the MOH.

II THE REGULATORY REGIME

i Classification

Generally, the distinction between preparations, devices and other products (e.g., biological preparations and food supplements) is based on their respective definitions, as outlined in the applicable legislation.

For products constituting combinations of preparations and devices, or whose classification is unclear or disputed, the MOH guidelines provide that classification would be based on the product’s primary mode of action. If a product is registered in more than one ‘recognised country’,5 including the United States, the preference will generally be the classification of the US Food and Drug Administration.

For preparations, the guidelines also distinguish between generic and innovative products. The registration of a generic preparation is a condensed procedure, mainly involving proof of bioequivalence to the reference innovative preparation.

Israel is a ‘second-line’ country (i.e., registration and marketing authorisation as granted by a recognised country6 would be a condition for registration and marketing in Israel).

Additional categories of preparations include ‘biological preparations’ and their follow-on versions, called ‘biosimilars’. Biosimilars are distinguished from standard generic preparations, mainly owing to the complexity of the biological active substances that render their follow-on versions as similar, albeit not identical. The registration of biosimilars thus requires experimental data (including in vitro, clinical and non-clinical data) proving their similarity to reference preparations, from the perspective of quality, safety and efficacy. Furthermore, biosimilars and their reference preparations are not interchangeable, unless decided otherwise at the time of registration. Following registration, the interchangeability will be reviewed periodically and at the registration holder’s request, ad hoc, by an advisory committee to the MOH.

ii Non-clinical studies

The regulation of non-clinical studies focuses on experimental testing carried out on animals.7

In general, animal testing is approved, provided that the goals of the experiment cannot be met by reasonable alternatives. Additionally, experiments may not be performed for cosmetic testing purposes. Experiments on animals must be conducted by a qualified investigator, approved by the Council for Animal Experiments. The Council also issues permits to institutes performing studies. Institutes carrying out studies are required to report to the Council annually, and upon discovery of failures or problems with an experiment.

The Council is further required to appoint an audit committee to investigate claimed violations of the original experiment permit. Punitive sanctions may be imposed, for example, where an experiment is performed without the proper permits.

Furthermore, non-clinical studies must be carried out in an authorised accredited laboratory in compliance with the OECD’s Principles on Good Laboratory Practice.8

iii Clinical trials

Clinical trials are largely regulated by regulations and guidelines,9 which outline the procedure for filing applications for the conduct of clinical trials and the approval process.

Generally, an application must be approved by the managers of the institute at which the clinical trial will be conducted, the Helsinki committee of the institute (the Israeli term for the Institutional Review Board, the IRB) and the MOH, prior to the clinical trial. ‘Special clinical trials’, in which the level of risk to the subjects is limited and which give rise to no exceptional ethical issues concerning the risks-benefits balance, generally do not require MOH approval. The classification of a clinical trial as special or non-special should be determined by the IRB within 48 hours of receipt of the full application. Applications relating to non-special trials are transferred immediately to the MOH.

An application can be submitted only by a licensed physician. Additionally, the application requires the submission of the sponsor’s undertaking form, the sponsor’s response to a questionnaire (which serves as a recommendation as to the classification of the trial), and other ancillary documents (e.g., the informed consent form, the study protocol).

Furthermore, the engagement between the sponsor and the lead investigator requires the approval of a committee established and operated under the supervision of the MOH.10

The investigator is required to obtain each participant’s informed consent in writing, following a clear, verbal, non-pressuring explanation. The Investigator is further required to inform the participants of any new information that could affect their decision to participate.

The lead investigator and the sponsor are required to report to the MOH on the progress and conclusion of the clinical trial, including any serious adverse events.

In 2017, the MOH launched a new website containing a registry of clinical trials conducted in Israel with human participants. Registration is required with respect to clinical trials involving pharmaceutical preparations (including advanced therapies) in Phases I, II, III and IV (excluding trials in which the participants are healthy volunteers), and those involving medical devices. Registration on the MOH website is intended to replace registration on the NIH website, which was required previously, pursuant to Israeli regulations.

iv Named-patient and compassionate use procedures
Preparations

Generally, a preparation may be marketed in Israel only if it is listed in the registry of preparations, by the MOH. Nonetheless, the MOH is authorised, under corresponding regulations and guidelines, to approve the marketing of a preparation even if it is not registered, or not in accordance with its registration, provided that the preparation falls within the specified exemptions, and provided further that it does not harm public health. These exemptions include, inter alia, preparations imported by a pharmacy or sick fund or manufactured in Israel in small quantities.11

An exemption may be applied for the importation of a preparation for the personal use of a specific patient (a named patient). It further applies to ‘essential medical treatment’ and ‘compassionate use’.12

Devices

A device may be marketed in Israel only if it is registered with the MOH, unless it falls within the products listed in the Second Addendum to the Law.

Furthermore, the MOH is authorised, under corresponding regulations, to approve the manufacturing and marketing of devices that are unregistered or not in accordance with their registration, inter alia, for ‘essential medical treatment’ and ‘compassionate use’.

v Pre-market clearance
Preparations

As noted in Section II.iv, a preparation may be marketed in Israel only if it is registered with the MOH, unless it falls within the specified exceptions and provided that it will not harm public health.

An application to register a preparation may only be filed by an Israeli resident or a company registered in Israel.

A preparation will be accepted for registration subject to the following principle conditions:

  1. the preparation satisfies the quality requirements, and is found to be appropriate for medical use;
  2. the preparation is found to be safe and efficient for its intended use and its name is not misleading;
  3. the preparation is manufactured under good manufacturing practices (GMP); and
  4. the registration holder maintains a pharmacovigilance (PV) system.

For imported preparations, a certificate of pharmaceutical product (CPP), indicating the approval and marketing of the preparation in a recognised country, is also required.13

The MOH may further register the preparation subject to certain conditions, for post-registration control purposes.

According to the GMP Regulations, a person may manufacture, import, market or store medicinal preparations only as part of an authorised business.14 The relevant authorisation is granted for a period of five years, provided that the following conditions are met:

  1. the business was inspected, and found to be GMP-compliant;
  2. the business is duly licensed;
  3. the business is managed by skilled and trained personnel, including a quality assurance (QA) manager, a responsible pharmacist and a production manager;
  4. the preparations are manufactured on the manufacturing sites in accordance with GMP;
  5. the active pharmaceutical ingredients (APIs) used for the manufacture of the preparations are manufactured in accordance with GMP.

A manufacturer or an importer of preparations is required to obtain GMP approval from the MOH, to ensure the quality and safety of those preparations.

According to the GMP Regulations, the manufacturer of a preparation will verify manufacture of the APIs in accordance with GMP, by carrying out audits at the manufacturing site. Where such audits cannot be carried out, other means of verification may apply.

For generics, the Registration Guideline provides an abbreviated registration procedure.

For biological preparations and biosimilars, the MOH guideline generally adopts the policy of the European Medicines Agency (EMA).15

Under the MOH policy,16 homeopathic products are not registered as preparations, since their therapeutic efficiency has neither been proven to, nor considered by, the MOH. Homeopathic products are approved for importation and marketing, provided their safety is proven.

Attribution of medical indications or therapeutic characteristics on packaging and on any advertising material is prohibited, unless approved in advance by the MOH, based on clinical data.17 Homeopathic products are stored in pharmacies behind the counter, separated from preparations and sold by a pharmacist. The holder of the marketing authorisation is required to report any complaint or suspected adverse event to the MOH.

Devices

As noted in Section II.iv, a device may be marketed in Israel only if it has been registered with the MOH, unless listed in the Second Addendum to the Devices Law, and save for the aforementioned exemptions.

An application to register a device with the MOH may only be filed by an Israeli resident or by a company registered in Israel.

The basic requirements for the registration of devices are that (1) the benefit outweighs the risks, (2) the device has been found to be efficient and of appropriate quality for its intended use, (3) the device has been manufactured according to GMP, and (4) the device’s name is not misleading.

However, if the device is registered or approved for marketing in one of the countries listed as a recognised country and is being marketed in that country, the MOH will register the device for the same period as approved in the recognised country.

vi Regulatory incentives
Patent term extension

The Israeli Patents Law18 empowers the Registrar of Patents to extend the term of certain patents for an additional term not exceeding five years beyond the 20-year period of protection. An extension order may be granted only with respect to ‘basic patents’, protecting a preparation, a substance (an API), a process for the manufacture of a substance or preparation or the use thereof, or a device for which licensing is required.

An extension order will be granted only if the following conditions are met:

  1. the substance, the process for its manufacture or use or a preparation that contains the substance or the process for its manufacture, or the device, has been claimed in the basic patent that is in force;
  2. a preparation containing the substance is registered in the Registry of Pharmaceutical Preparations;
  3. the registration detailed in point b, above, is the first registration allowing for use of the substance in Israel for medicinal purposes;
  4. no prior extension order has been granted in respect of the basic patent or the substance;
  5. the application for the extension order has been filed in good faith;
  6. the scope of protection to be granted under the extension order will not exceed the protection granted under the basic patent;
  7. an extension of the patent term protecting the preparation or device (the reference patent) has been granted in the United States; and
  8. an extension to the reference patent has been granted and has not yet expired in one or more of the following EU Member States: France, Germany, Italy, Spain, the United Kingdom.

In the event that marketing authorisation has not been obtained in the countries designated in points (g) and (h), above, (commonly known as the ‘two-states requirement’), the conditions set out in those paragraphs shall not apply.

Subject to the following, an extension order shall remain valid for a period equal to the shortest extension afforded to the reference patent in a recognised country.19 Reference patent term extensions granted after an Israeli extension order has been granted must also be considered.20 In any event, the extension term will not exceed five years. The extension order further provides that the overall period of the basic patent and the extension order shall terminate no later than 14 years from the date of the first marketing authorisation in a recognised country. Moreover, the extension order shall expire no later than the first date of expiry of the extension period granted in a recognised country, in which marketing authorisation has been obtained, or revocation of any reference patent.

The extension term will also expire, inter alia, if (1) the registration of the preparation containing the substance is cancelled, or (2) the basic patent is revoked or amended in such a way that the substance, the process for its manufacture, the use of the substance, the preparation incorporating the substance or the process for its preparation, or the device, is no longer protected under the patent.

An application for an extension order should be filed 90 days after a marketing authorisation is granted by the MOH. This period is not extendable.

Market exclusivity for original products

Israeli law provides protection, under certain circumstances, to confidential data submitted as part of a marketing authorisation application, provided that its origination entailed considerable effort. New chemical entities (NCEs) registered in Israel are therefore entitled to a period of market exclusivity, during which the MOH will not issue a marketing authorisation for a new medicinal product containing said NCEs. No regulatory exclusivity period is granted for a new indication.

The market exclusivity period will be capped by the earlier of the following:

  1. six years from the date of registration in Israel of the preparation that contains NCEs; or
  2. six years and six months from the date of registration date in a recognised country of the preparation that contains NCE.21

Other provisions aimed at encouraging the furtherance and development of products for rare diseases, diseases that are prevalent in developing countries and for paediatric use are not available in Israel.

vii Post-approval controls
Preparations

The Pharmacists Ordinance provides that the manufacturing, storage and distribution of preparations comply with GMP and good distribution practice (GDP) requirements.

The registration holder of a preparation is required to manufacture22 or import preparations only in accordance with the registration conditions, including validated infrastructure and facilities.

In addition, the MOH is authorised to conduct periodic inspections of the plant, in accordance with the EMA Guidelines.23 The MOH is required to sample registered and marketed preparations in accordance with an annual post-marketing plan, to be tested by the MOH’s Institute for Standardisation and Control of Pharmaceuticals. The post-marketing plan is formulated mainly by taking into account risk-management considerations.24

A registration holder may engage subcontractors to carry out the manufacturing and importing activities. However, the parties’ respective responsibilities should be clearly defined in the contract.

The manufacturing department of the registration holder is required to control the manufacturing process, in accordance with written and approved standard operating procedures, perform validation of new processes or major changes, and periodic revalidation of key stages of the manufacturing processes.

Furthermore, the manufacturer or importer must maintain an independent quality assurance (QA) department. QA is required, inter alia, to deal with complaints concerning the quality of the preparation and to investigate recalls from the market.

The first batch of a registered preparation must be approved by the MOH prior to being marketed for the first time.

The registration holder is also required to establish and maintain a PV system and to appoint a qualified person for pharmacovigilance.25

The registration holder is required to inform the MOH of any relevant change to the registration conditions. The manufacturer may not make material changes unless approved in advance by the MOH.26

Unauthorised changes could constitute grounds for the revocation of a registration. The MOH might also revoke a registration if the product may cause harm or is found to be inefficient, or if its registration requirements are not met. The MOH is required to allow the registration holder to submit arguments prior to rendering its final decision in this regard.

The Pharmacists Ordinance specifies a requirement to report a defect in a preparation and authorises the MOH to take action to safeguard public health. The corresponding MOH guideline27 contains requirements concerning, inter alia, the time frame for, and manner of, reporting a defect and its investigation, as well as the decision-making process concerning the handling of the defect, including the option to order a recall for the removal of defective preparations from the market.

Following notification by the manufacturer, the MOH will delete an agent’s status as registration holder. The MOH may, in accordance with the manufacturer’s notification, approve a new agent as the registration holder. The previous registration holder may continue marketing his or her inventory for a period of one year.

As noted in Section II.v, the MOH may make the registration of preparations subject to certain conditions for the purposes of post-approval control. One such condition – the existence of a regular and continuing supply – was recently addressed by the MOH, by directing the registration holders to hold, at any point in time, an inventory sufficient for at least 30 days of consumption (beyond the current inventory available in pharmacies and clinics). In exceptional cases (e.g., preparations with a short shelf life), an exemption must be approved in advance.

Furthermore, a registration holder is required to inform the MOH of marketing cessation (temporary or permanent) or of its decision not to renew its registration at least six months before the contemplated permanent cessation and at least three months before the contemplated temporary cessation, or – in the case of sudden and unexpected cessation – as soon as the registration holder becomes aware thereof. Accordingly, it is mandatory that the registration holder maintain an inventory of preparations intended to be marketed in Israel for a minimum period of six months.

In cases where a registration has expired and not been renewed, or where the registration has been revoked, the registration holder may continue marketing his or her inventory for a period of one year, unless the MOH instructs otherwise in writing.

Biosimilars must be labelled so as to distinguish them from any other similar product or ingredient, and are subject to strict monitoring and proactive reporting of adverse reactions, as well as the submission of a risk management plan, risk evaluation and mitigation strategy.28

Devices

The registration holder is required to inform the MOH of any change in the data submitted at the time of registration of the device.

The Minister of Health is authorised to enact regulations pursuant to which the registration holder will be required to perform follow-up operations and inspect the registered device. Regulations of this nature have not yet been drafted.

The Minister of Health is also authorised to enact regulations regarding post-marketing surveillance, including a duty to report to the MOH any known ‘special event’ arising in connection with registered devices. Special events include:

  1. a serious malfunction in the device that may endanger the patient’s health;
  2. use of the device that caused or was suspected of causing unexpected damage to the patient’s physical or mental health, or that caused significant damage or death; and
  3. action taken by any health authority or an announcement published by the manufacturer, the registration holder or any health authority concerning the device, its marketing and use, or any new safety data published in the main scientific literature in the field.

Regulations of this nature have not yet been drafted. However, a MOH guideline is currently being drafted based on the corresponding American and European guidelines.

The Minister of Health is authorised to enact regulations for the recycling of disposable devices. At this stage, no such regulations have yet been drafted.

viii Manufacturing controls
Preparations

As noted in Section II.vii, the GMP Regulations largely include conditions under which a manufacturer or an importer can obtain GMP approval from the MOH, and the basic requirements for manufacturing and testing preparations, to ensure their quality and safety.

The responsible pharmacist is required to notify the MOH of any transfer of ownership of the relevant manufacturing facilities.

Devices

One of the basic requirements for the registration of a device is that it is manufactured in compliance with the GMP requirements.

Marketing a device in Israel requires a certificate from the health authority or equivalent regulatory body of the country in which the device was manufactured, certifying that the manufacturer’s GMP standards accord with the requirements of ISO 13485.

Here too, the registration holder must notify the MOH of any transfer of ownership of the relevant manufacturing facilities.

ix Advertising and promotion
Preparations

The term ‘advertising’ is defined in the Pharmacists Ordinance as an act of disseminating information, in writing, through the media or by any other means.

The Pharmacists Ordinance distinguishes between advertisements directed at healthcare professionals and those directed at the general public, and between the advertising of prescription and non-prescription preparations. As a general rule, advertising a preparation cannot contradict its registration, nor can it attribute indications that were not specifically approved.

Advertisements aimed at healthcare professionals for prescription and non-prescription preparations are permitted, provided they emphasise the approved indications.

Online advertising for healthcare professionals is permitted, subject to certain limitations, such as applying mandatory means to identify users prior to them gaining access to said information.

By contrast, the advertising of prescription preparations directed at the general public is prohibited. However, subject to special approval being given, explanatory information may be handed personally to a patient by the attending physician.29

MOH guidelines concerning the improvement of compliance for patients who have been prescribed preparations, and raising public awareness of various diseases,30 may also allow registration holders to provide patients with a broader range of information. Subject to prior approval of the MOH, this information can also be communicated to a wide array of therapists, including those who are not authorised to prescribe prescription preparations, if the information is required as part of their professional services and for treating patients. In any event, the information cannot include advertising content or encourage the consumption of preparations. In this context, Guideline 137 now allows, in large part, for this information to be provided to patients, subject to the MOH being notified thereof, as opposed to obtaining the MOH’s prior approval, as was previously the case.

Advertising of non-prescription preparations is permitted, subject to its preliminary approval by the MOH. It must be accurate, clear and consistent with the registered indications. The regulation sets forth mandatory data that must be included in such advertising, as well as data that must be excluded. Restrictions are also imposed on advertisements including a comparison between products. An unapproved advertisement may result in a clarification notice, cancellation or prohibition of the advertisement and cessation of future marketing or cancellation of the product’s registration certificate.31

Promotion of preparations is also prohibited, specifically, raffles, handing out sample products or promising an additional preparation.

The rules of the Broadcasting Authority and the Second Authority for Television and Radio further regulate broadcast commercials and the concession owner’s liability with regard to misleading health-related advertisements or the unauthorised advertising of medicines.32 While the former prohibits almost all forms of advertisement for preparations, the latter allows commercials for non-prescription preparations, under various circumstances.

Devices

The MOH is authorised to supervise the advertising of devices but, to date, no regulation to this effect has been drafted.

x Distributors and wholesalers
Preparations

The Pharmacists Ordinance distinguishes between wholesale and retail marketing. Wholesale marketing may only be carried out by a wholesale pharmaceutical business33 or a health institution, and retail marketing may only be carried out by a pharmacist in a pharmacy.

Under the Pharmacists Ordinance and the GMP Regulations, preparations and APIs must be stored, transported or distributed in line with GDP. In this context, Israeli law adopted the principles of the EU regulatory regime.34

The MOH is authorised to conduct periodic audits of wholesale and retail businesses, in accordance with risk management and a list of priorities, at least every three years, following which a GDP certificate may be granted.

Devices

Transportation and storage of devices can be performed only by a licensed business that possesses a certificate from an entity recognised by the MOH, certifying its compliance with the requirements of ISO 9001.

xi Classification of products
Preparations

Legislation distinguishes between distribution of prescription (Rx) and over-the-counter (OTC) preparations, which can only be performed by a pharmacist, and distribution of general sales list (GSL) preparations, which do not need to be carried out in a pharmacy or by a pharmacist.

Classification of the relevant preparations is determined by the MOH, at the time of registration. The registration holder may apply to reclassify an Rx preparation as OTC.

Devices

The MOH is authorised to register a device, subject to certain conditions and restrictions, including restricting its use to professionally qualified personnel or only in accordance with a physician’s order.

Furthermore, the MOH is authorised to prescribe technical specifications for devices on the basis of which regulations were enacted for the licensing of special devices used by medical institutions, such as MRI and CT scanners.35

xii Imports and exports
Preparations

Under the Pharmacists Ordinance, the term ‘marketing’ is broadly defined to include ‘importing’. The following are required to obtain an approval to import a preparation:36

  1. a CPP indicating the approval and marketing of the preparation in a recognised country;
  2. importation may only be performed by a pharmaceutical company, a wholesale pharmaceutical business or a storage facility of a health institute;
  3. an application for an import certificate may be filed only by a pharmacist appointed by the applicant and approved by the MOH; and
  4. the preparation must be registered in the Registry of Preparations, or fall within the specified exemptions of preparations that may be manufactured, marketed and used even if unregistered, or not in accordance with its registration.37

The MOH will not issue an import certificate, unless the following conditions are met: (1) the preparation was transported into Israel by licensed dealers in recognised countries; and (2) en route to Israel, the preparation was stored only in recognised countries.

Special permits are required for importation and exportation of narcotics. Importation permits are valid for one year, while exportation permits are valid for only three months, although it is possible to obtain a three-month extension. Special permits are also required for importation of psychotropics and dangerous drugs.

Devices

The term ‘marketing’ in the Devices Law is defined broadly to include ‘importation’ of devices. Therefore, the principal requirements that are applicable to the importation of preparations also apply to devices.

The registration holder is required to identify the importer in the registration application, and the MOH will include the importer’s details in the registration certificate, on the basis of which the importer can then apply for an import permit.

Marketing an imported device requires a certificate from the health authority or any other regulatory body of the country in which the device was manufactured, certifying that the manufacturer’s GMP standards satisfy the requirements of ISO 13485. Furthermore, carriers of devices must possess a certificate from an entity recognised by the MOH, certifying that their storage and transportation conditions meet the requirements of ISO 9001.

xiii Controlled substances

Narcotics may be supplied only by a licensed pharmacist to hospitals, doctors, licensed pharmacists, a person who has been prescribed a narcotic or a person who holds a permit to buy narcotics. A permit for the manufacturing, possession or use of narcotics may be granted by the MOH, subject to specific disclosure requirements.38

A manufacturer or a wholesaler of psychotropics may only sell drugs listed in the First Addendum to the Pharmacists Ordinance to doctors, licensed pharmacists, dentists, veterinary surgeons or permit holders. In addition, a manufacturer or a wholesaler may not engage in the retail of psychotropic drugs, unless it is separate from the wholesale business.

Cannabis is classified under the Drug Ordinance as a ‘dangerous drug’. Recently, the MOH consolidated an outline for regulating all aspects of medical cannabis, in accordance with several governmental decisions. The regulatory authority tasked with the responsibility for regulating cannabis for medical use and research is the Medical Cannabis Unit within the MOH. The purpose of enacting new regulations in this regard is to enable patients to have access to reliable, qualified and approved sources of cannabis for medical use, while preserving public health and preventing any deviation and illicit use of cannabis for non-medicinal purposes.

xiv Enforcement
Preparations

The Pharmacists Ordinance imposes punitive measures, in the form of imprisonment or a fine, based on the type and nature of the offence.

In general, the punitive measures are imposed according to three levels of criteria, subject to the severity of the offence.

Under the first level, six months’ imprisonment or a fine not exceeding 29,200 shekels will be imposed for misdemeanours committed at the level of retail marketing.

Under the second level, one year’s imprisonment or a fine not exceeding 75,300 shekels will be imposed for offences committed at the level of manufacturing and wholesale distribution. Offences of this nature include, inter alia, wholesale marketing of preparations not by a wholesale pharmaceutical business or a health institution; running a wholesale pharmaceutical business without delegating the professional management to a responsible pharmacist; marketing a preparation of a quality that is inappropriate for medical use, or a preparation subject to a recall; manufacturing or importing a preparation without registration or not in accordance with its registration conditions, or not in compliance with GMP requirements; and storage of preparations that does not conform with GDP requirements.

The third level of punitive measures was established to tackle the phenomenon of pharmaceutical crime and, particularly, counterfeit, theft and use of defective preparations. It imposes three years’ imprisonment or a fine of 226,000 shekels for the manufacture, marketing or possession of a preparation (or a raw material) that is contrary to the registration requirements, and that may mislead customers with regard to an ‘essential detail’ of the preparation. In this context, an ‘essential detail’ is restricted to the preparation’s name, dosage form, labelling, indication, its classification as a preparation, composition, strength, batch number, expiry date, origin and marketing or release documentation.

In addition to criminal sanctions, which are intended to cater for situations giving rise to criminal liability, the Pharmacists Ordinance also allows for the imposition of monetary administrative sanctions. Based on the experience gained from the imposition of this type of penalty in other legislative fields, monetary administrative sanctions are the main tool relied upon as a means of enforcement of the regulatory regimen on legitimate ‘players’ in the market.

The monetary administrative sanctions are imposed in the event of a breach of provisions of the Pharmacists Ordinance (a PO breach) according to five levels of criteria, subject to the severity of the relevant breach.

Under the first level, a monetary administrative sanction of 7,000 shekels will be imposed for a PO breach committed at the level of pharmacy management (e.g., failure to provide employee training, failure to conduct annual inspections).

Under the second level, a monetary administrative sanction of 10,000 shekels will be imposed for a PO breach committed at the level of retail marketing, for marketing a preparation that is not registered, or for holding or marketing a preparation labelled as a ‘physician sample’.

Under the third level, a monetary administrative sanction of 20,000 shekels will likewise be imposed for a PO breach committed at the level of retail marketing, for holding preparations or raw materials intended for sale that were not obtained from a wholesale pharmaceutical business or a recognised institute, for storage not in compliance with GDP requirements or for marketing an expired preparation.

The fourth level imposes a monetary administrative sanction of 50,000 shekels on a registration holder, a manufacturer or an importer who marketed an inappropriately labelled preparation and on a pharmacy owner who fails to delegate the professional management of the pharmacy to a responsible pharmacist.

Under the fifth level, the MOH is authorised to impose a monetary administrative sanction of 150,000 shekels (300,000 shekels for a corporation) for a PO breach committed at the wholesale level, including running a wholesale pharmaceutical business without delegating the professional management to a responsible pharmacist. The fifth level may also apply for a PO breach committed at the registration holder, manufacturer and importer levels, where any of the aforementioned manufactured or marketed, for example, an unregistered preparation or a registered preparation contrary to its registration conditions.

The monetary administrative sanctions may be reduced under certain circumstances and having regard to various considerations.39

Apart from the above, the MOH has very little discretion as to the implementation of monetary administrative sanctions.

As an alternative to monetary sanctions, the Pharmacists Ordinance authorises the MOH to implement administrative measures in the form of advance warnings or binding undertakings, based on criteria as outlined in the MOH guidelines.40

The Pharmacists Ordinance also authorises the Minister of Health to appoint inspectors, who will have the authority to:

  1. demand identification;
  2. demand information or documents;
  3. enter a place where there exists a reasonable basis to assume that supervised preparations are being manufactured, stored or marketed; and
  4. take measurements or take samples of preparations.
Devices

The Minister of Health is authorised to appoint inspectors to supervise the implementation of the provisions of the Devices Law.

If a device ceases to comply with its registration conditions or any of the restrictions prescribed by the MOH, its registration in a recognised country has been revoked, or the MOH suspects that it may harm public health, the MOH is authorised to impose administrative sanctions, including discontinuation or restriction of manufacture or marketing of a device or deletion of its registration, restriction on the advertisement and recall from the market.

Furthermore, breach of the following provisions of the Devices Law is considered a criminal offence: (1) manufacturing or marketing unregistered devices, not for personal use or not in accordance with their registration conditions; (2) instructing the use of, or using, unregistered devices; and (3) instructing the use of, or using, devices not in accordance with the MOH’s instructions or restrictions. It will also be deemed a criminal offence if a registration holder fails to carry out follow-up activities, inspect registered devices or to report special incidents.

In such events, the court has the authority to impose criminal sanctions, including imprisonment and fines. Where the breach is committed by a company, the fines are doubled. Furthermore, office holders may be found liable for offences committed by the company or any of its employees.

III PRICING AND REIMBURSEMENT

The Israeli sick funds are required to provide to all Israeli citizens and residents a basic basket of medications and medical services (the Health Basket),41 for which the patient pays the deductible price only.42 The Health Basket is updated annually by the MOH’s general manager, based on the recommendations of the Public Committee.

The Ministers of Health and Finance are authorised to regulate the prices of services and products by issuing a relevant order.43

Three means of price regulation are applied in the field of preparations:44

  1. price fixing by the regulator is applied with regard to Rx preparations, and the price list is periodically updated.45Following a review of the current pricing model, the Inter-Ministerial Pricing Committee of the MOH and the Ministry of Finance recently invited the public to review the following suggested pricing policy:
    • branded products will be priced based on the average price listed in the three least expensive countries of the seven reference countries used for the current pricing model (Belgium, Hungary, Spain, France, the United Kingdom and Germany); and
    • generic products (as well as the corresponding branded products), will be subject to less stringent supervision, according to Chapter F of the Supervision Law, which allows price increases, subject to prior approval by the MOH;
  2. submission of an application prior to increasing prices above the fixed price is applied with regard to OTC preparations;46 and
  3. report of prices and profits is applied with regard to GSL preparations.

IV ADMINISTRATIVE AND JUDICIAL REMEDIES

MOH policy, procedures and guidelines are subject to judicial review, within the framework of a petition filed with the Israeli Supreme Court.

Concrete decisions, relating to specific preparations or technologies, are initially dealt with by appeal procedures within the MOH.47 According to the MOH guidelines, a decision given by the MOH in the appeal process will be considered final. However, in practice, the decision is subject to judicial review, through a petition filed with the Israeli Supreme Court.

V FINANCIAL RELATIONSHIPS WITH PRESCRIBERS AND PAYeRS

Financial relationships between companies that market preparations and devices, and healthcare professionals and health institutions and personnel, are subject to general restrictions set out in the Israeli Penal Law 1977 and the Civil Service Rules, to which civil servants are subject, with regard to, inter alia, private practice and employment as well as the acceptance of benefits.

Such relationships are further subject to the restrictions in Circular 4/10,48 which requires engagements funded by commercial companies to be approved in advance by the MOH committee and that the conditions for such engagements are specified.49

Donations made by certain entities to health institutions should be reported annually to the MOH by donors and recipients alike.50 Anyone who makes a donation to an entity in the health field must report annually to the MOH. Furthermore, donations to physicians, pharmacists and investigators, in an amount exceeding the aggregate of 2,500 shekels per year, must also be reported.

The Physicians Association in Israel and representatives of pharmaceutical companies published a Joint Ethical Convention in 2004 as a self-regulatory act. It was last updated in 2014. The Convention allows for the existence of a professional relationship between the two parties for the purpose of advancing medicine and science, while ensuring the physicians’ independence and professional integrity.

VI SPECIAL LIABILITY OR COMPENSATION SYSTEMS

No specific compensation regulations have been enacted with respect to preparations or devices. The Damaged Products Liability Law 1980 (DPL Law) defines a ‘damaged product’ as a product that may cause bodily injury because of a flaw or as a result of disregarding the warnings included in the patients’ leaflet or instructions for use. The DPL Law sets out the manufacture’s liability for compensating a person who suffered bodily injury as a result of a damaged product, regardless of whether the manufacturer was guilty for the damaged product; this compensation is subject to a cap. Alternatively, an injured person can claim negligence on the part of the manufacturer.51 In that event, the manufacturer’s guilt must be established; however, the damage is not limited to bodily injury or to a compensation cap.

VII TRANSACTIONAL AND COMPETITION ISSUES

i Competition law

Patent disputes and, in particular, pharmaceutical patents, are of special relevance to the life sciences sector in Israel.

The Restrictive Trade Practices Law 1988 (RTP Law) excludes arrangements in which the owner of a patent registered in Israel dictates restrictions relating to the use of its patent. Notwithstanding this, the Restrictive Trade Practices Tribunal has held that this exclusion does not apply to actions of a patent owner who abuses his or her position as a monopoly. Therefore, ownership of a patent does not necessarily establish immunity from supervision under the Law, if the patent owner has a dominant position in the market.

The settlement of patent disputes may also be subject to the RTP Law. However, to date, the Restrictive Trade Practices Authority’s involvement in the pharmaceutical market has been very limited.

Under the Patents Law, the Registrar may grant a compulsory licence if the patent owner abuses his or her position as a dominant firm (i.e., a monopoly). However, in practice, very few applications for a compulsory licence have been filed.

ii Transactional issues

Transactions are subject to the provisions of the RTP Law. Restrictive arrangements are prohibited, unless approved in advance or deemed exempt under the RTP Law. Furthermore, mergers that meet any of the thresholds prescribed in the RTP Law may be carried out only if approved in advance by the Controller of Restrictive Trade Practices, provided there is no reasonable suspicion that competition in the relevant market will be significantly harmed, or that the public will be harmed as a result. Granting exclusive licences for long-term periods (or for indefinite periods) may be considered as a merger, and, thus, subject to approval by the Controller of Restrictive Trade Practices.

Furthermore, as noted in Section II.vii, the transfer of a marketing authorisation is subject to prior approval by the MOH.

Transactional issues relevant to preparations and devices also involve patent transactions, such as patent assignment and licensing. The assignment of an invention and patent rights requires a written agreement, and must also be recorded in the Registry of Patents to be valid against third parties. A patent owner may grant exclusive or non-exclusive licences to use the patented invention. A licence so granted must similarly be recorded in the Registry of Patents to ensure its validity against third parties. Only an exclusive licence entitles the licensee to initiate infringement proceedings or apply for patent term extension.

1 Dovev Apel is a partner at S Horowitz & Co.

2 The Pharmacists Ordinance (New Version) 1981.

3 The Pharmacists Regulations (Preparations) 1986; the Pharmacists Regulations (Good Manufacturing Practice) 2008.

4 The Medical Devices Law, 2012. The Law will enter into force only after all relevant regulations have been enacted. At this stage, only a part of the regulations has been enacted (i.e., the Medical Device Regulations (Registration of a Medical Device and the Renewal Thereof), 2013). Nonetheless, in February 2014 the MOH published a circular advising on the implementation of the principles of the Medical Devices Law as of April 2014.

5 The recognised countries under the Medical Devices Law are: Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, the United Kingdom and the United States.

6 A ‘recognised country’ is defined in the Pharmacists Regulations as any one of the following: Australia, Canada, each Member State of the European Union, Iceland, Israel, Japan, New Zealand, Norway, Switzerland and the United States.

7 The Animal Welfare (Experiments on Animals) Law 1994; The Animal Welfare (Experiments on Animals) Rules 2001.

8 Under the Laboratory Accreditation Authority Law 1997, laboratories in Israel are accredited in accordance with the OECD’s Principles of Good Laboratory Practice (GLP), including non-clinical in vitro experiments.

9 Including the Public Health Regulations (Medical Trials in Human Beings) 1980, and the MOH Guidelines for Medical Trials in Humans, as updated in 2016. In February 2017, Guideline 144/01 entered into force and replaced the previous guideline (namely, MOH Circular 7/05), which contained provisions laying down the framework for the supervision of clinical trials in human beings (either by the MOH or by the relevant institutional bodies).

10 Circular 4/10, ‘Rules for the engagement of MOH Institutes with commercial companies’ (Circular 4/10).

11 Section 29(a)(3) of the Pharmacists Regulations.

12 Circular 19/07, ‘Approval of medicinal preparation according to Section 29 of the Pharmacists Regulations (Preparations), 1986, and Notice concerning the Manager’s Consent according to the Pharmacists Regulations (Preparations), 1986’. In December 2016, an updated version of the aforesaid Notice was published by the MOH. Among the changes introduced into the updated Notice is that the reference to ‘compassionate use’ in institutes – which previously was limited to three patients – can now be applied to ‘individual patients’ treated for the same therapeutic indication.

13 Guideline REG 08_2012, ‘Procedure for Filing Applications for the Registration of Medicinal Preparations (including Amendments and Renewals)’ (Registration Guideline).

14 In January 2018, new guidelines (Guideline EX-015/02) entered into force, setting out the procedures for obtaining a new manufacturer’s or importer’s authorisation, and the procedures for the renewal, updating, suspension and revocation of such authorisation.

15 Guideline 127, ‘Registration Conditions and Use Policy for Biosimilar Preparations’ (Guideline 127).

16 Guideline 10, ‘Homeopathic Products’.

17 Additional restrictions concerning the advertisement and labelling of homeopathic product are detailed in the said MOH guideline.

18 The Patents Law 1967 (Patents Law).

19 A ‘recognised country’ is defined, for this purpose only, to mean France, Germany, Italy, Spain, the United Kingdom and the United States.

20 LCA 8127/15, 8263/15 The Manufacturers Association of Israel v. Merck Sharp & Dohme Corp. et al. (15 June 2016).

21 Including Australia, Canada, Member States of the European Union, Iceland, Japan, New Zealand, Norway, Switzerland and the United States.

22 Under the Pharmacists Ordinance, the term ‘manufacturing’ is defined broadly as including ‘mergence, blending, assembly, refining, processing, transformation and activation of any chemical or physical process for the preparation of a product or the packaging of a product’.

23 EMA/572454/2014 ‘Compilation of Community Procedures on Inspection and Exchange’.

24 In February 2017, new guidelines (Guideline EX-016/01) entitled ‘Quality Testing of Registered and Marketed Medicinal Preparations in the Framework of Post Marketing Surveillance (Post marketing-PM)’, entered into force.

25 Guideline 6, ‘Reporting on Adverse Events and New Safety Information’.

26 Guideline EX-009/01, ‘Guideline for Filing an Application for Change in a Medicinal Preparation from the Quality Aspect’.

27 Guideline PUB-003/07, ‘Notification of Defect in Preparations and Active Raw Material’.

28 Guideline 127.

29 Guideline 24, ‘Advertising of Medicinal Preparations in accordance with Regulation 28’ (Guideline 24).

30 Guideline 137, ‘Rules for the Improvement of Educated Use and Medicinal Treatment Compliance in Patients who were Prescribed with Prescription Medicinal Preparations, via Noncommercial Information’ (Guideline 137); Guideline 134, ‘Raising Diseases Awareness – Rules for the Accessibility of Information to the General Public, Funded or Conducted under the Auspices of a Registration Owner or a Third Party’.

31 Guideline 24, Section 3.7; a letter from the MOH to responsible pharmacists, manufacturers, importers and owners of registered preparations.

32 The Rules of the Israeli Broadcasting Authority (Commercials and Radio Announcements) 1993, the Rules of the Second Authority for Television and Radio (Ethics in Television Commercials) 1994 and the Rules of the Second Authority for Television and Radio (Ethics in Television Commercials) 1999.

33 A ‘wholesale pharmaceutical business’ is defined in the Pharmacists Ordinance as a business used for storage, distribution, transportation and wholesale marketing of medicinal preparations or pharmaceutical raw materials. A wholesale pharmaceutical business can be operated, subject to the professional management of a responsible pharmacist.

34 Guideline 130, ‘Good Distribution Practice of Preparations’.

35 The Public Health Ordinance, 1940; the Public Health Regulations (Special Medical Devices) 1994.

36 The Pharmacists Regulations; the GMP Regulations; the Registration Guideline; MOH Guideline 33, ‘Importation and Marketing of Medicinal Preparations and Pharmaceutical Materials’; MOH Circular 19/07.

37 Section 29 of the Pharmacists Regulations.

38 The Dangerous Drugs Ordinance (New Version) 1973 (Drug Ordinance); and the Dangerous Drugs Regulations 1979; MOH Guideline 155, ‘Prescriptions for Dangerous Drugs – Clarifications’ (August 2016).

39 The Pharmacists Regulations (Reduction in Amount of Monetary Sanction) 2016; Guideline 145, ‘Administrative Enforcement – Provisions Regarding the Imposition of Monetary Sanctions Under the Pharmacists Ordinance’.

40 Guideline 146, ‘Administrative Enforcement – Advance Warnings or Binding Undertakings in Prevention of a Breach Under the Pharmacists Ordinance (in Lieu of Monetary Sanctions)’.

41 The National Insurance Law 1994 (NIH Law).

42 The deductible price is currently set at 16 shekels. If the price exceeds 118 shekels or 126 shekels, depending on the sick fund, the deductible price will be 15 per cent of the consumer price (if a generic alternative exists, the deductible price will be 10 per cent of the consumer price or 16 shekels, whichever is lower).

43 The Supervision of Prices on Services and Products Law 1996 (Supervision Law).

44 The Order for the Supervision on Prices of Products and Services (Application of the Law on Preparations) 2001 and the amendment thereto enacted in 2006.

45 The Order for the Supervision on Prices of Products and Services (Maximum Prices for Rx Preparations) 2001, outlines the pricing method by referencing prices from several European countries.

46 Guideline for handling a request for the approval of an OTC preparation.

47 Guideline 73, ‘Objection to the manager’s decision to reject a request for the registration of a preparation in the register, or to a decision to reject a request for an additional indication, or to a decision to restrict a preparation within its registration’.

48 Originally, Circular 4/10 applied to the MOH (including its various units) and the Clalit Sick Fund employees; in practice, it is implemented by additional health institutions.

49 For example, trials; holding conferences, seminars and advanced training; publication of a trial’s results; donation of medicinal products and equipment; financing of staff salary; and travels abroad, including participation in conventions.

50 The NIH Law.

51 The Civil Wrongs Ordinance (New Version).