Case C-329/16, SNITEM – against state diktats for healthcare software

When doctors write prescriptions for patented or brand medicines rather than generics this behaviour can cost a national healthcare system dear. Consequently, the French State has had a bright idea. Henceforth, any software running on prescribing-doctors’ computers must be approved of by the French State. Approval will only be granted where for example that software tells doctors about the existence and price of generic medicines. Unsurprisingly, industry objects to this French cost-cutting wheeze. It claims that this type of software is a ‘medical device’ within the scope of the EU’s ‘devices’ Directive 93/42/EEC. Accordingly, these criteria for obtaining French State approval are nothing other than technical state measures that are akin to quantitative import restrictions, and those are banned by Article 34 TFEU. However, the success of industry’s legal argument depends on whether such software can really be said to be a ‘medical device’ at all.

Background
In 2014, the French High Authority for Health decided that prescription practice needed to be improved, namely, treatment costs needed to come down.

To that end, the French Authority issued a state decree. All software programs involved with prescriptions and running on healthcare professionals’ computers would be required to display set-functionality related to the display of medico-economic advice. This information would include for example the price of a particular prescription, and the price of any available generic alternatives. Software also needed to be able to display supplementary information which could be extracted from a particular database about drugs that had been accorded the French State’s quality seal of approval. Other examples of requisite functionality would include the accessing of a patient’s medical file, and showing the latest best-practice when it came to prescribing behaviour. Software should also be required to display who had designed the software and how it had been financed.

The decree also set down a tight timetable for compliance. All relevant software would need to be tested and certified by the French State before the start of 2015.

This decree caused an outcry, and the health industry promptly set about challenging the legality of the decree. The French branch of Philips, plus the relevant French medical technology trade association known as the SNITEM (the Syndicat national de l’industrie des technologies médicales), each took the view that the decree was illegal because the French High Authority for Health was acting ultra vires.

More particularly, industry made the point that any edict requiring software to be adjusted to meet the criteria of the French State would be technical criteria. These criteria would have an effect equivalent to a quantitative restriction on imports, contrary to EU law. In particular, that would be the case where healthcare software had already have been awarded a CE mark elsewhere in the EU so any further national requirement for re-testing and re-certification would breach the EU’s CE-mark law as enshrined in the EU’s ‘devices’ Directive 93/42/EEC (OJ [1993] L169/1).

Industry escalated its legal challenge up to France’s highest court for matters of administrative law, the Conseil d’État.

At the French Conseil d’État
The French judges opened their deliberations by considering when ‘software’ could be a ‘medical device’. The latter term is defined in Article 1(2)(a) of the EU’s ‘devices’ Directive, 93/42/EEC (OJ [1993] L169/1), which explains:

‘“medical device” means any instrument, apparatus, appliance, software, material or other article, whether used alone or in combination, including the software intended by its manufacturer to be used specifically for diagnostic and/or therapeutic purposes and necessary for its proper application, intended by the manufacturer to be used for human beings for the purpose of:
– diagnosis, prevention, monitoring, treatment or alleviation of disease,
– diagnosis, monitoring, treatment, alleviation of or compensation for an injury or handicap,
– investigation, replacement or modification of the anatomy or of a physiological process,
– control of conception,
and which does not achieve its principal intended action in or on the human body by pharmacological, immunological or metabolic means, but which may be assisted in its function by such means.’

From this definition in the Directive, the term ‘medical device’ could cover software where it was used for diagnostic or therapeutic purposes.

Since the software could be within the scope of the Directive, it was then necessary to take into account Article 4(1) of the Directive. This rule imposes the following obligation on Member States:

‘Member States shall not create any obstacle to the placing on the market or the putting into service within their territory of devices bearing the CE marking provided for in Article 17 which indicate that they have been the subject of an assessment of their conformity in accordance with the provisions of Article 11.’

Hence, industry might have a valid legal point if industry-produced healthcare software had already been granted a CE mark elsewhere in the EU.

That said, the French judges appreciated that the Directive offered Member States a get-out clause. Article 8, entitled the ‘Safeguard clause’, permits the Member States to adopt the following measures:

‘1. Where a Member State ascertains that the devices referred to in Article 4(1) and (2) second indent, when correctly installed, maintained and used for their intended purpose, may compromise the health and/or safety of patients, users or, where applicable, other persons, it shall take all appropriate interim measures to withdraw such devices from the market or prohibit or restrict their being placed on the market or put into service. The Member State shall immediately inform the Commission of any such measures, indicating the reasons for its decision and, in particular, whether non-compliance with this Directive is due to:
(a) failure to meet the essential requirements referred to in Article 3;
(b) incorrect application of the standards referred to in Article 5, in so far as it is claimed that the standards have been applied;
(c) shortcomings in the standards themselves.
…’

This was the difficult issue. Could the software requirements be justified on the basis that they were a safeguard that improves the quality and safety of prescriptions, and encourages consistency and conformity in prescribing practices among the medical professions? Industry thought not because the software itself had no effect on the human body. Industry was against widening the scope of Article 8 where this would undermine the aim of the Directive as laid down in Article 4, which was to prevent states from introducing technical barriers to CE-marks.

Having heard the parties, the opinion of the French court’s advocate general, and having commissioned a supplementary specialist report, the Conseil d’État realised that the success of arguments relating to Article 8 of the Directive, and Article 34 TFEU turned on knowing what the definition of the words ‘medical device’ meant. Consequently, it decided to make a preliminary reference to the CJEU.

Question Referred
My unofficial translation of the question asked by the French Conseil d’État reads:

Is Directive 93/42/EEC […] to be interpreted as meaning that software that is intended to offer assistance to people authorised to prescribe medicines (either as independent practitioners or those working in healthcare centres, or socio-medical institutions) so as to improve prescription safety, simplify the work of the prescriber, encourage the conformity of prescriptions with national administrative rules, and lower treatment costs where alternatives of equivalent quality are available, is software constituting a medical device within the Directive when that software contains at the very least functionality which allows a doctor to use a patient’s data which helps him to put together a prescription, detect contra-indications, [adverse] drug combinations, and prescriptions for excess dosages, even when that software itself has no effect in or on the human body?

Commentary
The legal ability of a Member State to reduce its drugs bill is not unique to France. Italy would like its doctors to be able to prescribe ‘cheap’ Avastin rather than ‘expensive’ Lucentis in the treatment of some eye-diseases, and it is therefore challenging the licensing terms on which companies make their drugs available; see further, Case C-179/16, Hoffmann-La Roche – is off-label medicine use, off-limits to EU cartel law?