Goodwin Insights May 10, 2019

Business and Legal Considerations for Life Sciences and Healthcare/Technology Convergence Transactions

生命科学与医疗/技术融合交易的商业和法律考虑

Johnson & Johnson announced in January it entered into a research study in collaboration with Apple to investigate the new electrocardiogram feature on the latest Apple Watch to identify and potentially optimize diagnosis and treatment options for patients with atrial fibrillation. A month later, J&J announced it was acquiring Auris Health’s robotic surgical platform for $3.4 billion, one of the largest acquisitions of a private life sciences company of all time. These transactions are some of the latest in a growing number of high profile so-called convergence deals that are quickly transforming the life sciences and healthcare industries. They also are further evidence that life sciences / healthcare and technology centric business and legal issues are rapidly converging, creating opportunities and challenges for the business and legal professionals involved in implementing such complex arrangements. 

Like Flatiron Health’s stunning $1.9 billion sale to Swiss pharmaceutical giant Roche, these developments demonstrate that convergence is now at the forefront of deal activity in the life sciences and healthcare sector. By partnering with the National Institutes of Health, the National Cancer Institute and hundreds of community oncology practices, Flatiron quickly elevated a traditional electronic records platform into a healthcare technology behemoth that now successfully provides actionable data to optimize and improve oncology-focused clinical trials.

For Johnson & Johnson, the Apple and Auris deals supplement the earlier Verb Surgical joint venture between J&J subsidiary Ethicon Endo-Surgery and Alphabet’s Verily Life Sciences, as well as J&J’s collaboration with IBM to transform healthcare delivery. Verb employs robotics, visualization, advanced surgical instrumentation, data analytics and connectivity to build a next generation open surgical platform. IBM is working with J&J to build advanced intelligence coaching solutions and applications designed to transform patient experiences and deliver improved health outcomes.

The multi-billion dollar venture rounds for early cancer detection start up Grail, a company originally spun-out of Illumina, the leader in gene-sequencing technologies, earned Grail the rare status of a “unicorn” in the healthcare sector, quite an accomplishment for a company focusing on the overlap of life sciences, cloud computing, big data and artificial intelligence.

With the continuing convergence of the life sciences and technology industries, investors and lawyers involved with such deals are increasingly spending time on complex issues ranging from navigating an evolving regulatory environment to ownership of shared data to how to protect patient privacy and the security of applications. Below is a quick guide to key considerations surrounding the convergence of these industries:

FDA Regulatory Considerations: As convergence technologies, such as those powering developments in point-of-care diagnostics, robotics, bioinformatics, genomics, and more, continue to rapidly evolve, so too is the U.S. Food and Drug Administration, or FDA, modernizing its approach to regulating such convergence product offerings. Today, understanding whether, for example, a digital health product is actively regulated by the FDA and how a product is regulated involves a nuanced understanding of statutes, regulations, a web of guidance documents, and precedential decisions. Equally important is an understanding of how FDA’s regulatory framework may continue to shift over time. A thorough understanding of not only the regulatory implications of a convergence product offering, but also a developer’s business objectives can help inform efficient developmental and marketing strategies that can in turn help to ensure an expeditious path to market. 

Healthcare Regulatory Considerations: Convergence transactions often implicate a number of complex healthcare regulatory considerations. For example, as in a number of the transactions discussed above, the transfer or leveraging of health information is often an important aspect of such transactions. Consequently, the parties must consider whether any information that will be used or disclosed in connection with the arrangement is protected by The Health Insurance Portability and Accountability Act of 1996 (HIPAA), and, if so, whether the contemplated use or disclosure requires patient authorization or is allowed without patient authorization as in the case of uses and disclosures for treatment, payment, and, in certain cases, for healthcare operations. While pharmaceutical companies are typically not subject to HIPAA, their use and disclosure of patient information may be limited by other laws such as the General Data Protection Regulation (GDPR) in Europe, the terms of a patient’s consent to participate in research, the parties’ privacy policies, or other contracts. The parties to convergence transactions also should consider what obligations, if any, they have with respect to securing any data used or disclosed in connection with an arrangement and what obligations to include in the contract with respect to data security. Finally, parties to convergence transactions must consider whether the economic terms of their arrangement implicate health care fraud and abuse laws such as the federal Anti-Kickback Statute which makes it a criminal offense knowingly and willfully to offer, pay, solicit, or receive any remuneration to induce the referral of business for which payment may be made by a federal health care program such as Medicare or Medicaid.

Intellectual Property (IP) Considerations:  Recently, federal courts and the U.S. Patent Trial and Appeal Board (PTAB) have struck down more and more software- and diagnostic-related patents for reciting ineligible subject matter. Lawyers seeking to procure patent protection for such technologies must thoroughly understand the jurisprudence that has developed in federal courts and PTAB over the last decade. Copyright protection should also be considered as an option for protecting software, whether in place of, or in addition to, patent protection. Furthermore, companies should also take steps necessary to maintain trade secrets as part of their IP portfolios. Assets that may be eligible for protection as trade secrets include, for example, patient data, proprietary databases, details regarding innovations that need not be patented, software source code, and any other discoveries that may be difficult to patent or copyright (or to enforce as patents or copyrights in court). Finally, collaboration agreements should include clear provisions concerning ownership and licensing of IP rights, including those that arise out of the collaboration itself.

With the spate of recent high profile and high dollar convergence deals, it is clear that the marriage of life sciences, healthcare and technology is here to stay, and is creating regulatory and transactional legal complexity. Investors and their advisors involved in such convergence transactions that are able to navigate this complex hybrid of business and legal issues will have a competitive advantage over those who ignore the trend, and continue to focus on life sciences, healthcare and technology as distinct fields.

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*  Kris, Steve, Stephanie and Roger advised J&J on the recent Apple transaction

 强生公司1月份宣布,与苹果公司合作开展了一项研究,研究最新苹果手表上的新心电图功能,以确定并潜在优化房颤患者的诊断和治疗选择。一个月后,强生宣布以34亿美元收购Auris Health的机器人手术平台,这是有史以来最大规模的私人生命科学公司收购案之一。这些交易是越来越多备受关注的所谓融合交易中的最新交易,正在迅速改变生命科学和医疗保健行业。它们还进一步证明,以生命科学和技术为中心的商业和法律问题正在迅速融合,为参与实施此类复杂安排的商业和法律专业人员创造了机遇和挑战。 

就如 Flatiron Health以19亿美元售予瑞士制药巨头罗氏(Roche)此项惊人交易,可见在生命科学和医疗保健领域,融合交易现在处于交易活动的前沿。通过与美国国立卫生研究院、国家癌症研究所和数百种社区肿瘤实践机构合作,Flatiron 迅速将传统的电子记录平台升级为医疗保健技术巨头,现在已成功提供可操作的数据,以优化和改进以肿瘤为中心的临床试验。

 强生公司、苹果公司和 Auris的交易是继早前强生附属公司Ethicon Endo-Surgery与Alphabet旗下Verify生命科学组成合资公司Verb Surgical,以及强生与IBM合作的另一推动医疗保健服务演变的交易。Verb利用小号机器人、可视化技术、先进的手术仪器和数据分析和连接以建立一个未来的开放性手术平台。IBM正与强生合作,构建先进的智能辅导解决方案和应用程序,旨在改变患者体验并改善健康状况 。

由基因测序技术领头羊Illumina分拆出来的癌症早筛初创企业Grail进行经过几轮总值数十亿元的集资后,成为了医疗保健业的独角兽。作为一家专门从事涉及生命科学、云计算、大数据和人工智能重叠领域的公司而言,这是一项相当大的成就。

随着生命科学和技术行业的不断融合,参与此类交易的投资者和律师越来越多地花时间处理复杂问题,从应付不断变化的监管环境到共享数据的所有权,到如何保护患者隐私和应用程序的安全。以下是围绕这些行业融合的主要考虑因素的快速指南:
 
FDA监管方面的考虑:随着融合技术(如那些推动定点护理诊断、机器人技术、生物信息学、基因组学等技术)持续快速发展,美国食品和药物管理局(FDA)也在继续快速发展,使其管理融合产品的方法现代化。今天,了解数字健康产品是否受到FDA的积极监管,以及如何对产品进行监管,需要对法规、法规、指导文件网和先例决策有一个细微的理解。同样重要的是了解FDA的监管框架如何随着时间的推移而不断变化。深入了解融合产品的监管影响,以及开发人员的业务目标,有助于制定有效的开发和营销战略,从而确保快速进入市场。

医疗保健监管方面的考虑: 融合型交易经常涉及许多复杂的医疗监管考虑因素。如以上提及的许多交易中,健康信息的转移或利用通常构成这类交易的重要一环。   因此,当事人必须考虑与该安排有关的任何信息是否受到1996年颁布的《健康保險可攜性與可責性法案》(HIPAA)的保护。如果是,则拟使用或披露资讯是否需要患者授权,或是否允许未经患者授权的情况下使用或披露。如用于治疗、支付和在某些情况下用于医疗保健业务的用途和披露。虽然制药公司通常不受HIPAA的约束,但其患者信息的使用和披露可能受到其他法律的限制,例如欧洲的一般数据保护条例(GDPR)、患者同意参与研究的条款、双方的隐私政策或其他合同。参与交易各方还应考虑他们在保护与安排有关的任何使用或披露的数据方面的义务(如有),以及在合同中应包括哪些与数据安全有关的义务。最后,融合交易各方必须考虑其安排的经济条款是否涉及医疗欺诈和滥用法律,如联邦反回扣法令,这使得有意和故意提供、支付、招揽或收取任何报酬以诱使转介业务构成刑事罪行,因为可通过联邦医疗保健计划(如医疗保险或医疗补助)支付。

知识产权(IP)方面的考虑:最近,联邦法院和美国专利审判上诉委员会(PTAB)已经撤销了越来越多的与软件和诊断相关的专利,因为这些被视为专利不适格。寻求获得此类技术专利保护的律师必须彻底了解联邦法院和PTAB在过去十年中发展起来的法理。版权保护也应被视为保护软件的一种选择,无论是代替专利保护还是作为专利保护的补充。此外,各公司还应采取必要措施,将商业秘密作为其知识产权组合的一部分加以维护。可作为商业秘密获得保护的资产包括,例如,患者数据、专有数据库、无需专利的创新的详细信息、软件源代码,以及可能难以获得专利或版权的任何其他发现(或作为专利或版权在法院强制执行)。最后,合作协议应包括有关知识产权所有权和许可的明确规定,包括合作本身产生的规定。

随着最近出现一系列备受瞩目的大额融合交易,很明显生命科学、医疗保健和技术的结合将继续下去,并正在形成监管和交易法律的复杂性。参与此类融合交易的投资者及其顾问能够处理这些复杂的商业和法律问题,将较那些忽视这一趋势、并继续视生命科学、医疗保健和技术为各自独立领域的投资者具有竞争优势。

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*  Kris, Steve, Stephanie和Roger就苹果最近的交易为强生提供咨询。