1. International In-house Counsel Journal
Vol. 9, No. 36, Summer 2016, 1
International In-house Counsel Journal ISSN 1754-0607 print/ISSN 1754-0607 online
A Glance at Some of the Challenges of the GC Role in Pharma
GALIT GONEN
Senior Vice President & General Counsel for Teva Europe, Teva Pharmaceuticals,
Europe
Abstract
In the heavily regulated environment in which pharmaceutical companies operate,
success is defined by ensuring corporate compliance with disparate laws and
regulations without fettering the creativity and innovation on which pharmaceutical
companies depend. Business success can deliver life changing outcomes to patients
worldwide. It is fundamental that the GC in a pharmaceutical company understands and
facilitates this goal.
Diminished drug pipelines have required companies to rethink the drug discovery
process and move away from the search for new, small molecule drugs to focus instead
on the re-purposing of known drugs and development of biologics and "personalised"
medicines. New business models, often involving collaboration with third parties
including competitors, universities and charities have been introduced. There is increased
use of computer aided drug design, big data and artificial intelligence (“e-health”). All
give rise to numerous legal issues: how will outputs from collaborative research be
owned, protected and commercialised; what patient data can be used and how, in the drug
discovery process for the benefit of society; how will regulators approve bespoke drugs
for small patient populations for which a standard clinical trial is not feasible; how will
pricing and reimbursement by governments and healthcare providers be determined given
the pressures on healthcare budgets?
All of these challenges also present opportunities. The role of the successful GC in a
pharmaceutical company is that of legal strategist, navigating a path which ensures
compliance with known laws and regulations whilst identifying legal developments and
challenges which can be converted into business opportunities delivering real bottom
line, quantifiable value to the company and life changing therapies to patients, which
would otherwise be unavailable to them. The legal role is no longer only a gate-keeper
function. In house counsel have transformed into a true business partners and value
generators. This change in role requires the GC to understand fully the company’s
commercial strategies, work with the business leads, find solutions to barriers to market
access and identify opportunities for growth. Both business innovation and legal
innovation play a key role in the growth and success of the business.
Article
The success of any pharmaceutical company is inextricably linked to its ability to push
boundaries and innovate, to deliver the seemingly unimaginable and change patients'
lives in the process. Such innovation requires pharmaceutical companies to adopt a
creative approach to drug discovery, using new and emerging tools and business models.
Maintaining a satisfactory return on investment, in an environment where the price they
can charge for their drugs is not controlled by market forces and many innovations never
make it to market, requires the formulation of highly complex business strategies and
consideration of various legal factors: from effective maintenance and enforcement of

2. 2 Dr Galit Gonen
IP rights to providing close legal support throughout the process (e.g., R&D, clinical
trials, business development, market access, pricing and reimbursement), and to creating
innovative legal challenges and opportunities in order to provide a competitive edge. By
training, lawyers can be cautious and risk adverse. Whilst such a culture within the legal
team ensures they effectively fulfil the role of legal guardians of the business, by itself it
has the ability to destroy the very creativity that facilitates success and can result in the
lawyers being regarded as "blockers" rather than enablers risking their exclusion in future
strategic decision making.
In Europe, the pharmaceutical environment is further complicated through a fragmented
system of intellectual property rights, that although often granted centrally by European
bodies, are enforced before national courts with great variety in timelines, procedure,
specialism, expertise and approach of the different member states’ patent litigation courts
which leads to great uncertainties surrounding patent and SPC enforcement. Furthermore,
in Europe, procedures for determining the pricing and reimbursement of medicines
are not harmonised. Pricing and reimbursement is therefore set through the different
health schemes in each country and the rules that are applied are different in each
country. Lastly, there are increasing pharmacovigilance responsibilities.
Developing a culture in which legal risk is recognised and assessed without acting as a
brake on innovation and business strategy is key to the GC's role in pharmaceutical
companies. The best GCs create a culture in which they function as true partners and
value generators for the business, recognising how legal uncertainties can be converted
into business opportunities without risk to corporate reputation, unlocking additional
revenues and gaining a strategic advantage in a highly competitive market place.
To succeed the in-house legal team must be truly integrated into the business. They need
to think not in terms of legal disciplines (patents, regulatory, competition, commercial
etc.) but in terms of holistic business outcomes. They need to be stakeholders in the
strategies that the various business divisions pursue. That requires the GCs to understand
fully the commercial strategies and to work with the business leads to find solutions to
barriers to market access and revenue generation. They need broad ranging legal know-
how and understanding of compliance, enforcement and protection strategies to identify
opportunities for growth arising from legal developments. Increasingly multi-disciplinary
legal teams are being drawn together to deliver a business solution with a strong sense of
ownership of the business outcome and the ability to quantify the value they have brought
to the project.
For example, we believe strongly that in the pharmaceutical environment the complex
world of IP law cannot live in isolation. There is a close interplay with interfacing legal
subject matters such as regulatory law and data exclusivity, market access, parallel
importation, unfair competition, anti-trust, tenders legislation and more. A holistic view
of a product will result in a better overall strategy for the product for and the business.
This holistic view has also changed the legal function and has proven successful to the
business. With a legal department of knowledgeable lawyers who are true business
partners and fully understand its operation we find creative legal strategies which add
value to our business and finally, to patients through increased access to medicines.
Diversity within the pharmaceutical legal team is also key. Different genders and
nationalities bring important different perspectives to the problems faced by a multi-
national business. For pharmaceutical companies operating across Europe, this is
particularly so. Legal strategies can differ from one European country to the other but
need to be coordinated through true cooperation between the lawyers. A European GC in
the pharmaceutical industry has the challenging role of building and leading a unified

3. Challenges of the GC role in Pharma 3
legal department of successful business partners and value creators, despite its lawyers
coming from different backgrounds and expertise, different cultures and languages, and
working from many locations in Europe.
The challenges facing pharmaceutical companies change rapidly and the business must
constantly grapple with new issues where legal strategy will be a key determinant of
commercial success. For example, in Europe, the development of novel medicinal
compounds is incentivised and rewarded in a way that is proven, beneficial overall and
relatively predictable. However, diminished drug pipelines have required companies to
rethink the drug discovery process, to move away from the "traditional" search for new
small molecule drugs to focus instead on other ways to develop new treatments.
Often the legal systems that are effective when applied to novel compounds are not as
beneficial or predicable when they concern innovations in treatment made from
developing already known substances for new uses, formulations, methods of delivery
and so on. This uncertainty can be undesirable for all parties in attempting to decide their
product strategies but it can also create opportunities.
For example, both innovative and generic pharmaceutical companies may invest in
research into new uses for known drugs. This “repurposing” of known drug molecules is
an effective route for innovation for a number of reasons. Most importantly, it takes
advantage of the extensive body of knowledge, research and clinical experience that has
already been gained through the use of known treatments. By combining this body of
data with technological advances made since the discovery of the molecule, significant
and previously unknown uses for such drugs may be uncovered while testing on humans
is minimised.
The issue that this gives rise to is how to protect the discovery of inventive new uses for
known compounds without blocking the legitimate market for generic medicines for the
original treatment purpose when the original use is no longer protected. This is a topic
many in-house teams have been strategising around.
It is critical that in the pharmaceutical industry, originator legal strategies designed to
protect a repurposed follow-on market and the return on investment made to identify the
drug's efficacy, fairly balance effective rights enforcement with the generic producer's
legitimate right to market the same drug for the known and no longer protected use. An
approach which is too aggressive can cause long term reputational harm even if it
succeeds in securing short term revenues. A perception of anti-competitive conduct can
easily arise when the originator moves to enforce its protective rights in respect of
monopoly market positions and powerful interim remedies are sought before the merits of
any infringement case has been determined or patent validity assessed. It can alienate
policy makers, the public and even the company's own patients who without the drug
would see deterioration in their health and well-being.
Innovation can be risky and may require substantial investment in research and
development. Such investment should undoubtedly be rewarded. However we do not
consider that the current systems have yet struck the correct balance especially with
regard to the challenges presented by drug repurposing and reformulation where the
active substance itself is already known. We consider that a more sophisticated and
sensitive incentive system should be encouraged that is designed to offer a reward for
innovation that is proportionate to the size and value of that innovation. Striking this
balance correctly should create sustainable innovation whilst protecting healthcare
budgets through generic entry in appropriate product markets.

4. 4 Dr Galit Gonen
It may be that pricing and reimbursement could have more of a role in providing such
incentive and reward. Currently the manner in which pricing and reimbursement for
pharmaceuticals is determined varies across Europe. Under current systems medicines
prescribers are generally strongly incentivised to prescribe cheaper generic medicines in
place of the originator brand product wherever possible. Wide adoption of generic
prescribing and product substitution can result in generic medicines being dispensed to
patients for protected indications, even where the generic producer itself has no intention
to sell its product for protected indications and has actively taken steps to avoid such
happening.
Enacting a solution to this problem will require closer ties to be made between the
product protection systems and prescribing and reimbursement behaviours. Its
implementation would require the support of stakeholders such as doctors and
pharmacists but could be highly effective and beneficial to all. A legal team which can
look at all options and is close enough to commercial colleagues to identify solution(s)
and enforcement strategies which both protect its investment in such products and
legitimate revenue streams whilst enhancing rather diminishing the company's reputation
is key to really adding value to the business in such situations.
Modern drug discoveries do not of course comprise only reviewing known drugs for new
purposes. Drug discovery is also increasingly making use of big data, computer aided
drug design and artificial intelligence. Too often in-house teams are accused of telling
their colleagues about what they cannot do with patient data rather than what is possible
and what can be done. In-house teams should be focused on discovering what inventions
may be protected rather than what cannot and what other solutions may be available.
E-health and the rise of MedTech into products will both facilitate more patient
orientated solutions and a more integrated approach to managing health issues but can
also create new barriers to market access. Again, a multi-disciplinary, diverse legal team
is best placed to be at the front of devising strategies which both enable their companies
to embrace such new innovations in drug discovery whilst ensuring compliance with
regulation and maintaining patient confidence and avoiding reputational harm.
The GC as legal strategist in this context has the ability to provide invaluable support to
the business and its board. A diverse, multi-disciplinary approach from lawyers of diverse
backgrounds and geographies can only enhance the team's collective ability to transform
law and product protection from a fetter on innovation within their businesses to a
facilitator of it.
***
Dr Galit Gonen is the General Counsel for Teva Europe in an expanded role which also
includes the European IP litigations.
Galit began her career as a pharmacist. After passing the Israel Bar Association exam, she
worked as an associate for a private law firm in Israel, mainly on patent litigations for
branded pharmaceutical companies.
During her career she has been nominated and won several awards, including the
European and then the Global ‘IP Lawyer of the year’ from the International Law Office
IP, an individual award from Legal 500 UK and the Editor’s choice for the European
Woman in Business Law award in the IP category.
Teva is the world’s largest generics company, with a sizeable innovation speciality
business. Teva Europe HQ is in Amsterdam and active across 36 countries. Teva
Europe's 15,000 employees touch the lives of billions of people - every minute of every
day 2,500 packs of Teva medicines are dispensed to patients in Europe.