In review: the life sciences regulatory regime in United Arab Emirates – Lexology
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Introduction
The United Arab Emirates (UAE) biotechnology and pharmaceutical industries are subject to stringent regulation primarily by rules and regulations at the federal level and, to a lesser degree, at the individual emirate level. Abu Dhabi and Dubai have the most developed rules and regulations of the seven emirates with respect to biotechnology and pharmaceutical matters, and the other emirates usually follow their respective cues as regards policy and legislation.
As the UAE has now evolved as a member of the globalised economy, it has endeavoured to make itself a global destination for healthcare. Accordingly, much of its new legislation reflects the influence and direction of jurisdictional trends of international market players in the pharmaceutical and medical industries. There has been a growth phase in the healthcare sector in the past few years, which has helped the UAE move towards becoming a hub for medical tourism. The nation's strategy also aims to guide and support the industry by building sustainable publicprivate partnership models in the healthcare sector.
The regulatory regime
To be supplied in the UAE, therapeutic goods must be vetted by the Registration and Control Department (RCD) of the Ministry of Health and Prevention (MOHP). The importer, exporter, manufacturer or seller of medicine or medical devices must satisfy the requirements of the RCD before they can be disseminated for public consumption within the UAE.
The RCD regulates medication and medical devices (which includes a delineation for devices that include a pharmaceutical component). The RCD further oversees the examination and registration of dietary supplements (including vitamins and herbal extracts), medicated cosmetics, antiseptics and disinfectants, and all other products that contain a pharmaceutical component or medical claim that cannot otherwise be appropriately classified as a medication. Foodstuffs and general consumer products are not regulated by the RCD, provided they assert no medical or therapeutic value or claims.
The RCD and the MOHP have the unilateral right to pull or ban any products that they may later deem to be unsafe for public consumption based on studies or recent cases within the UAE.
UAE Federal Law No. 16 of 2007 (on animal protection) states, at Article 12, that the use of animals for scientific purposes must be approved by the applicable governmental authority. Further, animals are protected from neglect, abuse and cruel treatment by applicable UAE law.
The law specifically states 'scientific purposes', which seems to implicate medical or pharmaceutical testing and does not directly address or contemplate the use of animals for the testing of (non-medicated) cosmetics or household products. The governmental approval process is always at the discretion of the concerned director, who may reject any request deemed excessive, unnecessary or generally harmful.
Effective 1 January 2020, a new law has been enacted in the UAE whereunder fertility centres are now permitted to freeze human embryos, as well as unfertilised eggs and sperm for a period of five years (extendable upon request).
In vitro fertilisation (IVF) clinics are regulated pursuant to Cabinet Decision 64 of 2020 regarding the executive regulations of Federal Law No. (7) of 2019 regarding medical assistance for childbearing. Governmental approvals are contingent upon satisfaction of numerous requirements, including facilities, equipment and staffing with appropriate professional personnel. There are numerous IVF clinics throughout the UAE.
In 2010, the MOHP licensed its first stem cell practitioner, a specialist in spinal cord and brain injuries, and a facility to perform stem cell therapies within the UAE. There have been reports of autologous stem cell treatment on two patients with degenerative diseases. However, general stem cell transplants have been permitted on a restricted, alternative basis, although the storage of stem cells has been permitted. The Dubai Health Authority (DHA) approved the first stem cell and regenerative medical centre in Dubai in 2018. Abu Dhabi and Dubai are the two Emirates in the UAE that now have established public guidelines for the regulated sector of stem cell therapies. The rules and standards to be applied during the granting, collection, testing, processing, preservation, storage, distribution, import, export and implementation of procedures related to cord blood and stem cells, and other nuclei cells derived from blood-forming cells such as the bone marrow, peripheral blood, and cord blood are regulated under the Cabinet Decision No. 6/2020 on endorsement of the regulations of cord blood and stem cells storage centres.
We understand a number of memoranda of understandings have been signed regarding stem cell therapy treatments with the regulators in the UAE.
The UAE federal law permitting organ transplantation became effective in March 2017. The law allows the transplant of tissue or organs from either live or deceased patients for the care of patients in need of the same. However, the law prohibits the sale of human tissue or organs, the funding of transplantation if this results from such sale, and the unlicensed advertising of transplantation services.
All clinical and research trials within the UAE require human subject consent, as well as the written approval of the MOHP, or other concerned governmental authorities, after a review of an application for such trials.
The Guidance of the Drug Control Department of the MOHP states that the sponsor of a specific clinical trial or experimental protocol is required to secure all the necessary agreements between the concerned parties.
Designated clinical trial centres should establish independent institutional ethics committees (IECs), which are then tasked with reviewing the relevant proposals of the sponsors. These IECs will review the proposals for clinical trials and experimental protocols, taking into consideration the soundness of the objectives and the medical protocols and practices.
The IECs will render recommendations as whether or not to commence a clinical trial based upon the information provided. The findings and recommendation will then be provided to the applicable governmental authorities for their final, official approvals.
In the respective proposal, the sponsor is to set forth the compensation (if any) for the investigators and the subjects of a clinical trial in its proposal to the IEC. Furthermore, the IEC is to review and approve the proposal of the sponsor with respect to insurance coverage, indemnities or other forms of compensation in case of subject injury.
The investigator may also be the sponsor of a clinical trial, provided it independently plans, conducts and assumes full responsibility for the clinical trial.
All amendments to protocols and all unexpected or serious adverse reactions to drugs administered during the clinical trial are to be reported immediately to the Ethics Committee.
While the clear letter of the law states that no unregistered drugs may be used within the UAE, there are certain circumstances where the MOHP or other governmental departments have approved the use of unregistered drugs (discussed in further detail in Section II.iv).
The Guidance further states that all clinical trials should follow the Helsinki Declaration to safeguard the rights of individuals subject to a clinical trial.
In exceptional circumstances, governmental authorities in the UAE have permitted the importation and use of unregistered medicine into the country. The MOHP has put forth an approval process that allows such importation, under any of the following circumstances:
Because of the nature of the UAE's regulated market, applications to obtain or use unregistered medication or devices must be tailored for specific patients, trials or protocols, and exigent circumstances. As a result, the quantity of unregistered medication should be limited to a specific hospital or clinic capacity, and for existing or anticipated patients per the application. The MOHP has the discretion to reject, approve, or approve with modifications any application for unregistered medication.
Furthermore, the application to the MOHP must include the following documents or information: (1) a signed undertaking letter from the concerned hospital or clinic that it shall bear all liability for the use of the unregistered medicine; (2) a certification that the medicine is registered in the country of origin or an approved jurisdiction, such as the United States, the European Union or the Gulf Cooperation Council; and (3) a registration certificate from the manufacturer listing the chemical components of the medication.
To be supplied in the UAE, medication, pharmaceuticals and medical devices must be vetted and cleared by the MOHP. A foreign manufacturer of medication, pharmaceuticals and medical devices must establish a local presence and appoint a local representative or a local agent (which may be the same person) for the sale and distribution of these products within the UAE.
Unless there are exigent circumstances (as described in Section II.iv), there are virtually no exceptions to expedite or accelerate the approvals process. The approval of a new medication, for example, would take, on average, no less than two years from submission of an application to the relevant authorities.
The UAE is a signatory to international conventions on narcotics and psychotropic substances. When a medication is approved and registered for use in the UAE, the method of dispensation is also agreed. This is based on the level of control in the source country, as well as the level of control of the active ingredient pursuant to UAE law.
Pricing for medications is fixed by UAE law, and the MOHP provides an updated pricing list for these periodically. Attempts by manufacturers and agents to circumvent the fixed pricing may be subject to fines, bans or other legal recourse by the UAE government.
Medical devices must also be approved by the MOHP before they can be sold or distributed in the UAE. The law defines a medical device as any such device that is used to diagnose, monitor or treat an illness. UAE laws and regulations make a distinction between devices that provide therapeutic benefit through purely mechanical or non-pharmaceutical means and those devices that have a pharmaceutical component (i.e., devices that dispense a drug therapy). The latter may be subject to pricing controls similar to those of medication.
Currently, the UAE is largely dependent on the import of sophisticated medical equipment. However, recently, there has been development in the nascent medical products industry. In the near future, the UAE may play a leading role in 3D printing in the medical products sector, which could involve developing 3D-printed teeth, bones, artificial organs, medical and surgical devices, and hearing aids.
Patents in the UAE are registerable for pharmaceuticals for a period of up to 20 years, with no extension period allowed.
The UAE recognises the patentability of second-use medical inventions under the law and has registered a number of these.
There are no remarkable regulatory incentives within the UAE with respect to the marketing, developing or production of pharmaceuticals at this time.
Under the UAE law, the foreign manufacturer of a drug must appoint a local authorised representative within the UAE. The representative may also be the distributor of the medication within the UAE. The representative will be tasked with handling all complaints or recalls relating to the medication, as well as fulfilling all requirements with respect to placing the product in the market. The post-market obligations include the obligation to maintain distribution records, complaint-handling procedures and incident-reporting processes, and implement processes to execute investigations and recalls in respect of defective or potentially defective products promptly.
The RCD or MOHP have the discretion to recall any medication based on any information or incident reports directed to them.
The MOHP newly established a decree in June 2021 for a system wherein pharmaceutical products within the UAE and those entering the UAE are tracked and traced for authenticity and legality. This decree applies to all standard pharmaceutical products traded in the UAE. To develop a centralised platform, MOHP, in partnership with EVOTEQ, is developing the track-and-trace platform Tatmeen, which will be used to track individual events in the drug supply chain and confirm their authenticity.
The relevant governmental authorities must approve a pharmaceutical manufacturing plant within the UAE.
The proposed facility must be approved as far as its layout, infrastructure, manufacturing capacities, and its storage and handling of chemicals. The government reserves the right for site inspections and for assessing penalties upon non-compliant facilities.
The UAE has repealed the Commercial Companies Law (Federal Law No. 2 of 2015, CCL) by issuing Federal Decree Law No. 32 of 2021 (Decree Law) and thereby overhauling the entire corporate legal framework by removing the requirement to have 51 per cent share capital owned by majority UAE national shareholders or a company wholly owned by UAE nationals (except for certain activities of strategic importance). The said changes are effective from 2 January 2022.
Healthcare and medical advertising are strictly regulated by governmental authorities and there are stringent guidelines to ensure transparency and honesty, and to stamp out misleading marketing practices. All forms of medical and pharmaceutical advertising require governmental pre-approval before publication. Comparative advertising is usually not permitted and, given other considerations (mainly relating to potential criminal liability for libel or harm to business reputation), most companies steer clear of any advertising pitting themselves against their competitors. Even advertisements on discount websites for businesses such as laser hair removal or dermal fillers require MOHP approval and carry a requisite warning to customers relating to efficacy or potential risks of such procedures.
Additionally, advertisements must not violate public morals, decency, UAE customs or Islamic values and traditions. Medical advertising cannot be false, deceptive or misrepresent the quality or type of medical treatment or product presented. Further, it cannot mislead potential patients regarding the efficacy of certain medication treatment, therapy or protocol, or that the aforementioned will have no potential side effects.
Advertising for telemedicine companies should clearly state what services they are and are not authorised or licensed to provide. Advertisements geared towards children are prohibited.
Incentives to healthcare workers for the sale of specified medications, procedures or devices are not permitted by any medical or healthcare advertisement.
The UAE has a number of provisions within its Agency Law, Civil Code and Commercial Code that provide a number of protections to local agents and distributors. Some pharmaceuticals or medical equipment may, in certain circumstances, require a registered 'commercial agent' to be the importer on record. Such registered commercial agents enjoy wide protections under the UAE's Agency Law, including exclusivity within the UAE market.
A registered agency under the Agency Law makes it difficult for a foreign principal to terminate. Often, a registered agency will only agree to deregister a registered agency (and, hence, allow the principal to distribute products through other agents or resellers) upon an agreed and substantial financial settlement. A new draft Agency Law was discussed in mid-2022 in which a commercial agency can be terminated by mutual agreement of the parties or on the expiry of its term. The criticism of the current law of Agency Law as biased in favour of UAE national commercial agents (i.e., cannot be easily terminated even at the expiry of the contractual term) over foreign principals may be put to rest if the draft law is released in the format discussed in the press.
In addition to the basic definition of 'prescription' medication, the MOHP recognises the following three classifications: narcotics, CDA and CDB.
Narcotics are defined based upon their active ingredients and composition. Additionally, CDA medications are defined by their active ingredients, as well as their potential for abuse or diversion for illegal use. CDB medications are defined as those that are used for psychiatric conditions, avoid narcotic controls and restrictions owing to their chemical formulation, or require stricter control than simply those medications that are designated as 'prescription'.
Medical devices are classified in order of risk:
That being said, the vast majority of medication or medical devices that fall outside the categories of stricter scrutiny are available for sale and distribution over the counter.
To import medicine or medical devices into the UAE, a UAE company must obtain a medical warehouse licence or a UAE national must obtain a medical importer licence with the relevant government authorities. The law was amended to permit companies with mixed UAE and foreign shareholding to obtain a medical import licence.
Re-exportation of imported goods can occur within six months of importation, provided the goods are in unused and otherwise exportable condition and the applicable documentation relating to the goods is current.
The UAE abolished the Boycott of Israel Law in 2020 and subsequently revoked all trade restrictions that were previously in place with Israel.
Controlled substances are heavily regulated and monitored in the UAE. In most circumstances, narcotics or psychotropic substances can only be administered within the confines of a hospital or clinic, or dispensed exclusively from a government hospital upon submission of a valid prescription.
The MOHP has a list of controlled substances that cannot be brought into the UAE by people visiting or entering the country, regardless of whether the person has a valid prescription for the medication in the country of origin. UAE residents and travellers are allowed to import narcotic medicines and psychotropics (controlled medicine) for personal use to the country upon the issue of a permit from the MOHP official portal.
The UAE governmental authorities have broad powers of regulation and sanction for the violation of any laws or regulations relating to medication and medical devices. These include: warning, fining, banning of distribution of certain products, blacklisting of manufacturers or medication, suspension or deregistration of local representatives or agents, and closing operations of pharmaceutical plants. The fines may be substantial, and imprisonment may be warranted in cases of intentional criminal activity.
The UAE has enacted the Health Data Protection Law (UAE Federal Law No. 2 of 2019), with the objective of addressing the protection of health data originating in the UAE. This law derives principles from the European Union's General Data Protection Regulation, including purpose limitation, accuracy, integrity and confidentiality. Any health-related information and data that originates in the UAE may not be stored, processed, generated or transferred outside the UAE certain exceptions to this rule were clarified in an amendment to the law in 2021. This has a direct effect on foreign companies that provide cloud-based services, in addition to local companies that use these services. With regard to enforcement, healthcare providers that violate certain provisions of the Health Data Protection Law may face fines ranging from 1,000 to 1 million dirhams, effective from May 2019. Although the legislation has the clear intent of enforcement, it is not clear whether the MOHP and relevant authorities will take immediate action.
Pricing and reimbursement
Pricing of medication is fixed and regulated by applicable laws, with specified margin limits. Hospitals and clinics must sell medication to the public at the prices specified by the MOHP and cannot give discounts on medication outside the margins fixed by law. Bonus schemes between manufacturers and distributors are strongly discouraged (if not prohibited by law).
Since 2010, and under the direction of Abu Dhabi, the UAE has been moving towards a diagnostic rate group (DRG) system for insurance billing and reimbursement. One of the intended purposes of switching to the DRG system is to lower medical costs in the UAE (where the vast majority of medication is imported).
The DRG system requires new billing systems within hospitals and clinics, and the requisite staff training for documenting and coding applicable medical services. One potential benefit of the installation and implementation of the DRG system UAE-wide is providing transparency and avoiding excess payments or overbilling.
Administrative and judicial remedies
The UAE Medical Liability Law (UAE Federal Law No. 4 of 2016 read together with the implementing regulation of 2019) gives patients the right to report any form of medical malpractice or medical negligence by their service providers or by pharmaceutical companies directly to the MOHP, or its applicable departments. The complaints are to be referred to medical liability commissions, formed by the MOHP, or the chairman of the local health authority.
The relevant commission will review the complaint with all the applicable documentation and make an adjudication on the existence of malpractice and, if applicable, the causes and results of that malpractice.
The decisions made by the commissions are appealable by the patients, doctors or providers within 30 days to a higher liability commission, formed by the UAE Cabinet. After review of the file, the decisions of this higher commission are final and binding upon all parties.
Financial relationships with prescribers and payers
The Emirates of Abu Dhabi and Dubai have instituted mandatory health insurance schemes upon all employers. Additionally, the Department of Health Abu Dhabi (DOH) introduced a standard provider contract mandating that all contracts between insurers and providers meet required standards. One such requirement is that reimbursement of healthcare fees is made in accordance with a mandatory tariff, which specifies the price for basic services. Ideally, such requirement is an attempt to discourage or stop commissions or kickbacks between providers.
The DOH previously issued a directive relating to kickbacks in medical laboratory services and testing. This directive was the result of complaints from patients who were often directed to a medical laboratory that a specific doctor had an agreement with, to be billed for examinations, diagnostics or treatments that were unnecessary. The doctor was given a portion of any fees generated from such visits.
Additionally, local insurers have recently taken a novel approach in requiring that providers sign an undertaking letter to the effect that providers would comply with the spirit and letter of contractual requirements of their binding contract, with a sworn statement that no volume incentives or commissions are being paid for obtaining services. Violation of the undertaking letter could result not only in a material breach of the underlying contract justifying termination, but would allow the insurer to petition the DOH or another concerned governmental authority for redress.
Efforts to stem the flow of kickbacks are much more likely to have a significant impact on smaller secondary care providers (e.g., medical laboratory service providers or specialist diagnostic centres) that generate much of their revenue from larger hospitals or clinics. One way to ensure referrals is the payment of kickbacks. If kickbacks are no longer available through this route, companies will need to become more competitive.
The DRG billing system (as discussed in Section III) may be a further tool in the future to combat kickbacks and illegal commissions.
Special liability or compensation systems
Other than the remedies delineated in Section IV, there are no special liability or compensation systems contemplated in applicable law.
Transactional and competition issues
UAE Federal Law No. 4 of 2012 on the regulation of competition (the Competition Law) became effective in 2013 and regulates competition within the UAE market. The production and distribution of pharmaceuticals are specifically exempted from the Competition Law. Further, as stated elsewhere, the pricing of medication and pharmaceuticals is fixed by UAE law.
With respect to the sale of pharmaceutical manufacturing plants, companies or patents in the UAE, generally, these would follow the rules and requirements contained in the UAE Commercial Companies Law or Commercial Transactions Law. Approval of the relevant health department (DOH or DHA) or the Ministry of Health may be required depending on the specific activity on the licence of the company.
With respect to patent licensing, a patent licence cannot be transferred to a third party unless ownership of the licensed item has been assigned and approved by the respective court.
Current developments
Many of the legal and regulatory reforms contemplated herein strongly convey the desire of the UAE to be at the forefront of medical care. The ultimate objective of the UAE (the Emirates of Abu Dhabi and Dubai in particular) is to be able to manufacture or provide medication and healthcare that rivals that of any country around the world. This also includes a renewed focus on research and development and attracting qualified medical professionals and researchers.
During the past few years, the UAE has ramped up its investment strategy in the pharmaceutical industry. The UAE has witnessed significant deals in terms of mergers, acquisition and strategic tie-ups between healthcare stakeholders and public and private entities to enhance the healthcare industry in the recent years. The UAE pharmaceutical sector is expanding rapidly and is expected to reach almost 11.1 million by 2030, according to the World Bank. The Dubai Industrial Strategy 2030 and the Abu Dhabi vision 2030 consider the pharmaceutical industry as one of the main sub-sectors to develop with its future growth prospects, export potential and mid-term to long-term economic impact. This augmented investment strategy is propelled to focus on one of the significant national agenda items (i.e., to achieve a world-class healthcare system in the UAE and reduce reliance on imported pharmaceuticals and manufacture locally).
Outlook
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In review: the life sciences regulatory regime in United Arab Emirates - Lexology