LSHC Horizons Brochure 2024 - Flipbook - Page 86
Hogan Lovells | 2024 Life Sciences and Health Care Horizons | Europe
86
Updates on the conflict between medical device companies and Italian
Public Administration over the implementation of the payback legislation:
Is it worth challenging unjust administrative measures in Italy?
On 15 September 2022, the Italian Government
implemented the payback mechanism for medical
devices (Mechanism) through the Ministry of
Health’s Decree. According to the Mechanism,
companies supplying medical devices to the
National Health Service (NHS) were required
to pay about 45% of the amount exceeding the
spending cap by Italian Regions for the purchase
of medical devices from 2015 to 2018.
Although the Mechanism was introduced in 2015,
it was activated with very little notice and without
clear parameters for quantifying the spending
cap’s exceeding. Moreover, the Mechanism failed
to take into account that prices of medical devices
are determined based on public procurement
tenders, thus resulting in an unjustified and
excessive burden on companies that participated
in these tenders. On top of that, the Mechanism
was activated retroactively, without any
predictability for economic operators, affecting
profits accrued in previous years, without any
guarantee that a minimum reasonable margin
of profitability would remain.
In response, affected companies filed hundreds
of appeals to the competent administrative
court (TAR Lazio) against the payback
implementation provisions.
As a significant outcome of the aforesaid
legal actions, the initial payment deadline
scheduled for mid-January 2023 was extended
multiple times, finally reaching 30 November
2023. Additionally, the Italian Government
Giuseppe Aminzade
Counsel
Milan
introduced a ‘legislative settlement’
mechanism, offering a 52% discount on the
amount due for companies that chose not to
pursue legal action.
For companies resisting the settlement
temptation, TAR Lazio, acknowledging the
potential validity of their contentions, issued
a precautionary suspension of payback in
July 2023 for the appealing companies. In
November 2023, TAR Lazio elevated the issue
of the constitutional legitimacy of payback
legislation to the Constitutional Court,
confirming the suspended payment obligations
for the years 2015-2018.
Meanwhile, the Ministry of Health has
instructed Italian Regions to calculate payback
amounts for 2019. The stance of the Italian
Government on this matter remains unclear for
the time being. While it has shown a willingness
to accommodate companies’ demands, it is
also mindful that canceling the measure could
jeopardize revenue crucial for the entire NHS.
Regardless of the final outcome of this conflict,
legal initiatives have brought immediate
benefits for companies taking advantage of
the 52% discount and extended payment
deadlines. Furthermore, these initiatives serve
as a warning against the issuance of manifestly
unjust administrative measures in the future.
Let’s stay connected for the next episodes of
this ongoing saga!
Angelo Forte
Associate
Milan
Read our Life Science
Law Update for key
developments for
pharma & device
companies in the EU
