The hospital exemption pathway for non-industrially manufactured advanced therapy medicinal products: a fragmented landscape in the face of EU legislative reform

Jordi Faus
Faus Moliner, Barcelona
jfaus@faus-moliner.com

Claudia Gonzalo
Faus Moliner, Barcelona
cgonzalo@faus-moliner.com

Introduction

Few topics generate as much discussion as innovation, whether it’s the latest breakthrough in artificial intelligence or cutting-edge digital tools revolutionising healthcare. Among the most transformative areas of innovation in life sciences is the evolution of treatment delivery. In recent years, the rise of advanced therapy medicinal products (ATMPs) has presented unprecedented possibilities for treating severe conditions. The aim of this article is to discuss the regulatory challenge related to the fact that in the European Union, together with ATMPs that have received marketing authorisation, other ATMPs also exist. These are usually referred to as products prepared pursuant to the hospital exemption (HE) scheme.

The HE scheme for ATMPs was initially conceived as a mechanism to allow hospitals to provide treatment to an individual patient under the exclusive professional responsibility of a medical practitioner.

At present, Directive 2001/83/EC, which regulates medicinal products for human use in the EU, provides (Article 2) that it applies to ‘medicinal products for human use intended to be placed on the market in Member States and either prepared industrially or manufactured by a method involving an industrial process’. ATMPs prepared according to the HE scheme are outside the scope of Directive 2001/83/CE (Article 3(7)) and, therefore, are governed by national Member State rules.

This is particularly relevant because the rule in Article 6 of Directive 2001/83/CE (no medicinal product may be placed on the market in a Member State unless a marketing authorisation has been issued by the competent authorities in that Member State or by the European Commission) does not apply to ATMPs prepared under the HE scheme. In short, under the current regime, Member States are required to regulate compliance with certain minimum rules (for instance, ATMPs that fall under the HE scheme shall have levels of national traceability and pharmacovigilance that are equivalent to those provided for at EU community level in respect of ATMPs for which marketing authorisation is required), but ATMPs that fall under the HE scheme are not required to obtain marketing authorisation.

The ‘Spanish model’

One of the examples usually brought to the table when discussing ATMPs under the HE scheme is the so-called ‘Spanish model’.

In Spain, the regulation of ATMPs distinguishes between those that are industrially manufactured and those that are not. The legal framework, primarily established by the Law on Guarantees and Rational Use of Medicinal Products and Medical Devices (LGURMPS) and Royal Decree 1345/2007, allows hospitals to prepare ATMPs under specific conditions without requiring marketing authorisation. This framework is further regulated by Royal Decree 477/2014, which governs the approval of non-industrially manufactured ATMPs. In real life, the line between ATMPs subject to the HE scheme and ATMPs that have obtained marketing authorisation is being blurred. In practice, ATMPs that fall under the HE scheme in Spain are often treated as authorised products. For instance, the Spanish Agency for Medicines and Health Products (Agencia Española de Medicamentos y Productos Sanitarios or AEMPS) approves, for ATMPS that fall under the HE scheme, a ‘technical data sheet’ similar to the summary of product characteristics that is approved as part of an ordinary marketing authorisation. Furthermore, ATMPS subject to the HE scheme also receive price and reimbursement approval. All of this creates the perception that they have the same status as industrially manufactured ATMPs.

This regulatory approach has both advantages and risks. On the positive side, it encourages the work carried out by research institutions and healthcare teams.

However, this model also raises concerns, particularly regarding the coexistence of ATMPs that fall under the HE scheme and fully authorised ATMPs that are intended for the treatment of the same medical conditions. Unlike other countries, Spain does not explicitly restrict the use of ATMPs produced under the HE scheme to cases where no authorised form of treatment is available. This has led to situations where both hospital-exempt and industrially manufactured ATMPs could be used for the same health-related indications. This was first seen in regard to ARI-0001 and tisagenlecleucel therapy for the treatment of B-cell acute lymphoblastic leukaemia.

It is worth noting that when ARI-0001 received its authorisation for use from the AEMPS, its technical sheet restricted its use to patients over 25 years of age in order to avoid a possible collision with a centrally approved product. This implicit consensus that ATMPs falling under the HE scheme shall cover those areas of unmet medical need was somewhat broken when, in 2024, ARI0002H obtained authorisation for third line use in cases of multiple myeloma, as its technical data sheet states that it is ‘indicated for the treatment of adult patients with relapsed and refractory multiple myeloma who have received at least two prior lines of treatment, including an immunomodulatory agent, a proteasome inhibitor and an anti-CD38 antibody, and who have progressed since their last treatment’. At least in theory, this means that some patients could be eligible for treatment with ARI0002H even before being eligible for some centrally approved products, which require three lines of prior treatment.

This is a good example to frame the debate: the HE scheme aims to facilitate patient access and foster innovation, but there is a need to find a balance between supporting the non-industrial development of such products and maintaining incentives for companies to invest in gaining full marketing authorisation for their products. Additionally, there is growing sensitivity towards the fact that more cooperation is needed to facilitate ATMPs subject to the HE scheme moving towards central authorisation procedures when going beyond ‘non-routine’ use to avoid the risk of creating a parallel route to entry into the ATMP market. HE regulation plays a pivotal role in striking this much-needed balance.

The European Commission has acknowledged that the implementation of the HE has been fragmented and inconsistent among the Member States.[1] In a bid to address this fragmentation and ensure community-level quality, traceability and pharmacovigilance requirements for all ATMPs, the proposed revision of the general pharmaceutical legislation (the ‘Commission’s proposal’), published in April 2023, included non-industrially manufactured ATMPs within its scope. It’s time to analyse whether we are on the road towards curbing divergences in HE applications or whether the regulatory landscape could be inadvertently shifted in a manner that raises new concerns.

The Commission’s proposal

The Commission’s proposal shifts the regulatory paradigm in regard to medicinal products, as it states that the proposal should not only apply to products that are ‘industrially prepared or the manufacture of which involves an industrial process’, but to medicinal products intended to be placed on the market in general. Together with this proposed extension of the scope of the legislation, the immediate consequence is the need to regulate the exceptions.

In this regard, the Commission’s proposal maintains some of the traditional exemptions from the scope of the directive, such as the one excluding magistral formula. However, when it comes to ATMPs subject to the HE scheme, the Commission chose a different drafting technique, which is that of inserting an article specifically dedicated to products manufactured pursuant to the HE scheme. This is in the form of Article 2 of the proposal for a directive. This choice by the Commission recognises, on the one hand, that ATMPs subject to the HE scheme should be regulated differently from industrially manufactured products, but, at the same time, the Commission has chosen to regulate them at the EU level to solve the fragmentation issue that has been created as a result of Member States having to regulate such products. Newly proposed Article 2 defines ‘advanced therapy medicinal products prepared under hospital exemption’ as those ATMPs prepared non-routinely and used within the same Member State in a hospital under the exclusive professional responsibility of a medical practitioner, for the purpose of complying with an individual medical prescription in regard to a custom-made product for an individual patient.

The Commission’s proposal maintains that ATMPs subject to the HE scheme do not require marketing authorisation, but that they must be approved by the competent authority in the relevant Member State, which must notify the European Medicines Agency (EMA) of any approvals or changes to such authorisations. The manufacturing and traceability requirements align with good manufacturing practices, ensuring compliance across all the different types of ATMPs. Member States must also mandate data collection and annual reporting on the use, safety and efficacy of ATMPs subject to the HE scheme, with the relevant authorities tasked with reviewing this data to verify compliance. If a HE is revoked due to safety or efficacy concerns, the Member State must inform the EMA and other Member States. Additionally, the EMA will receive annual data reports from Member States and maintain a central registry in collaboration with national authorities and the European Commission. To assess the effectiveness of the regulatory framework, the EMA will submit a report to the European Commission three years after the new directive’s implementation deadline and every five years thereafter.

Equally important to newly proposed Article 2, is those aspects that do not fall within the scope of such article, and where Member States will retain their competence to regulate ATMPs as they see fit. In other words, if only Article 2 applies to ATMPs subject to the HE scheme, for example, the provisions on the need to have in place an adequate system of sanctions or provisions to regulate advertising do not apply to them.

The second challenge to note is the interpretation of the indeterminate concepts that are included in the definition of ATMPs subject to the HE scheme. For example, one of the historical sources of fragmentation among Member States has been a lack of definition of what a ‘non-routine basis’ actually is, and the lack of  clarity on how quality, safety and efficacy can be demonstrated in this context. The Commission had the opportunity to clarify such concepts in its proposal but decided to leave them open to interpretation, which will probably mean that the adoption of implementing acts is required in the future.

The European Parliament’s mandate

At the beginning of the parliamentary process in regard to the creation of a proposal for a directive, the European Parliament Committee on Environment, Public Health and Food Safety (ENVI) was announced as the committee responsible for this area of law. The report, drafted by Member of the European Parliament Pernille Weiss, set the foundation for the European Parliament’s discussion on the regulatory framework for the HE scheme in the proposed directive. Such report took a rather restrictive stance, advocating strict limitations on the HE scheme, including a 12-month validity period for regulatory approvals and a narrow definition of ‘non-routine’ use, requiring confirmation that no authorised ATMPs or relevant clinical trials were available for the same clinical indication.

On 10 April 2024, the European Parliament adopted its legislative resolution on the proposed directive concerning the EU code for medicinal products. The adopted position introduces several refinements to the original proposal, particularly in regard to strengthening the regulatory framework for HE ATMPs. Notably, applications for HE scheme approval are expected to include evidence on the quality, safety and expected efficacy of the therapy. Additionally, good manufacturing practices and traceability requirements will be reinforced through site inspections, pharmacovigilance plans and evaluations of preclinical and clinical data. Member States will also face expanded obligations to collect and report patient follow-up data, ensuring a more comprehensive understanding of long-term effects of HE ATMPs. A key addition is a new provision allowing the cross-border exchange of HE ATMPs in exceptional medical cases, where no alternative treatments exist for an individual patient.

The European Parliament’s stance permits ATMPs subject to the HE scheme to follow ‘good pharmacy preparation practices adapted to hospital processes’ rather than full adherence to good manufacturing practices (GMPs), raising concerns about regulatory oversight. Additional blind spots, including the absence of provisions on sanctions, advertising and the re-evaluation of HE scheme approvals, further complicate the proposed framework. Moreover, the European Parliament mandate offers no clear pathway for transitioning from HE scheme-related requirements to full marketing authorisation, leaving a regulatory gap that could hinder long-term industry growth and patient access.

Conclusions

Significant concerns remain that the revised proposal for a directive may not fully resolve the regulatory inconsistencies identified by the European Commission. The risk remains that the proposed reforms will fail to draw a clear distinction between ATMPs subject to the HE scheme and industrially manufactured ATMPs that have obtained marketing authorisation, creating uncertainty for stakeholders navigating the competitive life sciences landscape. With only the Council of the European Union’s position and the trilogues left in the legislative process, critical questions remain unanswered, particularly regarding the definition of ‘non-routine’ use and, more urgently, the applicable manufacturing standards to be applied. To strike a balance between fostering innovation in hospital settings and upholding the highest standards of safety and efficacy, the EU must implement clear, transparent and equitable measures.

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