What’s the Verdict: Industry Weighs in on the EU’s Proposed Pharma Reforms

The European Commission’s proposal to revise the EU’s pharma legislation includes changes for market exclusivity, further incentives and support for innovation, and measures to increase availability of both innovator and generic drugs. What does the industry think?

The European Commission’s proposal to revise the EU’s pharma legislation includes changes for market exclusivity, further incentives and support for innovation, and measures to increase availability of both innovator and generic drugs. What does the industry think?

The European Commission is proposing to revise the European Union’s (EU) pharmaceutical legislation, the largest reform in over 20 years. The European Commission began the process for the proposed reforms in November 2020 by issuing its Pharmaceutical Strategy for Europe. The Strategy kick-started a revision of the current pharmaceutical legislation and seeks to respond to current challenges faced in the EU’s pharmaceutical sector. The legislative proposals will now be submitted to the European Parliament and the European Council for discussion and consideration for adoption.

The revision includes two legislative proposals: a new Directive and a new Regulation, which constitute the EU regulatory framework for all medicines and simplifies and replaces the previous pharmaceutical legislation. The proposed Directive contains all the requirements for authorization, monitoring, labelling and regulatory protection, placing on the market, and other regulatory procedures for all medicines authorized at the EU and national levels. The Regulation sets specific rules (on top of the ones in the Directive) for medicines authorized at the EU level. It sets out the rules on coordinated management of critical shortages and security of supply of critical medicines. It also sets out the rules governing the European Medicines Agency (EMA). The proposed reforms seek to achieve the following main objectives:

Security of supply. Enhance availability and ensure medicines can always be supplied to patients, regardless of where they live in the EU;

Increase access to medicines. Create a single market for medicines ensuring that all patients across the EU have timely and equitable access to safe, effective, and affordable medicines;

Facilitate innovation. Continue to offer an attractive and innovation-friendly framework for research, development, and production of medicines in Europe;

Improve the regulatory process. Reduce drastically the administrative burden by speeding up procedures significantly and reduce authorization times for medicines, so they reach patients faster;

Address antimicrobial resistance. Address antimicrobial resistance and the presence of pharmaceuticals in the environment through a One Health approach;

Environmental standards for medicines. Make medicines more environmentally sustainable.

Key elements of the proposal, as outlined by the European Commission, are further detailed below.

Better access to innovative and affordable medicines. Under the proposal, new incentives would encourage companies to make their medicines available to patients in all EU countries and develop products that address unmet medical needs, according to the European Commission. Furthermore, earlier availability of generic and biosimilar medicines will be facilitated, and market authorization procedures simplified. Measures for greater transparency of public funding of medicines development will be introduced, and the generation of comparative clinical data will be incentivized.

Promoting innovation and competitiveness through an efficient and simplified regulatory framework: The reforms will create an innovation-friendly regulatory environment for the development of new medicines and the repurposing of existing ones, according to the European Commission. Under the proposal, the European Medicines Agency (EMA) would provide better early regulatory and scientific support for developers of promising medicines to facilitate fast approval and help small-to-medium sized enterprises and non-profit developers. The scientific evaluation and authorization of medicines will be sped up (e.g., EMA authorization procedures will take 180 days, helping reduce the current average of around 400 days), and the regulatory burden will be reduced through simplified procedures (e.g., by abolishing, in most cases, marketing authorization renewal and introducing simpler procedures for generic medicines) and digitalization (e.g., electronic submissions of applications and electronic product information). 

Incentives for innovation: The proposal calls for regulatory protection of up to a maximum of 12 years for innovative medicines (now it is 11 years maximum). To create a single market for medicines, the reform will move the current system away from its “one-size-fits-all” regulatory protection toward a more effective incentives framework for innovation that also promotes public health interests, according to the European Commission. To achieve this, it proposes a minimum period of regulatory protection of eight years, which includes six years of data protection and two years of market protection, which can be extended in the following cases: if medicines are launched in all EU member states (+ 2 years); if they address unmet medical needs (+ 6 months); if comparative clinical trials are conducted (+ 6 months); or if a new therapeutic indication is developed.

“The combination of the existing intellectual property rights and the new regulatory protection periods will also safeguard the EU’s competitive edge in pharmaceutical development, one of the most protective world-wide,” said the European Commission in its proposal. “The reform will drive efforts so that research and development will focus on the patients’ greatest needs and there is more timely and equitable patient access to medicines across the EU.”

For medicines for rare diseases, the European Commission’s proposal calls for standard duration of market exclusivity of nine years years. Companies can benefit from additional periods of market exclusivity if they address a high unmet medical need (+ 1 year), launch the medicine in all EU member states (+ 1 year), or develop new therapeutic indications for an already authorized orphan medicine (up to 2 extra years). The regulatory production periods can add up to a maximum of 13 years while today the maximum is 10 years.

Addressing shortages of medicines and ensuring security of supply: The reform introduces new requirements for monitoring of shortages of medicines by national authorities and EMA and a stronger coordination role for EMA. Obligations on companies will be strengthened, including earlier reporting of shortages and withdrawals of medicines and development and maintenance of shortage prevention plans. An EU-wide list of critical medicines will be established, and supply-chain vulnerabilities of these medicines will be assessed, with specific recommendations on measures to be taken by companies and other supply=chain stakeholders. In addition, the European Commission would be able to adopt legally binding measures to strengthen security of supply of specific critical medicines.

Stronger protection of the environment: Better enforcement of current environmental requirements will limit the potential negative consequences of medicines on the environment and public health.

Tackling antimicrobial resistance (AMR): AMR is considered one of the top three health threats in the EU, according to the European Commission. The reforms provide incentives through transferable vouchers to companies that invest in novel antimicrobials that can treat resistant pathogens. These transferable data-exclusivity vouchers can be used by developers themselves or they can sell them. The voucher will provide the developer an additional year of data protection from competition for the medicine that the voucher applies. In addition, measures and targets for the prudent use of antimicrobials, including adapted packaging and prescription requirements, will also be introduced to keep the antimicrobials effective.

The proposal includes a recommendation to the European Council containing complementary measures to combat antimicrobial resistance in the fields of human health, animal health, and the environment, through the so-called One Health approach. In addition, the proposal will boost national One Health action plans on AMR, foster research and innovation, reinforce surveillance and monitoring of AMR and antimicrobial consumption, enhance global actions, contribute to the design of an EU multi-country financial incentive to improve access to antimicrobials and incentivize the development of other AMR medical countermeasures such as vaccines and rapid diagnostics.

Industry feedback
On the innovator side, both the European Federation of Pharmaceutical Industries and Associations (EFPIA), which represents European innovator, research-based bio/pharmaceutical companies and national pharmaceutical associations in Europe, and the Pharmaceutical Research and Manufacturers of America (PhRMA), which represents innovator drug makers in the US, criticized certain measures of the European Commission’s proposed reforms.

EFPIA, PhRMA raise concerns
“From its inception, EFPIA, said its member companies and associations have supported the aims of the EU Pharmaceutical Strategy,” said Nathalie Moll, Director General, EFPIA, in an April 24, 2023, statement. “Delivering faster, more equitable access to medicines, avoiding and mitigating shortages as well as ensuring that Europe can be a world leader in medical innovation are goals we share. Unfortunately, [the] proposal manages to undermine research and development in Europe while failing to address access to medicines for patients.”

For innovator companies, EFPIA is particularly concerned over the proposed measures that condition an additional two years of market exclusivity on medicines being available in all EU member states. The European Commission’s proposal involves cutting market exclusivity for new medicines from 10 to eight years but allows drug companies that launch new medicines in all 27 EU member states within two years of approval to still be able to get the extra two years’ exclusivity.

“The approach set out in the pharmaceutical legislation, penalizing innovation if a medicine is not available in all Member States within two years is fundamentally flawed and represents an impossible target for companies,” said EFPIA’s Moll in her statement. “The vast majority of delays in access to new medicines are known to occur after a company has filed for pricing and reimbursement and is awaiting a decision, so that the new treatment can be made available to patients. Fixing the tenfold variation in access to new medicines across the EU requires all partners to urgently get round the table and address the real issues rather than unworkable EU-level legislation that is destined to fail.”

PhRMA also raised concerns on the impact on the proposed legislation on product innovation. “We support the [European] Commission’s goal of improving the availability of medicines across the European Union,” said PhRMA in an April 26, 2023, statement. “Unfortunately, the proposed overhaul of the EU pharmaceutical legislation could make that goal harder. It shows a profound misunderstanding of how the process of medicine development, approval and access works and will erode the intellectual property system that is essential for the discovery of new treatments and vaccines.”

Further concerns on intellectual property protection were raised by EFPIA through proposed regulations for patent reform. Following the release of its proposed reforms to the EU’s pharmaceutical legislation, late last month (April 2023), the European Commission also issued proposed regulations for patent reform, which included measures for compulsory licensing of patents in crisis situations and the revision of legislation on supplementary protection certificates.

Compulsory licensing of patents allows a government to authorize the use of a patented invention without the consent of the patent holder. “Voluntary licensing agreements with manufacturers are generally the preferred tool to ramp up production, but should voluntary agreements not be available or adequate, compulsory licensing can help provide access to key crisis-relevant products and technologies as a last resort in times of crisis,” said the European Commission in an April 27, 2023, statement in outlining its proposal. “Currently, there is a patchwork of 27 national compulsory licensing regimes even though many value chains operate across the EU. This can be a source of legal uncertainty for both right holders and users of IP [intellectual property] rights.”

The proposed new rules would create new EU-wide compulsory licensing, something that EFPIA opposes. “Strong intellectual property protection is the foundation for medical innovation,” said EFPIA’s Moll in an April 27, 2023, statement. “Protecting the EU’s intellectual property framework could not be more important if we are to close the investment gap between Europe, the US, and increasingly China and continue to offer patients the best possible treatments. Yet we are seeing multiple proposals emerging from the European Commission in the pharmaceutical legislation and patent package, which tend towards the opposite. The introduction of compulsory licensing at the EU level would promulgate the perception of companies and investors that Europe’s intellectual property framework is not predictable or stable. Compulsory licensing also undermines the innovation that we need when a health crisis arises,” she said.

The European Commission’s patent proposals also include an EU-level process for supplementary protection certificates (SPCs), a measure that EFPIA supports. SPCs extend the term of a patent (by up to five years) for a human or veterinary pharmaceutical product, or a plant protection product, which has been authorized by regulatory authorities. SPCs are now only available at national levels, which creates “fragmentation, which leads to complex and costly procedures, as well as legal uncertainty,” said the European Commission in an April 27, 2023, statement.

The proposal by the European Commission introduces a unitary supplementary certificate to complement the unitary patent system in the EU and would establish a centralized examination procedure, implemented by the European Union Intellectual Property Office, in cooperation with EU national IP offices. Under this regime, a single application will be subjected to a single examination process that, if positive, would result in the granting of national SPCs for each of the EU member states designated in the application. The same procedure may also result in the grant of a unitary SPC.

EFPIA supports such measures. “EFPIA is encouraged by the move toward simplification and harmonization surrounding the SPC framework and the opportunities for its implementation via the Unitary patent,” it said in its April 27, 2023, statement. “…The implementation of the Unified Patent provides an opportunity for SPC harmonization, permitting greater efficiency, consistency, and legal certainty for this key innovation enabler in Europe. The SPC is the key IP protection driving pharmaceutical investment in Europe for over half of innovative products; given the trend for reduction and curtailing of IP and other R&D enablers across recent EU legislative proposals, it is more important than ever to ensure this key protection remains stable and predictable.”

European generics industry provides feedback
In commenting on the European Commission’s proposed changes to the EU’s pharma legislation, Medicines for Europe, which represents the generic-drug and biosimilars industry in Europe, called for further action to strengthen the off-patent drug sector in Europe. “The long-awaited revision of the EU pharma legislation is here. The central role of the off-patent medicines industry for the patient is clearly reflected in the intentions of the draft legislation, mirroring our commitment to make medicines available when and where they are needed. We will help the EU deliver on better access to medicines with Day-1 competition,” said Elisabeth Stampa , President of Medicines for Europe, in an April 26, 2023, statement. “We have had years of good cooperation with the European Commission, through the pandemic and the war in Ukraine, and this legislation must reflect the hard-learned realities of the medicine’s framework. We are still lacking an industrial strategy to strengthen the European off-patent sector and improve open strategic autonomy in health. Therefore, I am looking forward to working with the European Parliament and Member States to make equitable and timely access, availability, and security of supply for all a reality in Europe.”

Medicines for Europe also commented on the European Commission’s proposed patent reforms, specifically SPCs. “The proposal for a reform in the SPC system has the potential to reduce fragmentation in Europe, but the legislation must ensure improved quality and transparency of granting procedures to prevent misuse by right holders to delay competition,” said Medicines for Europe’s Director General Adrian van den Hoven in an April 27, 2023, statement. “Medicines for Europe is ready to work constructively to ensure that the right safeguards, transparency and due process are included for timely patient access to medicines”.

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