The EU’s New Pharma Rules: A Once-in-a-Generation Opportunity or a Missed Chance? | Brunswick Group

The EU’s New Pharma Rules: A Once-in-a-Generation Opportunity or a Missed Chance?

Europe is updating its rules for how it regulates the pharmaceutical and life sciences industry – with far-reaching implications for its life sciences ecosystem. With the fine print to be negotiated over the coming months, companies still have time to make the case for innovation and ensure Europe doesn’t miss out on a once-in-a-generation opportunity.

Are you ready for Europe’s new pharma rules?  

In the run-up to elections in June, Europe is getting ready to finalise new rules for pharmaceuticals. The aim is to increase access and affordability, improve resilience and foster innovation. But in a regulatory environment that is already perceived as burdensome by many in the industry, the proposals – which include curbs on the period of exclusivity for new medicines – have sparked fears that Europe could end up putting off investors and undermining competitiveness. 

The coming months will be crucial to ensuring the final legislative text strikes the right chord for a European innovation ecosystem that must compete with the US and China – both of which have recently seen much faster growth in pharma R&D investment. 

What’s at stake 

The EU’s general pharmaceutical legislation and the rules covering orphan and paediatric medicinal products are the fundamental framework through which medicines reach the European market. In updating the framework, Brussels wants a future-proof and crisis-resistant medicines regulatory system that provides access to affordable medicines for patients, improves security of supply, adapts to new scientific and technological advances, encourages innovation and reduces red tape.  

The new rules are designed to work hand-in-hand with other initiatives, including the recently announced Biotechnology Initiative, which declares biotech as one of 10 critical technologies, and promises better coordination and streamlined regulation to make Europe more competitive. 

The stakes are high. While there is broad agreement that the current framework needs updating, there are real fears that the choices being made could deter investment and actually end up damaging the life sciences innovation ecosystem.  

“It is difficult to understand how reducing incentives to research, develop and manufacture new medicines and vaccines could ever be in the best interest of Europe or European patients, particularly at a time when Europe recognises that it needs to boost competitiveness to compete for global investment with ambitious nations like the US and China.” – Nathalie Moll, European Federation of Pharmaceutical Industries and Associations (EFPIA) Director General 

“Today’s plenary vote by the European Parliament on pharmaceutical reforms marks a significant stride forward for the 30 million Europeans living with rare diseases and their families. Against the backdrop of 94% of rare diseases still lacking a dedicated treatment, we welcome the genuine political will that has been demonstrated to improve treatment development and access.” – Valentina Bottarelli, Public Affairs Director at EURORDIS – Rare Diseases Europe 

What to expect 

Almost a year after the first legislative proposals were put forward by the European Commission, the European Parliament this week held a milestone vote in favour of a common negotiating position on the ‘pharma package’. After the European elections (6-9 June), the EU Member States are expected to agree on their position, which will then be negotiated in so-called trilogue negotiations between representatives of the European Parliament, Member States and the European Commission to come to the final legislative texts – with timing hard to predict at this stage. Once adopted, the rules will be binding and apply in all 27 EU Member States 18 months after entering into force.  

Key changes proposed to the current framework include the tightening of the incentives system for medicines and orphan drugs, including by tying incentives to certain conditions such as meeting new definitions of unmet medical need and high unmet medical need.   

One of the hottest topics in the debate has been the reduction of the regulatory data protection (RDP) period for medicines. While the Commission’s original proposal was to reduce the baseline RDP period from eight years to six years, the Parliament compromised on a period of 7.5 years, following contentious discussions. Under the Parliament’s position, RDP can be extended up to a maximum of 8.5 years if certain conditions are met; for instance, if the product meets an unmet medical need. Two years of market protection are also granted. Since it may be unclear early on whether a product will meet the criteria for an RDP extension, planning might become more difficult, increasing unpredictability. 

Market exclusivity for orphan medicinal products (OMPs) has also been on the radar. The Parliament has kept the reduction of baseline exclusivity period at nine years (down from 10 currently), with the possibility to increase to 11 years for medicines addressing high unmet medical need, as defined in the legislation. Medicines that are awarded a new indication can also get an extra year of market exclusivity, with a maximum of two indications. 

Other fiercely debated issues include how to best address medicines shortages and supply chain concerns, measures to tackle antimicrobial resistance (AMR) such as the introduction of transferable exclusivity vouchers (TEVs), regulatory sandboxes and the introduction of stricter environmental risk assessment (ERA) requirements for the pharma industry. 

According to an impact assessment commissioned by EFPIA, the Commission’s proposals to reduce incentives (i.e., reducing baseline RDP from eight to six years) would have resulted in the European share of global biopharmaceutical R&D spend falling to an estimated 21% in 2040, compared to 32% currently.  

On the other side of the argument, according to the German Social Insurance European Representation (DSV), every year that generic competition is delayed costs the Statutory Health Insurance system in Germany more than 1 billion euros. Across the EU, costs for each additional year of regulatory document protection amount to more than 3 billion euros. 

What does this mean for business?

The policy landscape for the healthcare and life sciences sector is changing in Europe.  

Healthcare is increasingly seen as a driver of global competitiveness in a complex geopolitical landscape. The revamp of Europe’s pharma framework is only one way in which Europe seeks to boost its competitiveness, stimulate innovation and keep companies in Europe. But whether these new rules will achieve these goals – or miss the mark – is yet to be seen. While the proposed changes aim at boosting innovation in areas where it is most needed for patients, doubts remain as to what actual effect they will have on Europe’s life sciences innovation ecosystem. 

While it is difficult to predict when exactly the fine print of the proposed changes will be ready and enter into legislation, it is important for businesses affected by the new rules to continue to engage over the coming months and make their voices heard around what Europe’s future frameworks for pharmaceuticals and biotechnologies should look like in order to truly incentivize innovation and to build a system that can compete with the US and China.  

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To continue the conversation 

Dr. Agnes Brandt  
Director, Brussels 
[email protected]

Agnes has extensive expertise in the EU policy and regulatory field. As an expert in health and climate policy, she has led a range of European and global public affairs programs for her clients spanning horizontal themes as well as disease-specific matters. 

Francesca Scassellati Sforzolini
Partner, Healthcare & Life Sciences Sector Group Lead, Europe 
[email protected]

Francesca is a senior government relations and corporate affairs professional with deep knowledge of the Healthcare and Life Sciences sector and EU healthcare policy. She has spent more than 20 years designing and managing pan-European, multi-stakeholder strategies and leading public affairs and communications campaigns for global organisations.

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