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On 26 April, after months of delay, the European Commission published its long-awaited proposed reform of the pharmaceutical legislation. The largest overhaul of the EU’s health legislation in over 20 years, the “Pharma Package” focuses on supporting both drug availability and affordability and investment in health innovation by making pharmaceutical incentives more conditional. Heated debates have subsequently taken place on the impact of the reform, and whether it goes too far or accomplishes too little.
Just one week after the publication of the Pharma Package, here is what you need to know on how key business and political stakeholders have responded to the European Commission’s proposal.
The Pharma Package aims to make medicines more available, accessible, affordable and environmentally friendly, while supporting both health innovation and the growth and competitiveness of the EU’s pharmaceutical industry.
To meet this long list of somewhat conflicting objectives, the Pharmaceutical Package includes measures aiming to cut red tape and make drug evaluation procedures quicker, fight drug shortages and address antimicrobial resistance, provide greater transparency on public funding, better integrate environmental parameters in market approval, and facilitate the use of compulsory licenses.
But the key provision of the reform is to improve access to new medicines across the EU by reducing the period of exclusivity from ten years to eight. The two additional years of exclusivity can be restored if the medicine is marketed throughout the EU. The European Commission’s proposal also brings down the standard market exclusivity period for orphan products to nine years (vs. ten today).
It is an understatement to say that this revision of market protection rules has been met with mixed reactions, with representatives of the life science industry warning it undermines efforts to support the EU’s competitiveness as a health innovation hub and will likely result in Europe falling further behind the US. Meanwhile, health advocacy groups have welcomed this measure. The Commission has defended its proposal by underlining that the EU’s incentives will remain among the most generous in the world, and that by modulating incentives, rather than a one size fits all system that exists today, industry will get the protection they require, provided they fulfill certain responsibilities and requirements, namely around improved access.
Among the most vocal critics was the European Federation of Pharmaceutical Industries and Associations (EFFPIA), which stressed that the overhaul could have a tremendously damaging impact on job creation and investment in health innovation in Europe, without solving delays in access to new medicines. EUCOPE, the European confederation of small and mid-sized health technology companies, underlined how the reform of regulatory data protection will create extra uncertainty for innovators, particularly impacting highly innovative biotech companies with a limited revenue stream, and will hamper the development of groundbreaking medicines.
The Pharma Package is also being closely monitored beyond the EU borders, with third countries hoping the new legislation will help them lure investment that would otherwise been made in the Union. This certainly rings true in Switzerland, a pharma stronghold offering generous incentives – although current negotiations on the country’s relationship with the EU means Bern will have to carefully respond to the European Commission’s proposal. There is also a certain sense of optimism in the British life science industry, with the CEO of the UK BioIndustry Association stating the UK had “increased its attractiveness as a market simply by standing still.”
The Pharma Package is not only proving controversial within the life sciences industry. MEPs and Member States themselves are divided.
Last year, Cristian Bușoi (EPP) and 31 other MEPs, mostly from the EPP and Renew Europe, sent a letter to the European Commission to both argue against creating “disproportionate obligations” and call for a “competitive R&D environment in the EU”. They are unlikely to be pleased by the proposed market protection rules. Other MEPs, including Tomislav Sokol (EPP), have also warned against the uncertainty created by the overhaul. On the other end of the spectrum, mostly in the S&D and Greens/EFA groups, the reform has been hailed as a – albeit small – step in the right direction, with the likes of Tilly Metz MEP (Greens/EFA) stating they would fight to ensure that patient interest, transparency and environmental issues come first.
At Member State level, Germany and Italy, two countries with a strong life science industry, have voiced concerns on the Pharma Package’s impact on the EU’s competitiveness, while the Netherlands, Poland, Austria, Hungary, Estonia and Slovakia have been supportive of the revised regulatory incentive system.
The Pharma Package will have to be adopted by both the Council and the European Parliament before it becomes law.
In Parliament, attempts to water down at least part of the Commission’s proposed revision of market protection rules are to be expected if the Rapporteur handling this part of the Pharma Package (made up of one Directive and one Regulation proposal) comes from the EPP. We also anticipate MEPs to focus on Europe’s health autonomy and ways to tackle increasingly frequent drug shortages, which several policymakers think the proposed reform fails to properly address. In the Council, the position of France, Spain, Ireland and Belgium – four of the EU’s biggest players in life science – will be key. Should they join forces with Germany and Italy, a strong push in favor of a more industry-friendly Pharma Package is to be expected.
Given both the size and sensitivity of the dossier, and the EU’s busy legislative agenda, it is unlikely the Pharma Package will be adopted before the May 2024 European elections. This will give plenty of time for industry representatives and patient and public health associations to advocate for amendments to the European Commission’s proposal.
Quentin Duthilleul is a director based in Paris. His expertise is in French and European policy, and he has experience advising clients in the healthcare, agri-food, energy, and transport sectors on both EU and French political and media engagement. Benoît Roussel is a policy and regulatory strategist with a strong focus on health, antitrust and digital policy. He has led major public affairs campaigns for biotech and multinational companies. To find out more about how Flint can help you navigate the risks and opportunities of these developments, please get in touch