Commission and pharma industry in dispute over R&D incentives

The European Commission argues that the upcoming pharmaceutical revision must not favour incentives to industry over the availability of medicines, while drug manufacturers warn that in pharmaceutical research and development, Europe is already lagging behind major global competitors, the United States and China.

The new EU pharmaceutical package, proposed by the Commission in April 2023, aims to improve access to modern medicines for patients while strengthening Europe’s position in the global medicines market.

Everyone agrees on the goal, but the problem is how to get there. The view of the Commission, which has proposed an update for 20-year-old pharmaceutical legislation, is not to the liking of the industry.

“The current form of several legislative proposals will not reverse the trend we have seen in the industry over the last two decades, but could have exactly the opposite effect,” Juan Yermo, director general of the Spanish association Farmaindustria, told in a conference at the Permanent Representation of the Czech Republic to the EU in Brussels.

National pharmaceutical associations that took part in the conference, organised with the support of EFPIA on 7 November, warned that new rules could lead to their exit from the European market.

“We hear that the new rules will squeeze us a bit, but we will eventually adapt. Yes, but maybe we will adapt elsewhere [not in Europe],” Claus Runge of Bayer Pharmaceuticals warned during the debate. 

The  incentivised data protection is not to the industry’s taste

The main stumbling block is the intellectual property protection for newly developed medicines, particularly the proposed two-year reduction of Regulatory Data Protection (RDP) for drug research and development, which in the Commission’s proposal is balanced with an incentive system. 

Currently, there is a ten-year period of protection. This period includes eight years of data protection, ensuring that pharmaceutical companies have exclusive rights to their research data for a specific time, and preventing competitors from using it to gain approval for similar products.

After this period, an additional two years of marketing protection prevent generic versions from being sold in the EU market. For orphan drugs (medicines for rare diseases), the maximum regulatory protection period is ten years.

The Commission’s proposal of the new pharma directive envisages a minimum period of regulatory protection of eight years consisting of six years of data protection and two years of market protection.

This period can be extended in particular cases – if medicines are launched in all EU countries (+2 years), if they address unmet medical needs (+6 months), or if comparative clinical trials are conducted (+6 months).

For rare disease medicines, the standard duration of market exclusivity will be nine years. Additional years of protection will be applied if companies address a high unmet medical need (+1 year), launch the medicine in all EU states (+ 1 year), or develop new indications for an already authorised orphan medicine (up to 2 extra years).  

The industry argues that these conditions are unworkable because how quickly a drug can reach a patient in a particular country does not depend only on companies but also on the characteristics of the national health system, such as the willingness of insurance companies to reimburse therapies.

Thus, according to the manufacturers, it is unfair to hold them responsible for something that is not entirely in their hands. 

However, the European Commission remains adamant that the new system should strike a better balance between innovation and the availability of medicines to patients.

Sandra Gallina, who heads the Commission’s Directorate-General for Health and Food Safety (DG SANTE), pointed out that innovative medicines are often only available in EU countries that can afford them. 

According to Jakub Dvořáček, the deputy minister of the Czech Ministry of Health, governments will push for changes which would boost the availability of new medicines even in countries where they are currently not available or are delayed.

“Pricing is related to this. We are in a situation where we, as member states, insurance companies or simply customers, do not understand how you set the price (of innovative medicines),” Dvořáček told European pharmaceutical companies representatives. 

“If we do not understand this, we cannot understand your needs related to the protection of intellectual property (…),” he added, calling for a greater mutual understanding of how companies choose which markets to start selling their medicines. 

Study: Europe could lose a third of its share in R&D 

The European Federation of Pharmaceutical Industries and Associations (EFPIA) commissioned and funded a report on the potential impacts of the proposed rule change.

In the report, international consultancy Dolon estimates that Europe could lose a third of its current share of global research and development of advanced medicines by 2040 if the incentive system is changed. This would mean an annual loss of €2 billion in R&D investment.

The Dolon analysis estimates that changes in legislation will reduce investors’ incentives to invest in new drugs in Europe by 55% over the next 15 years. In short, the continent may become less attractive to them because of the regulatory environment.

The Commission’s proposals would reportedly hit the European biotechnology sector the hardest, especially SMEs. Nine out of ten biotechnology research projects that depend on intellectual property protection would reportedly be at risk because they would no longer be economically viable.

However, the patients’ organisation representative is not convinced about the study results. The analysis talks about the potential loss of 16 million life years of patients if the new rules go through.

“Those predictions are very scary, but I would like to see the model. Predictions need a solid model behind them, without it, we are scaring people,” said Julian Isla, chief scientific officer of the European Dravet Syndrome Federation, and European organisation of patients with Dravet Syndrome.  

[Edited by Giedrė Peseckytė/Zoran Radosavljevic]

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