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Industrial Policy

Push for fairer pharma rules hits brick wall of business interests

If you want to do the right thing, you had better do it right.

That’s the lesson the European Commission is being forced to learn after a landmark proposal to level the playing field for access to medicines across the EU was sent back to the drawing board over concerns that the cost to the drugs industry could be excessive, according to people familiar with the matter.

As reported exclusively by POLITICO this week, the proposed overhaul of the EU’s pharmaceutical rulebook would tie special benefits for companies launching new drugs to rolling them out together across all 27 member states.

Its goal is to help the bloc’s poorer eastern members, which usually get stuck at the back of the queue for new medicines. In Romania, the worst performing EU country, patients typically have to wait two-and-a-half years years before a medicine is reimbursed by the health system, industry data show, compared to an average delay of just four months in Germany.

The EU’s quality-control panel rejected the draft report, according to the sources, delaying a policy process in which the Commission sets out different options to tackle the issue of access to medicines that would then be fed into a concrete legislative proposal to update the EU’s pharmaceutical rules.

The text now has to be fixed to satisfy the panel’s objections, with insiders in the European Parliament and in industry telling POLITICO that worries over how the rules might affect the strength of the European pharmaceutical industry weighed on the decision.

A first negative opinion from the board isn’t a necessarily fatal setback — in 2021 nearly 40 percent of reports were given an initial thumbs-down. More concerning would be if the document were to receive a second negative opinion, a much rarer occurrence.

In theory, the Regulatory Scrutiny Board isn’t meant to evaluate the political “meat” of legislation: instead it is meant to provide quality control, ensuring that the documents stick to the “better legislation policy” introduced by the Commission in 2015. But watchdog group Corporate Europe Observatory has argued that, in practice, the board does tend to default to business-friendly proposals, emphasizing competitiveness and “handing companies a key tool with which they can argue that a proposal goes too far, will disadvantage affected companies, and hit profits.”

The negative opinion means that the legislative proposal, first planned for December, is now more likely to land in February or March, insiders say. Elections to the European Parliament expected in 2024 may further delay reform. Negotiators will either have to move quickly to reach an agreement on the file once it is presented, or wait until after the vote and a new Parliament is in place to complete it.

It’s possible that the board will be satisfied with cosmetic changes, allowing the proposal through at a second reading. But should a wide-ranging rewrite be necessary, or even worse should the incentive proposal be scrapped altogether, it would be a black eye for the Commission’s health department which has staked its reputation on the once-in-a-generation reform. It’s all part of the “Health Union” championed by Commissioner Stella Kyriakides that aspires to close the yawning chasms in health care provision between EU countries.

The incentives question

In the favored option considered in the draft, pharmaceutical companies’ market exclusivity benefit for new medicines would be cut by two years, to eight years.

Businesses developing new drugs make money from the exclusive right to sell their medicines. Under current rules they usually have a decade of exclusive protection. After that period, generic drugmakers can enter the market with their own, cheaper versions, lowering the cost for health systems but causing sales of the original brand to plummet.

With the proposed changes, companies would only be able to claw back two years of exclusivity, and return to the current 10 years, if they launch their medicine in all 27 EU markets within two years of regulatory approval. The draft report estimates that the measure could save European taxpayers between €330 million and €440 million a year thanks to faster generic competition. It would also increase the proportion of the European population that gets access to branded drugs by encouraging drug makers to launch in all markets.

Pharmaceutical access advocates have campaigned for measures to equalize access to drugs between different EU countries. The issue was also highlighted in the Commission’s pharmaceutical strategy, where it notes that “access varies considerably across Member States” and that the issue is exacerbated in “smaller and less wealthy markets.”

But industry has pushed back against the proposal, saying it will make Europe a less attractive place to develop medicines.

The European Federation of Pharmaceutical Industries and Associations (EFPIA), a Brussels-based lobby group, has issued a public commitment on behalf of its members to voluntarily enter all EU27 markets within two years of a drug receiving regulatory approval. But the trade group warned that tying benefits to market access through regulation is a mistake.

“We do not believe that linking this commitment to [intellectual property] protections designed to support research and development will facilitate faster access for patients,” EFPIA said in a statement to POLITICO. Instead, it “would represent a further erosion of existing IP protecting medical innovation in Europe.” While protests from Big Pharma aren’t a surprise, data does point to a relative decline in Europe’s research edge. In the advanced medicines field, for example, Europe trails the U.S. and China as an attractive place to do clinical trials.

One European Parliament insider said that motivating the Regulatory Scrutiny Board’s negative opinion was the perception that the proposal risked harming research and innovation in the EU, and that there were issues related to the “the problem definition, market launch obligation and sanctions.”

The exact mechanism of the proposal — for example, what exactly would count as market launch of a drug — also still needs to be fleshed out. The report itself notes, meanwhile, that only around one-third of new medicines would be affected by the change in incentives. The rest rely on patent protection to maintain their market exclusivity, and this wouldn’t be affected by the proposed changes.

This article is part of POLITICO Pro

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