Following eleven hours of intense negotiations overnight, the European Union (EU) clinched a landmark agreement on the most significant pharma reform of its medicines market in over 20 years on Thursday.  Reached in the final moments of the Danish EU Presidency’s mandate, the deal aims to strike a critical balance stimulating pharma innovation, particularly for critical new antibiotics and rare disease drugs, but also speeding the development of generics to ensure more affordable treatment in all 27 member states.

“The deal demonstrates the EU’s commitment to innovation and ensuring that patients in Europe have access to the medicines they need,” remarked Sophie Løhde, Denmark’s Minister for the Interior and Health, a member of the EU Council, the governing body driven by ministers from all EU countries. She led the negotiations between the Council and the Members of the EU Parliament (MEPs) that clinched the deal.

The EMA welcomed the pharma reform package in a statement published shortly after the deal was announced, with Emer Cooke, EMA’s Executive Director, hailing it as a “historic milestone for European medicines regulation and for patients across the EU.” However, leading industry representatives warned that the compromise does not go far enough to ensure Europe’s global competitiveness and attract investment.

Pharma reform aims to reward innovation and access

At the heart of the pharma reform lies a revised regulatory regime that reduces the previous 10-year data protection and market exclusivity period to a baseline protection of nine years that aims to incentivise drug development and accessibility through a performance-based model – including eight years of data protection and one added year of exclusive market access.

In the first eight years after a medicine receives marketing authorisation, the pharma innovator’s preclinical and clinical test results from the regulatory dossier remain confidential and inaccessible to use by companies developing generic or biosimilar versions of most patented drugs.  After one additional year, generic or biosimilar producers could then put competing drugs on the market, effectively reducing a key aspect of patent protections by a year.

The pharma reform deal strikes a balance between the interests of drug developers and market access for cheaper generic products, Spanish MEP Dolors Montserrat from the European People’s Party (EPP) stated. She was one of the European Parliament’s two leading negotiators.

The European Commission had initially proposed a much shorter Regulatory Data Protection (RDP) period of six years as a baseline. The European Federation of Pharmaceutical Industries and Associations (EFPIA) strongly advocated for a longer baseline period. They claimed that shorter protection periods would deter investment in research and development.

Exceptions for drugs addressing unmet needs and rare diseases

But the EU deal also introduces exceptions allowing the total combined Intellectual Property (IP) protection period to be extended in the case of rare diseases or other unmet needs.

Products that address rare diseases for which there is currently no treatment available, and which are defined as ‘breakthrough orphan medicinal products’, may benefit from up to 11 years of market exclusivity, with a maximum of 13 years.

The IP protection period could also be extended from nine to eleven years, if any of the following public health criteria are met:

• If the medicine is continuously supplied in sufficient quantity in all Member States;
• If products address unmet medical needs, such as a disease for which there is not yet a cure;
• A new therapeutic indication for the existing drug provides significant clinical benefits
• A company conducts comparative clinical trials in several EU Member states (rewarding comprehensive data generation), as well as applying for authorisation outside the EU within 90 days (to incentivise global competitiveness).

Crucially, the new package also shortens the timeframe in which the European Medicines Agency (EMA) would be expected to review and approve new drugs from the previous standard of 210 days to 180 days – a measure welcomed as “encouraging steps” by industry.

The ‘Bolar Exemption’: prepping generics for Day One launch

In another move to lower costs, the EU agreed to speed up the market entry of more affordable generic and biosimilar medicines immediately following the expiration of the original protections under a strengthened version of the so-called “Bolar Exemption”. This exemption will now allow generic and biosimilar manufacturers to access data from a patented product to conduct their own clinical trials, even during the eight-year Regulatory Data Protection (RDP) period.

“The day after a patent expires on a medicine, generics will be available,” explained MEP negotiator Montserrat. She described it as a clear win for the generic industry.

The various exceptions illustrate how negotiators had to strike a balance between pharma incentives to invest in new medicines development, including for rare diseases, and ensuring that a broad range of other drugs remained accessible and affordable across the continent.

To promote affordability further, the EU pharma reform intends to implement various measures. For example, it will require manufacturers to publicly disclose all “direct financial support” received from public authorities or funded bodies for R&D. This is expected to help Member States in their price negotiations.

‘Netflix’ model to incentivise development of new antibiotics

Another key element of the deal is tackling antimicrobial resistance (AMR), which, according to the European Medicines Agency (EMA), is responsible for over 35,000 deaths in Europe each year – and over 1 million deaths globally.

To address the conundrum that new, and more effective antibiotics must be used sparingly as a last resort, thereby reducing the sales volume needed to recoup research and development (R&D) costs, a new financial incentive is introduced.

This comes in the form of transferable vouchers for another year’s worth of data exclusivity.  A company that develops a priority antimicrobial can use the voucher to protect another drug from competitors for a longer period – or sell to another company.

However, this also comes with a “blockbuster” restriction. This stipulates that the data exclusivity vouchers cannot be used for products with annual gross sales exceeding 490 million Euro in the preceding four years.

A “Netflix model” procurement mechanism also enables Member States to purchase antimicrobials via multi-year subscription contracts. MEP Tiemo Wölken from the Socialists and Democrats (S&D) hailed its inclusion as a breakthrough that would decouple antibiotic developers’ revenue stream from actual sales volumes. That will provide pharma developers with a stable income stream to recoup R&D costs while enabling to only use the new drugs when absolutely necessary, thereby reducing the spread of more drug resistance.

New measures to fight antimicrobial resistance

These incentives are complemented in the pharma reform by strict requirements, including mandatory medical prescriptions for all antibiotics sold across the EU, with only a few exceptions, as stated by EPP politician Dolors Montserrat.

The new rules also require manufacturers to submit an “antimicrobial stewardship plan” and include an evaluation of the risk of AMR selection across the entire “manufacturing supply chain inside and outside the Union” as part of a compulsory environmental risk assessment (ERA, which tracks risks like AMR selection throughout the manufacturing supply chain).

The issue is particularly critical in countries outside the EU, specifically Lower- and Middle-Income Countries (LMICs). Global surveillance data from the WHO indicates that resistance to life-saving antibiotics is extremely high and increasing, particularly in settings with limited resources. Globally, more than 1.1 Million people die due to AMR, according to WHO numbers.

By mandating environmental risk assessments covering AMR throughout the manufacturing supply chain, both within and outside the EU, the bloc is also leveraging its substantial market influence to impose stronger global standards. This also applies to the sale of antimicrobials for use for farming animals, in meat production and aquaculture – three of the main drivers of AMR.

This push for environmental standards is expected to provide positive effects globally, Dorothea Baltruks, Director at the Berlin-based Centre for Planetary Health Policy (CPHP), explained in a statement to Health Policy Watch. “When a large market such as Europe sets binding environmental compatibility standards for medicines, this can provide significant impetus for the global market, which also benefits people in LMICs,” Baltruks emphasised.

Industry: package lacks steps to bolster competitiveness

“It is crucial that Europe has a regulatory system in place that can keep up with all these challenges,” concluded Wölken. “We cannot forget that we are faced with international challenges.” According to him, the package is key to assure competitiveness and innovation.

This perspective, however, is precisely where EFPIA views the reform package as insufficient. In a statement released shortly after the agreement, the industry association charged that the current baseline protection is not long enough to attract and retain global investment into European R&D. EFPIA also called the stronger language on the Bolar exemption an “unnecessary move” that would further erode competitiveness.

Nathalie Moll, Director General of the EFPIA said: “Our region has lost a quarter of its global share of investment to other parts of the world in two decades, while our share of clinical trials has halved. If this is the legislative framework that is expected to attract the medicines innovation of the next 20 years to Europe, the outcome is underwhelming,” she criticised.

Despite the objections, the agreement on the pharma reform now heads to the European Parliament and the Council for formal endorsement, which is expected in the coming weeks.

Image Credits: European Union, EU Parliament, Felix Sassmannshausen, European Union, EU Parliament.