The newly proposed EU pharmaceutical legislation aims to increase access to medicines for patients in all EU member states, but as the proposed changes in intellectual property rights for new drugs put European innovation at risk it may have the opposite effect.
The European Commission put forth its long-awaited proposal for the new European pharmaceutical legislation in spring, causing a stir among life science leaders with its suggested slashing of IP rights for pharmaceutical products.
Although the new legislation’s proposal to shorten lead-times and reduce the complexity of regulatory pathways is positive, the suggestion to shorten the data protection period from eight to six years risks driving companies away from the EU. This is particularly true for small and medium-sized businesses that often rely on IP rights to attract investment.
The proposal contains provisions for companies to apply for two additional years of data protection. If a product is launched in all 27 EU member countries, the company is eligible for an extended IP period. That is nigh on impossible for small companies to achieve – and a tall order even for big companies – as it requires parallel negotiations on pricing and reimbursement models in all member countries within a short span of time.
The production capacity is also uneven across the EU, where some countries lack the infrastructure to produce, for example, advanced therapies (ATMPs), which throws another spanner to launch some cutting-edge drugs in some countries.”
An EU-wide pharmaceutical product launch also depends on many factors that are beyond the pharma companies’ control. For example, if a member country cannot or does not want to pay for the new drug, the company cannot qualify for the full eight years of IP protection. The production capacity is also uneven across the EU, where some countries lack the infrastructure to produce, for example, advanced therapies (ATMPs), which throws another spanner to launch some cutting-edge drugs in some countries.
On the financing side, a shorter data protection period will make it harder for small companies to attract foreign investments or do business with foreign companies. Cutting the IP rights for new pharmaceuticals by two years reduces the company’s earnings significantly. This in turn hampers the ability to invest in future pharmaceuticals as the entire development process for new drugs take years of work – at a hefty price tag that requires heavy investment and where the return only comes once the product reaches the market.
The new EU pharmaceutical legislation poses a real threat to the survival of Europe’s small companies and removes the incentive for big actors to launch new products in Europe first.”
The new EU pharmaceutical legislation poses a real threat to the survival of Europe’s small companies and removes the incentive for big actors to launch new products in Europe first. Patients in the EU risk losing out on the latest advancements within healthcare if new treatments launch in other parts of the world instead, and European healthcare systems must wait for the IP rights to expire so that generic versions can reach the EU.
There is also a real financial loss to consider for the EU’s economy. To use Sweden as an example, pharmaceuticals is one of the country’s main export product categories. Fresh data from the government agency Statistics Sweden shows a 12% year-on-year increase in export value for pharmaceuticals during the first half of the year, underlining the industry’s significant contribution to the economy.
SwedenBIO and other industry associations and business leaders in the Nordics and Europe are coming together to make our voices heard.”
SwedenBIO and other industry associations and business leaders in the Nordics and Europe are coming together to make our voices heard to impact the outcome of the pharmaceutical legislation. Everyone, from the European Commission and national governments to pharma companies and healthcare actors across the spectrum, agree that European patients deserve reliable access to the latest treatments. We can and must find positive pathways forward to safeguard Europe’s innovative power for the benefit of our patient populations.
This column was originally written by Maja Neiman, Science Director, SwedenBIO, and Afram Yakoub, Communications Officer, SwedenBIO, for NLS magazine No 03 2023, September 2023
Photographer: Eva Garmendia