BELGIUM — The European Commission’s comprehensive pharmaceutical regulation overhaul has raised industry concerns, with the European Federation of Pharmaceutical Industries and Associations (EFPIA) sounding the alarm about a potential decline in Europe’s global research and development (R&D) share.
The draft published by the European Commission on April 26 represents the most extensive overhaul of existing medical laws in two decades.
EFPIA’s warnings suggest that the proposed changes could result in a substantial reduction in Europe’s contribution to global research and development, a matter of significant concern for the pharmaceutical industry.
EFPIA’s estimate suggests a potential reduction by one-third, resulting in a decrease to 21% by 2040, equivalent to 2 billion euros (US$2.2 billion) in lost investments annually. The proposed regulatory changes have not been without controversy.
EFPIA has criticized the European Commission for not conducting a competitiveness impact assessment, expressing concerns that the new rules could accelerate the negative innovation trend in the European Union (EU). These changes could particularly impact small and medium-sized enterprises.
One key proposal aims to shorten the protection period for pharmaceutical companies before generic versions can enter the market from ten to eight years.
However, the Commission has offered a countermeasure to incentivize companies: they can regain two years of exclusivity for a product if it is launched in all 27 EU member states.
In specific cases, the proposed rules could extend protection for up to 12 years, such as when a product addresses an “unmet medical need.”
According to the European Commission, these changes would affect both EU-based and foreign-based companies that market medicines in the EU, ensuring no disadvantage for EU firms.
The proposed changes have drawn criticism from drug manufacturers like Denmark’s Novo Nordisk and Germany’s Bayer, as well as biotech firms, all of which contend that Europe is already losing its standing as a destination for research and development (R&D).
Medication represents a substantial contributor to the EU’s trade surplus, with 235 billion euros (US$252.1 billion) in exports in 2021.
Despite these proposals, the EFPIA has expressed concerns about the impact on small biotech companies, with some already relocating to the United States and China.
The Commission’s goal in reducing the patent duration for new medicines is to reduce costs and foster a quicker shift to more affordable generics.
The proposed changes would also speed up new medicine approval times, from 400 to 180 days.
The potential reforms have generated divisions within the industry, with both big pharma and biotech startups opposing the changes.
This opposition comes at a time when there is no clear consensus on the need to modernize outdated pharmaceutical regulations.
CEOs of major pharmaceutical companies, including Lars Fruergaard Jorgensen, CEO of Novo Nordisk, have expressed reservations about the reduction in exclusivity periods.
They argue that it may not allow pharmaceutical companies to recoup their development investments and marketing costs.
Jorgensen emphasized the importance of preserving the full exclusivity period: “If you chop off, one or two or three years of exclusivity, it’s the peak sales that you take away.
“When you launch a product, you have a negative profit contribution because you invest more in marketing, sales… it’s really only the last few years that you recoup your investment.”
The EFPIA has highlighted the potential negative impact of reduced market exclusivity on the development of “orphan” drugs designed to treat rare conditions.
Novo Nordisk, which has developed groundbreaking weight loss and diabetes drugs, Wegovy and Ozempic, is currently Europe’s most valuable listed company.
The company has already increased its investments in the United States, as Jorgensen suggested, and many pharmaceutical trials are shifting toward the U.S. market, which offers a single approval process, in contrast to the complex, country-by-country process in the EU.
The proposed rules could have a disproportionate impact on countries like Germany, Belgium, and France, according to the EFPIA’s research.
For all the latest healthcare industry news from Africa and the World, subscribe to our NEWSLETTER, and YouTube Channel, follow us on Twitter and LinkedIn, and like us on Facebook.
