The 5 stakes of the new EU pharmaceutical legislation reform

The pharmaceutical industry is one of the most regulated industries, with strict guidelines for the development, manufacturing, and distribution of drugs. In Europe, the regulatory framework is governed by the European Commission which oversees the approval of medicines for use throughout the European Union (EU). In addition, the institution proposes and amends regulations for the pharmaceutical sector, implements measures and accurate enforcement of EU pharmaceutical legislation, collaborates with relevant international partners, and advocates for the EU system globally.

On April 26th, 2023, the European Commission adopted a proposal to revise the pharmaceutical regulation, which brings various significant changes to the industry. This revision is the biggest in over 20 years but still needs to be approved by the European Parliament. Its objective is to increase the availability, accessibility, and affordability of medicines, as well as to ensure that the EU pharmaceutical industry remains a competitive, attractive, and innovative sector. In this article, Alcimed explores five key stakes from this new legislation and their impact on the industry coupled with the questions bound to emerge for decision-makers in this industry.

Stake n°1: reducing temporal exclusivity and allowing earlier availability of generics and biosimilars

One of the most important changes brought about by the new legislation proposal is the reduction of the period of exclusivity for a drug. The minimum period of regulatory protection will be lowered from 10 to 8 years. However, pharmaceutical companies will still be able to benefit from an extended period of exclusivity (up to 12 years in total, or 4 additional years) if:

• The drug meets an unmet medical need
• Comparative clinical trials are conducted
• Products are launched in a larger number of countries
• Multiple indications are considered in the development

Thus, manufacturers will have to review their research, development, and marketing strategies to meet these eligibility criteria for the extension of the duration of protection. However, meeting these criteria will represent a real challenge for pharmaceutical companies. A first example of this challenge is the notion of comparative trials, which are not always relevant in rare diseases and are also globally more risky for drug manufacturers. A second example will be the launch in the 27 EU countries in 2 years. It will require significant commercial and operational excellence considering that today launches in all these countries are done over longer periods. What about companies that do not have a footprint in some of these countries? This will probably require reviewing the distribution strategy in the European countries not covered.

Beyond this reduction in the duration of protection, the pharmaceutical industries has to expect earlier launches of generics and biosimilars. These two factors combined can lead to a potential loss of revenue and will lead industry decision-makers to quickly revise their 10-year profitability and revenue forecasts if this text is adopted.

Stake n°2: ending drug shortages and ensuring the security of supply

The reform of EU pharmaceutical legislation aims to address drug shortages and logistical weaknesses to ensure the availability of essential medicines and to ensure that patients always have access to medicines, regardless of where they live in the EU. To this end, the new regulation will require national authorities and the European Medicines Agency (EMA) to monitor stock-outs of medicines and for industrials to meet stricter obligations, including promptly reporting supply problems and withdrawals of medicines, and developing shortage prevention plans. An EU-wide catalog of essential medicines will be established, with an assessment of supply chain weaknesses to advise organizations and other stakeholders on specific actions to be taken.

As a result, pharmaceutical companies may have to disclose their shortages to their competitors, revealing their weaknesses or at least the gap with the desired situation at the sector level. However, these steps can also be transformed into opportunities: how can solid plans for securing supplies be turned into an asset for winning tenders?

Stake n° 3: making medicines more environmentally sustainable

The updated laws aim to promote the environmental sustainability of medicines by improving the implementation of existing environmental regulations and requiring drug manufacturers to disclose their residues. These measures aim to increase environmental awareness and minimize any potentially harmful environmental impacts while motivating manufacturers to incorporate environmentally friendly practices into their production processes. In this sense, regulation provides an additional incentive to work on the environmental impact of the healthcare sector.

Stake n°4: combating antimicrobial resistance (AMR) through the “One Health” initiative

The revised regulation focuses on combating AMR, which is one of the major health threats in the EU. This new approach aims to encourage investment in this area and contribute to the fight against AMR. Indeed, it encourages organizations to invest in the development of new antimicrobials that can effectively treat resistant pathogens and focus on antibiotic innovation. Such research will be encouraged through transferable vouchers that will speed up the regulatory process. We believe that this regulation will help continue to shape the underlying trend of seeking R&D and business development opportunities in this area.

The text also proposes a Council Recommendation that promotes a “One Health” approach that integrates human health, animal health, and the environment. This proposal supports the responsible use of antimicrobials by setting measurable targets that take into account national situations and aims to improve public awareness and professional training while encouraging cooperation between stakeholders.

Stake n°5: simplify administrative procedures and ensure transparency on drug development funding

The final issue of the EU pharmaceutical legislation reform is the reduction of the administrative burden. The overhaul proposes to speed up the scientific evaluation and authorization process for medicines, thus reducing the average time for EMA authorization procedures from 400 days to 180 days. In addition, the regulatory revision aims to create a regulatory environment that fosters innovation and provides better regulatory and early scientific support.

Simplified procedures will be introduced for promising medicines and digitization will be adopted, such as electronic submission of applications and electronic product information.

If this measure was to become a reality, the primary impact would be for subsidiaries to prepare to launch earlier than today, which would be a real challenge, especially for smaller subsidiaries that often prepare launches shortly before the actual launch.

Finally, the legislation revision will also introduce transparency in public funding of drug development, and the production of comparative clinical data will be encouraged. It will then be interesting, once this data has been collected, to see which players receive the most public funding for their R&D in Europe.

In conclusion, if the new EU pharmaceutical legislation reform is passed, it will bring significant changes to the sector and companies will have to adapt to the new requirements. In short, it aims to promote innovation and competitiveness, ensure faster access to medicines for patients, and maintain high standards of safety and efficacy.

However, this regulation will potentially make the European system less attractive from a business standpoint. The overhaul will trigger the risk that pharmaceutical industries will prioritize other geographical areas, an option some have already stated to be considering. Indeed, several stakeholders argue that the revision will hamper research, competitiveness, and innovation without actually solving current accessibility problems.

The EU pharmaceutical sector is thus on the verge of a significant transformation. It remains for the health industry to react and set up action plans to transform these novelties into competitive assets. Alcimed can accompany you in your projects related to this new regulatory. Don’t hesitate to contact our team!

About the author,

Zoé, Consultant in Alcimed’s Healthcare team in France