As part of its vision to build a European Health Union, the European Commission announced the new pharmaceutical strategy for Europe (the new Strategy) on 25 November 2020. The new Strategy introduces new policies and ideas but also brings into the spotlight long standing challenges which were recently exacerbated by the coronavirus outbreak. The new Strategy puts forward numerous proposals for legislative reforms that are likely to affect the regulation of the entire life cycle of a medicinal product. Some of these revisions also affect the regulation of medical devices. The main elements of the new Strategy relate to innovation, availability, accessibility, affordability, and supply in relation to medicinal products.

In this post, we focus on the key proposed regulatory changes expected to impact the pharmaceutical industry. The post also discusses the implications of the new Strategy from the EU competition law perspective.

Availability, accessibility and affordability of medicinal products

The new Strategy argues under the heading “Prioritising unmet medical needs” that current incentive models do not provide an adequate solution for unmet medical needs or incentivise appropriately investments in innovation. It highlights AMR as a key unmet need, but also paediatric and rare diseases, and argues that investments do not necessarily focus on the greatest unmet needs.

In addition, the European Commission considers that, even when innovative therapies are developed, their availability to patients depends on the marketing decisions of the particular companies involved. The Commission takes the position that these decisions depend on the characteristics of each EU Member State (e.g., size of population, pricing and reimbursement system, health organisation and administration, etc.).

The proposed solutions to direct more investment towards unmet needs include more collaboration in research and regulatory reviews, and better tailored incentives. But to address accessibility, the new Strategy aims at reforming the system of incentives, potentially including the introduction of stricter rules and requirements for the grant of incentives to pharmaceutical companies, including measures that promote transparency of research costs or return on investment. It is unclear to us if this will hit the target in driving more investments, instead of measures that e.g. ensure stronger IP protection.

On affordability, the Strategy focuses again on transparency of R&D costs linked to a review of ‘fair return’. Those are potentially significant initiatives which we would suggest require careful consideration in a debate about increasing innovation. In line with the position adopted by a number of EU Member States, the Strategy aims to foster price transparency. The position of the European Commission is that it would help EU Member States to take better pricing and reimbursement decisions.

Finally, the new Strategy considers how competition law enforcement can help address affordability concerns. The focus is on generic and biosimilar competition. The Strategy seems to suggest that the European Commission is considering a review of the incentives on orphan medicinal products such as exclusivity, as well as the absence of automatic substitution for biologicals, in order to further strengthen the impact that generic and biosimilar competition can have on prices. While it is not clear from the new Strategy what exactly the European Commission envisions, the suggestion may have significant impact, and raises difficult questions about how to balance the equation of increased innovation in products with little market demand or which are very expensive and complex to develop and produce, with access at prices that are sustainable for the healthcare systems. Above all, it underscores the significant focus of DG COMP on generic and now increasingly biosimilar competition to help manage public health budgets.

Streamlined innovation and enhanced competition

The new Strategy also refers to the European Commission’s policy initiatives on intellectual property and data governance and how those can support innovation and competition. In particular, Supplementary Protection Certificates (SPC) are again at the centre of attention. The optimisation of the SPC system, according to the new Strategy, will address duplications and inefficiencies that hamper competition. Additionally, the European Commission considers that the introduction of a European health data space providing access to health data across the EU will improve healthcare and research.

The new Strategy discusses other important initiatives concerning several areas that, according to the European Commission, would streamline innovation and competition such as:

  • Vaccines: The new Strategy mentions that platforms monitoring the safety and effectiveness of vaccines after their approval will be created in addition to the application of existing pharmacovigilance requirements;
  • Supercomputing and artificial intelligence: The new Strategy highlights that their use may help in the identification of potential active substances for repurposing to reduce high failure rates;
  • Clinical trials: According to the new Strategy the implementation of the Clinical Trials Regulation will improve transparency of information, development of adaptive and complex trials as well as the use of in-silico techniques and virtual approaches. The European Commission aims to support innovative patient-oriented trial designs;
  • Repurposing off-patent medicinal products: The European Commission will support academic researchers and not-for-profit stakeholders to use the evidence they generate to repurpose off-patent medicinal products for new therapeutic uses. Similarly, the engagement and partnership of the pharmaceutical industry will be promoted;
  • Combination products: The new Strategy identifies that there are remaining regulatory challenges that need to be clarified regarding the roles, responsibilities and procedures for medicinal products combined with medical devices;
  • New methods of evidence generation and assessment: The European Commission is planning to propose revisions that will touch upon the analysis of big and real world data for the development and use of medicinal products. Additionally, it will incentivise the development and validation of relevant biomarkers to support the effectiveness of some new and expensive but also generic medicinal products; and
  • Regulatory efficiency: The new Strategy provides that the European Commission aims to evaluate existing procedures and explore new approaches of assessing scientific evidence. In particular, priority review and scientific advice might be revised for the development of innovative products for unmet medical needs. The European Commission also highlights that simplified procedures are required for the management of variations of marketing authorisations and the assessment of quality files relating to active substances. Another area that the European Commission is planning to explore for solutions concern the procedures applying to medicinal products containing or consisting of genetically modified organisms. Finally, the new Strategy highlights that the European Commission may revise the EMA fee legislation in order to support funding regulatory activities at EU level.

Securing supply and controlling shortages of medicinal products

The COVID-19 pandemic triggered discussions on the weaknesses of the existing regulatory framework and its ability to ensure continuous supply and avoid shortages of medicinal products. EU Institutions such as the European Parliament, highlighted the need to revise the current rules. According to the new Strategy, the European Commission will consider both preventative and mitigating measures which may result in new obligations for the pharmaceutical industry, such as earlier notification of shortages or product withdrawals and greater transparency of information concerning existing stocks. This complements the efforts to implement an EU framework for coordinated approach to addressing emergency public health threats (see our blog post).

Next steps

The new Strategy is setting out the priorities and future goals of the European Commission. During the coming months and years, we would anticipate that new legislative proposals and revisions to the current regulatory framework will be introduced to address the challenges identified in the new Strategy. The coronavirus pandemic arguably provides the European Commission with strong leverage to pursue the implementation of the new Strategy, but hopefully the success of the public-private partnership between governments and industry to address the pandemic will also be a driver to continue fruitful exchanges and find solutions that are truly effective. In any case, pharmaceutical companies need to closely follow developments and remain engaged in dialogue with the European Commission, including through contributions to public consultations.