Comments to the European Commission Regarding the EU General Pharmaceuticals Legislation

The Information Technology and Innovation Foundation (ITIF) made the following submission to the European Commission with regard to its request for public comment on the European Union (EU) General Pharmaceutical Legislation.

EU countries once led the world in biopharmaceutical innovation, with EU-headquartered companies in the last half of the 1970s producing more than twice as many new-to-the-world drugs as American ones. Unfortunately, Europe’s competitiveness in life-sciences innovation has slipped considerably since. As the European Federation of Pharmaceutical Industries and Associations (EFPIA’s) Nathalie Moll wrote in 2020, “The sobering reality is that Europe has lost its place as the world’s leading driver of medical innovation. Today, 47 percent of new treatments are of U.S. origin compared to just 25 percent emanating from Europe. It represents a complete reversal of the situation just 25 years ago.” As EFPIA elaborates, “Many European countries have driven prices so low that many new drugs can no longer recoup their development costs before patents expire.”

Unfortunately, changes proposed in the EU General Pharmaceutical Legislation would double down on policies that hinder, not enable, EU life-sciences innovation potential, while forsaking other avenues that could more effectively enhance access without compromising innovation.

In particular, the proposal would reduce a key intellectual property (IP) protection, notably: baseline regulatory data protection (RDP) duration for new medicines from eight to six years, with some options for recoupment, such as launch and supply in all 27 EU markets within two years of regulatory approval (+2 years) and launching a product with high unmet medical need (HUMN) (+6 months).

But much of this is problematic. First, the Commission uses broad language in defining what launch means, such that this is quite variable to interpretation and could be conceived differently by different member states. Some nations may have small (or even no) patient populations needing certain drugs. Further, small to medium-sized enterprises would likely be disproportionately impacted by the legislation, with one study finding that only about one-tenth of products relying on RDP would be economically viable in Europe.

Moreover, a requirement to launch in all states at the expense of a 2-year RDP penalty is unnecessary when companies have already made a commitment to file for pricing and reimbursement in all EU countries within two years of receiving marketing authorization. This would increase the availability of medicines from 18 to 64 percent in several countries and reduce the time patients wait for new medicines by four to five months in countries like Bulgaria, Poland, and Romania.

Also concerning is that the definition of HUMN lacks a predictable set of criteria that addresses disease severity and burden on patients, families, and caregivers. Further, the definition of orphan products establishes a new standard that may be difficult to achieve.

A November 2023 EFPIA study finds that the General Pharmaceutical Legislation proposals—most notably the reduced RDP duration—would translate to the loss of 50 of the 225 products relying on RDP otherwise expected to be developed from 2020-2035, a 22 percent decrease, and that it would lead to an 11 percent decline in the EU share of global biopharmaceutical R&D investment, from 32 percent today to just 21 percent by 2040. Ultimately, as the report concludes, “Decreasing RDP duration further hampers the economic case for launch, casting doubt over the soundness of the logic of diminishing RDP duration with the view to enhance breadth of access.”

In summary, European policymakers are justified in seeking to enhance access to drugs while managing costs, yet in a way that preserves biopharmaceutical companies’ ability to earn revenues needed to invest in the world’s most R&D-intensive industry. Yet there are better ways to achieve these objectives without severely weakening IP protections like RDP. Moreover, at a time when global competition in the sector is fiercely increasing—China now offers 12 years of protection for biologic drugs—European policymakers need to seriously consider counterproposals that achieve enhanced-access aims without weakening IP rights or compromising innovation potential.