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Will the changes to the EU pharmaceutical legislation reduce innovation?

In April 2023, the European Commission released its proposed reforms for the general pharmaceutical legislation. We address these changes across a two-part series. In part one, we explored the emphasis of the reforms on the importance of transparency and cooperation for improving affordability and supply of medicines. In this article, we address the impact of the reforms on competition and incentives.

Since being published, the proposed changes to the period of regulatory protection have sparked considerable discussion. By addressing competition, the Commission aims to incentivise companies to invest in areas with the greatest unmet need and increase patient access in all member states. In practice, adjustments to the regulatory protection period and requirements results in an incentive structure that, relative to current protection, could penalise innovative medicines that do not meet the required criteria.

Specifically, the reform proposes that innovative medicines will have a minimum period of regulatory protection of 8 years (6 years of data protection and 2 years of market protection), 2 years shorter than the current period. Under certain conditions, this period can be extended:

- If the medicine is launched in all member states: 2 additional years.

- If the medicinal product addresses unmet needs: 6 additional months.

- If the company conducts comparative clinical trials: 6 additional months.

- If the medicine is for a new therapeutic indication: 1 additional year.

Concerns have been raised that reducing the regulatory protection period will reduce innovation and discourage companies from launching treatments in Europe. The Commission argues that the total number of years of regulatory protection (12) is greater than the current maximum number of years (11). However, it is likely that very few drugs will meet all the criteria.

In part one, we discussed how the Commission is calling for an increase in cooperation between member states on pricing and reimbursement policies. If this action were successful, it could aid companies to launch their medicines across all member states, increasing the years of regulatory protection obtained.

It is also worth noting that there is a proposal to reduce the assessment and authorisation time by the EMA and Commission respectively. The EMA will now be required to assess medicines in 180 days (reduced from 210 days), and the Commission will need to authorise medicines in 46 days (reduced from 67). However, the Commission also notes that it currently takes, on average, 400 days from submission to marketing authorisation, which suggests that this proposed change is unlikely to carry any significant weight.

The impact of reducing the regulatory protection on various stakeholders remains to be quantified. However, the incentives proposed to mitigate the impact on innovation are unlikely to benefit most on-patent medicines and their success relies on highly uncertain results from administrative changes and cooperation.

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