As part of its vision to build a European Health Union, the European Commission (Commission) announced the new pharmaceutical strategy for Europe (Strategy) on 25 November 2020. The Strategy is likely to result in significant changes to the European Union (EU) regulatory framework, that will have a substantial impact on both the marketing of medicinal products and the strategic business planning of pharmaceutical companies.
One key aspect is the re-thinking of the mechanisms for incentivising and rewarding innovation and the EU's approach towards the concept of unmet medical need. The Commission is also focused on the proposed measures to improve accessibility and affordability of medicinal products for all EU citizens.
The first part of this advisory sets out a summary of the Strategy. We then consider the steps that have so far been taken to implement the Strategy and the current state of play with the Commission's proposals. Companies interested in the area should strongly consider responding to the current Commission public consultation to ensure their views are considered as part of the proposed reforms.
The Key Elements of the Strategy
The Strategy introduces new policies and ideas but also brings into the spotlight long standing challenges that have been recently exacerbated by the coronavirus outbreak. The 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 Strategy can be divided into three key areas:
- availability, accessibility, affordability of medicinal products;
- streamlined innovation and enhanced competition; and
- securing supply and controlling shortages of medicinal products.
1. Availability, accessibility and affordability of medicinal products
The Strategy, and in particular the section on "Prioritising unmet medical needs", reflects the belief within the EU institutions that current incentive models neither provide an adequate solution for unmet medical needs nor appropriately incentivise investments in innovation. It highlights anti-microbial resistance (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. This could be interpreted as an indication that the Commission considers that pharmaceutical companies do not focus their efforts and investments in the "right" areas and that the regulatory model, including the incentives and rewards for innovation, must be reformed to address this shortcoming.
In addition, the Commission considers that, even when innovative therapies are developed, their availability to patients depends on the marketing decisions of the particular companies involved, often depending on the characteristics of each EU Member State (e.g., size of population, pricing and reimbursement system, health organisation and administration, etc.). This reflects the long-standing concern of the Commission that such decisions are not necessarily in line with the needs of patients, and that pharmaceutical companies do not make innovative treatments available in all EU Member States, thus undermining the accessibility of treatments for EU citizens and failing to address unmet medical needs.
The proposed solutions in the Strategy are to direct more investment towards unmet needs through collaboration in research and regulatory reviews, and better tailored incentives. To address accessibility, the Strategy aims to reform 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 succeed in driving greater investment, instead of measures that e.g., ensure stronger IP protection.
In relation to affordability, the Strategy focuses on transparency of R&D costs linked to a review of 'fair return'. In line with the position adopted by a number of EU Member States, the Strategy aims to foster price transparency, and the hope of the Commission is that this would help EU Member States to take better pricing and reimbursement decisions.
Finally, the Strategy considers how competition law enforcement can help address affordability concerns. The focus is on generic and biosimilar competition, and suggests that the 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. This underscores the significant focus of DG COMP on generic, and now increasingly biosimilar, competition to help manage public health budgets.
2. Streamlined innovation and enhanced competition
The Strategy refers to the 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 Strategy, will address duplication and inefficiencies that hamper competition. Additionally, the 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 Strategy discusses other important initiatives concerning several areas that, according to the Commission, would streamline innovation and competition such as:
- Vaccines: 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 use of such technologies may help in the identification of potential active substances for repurposing to reduce high failure rates;
- Clinical trials: According to the 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 Commission also aims to support innovative patient-oriented trial designs;
- Repurposing off-patent medicinal products: The 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 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 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 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 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, as well as in relation to the procedures applying to medicinal products containing or consisting of genetically modified organisms. Finally, the Commission may revise the EMA fee legislation in order to support funding regulatory activities at EU level.
3. 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 Strategy, the 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.
Implementation of the Strategy
During 2021, the Commission began to implement the Strategy by introducing new initiatives addressing the areas identified above. These are set out below.
1. Availability, accessibility, affordability of medicinal products: Pilot Project on Market Launch of Centrally Authorised Medicinal Products
In March 2021, the Commission, jointly with the EMA and EU countries, launched a pilot project with the objectives of:
- better understanding the root causes of deferred market launches; and
- improving the EMA's knowledge of planned marketing of centrally authorised medicinal products and the reasons behind delayed launches.
The pilot invites applicants of marketing authorisations for orphan medicines and cancer therapies to share their market launch intentions. The pilot will run until August 2022, and applicants are also offered the opportunity to make suggestions to address and improve any gaps identified. Participation is voluntary and any information supplied will remain confidential and be used solely for the pilot, although the information collected will be published in aggregated form.
The intention is for the EMA to use this research to map out the variations in access to medicines across the EU, and identify the reasons for such variations. This, it would seem, is the first step before proposing policy-based legislative solutions to improving patients' access to medicines.
2. Streamlined innovation and enhanced competition: The Commission's Combined Evaluation Roadmap
By far the most activity has been in the area of the operation of the regulatory framework. In March 2021, the Commission launched the "Combined Evaluation Roadmap/Inception Impact Assessment" to evaluate whether the general pharmaceutical legislation-set out in Directive 2001/83/EC and Regulation (EC) 726/2004-has delivered its objectives. Feedback on the Roadmap was requested through April.
The proposed amendments to the legislative regime seek to address perceived weaknesses that came to light during the evaluation phase. The issues identified thus far include:
- unmet medical needs in areas currently not within the scope of the legislation governing rare diseases and paediatric medicines;
- varying and unequal access to affordable medicines across the EU;
- current legislation being ill-equipped to deal with and respond effectively to innovative and emerging technologies, such as genomic sequencing, genome editing, artificial intelligence and products based on genetically modified organisms;
- a need for the simplification of applicable rules and procedures, digitisation of tools, and optimisation of interfaces with other frameworks (e.g., medical devices); and
- vulnerability in supply chains, ensuring a greater security of supply and identifying shortages early.
Stakeholder comments on the Roadmap are available to the public at the link above.
- Evaluation of Orphan and Paediatric Legislation
A key area that was identified in the Roadmap as in need of revision was the unmet medical needs in areas currently not within the scope of the legislation governing rare diseases and paediatric medicines. The Commission has been focused on this area for a number of years, and there have been a number of consultations and stakeholder engagements to explore possible changes to the legislative regime.
On 11 August 2020, the Commission published its evaluation of the legislation governing medicines for rare diseases and children. The evaluation aimed to assess the strengths and weaknesses of Orphan Regulation (EC) 141/2000 and Paediatric Regulation (EC) 1901/2006, and took into account recent studies on paediatric and orphan medicines, as well as extensive consultation with stakeholders.
The evaluation showed that the regulations have stimulated research and development of medicines to treat rare diseases and of medicines for children. However, the regulations were stated to have not adequately supported development in areas where the need for medicines is greatest. A number of shortcomings were noted, including:
- 95% of rare diseases still have no treatment option;
- Failure to sufficiently address the highest unmet needs for children (e.g., mental and behavioural disorders and neonatology);
- Lack of consistency in accessibility and availability to all EU patients across the Member States;
- Inadequate measures to adopt scientific and technological developments.
There was particular focus in the report on the incentives under the regulations, and whether these encouraged the development of medicines. It was noted that advances in science, such as personalised medicine and the use of biomarkers, add complexity to the regulatory framework, and could lead to a proliferation of protection periods. In addition, the report questioned whether the protection periods were justified in all cases or truly stimulated development. In relation to paediatric medicines, it noted that there is no dedicated instrument to direct development, which was largely driven by adults' needs. Further, it was noted that methods available to shorten protection periods, such as to reduce the 10 year orphan exclusivity to six years if the product is sufficiently profitable, were under-used. The procedures were also noted to be inefficient and burdensome.
- Commission Consultations
Following this report, the Commission has published consultations seeking views on suggested amendments to the legislation.
Firstly, in November 2020, the Commission published an Inception Impact Assessment, which proposed various options and invited citizens and stakeholders to provide feedback. The options in relation to paediatric medicines were:
- Six month SPC extension to remain the main reward for completion of the paediatric investigation plan (PIP);
- Six month SPC extension only for medicines addressing unmet needs for children;
- Six month SPC extension for completion of the PIP AND novel reward for medicines addressing unmet needs;
- Novel reward for medicines addressing unmet needs (no six month SPC extension).
The options in relation to orphan medicines were:
- Market exclusivity to remain the main reward (but its duration will be variable);
- Market exclusivity will remain the main reward (but its duration will be variable) AND changes would be made to the criteria for designation to better identify rare diseases;
- Market exclusivity will remain the main reward (but its duration will be variable) AND novel reward for medicines addressing unmet needs;
- Novel reward for medicines addressing unmet needs (no market exclusivity).
Having considered the responses to the Impact Assessment, in May 2021 the Commission launched a public consultation to revise the legislation on medicines for children and rare diseases. Interested parties were invited to share their views via a questionnaire until 30 July 2021. The questionnaire focused on barriers to developing treatments for rare diseases and for children, and asked for views on a number of approaches that could be used to better address the needs of patients. For example, responders were asked whether additional incentives should be offered where the medicine is developed with the potential to address unmet needs of patients, and for views on the best way to reward innovation where other treatments are available. Comments were also requested on whether access to medicines in all Member States should be a condition on obtaining any reward.
There were many and wide ranging responses to the consultation. For example, the industry bodies representing the innovative pharmaceutical industry provided the following comments:
EFPIA: The European Federation of Pharmaceutical Industries and Associations (EFPIA) published its response on 29 July 2021, accompanied by a report by Dolon (a strategic pricing and market access consultancy specialising in rare diseases) and supporting illustrative case studies. Commenting on the Commission's proposed changes, EFPIA states: "aiming to reduce the period of market exclusivity, narrow development incentives, promote faster generic competition and cap the aggregate number of patients that can benefit from a designated orphan product, is likely to drive research investment away from meeting the needs of patients and weaken a sector at the very heart of EU competitiveness and service to citizens." In terms of boosting the development of medicines in these areas, EFPIA considers that assistance with R&D (where medicines under development can benefit from national and/or EU funding), assistance with authorisation procedures and additional post-authorisation incentives would all be effective.
EUCOPE: The European Confederation of Pharmaceutical Entrepreneurs (EUCOPE) also published a response to the consultation, citing two position papers it has published on the regulations. EUCOPE states that it was concerned that the Commission's consultation presents "a narrow view of the process of pharmaceutical innovation and its benefits to patients." and noted, with particular concern, the suggestion of linking incentives to product availability. This, it considers, would "affect disproportionately small- to mid-sized companies and restrict[.] both designation and incentives for rare diseases medicines development."
Most recently, on 28 September 2021, the Commission launched a further public consultation, seeking the views of all stakeholders on the existing regime and the impact of revisions to it. This is broader than the consultation in relation to orphan and paediatric medicines discussed above, but covers some of the same areas. The consultation is open until 21 December 2021.
The key issues addressed include:
- Identification of the issues that need to be addressed by the revision of the EU pharmaceutical legislation and whether there are issues that have not yet been identified by the Commission;
- Assessment of the performance and adequacy of the current legislation;
- The definition of unmet medical need;
- Improvement of patient access to and affordability of medicines in the EU;
- Adequate measures to support innovation, including in areas of unmet medical need;
- Need for incentives for the development of new antimicrobials;
- Steps to create better regulatory frameworks for novel medicinal products;
- Changes to the definitions within and scope of the current EU pharmaceutical legislation;
- Stimulating repurposing of off-patent medicinal products;
- Measures to ensure security of supply of medicinal products in the EU;
- Ensure the high quality of medicinal products manufactured and distributed in the EU;
- Addressing environmental challenges.
The consultation does not set out any proposed changes to the legislation, but seeks views on various options and the areas where the Commission should focus any amendments. The purpose is to gather views and information to support the Commission's impact assessment for the revision of the EU pharmaceutical legislation.
From the Annexes to the 2022 Commission Work Programme, we understand that the Commission intends to publish its proposal for new legislation in the fourth quarter of 2022.
3. Securing supply and controlling shortages of medicinal products: Structured dialogue initiative to strengthen supply chains
On 26 February 2021, the Commission launched a "structured dialogue initiative" to seek to strengthen the resilience of pharmaceutical supply chains and ensure the security of supply of medicines. The aim of the dialogue is to put forward, by the end of 2021, a set of policy recommendations to address identified vulnerabilities in the pharmaceutical manufacturing supply chain. Supply chain issues are also one of the main concerns identified in the Roadmap discussed above. It acknowledges that the current provisions need to be enhanced to increase transparency of stock, ensure early notification of anticipated shortages and strengthen the obligation to supply. To this end, the Roadmap proposes potential solutions including placing greater responsibility on actors and increasing oversight of the supply chain.
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