First published in our Biotech Review of the year – issue 8.

Amidst the pandemic and negotiations to avoid the UK crashing out of the EU without a deal, the European Commission (EC) had time to release its (bio)pharmaceutical strategy for Europe[1] towards the end of 2020.

The EC strategy revolves around fulfilling unmet medical needs and ensuring accessibility and affordability of medicines, supporting a competitive and innovative European pharmaceutical industry, and securing the supply of medicines across the EU to avoid shortages.

Of course, the importance of fulfilling each and every one of these objectives has been made clear by the COVID-19 crisis. Ultimately, the pandemic has exposed not just the EU’s dependence on critical innovations and technologies, but also the frailty of supply chains.

The release of the strategy document coincided with the issuing of another equally relevant communication from the EC: an intellectual property (IP) action plan “to support the EU’s recovery and resilience”[2]. Both documents point towards changes in the incentives system. This is not new, as the EC has been reviewing the incentives system since 2016 and the introduction of the SPC manufacturing waiver was the (first) outcome of the review.

More tailored incentives for treatments of unmet medical needs?

In the strategy document, the EC echoes the need to rethink policies to stimulate innovation, in particular in areas of unmet needs. For this reason, the EC strategy proposes to revise the legislation on medicines for children and rare diseases to improve the therapeutic landscape and address unmet needs, like paediatric cancer, through more tailored incentives.

This fits into the EC’s broader proposal to review the system of incentives, possibly including a greater ‘conditionality’ of incentives to support broader access for patients, which the EC considered to be hindered by a lack of transparency of research costs or return on investment.

This position follows from the EC joint evaluation of the published last summer[3], which took place in the framework of the broader pharmaceutical incentives review that the EC has been carrying out since 2016. The resultant report found that while the Orphan and Paediatric Regulations have fostered the development and availability of medicines for patients with rare diseases and for children, the development has been boosted mainly in areas where adult development was already planned. In this regard, the evaluation found that the Paediatric Regulation seems to work best in areas where the needs of adult and paediatric patients overlap.

The reason being that, despite the obligations under Paediatric Regulation to develop new medicines in children, there is no dedicated instrument to direct development in areas relevant for children, meaning that the development of new medicines for children therefore remains mainly driven by adults’ needs.

On the rewards and incentives of the two pieces of legislation, the report criticised the 10 year orphan market exclusivity for not being fully justified for certain orphan medicines for some rare diseases, in cases where the market has started to look more similar to ‘standard’ medicines. The evaluation refers to them as ‘often well-established use products, or medicines authorised for multiple orphan conditions.’

According to the report, the rewards in the Paediatric Regulation seem to partially compensate the cost of conducting the Paediatric Investigation Plan and so it is partly fulfilling its role, but it has not shown to be effective in stimulating the development of medicines whose development for adults is not attractive. Obtaining this reward may be complex, as companies have to request it individually at the various national patent offices. Having said that, the report concluded that the incentives and rewards provided by both regulations come with a cost, but the benefits the legislation brought for children appear to outweigh the costs imposed on both industry and society.

So, judging by the contents of last summer’s report, the review of the legislation on medicines for children and rare diseases to improve the therapeutic landscape and address unmet needs, as announced in the EC’s strategy document, may try to exclude orphan market exclusivity from those products that receive an overcompensation as a result of the protection.

A less fragmented IP system?

On its part, the EC’s IP action plan has identified the fragmentation of the EU’s IP system as one of the main challenges in the upgrading of the EU’s IP framework. For this reason, the EC fully supports the unitary patent and the system of centralised litigation before the new Unified Patent Court (assuming this eventually comes into effect). The EC has high hopes for the unitary patent system, considered ‘a key tool for the EU’s industrial recovery, especially for the renewable energy, electronics, aerospace and defence, and mobility ecosystems.’

In similar lines, the IP action plan highlights that the SPC system suffers from fragmented implementation across Member States, which translates into inefficiencies and a lack of transparency and predictability. For this reason, the EC is assessing ways to address these pitfalls, including the possibility to introduce a unified SPC grant mechanism and/or create a unitary SPC title.

Another example of the fragmented IP system is the Bolar exemption. The way in which Member States have transposed article 10.6 of Directive 2001/83/EC on medicinal products for human use into national law is far from harmonised, as the Directive only provides for minimum standards. While in some countries the Bolar exemption is limited to activities related to the generation of data for regulatory submissions of generic submissions in the EU/ EEA, in other countries it includes activities related to the generation of data for any type of submission, including full applications, for regulatory approvals outside of the EU/EEA. The EC hints at a review of the Bolar provision, to support greater generic and biosimilar marketing authorisation applications to increase competition.

What does the future hold?

Amongst many other initiatives, the EC proposes to revise the legislation on medicines for children and rare diseases to improve the therapeutic landscape and address unmet needs through more tailored incentives in 2022, including exploring new types of incentives for innovative antimicrobials. At the same time, the EC also proposes revising the system of incentives and obligations in the pharmaceutical legislation, taking into account the relationship with IP rights, to address market competition considerations and improve access to generic and biosimilar medicines, including the Bolar exemption, in 2022.

The EC’s proposals are many and very ambitious, so the involvement of diverse and engaged stakeholders is needed more than ever to make the most of the opportunity to improve the competitiveness and attractiveness of the EU to attract a strong, fair and competitive industry.

Public interest in the biotech sector has arguably never been greater. Though this is no small part down to COVID-19 – in January 2020 alone, ‘Coronavirus’ appeared in 19,000 newspaper headlines across the world – there has been a significant increase in interest in biotech. In fact, Google searches for the word ‘Biotech’ doubled between June and July 2020 alone. More eyes are trained on the sector than ever before.

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[1] https://eur-lex.europa.eu/legal-content/EN/TXT PDF/?uri=CELEX:52020DC076 1&from=EN
[2] https://ec.europa.eu/docsroom/documents/43845
[3] https://ec.europa.eu/health/human-use/paediatric-medicines/evaluation_en