A Revised EU Pharmaceutical Legislation: Amid the Challenges Opportunities Exist

Cem Zorlular

On April 26, the European Health Commission proposed a revision to the EU’s pharmaceutical legislation which aims to allow for more accessible, affordable, and innovative medicines for patients across the region. As the largest reform in over 20 years, the updates aim to make the regulatory framework “more agile, flexible, and adapted to the needs of citizens and businesses across the EU.” How can manufacturers leverage the proposed legislation to deliver needed treatments to patients in a way that is sustainable for long-term returns?

Overall, there is agreement that legislative updates are past due. Publication of the draft, however, has sparked pushback from some corners, despite the likelihood of significant changes as the proposals advance through the years-long process towards adoption. As pharmaceutical manufacturers consider how these changes could impact their drug commercialisation strategy, we believe the reform brings the opportunity for meaningful conversations on how best to achieve an equitable balance between encouraging innovation while increasing the affordability of and access to treatments.

To decrease disparities in the time it takes for patients in some EU countries to access medications, the update proposes two years of additional exclusivity to companies that launch across all member states within two years. We stand in agreement with numerous industry groups who believe that there are significant challenges ahead of achieving this ambitious goal. Currently, taking a drug to market with full reimbursement across the 27 member states practically takes longer than two years. The planning and execution involved is a multiyear process, and dealing with the various local constraints in numerous EU countries adds to the timeline of a drug launch. We are looking forward to seeing the impact of conversations between policymakers from all member states and the pharmaceutical industry about this revised timeline of drug availability and how it can continue to encourage innovation and accelerate fair access of treatments across the EU.

Regional Investment and SME Innovation

It is too early to predict what impact a new legislation may have on the Net Present Value (NPV) of drugs launching across EU’s 27 states, especially how it will affect SMEs looking to expand treatments across all member states. SMEs are key drivers of drug innovation in Europe and critical to the development of new medicines. Under the current pricing, a company having exclusivity of its treatment for a longer period is positive and can support price increases based on streamlined reference price baskets. However, with the proposed legislation, if you are a SME currently operating in smaller countries launching a drug in all EU member states is both more costly and riskier as it involves negotiations in so many markets. As a result, market size and affordability constraints may force SMEs to launch outside the EU where the perceived risk is lower. The proposed legislation may encourage more collaboration with local or regional partners that can help negotiate pricing and distribution to ensure reimbursement and deliver consistent revenue at a fixed margin split, potentially decreasing risk and reliably contributing to the NPV.

Repositioning the EU in the Global Launch Sequence

As companies look to evaluate their product launch sequence, global changes such as updated legislation and pricing can cause manufacturers to rethink market prioritisation. Traditional criteria for determining launch sequence includes market size, opportunity and accessibility, partnerships, and experience in a region, however, this is typically not a one-size-fits-all strategy. There may be other unforeseen factors to consider that will impact the success of a launch. In addition, the potential of launching in smaller countries in CEE that may not be part of the launch sequence can add value to manufacturers by providing them with information they can use to successfully commercialise treatment in larger populated countries.

The degree to which these proposed changes will impact innovation in the EU is uncertain at this point, as is the degree to which the legislation may affect NPV as it takes its final shape. While companies model longer exclusivity as a positive and the need to launch across so many countries as a negative, the proposed legislation provides an opportunity to discuss structural pricing and market access issues that make it more difficult for some patients in the EU to access novel treatments.

Before launching a new treatment in any country, pharmaceutical manufacturers should review their current strategies to ensure it is in line with updated legislation. Consulting with local companies with extensive knowledge around the nuances of drug commercialisation in regions where manufacturers may not have considered entering, can help manage and minimise downstream risks.