EU’s Overhaul Of Pharma Legislation Amended With Uneasy IP Compromises

On March 19, 2024, a set of 100 “Compromise Amendments” to the European Commission’s far-reaching overhaul of the EU’s rules for medicines, the Pharmaceutical Review (the Review), was adopted by the European Parliament’s ENVI Committee. Maarten Meulenbelt, Chris Boyle and Zina Chatzidimitriadou explain the main changes, associated risks, and next steps.

The Review, first revealed in a leak in January 2023, is a complex and ambitious project, not least because it was founded on the unsupported idea that, by reducing IP and regulatory protection overall, investment could be steered into “unmet medical need” (“UMN”) areas where IP reductions would be smaller (see our previous blogs covering six surprises, missing numbers and economic realities of the Review).

The Compromise Amendments adopted by the Parliament’s ENVI Committee on March 19, 2024 demonstrate an uneasy truce between different worldviews, rather than a coherent blueprint for keeping the EU attractive for research, clinical trials and manufacturing. They do bring some improvements, but they also create several new risks.

The Compromise Amendments propose the following significant developments. It is important to note that there has been no assessment of the impact of these measures on the EU pharma industry’s competitiveness.

Lower baseline protections

In a typical EU compromise between different views, it is now proposed that regulatory data protection – the baseline protection for all medicines – be reduced from 8 to 7.5 years. There are possibilities for adding 12 months for products that address UMN, 6 months for conducting comparative trials, and 6 months for doing “a significant share” of R&D in the EU (capped at 8.5 years overall). But these additions are not yet well-defined, and likely difficult to achieve. The baseline protection for orphan medicinal products (OMPs) has also been reduced, from about 11 years exclusivity to a baseline of 9 years, with a potential increase for products addressing high unmet medical need (“HUMN”), a concept which is difficult to define – and significantly reduced exclusivity for new orphan indications.

Obligation to file for pricing & reimbursement – with a catch

The previously proposed “launch conditionality” requirement that a product be launched across all EU member states has been deleted in favour of an obligation on the marketing authorization holder (MAH) to file for pricing and reimbursement in each member state that requests it, “to negotiate”, and to launch the product if a reimbursement decision is “positive”. However, it is unclear how this launch obligation – with sanctions for non-compliance – will apply if the price or reimbursement level is unsustainably low.

Paediatrics: more flexibility, but more burdens and less protection

For paediatric medicines, the Compromise Amendments maintain the Commission’s welcome proposal to introduce “evolutionary and simplified” paediatric investigation plans, providing much-needed flexibility.  However, they also introduce new burdens, in particular the obligation to conduct paediatric studies based on the “mechanism of action” of the product in different paediatric diseases, and an extended obligation to launch.

Antimicrobial resistance

The Commission’s proposal to introduce a Transferable Exclusivity Voucher (“TEV”) in order to use the extension of RDP for a successful product as a source of funding for new antimicrobials is maintained, but with stricter conditions, shorter durations, and as a complement to “milestone payments” and a subscription model for joint procurement. The chances of using TEVs successfully in practice do not appear high.

General IP exemptions: Bolar, “pharmacy compounding” and ATMPs

The Compromise Amendments provide for several general exemptions to IP rights that are likely to generate concern. Firstly, they extend the “Bolar” provision, which currently exempts from patent infringement all activities by generic/biosimilar applicants to obtain a generic or biosimilar marketing authorization (“MA”).  The Bolar exemption would extend to conducting health technology assessments and obtaining P&R approval and associated “subsequent practical requirements”.

Secondly, the Amendments open the door – even more widely than the Commission had proposed – to pharmacy compounding, e.g., preparing a stock of medicinal products by pharmacists (“officinal formula”). These compounded products would be available to patients served by the compounding pharmacy, but also to the patients of “another pharmacy”. The Amendments do not specify – as they should, under European Pharmacopoeia rules – that such compounding should not replace suitable comparable authorized medicinal products. Replacement compounding has been shown to have serious implications, bypassing IP rights and blocking market access to compoundable authorized medicinal products. An additional exemption is proposed for “hospital formula” compounding for the supply of hospital patients, without a manufacturing authorization. Furthermore, it is envisaged that compounded products could block orphan designations in certain circumstances.

In relation to the manufacturing of advanced therapy medicinal products (“ATMPs”) without an MA in a hospital, the Compromise Amendments require the existence of “special needs” but do not maintain the restriction of ATMP production –- as proposed in the October 2023 Weiss Report — to situations where “no [ATMP] is authorized” within the EU. The Compromise Amendments anticipate a “cross-border exchange” of ATMPs in “the absence of other solutions for the individual patient”.

The Compromise Amendments now move to the Parliament’s Plenary Session for a vote, and will be subject to further discussions with the Commission and the Council (comprised of the EU member states). Entry into force of the new rules is still some years off, but product pipelines may already be affected.

For further details on all these changes and more, see our Sidley Update, “Uneasy Compromises: 100 Amendments to the EU’s Pharmaceutical Review.”

This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.