The pharmaceutical industry is one of the key industry sectors in the European Union. Healthcare expenditures account for 8.9% of the GDP in OECD countries on average in 2006. In 2007, the total size of the pharmaceutical market in the EU was € 214 billion at retail level and € 138 billion at ex-factory level. Per European citizen, on average 430 € is spent for pharmaceuticals per year mainly through public or third party funding.
The pharmaceutical industry is a highly innovative industry. It represents 19.2% of total EU private R&D expenditure and provides 635.000 often highly-skilled jobs. Pharmaceutical entrepreneurs contribute to the well-being of European citizens by providing access to innovative and affordable medicines.
At the same time, the sector is highly regulated, not only with regards to the product itself but also on the distribution and purchasing level. Regulation on the latter levels makes it hard to compare it to any other market. Public authority decisions on pricing and reimbursement are of significant importance for market access.
Taking into account these facts EUCOPE stands for the following positions and policy objectives:
EUCOPE Position Papers
- EMA Policy on Proactive Disclosure of Clinical Trials Data
- Explanatory Memorandum – Price differences in the EU / International Reference Pricing
- Commission Proposal Review Transparency Directive 89/105/EEC
Upcoming EU legislation
EUCOPE consultation submissions
- Review Transparency Directive 89/105/EEC
- Review Clinical Trials Directive 2001/20/EC
- Falsified Medicines Directive – Delegated Act Unique Identifier
- Pharmacovigilance Implementing Measures
- Commission Green Paper on EU Research and Innovation Funding
- HMA / EMA guidance on confidentiality of data
- Commission Green Paper on EU Approach to Collective Redress (SEC(2011)173)
EUCOPE policy objectives
- New EMA Transparency Policy / Effective protection of clinical data
- Relation between FOI and Regulatory Data Protection
- Transparent reimbursement and pricing decisions
- Fast national marketing authorisation procedures
- Incentives for incremental research
- Public perception of pharmaceutical innovations by SMEs
- Increased need for collaboration
- EU patent and strong intellectual property rights
- Recast of the clinical trials legislation
- Informed patient as political objective
- Effective promotion of R&D by tax incentives
- Reduced VAT rates for pharmaceuticals
- Prevention of late payment by public authorities
New EMA Transparency Policy / Effective protection of clinical data
Clinical trials are one of the most cost intensive factors in developing a new medicinal product. Therefore, the protection of clinical trial data is a fundamental element in the pharmaceutical sector. Art. 39.3 of the TRIPS agreement obliges the Members to protect such data against unfair commercial use and disclosure. While the business model of generic companies is build on the use of such data, reference to the originator’s data should only be permitted after expiration of a reasonable period of protection.
Therefore, keeping in mind that the protection of this data is – as opposed to the case of patents – not the responsibility of the holder of such rights, but the responsibility of governments and authorities, the EMA should be especially restrictive to disclose such information (see: http://www.ema.europa.eu/docs/en_GB/document_library/Other/2010/11/WC500099473.pdf). Without a proper definition of business secrets and commercially relevant data no such data should be disclosed. Obviously, if the protection of such information is not ensured and predictable, innovative treatments will be not protected and thus the availability might be reduced.
Relation between FOI and Regulatory Data Protection
The question whether regulatory data protection of originators is jeopardized if competitors collect clinical trial data via FOI applications is increasingly debated. The Commission has taken a clear approach by initiating an infringement procedure against Germany which had granted a marketing authorization on the basis of FOI material (IP-10-536). Transparency and freedom of information (FOI) are core values of good governance. However, a clear distinction between FOI and regulatory data protection has to be drawn in order to remain incentives for innovations. This is recognized by the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) where Article 39.3 underlines the importance of regulatory data protection and implements an obligation of Members to protect such data. The European Commission has rightfully pointed out that “it should be avoided that the use of Article 10a leads to a circumvention of data protection rules in the pharmaceutical acquis.” This objective can only be achieved if data collected via FOI applications cannot be used for marketing authorization applications during the time regulatory data protection exists. The Commission approach taken in a recent case should thus be followed by all agencies be it national or the EMA.
Transparent reimbursement and pricing decisions
Innovative companies increasingly have to terminate research projects when they feel that social security systems will be unwilling to pay for their innovation. We see an urgent need that the rules for these decisions by the social security systems of the Member States are transparent and fair. Otherwise promising research projects might have to be terminated just because of the fact that the reward on innovation cannot be calculated or is not guaranteed at all. The High Level Pharmaceutical Forum and the European Commission underlined the importance of transparent pricing and reimbursement decisions.
The Commission stresses the need for an effective application of the Transparency Directive 89/105/EC in a recent Communication and in the final report on the sector inquiry. The effective application of the Transparency Directive would indeed be an important step to set the right regulatory environment for pharmaceutical innovations.
Fast national marketing authorisation procedures
EUCOPE stresses the aspect of time and duration of national marketing authorisation procedures, be it MRP, DCP or purely national marketing authorisations. It seems that the national authorities do not have sufficient resources to meet the demands. Taking into account that the majority of national procedures take place in only four Member States, this situation does not come as a surprise. This of course creates an enormous backlog for the agencies in these Member States.
EUCOPE therefore encourages Member States to correspond to this situation by raising the number of their staff in their marketing authorisation agencies and/or to take measures to increase the efficiency of the authorisation process. Also, in the sector inquiry the European Commission has found market access delays due to regulatory backlogs in national agencies. The final report states that companies can face delays and very late slot openings to submit their files.
Incentives for incremental research
Special attention should also be placed on implementing strong incentives for incremental research. At the moment the EU system only allows one year regulatory data protection, which is too short to grant an appropriate return on investment. Incremental research provides real benefits to patients especially in terms of new indications of known APIs, reduced side effects and improved dosage forms.
The real benefit of existing APIs is often not discovered in clinical trials but through the broad usage by physicians after their release to market and after applying them in numerous cases. The therapeutic value of an additional indication of an existing API is as high as the development of a new chemical entity (NCE). However, the reward on innovation in terms of data exclusivity differs significantly from one (new indication same API) to ten years (new NCE).
Public perception of pharmaceutical innovations by SMEs
The share of small and medium-sized enterprises (SMEs) in the development of innovative pharmaceuticals is recognised only to a minor degree in public perception. According to the final report of the sector inquiry large pharmaceutical companies are increasingly in-licensing new products. Currently 25% of the molecules in clinical development have been acquired from other companies, including SMEs. This does not take into account the acquisition of entire companies. It has to be pointed out clearly that this increase is a consequence of the innovative achievements of small research entities. The Commission report states “This is confirmed by the findings of the sector inquiry and shows the importance of SMEs for maintaining the innovative character of the pharmaceutical sector.” For these reasons, especially in an innovative sector as the pharmaceutical industry the impact on SMEs must be considered in detail in all legislative proceedings.
Increased need for collaboration
The above mentioned facts also show the need for cooperation between large companies and small research teams. The Commission concludes in the final report of the sector inquiry that “SMEs and large pharmaceutical companies are mutually depending on collaboration between each other.” These results correspond to a study showing that only 20 % of large pharmaceutical companies rely on their in-house R&D as the best source of future innovations while 41 % are preferring the external purchase of innovations (in the sense of in-licensing or partnerships) and 39 % are preferring the acquisition of entire companies. Favourable conditions for collaboration between small research entities, SMEs and large pharmaceutical companies should therefore be increased. The Innovative Medicine Initiative is a step into the right direction in this respect. However, it has to be tightly monitored which role SMEs play as partners in the Joint Technology Initiative.
EU patent and strong intellectual property rights
The development of a medicine with a new active pharmaceutical ingredient can last over a decade and involves considerable costs and risks regarding the success of the development. The complexity of the legal system could discourage certain pharmaceutical companies, especially SMEs, to invest in new research projects due to the intricacy of the patent system and litigation costs. If the system does not entirely prevent a company from launching a new product, it might still prevent it from distributing it in all Member States. In order to meet the needs of pharmaceutical companies, EUCOPE supports the creation of a Community patent and a European patent litigation system. At the same time it has to be ensured that the Community patent decreases the costs of patenting and is of a consistently high quality standard regarding authorities and jurisprudence. EUCOPE underlines that there is only one incentive that keeps pharmaceutical R&D alive in Europe: the financial rewards for innovations on the market, which are protected by strong intellectual property rights.
Recast of the clinical trials legislation
Over the last decade the nature of clinical trials has changed considerably. Although the clinical trial segment is still growing and the implementation of the EU Clinical Trials Directive in 2001 contributed to harmonise national regulatory frameworks, pharmaceutical and biotechnology companies have become confronted by a variety of complex issues affecting their operational efficiency and profitability. Major challenges are the loss of major patents, generic competition, and a relatively thin pipeline. To develop the types of innovative treatments that will be demanded by global markets, companies have to adapt to many new topics such as personalised medicine, proteomics, genomics. Drug development has to be optimised by reducing clinical trial timelines, by delegating the responsibility of conducting clinical trials to contract research organisations (CROs), by improving patient recruitment and improving the efficiency of clinical trial results. New study designs have to include a more patient oriented perspective as well as economic aspects prior to product launch to be prepared for drug assessment and reimbursement in different markets. These aspects have to be taken into account in the announced recast of the clinical trials legislation.
Informed patient as political objective
Patients are in need of and entitled to appropriate information in order to be properly aware of their medication. The European Commission addressed this fact by proposing legislation on information to patients with regards to prescription medicines (COM (2008) 662 and 663). Hereby the EU reacts to the fact that patients seek information via internet worldwide and presents a European regulatory framework as a counterpart to regulation in other countries. It is self-evident that an effective control on information given by the industry on prescription medicines has to be guaranteed. However, these control mechanisms have to be fast and effective in order to prevent patients from seeking information through other sources. Statutory time limits for control proceedings must be mandatory like foreseen for centrally authorized products.
Effective promotion of R&D by tax incentives
Research and development is key in a sector as innovative as the pharmaceutical industry. Instruments to stimulate innovation should not be limited to funding opportunities but also include tax incentives. R&D tax credits are a company tax relief which can either reduce a company’s tax bill or, for small or medium sized enterprises (SME), provide a cash sum. The aim of tax credits as practiced in the UK is to encourage greater R&D spending in order to promote investment in innovation. By March 2007 over 36.000 claims had been made in the UK, over 30.000 of which were made under the SME scheme and over 6.000 of which were made under the large scheme, amounting to £3 billion of support. Tax credits are a practicable and unbureaucratic method to stimulate R&D which should be used by more Member States next to adequate funding opportunities for individual projects and companies. This issue also affects the competitiveness of the entire European pharmaceutical industry as most of the OECD countries, e.g. in Japan, are using tax credits to stimulate innovation in the pharmaceutical sector.
Reduced VAT rates for pharmaceuticals
VAT rates applying for pharmaceuticals in the EU range from 0 up to 25 %. Even though Member States have the authority to set VAT rates on their own discretion, they are only allowed to favour specific goods and services if foreseen by EU legislation. Many Member States have already taken the opportunity given by the Community legislator to implement reduced VAT rates for pharmaceuticals. Even though these decisions have to be taken by Member States, national legislators should be made aware of the fact that the EU legislator considers pharmaceuticals as specific goods qualified for a special tax status.
Prevention of late payment by public authorities
Recent analysis of the European Commission has shown that a considerable amount of late payment exists in the EU when public authorities are concerned as debtors. This affects in particular the health care industry because products are often bought and/or reimbursed by social security systems. Unlike in other sectors quota limitations and refusals to deal are no adequate means for the health care industry to prevent late payment by public authorities for patient safety and ethical reasons. Apart from that, innovative companies often have the legal obligation to supply pharmaceuticals within ordinary orders. In addition, prices in health care systems are usually set by the government itself either directly or indirectly. These three facts have to be taken into account when late payments by social security systems are concerned. The measures foreseen in the recast of the late payment Directive (COM (2009) 126) are not sufficient to address these specific characteristics of the health care market.