Implications of the Proposed EU Pharmaceutical Law Reform Overhaul

On April 26, 2023, the European Commission proposed a pharmaceutical law reform directed to replacing the existing pharmaceutical legislation. The reform aims to increase innovation and competition in the pharmaceutical industry, while reducing the cost of drugs for consumers.

One of the key changes proposed is the reduction of the basic market exclusivity period for drug makers before generics can enter the market. Currently, drug makers have 10 years of exclusivity for their new drugs. This means that no other company can produce a generic version of the drug during this period, and drug makers have 10 years to recoup their investment in research and development. The proposed reform would reduce the exclusivity period to 8 years. However, the proposal offers two additional years of exclusivity if the drug makers launch and continuously supply their new medicines, in sufficient quantities, in all 27 member states within two years. The proposal also offers additional regulatory data protection for medicinal products aimed at treating multiple diseases or treating conditions where there is an unmet medical need. With a shorter exclusivity period, drug makers will have less time to recover their costs and make a profit; although with increased competition in the market, drugs are expected to be more affordable and readily available for consumers in all 27 member states.

In a further attempt to keep drug prices competitive, the proposed reform also includes measures to increase transparency of all direct public funding received for the research and development of drugs in the pharmaceutical industry. The proposed reform would oblige drug makers to disclose more information about their pricing and research and development costs.

Notably, the proposed reform does not impact the EU system of intellectual property protection covering medicinal products. Accordingly, companies will continue to benefit from the EU’s globally competitive system of intellectual property incentives.

Although the ultimate outcome remains to be seen, the proposal initiates the legislative process. Before being approved, both the European Parliament and the Council of the EU will need to reach an agreement on each of the laws before they can finally be voted through.

Editor: Brenden S. Gingrich