In last week’s analysis of the upcoming revision of the General Pharmaceuticals Legislation, we drew attention to supply chain resilience and affordability. We saw that the Commission is likely to introduce incentives for manufacturers to bring back production to Europe. However, other measures, for instance regarding intellectual property, transparency and conditionality, risk disincentivising manufacturers. Hence, many industry representatives and analysts fear that the revision of the General Pharmaceuticals Legislation (GPL) will have a negative effect on the investment climate in Europe. To maintain a favourable business environment, the Commission will therefore introduce incentives that make the development, production and sales of medicines in Europe more appealing for pharmaceutical companies. This part will focus on the Commission’s two other priorities: unmet medical needs and reducing red tape.
Unmet medical needs
The Commission estimates that of the more than 7,000 known rare illnesses, only 1 in 20 has a cure. So far, many areas of unmet medical needs have been left out because of insufficient commercial incentives. Niche medicines have a tricky business case. As with drugs for more wide-spread diseases, the costs of the research, development and regulatory approval process of new drugs for rare diseases are measured in billions of euros. The trajectory from research to market entry takes about twelve years, with a very low success rate. Yet the size of the market for rare diseases is much smaller. Pharmaceutical companies will therefore only choose to invest in them if the regulatory conditions are right: generous intellectual property protections, (non-)financial support for R&D, and efficient regulatory permission procedures.
Especially intellectual property protections act as a driver of innovation in the pharmaceutical sector. Intellectual property protections grant pharmaceutical companies considerable market power for a limited time, and are therefore an integral part of the industry’s business models. This suggests that better intellectual property protections are essential to incentivise companies to address unmet medical needs. This stands in contrast with the Commission’s objective of affordability, described in part one. Here, we saw that some of the Commission’s proposals to promote affordability are restrictive to intellectual property rights.
The Commission’s strategy for unmet medical needs therefore relies not only on market incentives, but also on improved investment and cooperation in research. The Commission is aiming to introduce measures which facilitate cooperation between researchers from the private sector and academia, as well as health care providers, insurers, and public authorities. Coordinated cooperation between these actors should create all-encompassing biotech ‘ecosystems’.
A biotech ecosystem can provide new incentives to address unmet needs if it meets three criteria. First of all, it requires purpose: actors need to coalesce around well-defined, long-term societal goals. This enables actors across different sectors to align their work, and to cooperate. Indeed, cooperation is the second criteria: collaboration should become the central principle of the ecosystem. Academia should be better connected too private companies. Silos within authorities should be broken down. Authorities should act not only as mere regulators, but with the perspective of investors too. Thirdly, all public and private stakeholders need to take an innovative approach to the innovation process itself. Here, digitalisation plays an important role. It creates new ways to share knowledge, enables better access to data, encourages new management systems, and allows for faster regulatory approval. By connecting stakeholders from different sides of the value chain with each other, digitalisation help to construct collaboration within the ecosystem.
An important unmet medical need that has not been discussed so far, is antimicrobial resistance (AMR). Due to the high use of antibiotics in certain industries and the healthcare sector, it is likely that new diseases will appear that are resistant to common current antibiotics. To prevent the rise in AMR, the General Pharmaceuticals Legislation is therefore likely to introduce limitations and optimisations in the application of antibiotics.
The European biotech sector is currently drawing attention to the need for improved access to capital as a solution towards meeting unmet medical needs. In the US, the overall size of investments in the sector is much bigger. Many European companies are listed on stock exchanges like the Nasdaq. A possible solution could be the introduction of a dedicated European stock exchange for pharmaceutical investments, or measures that encourage – or oblige – European pension funds to invest more in the sector. Finally, the European biotech sector urges policymakers to take into account the personalisation of healthcare. Digitalisation is an important driver of the customisation of healthcare to the patient’s personal needs. Therefore, healthcare digitalisation should be included in the revised General Pharmaceuticals Legislation.
Finally, the Commission included addressing the issue of red tape as a priority in its Pharmaceutical Strategy. There are three ways in which this issue can be addressed. First of all, there are many examples of low-hanging fruit that is ready to be picked. An example of this is fragmentation of the regulatory framework. Novel products, such as drug-device/diagnostic combination products are not yet fully under the scope of the EMA, therefore subjecting them to a patchwork of national member state regulatory approval procedures. Another example is the administrative burden: while digital technologies allow for faster processes, inefficient administrative procedures and duplication across agencies continue to slow down the approval of medicines. Improved administrative procedures would also increase the predictability of the process. Predictability is an important factor in encouraging investments in research and development.
Secondly, the aspect of time. A potential time-saving measure could be the introduction of shorter time limits in the regulatory approval process. The coronavirus pandemic showed that expedited regulatory approval procedures helped to deliver urgently needed vaccines and treatments in record time. This inspired policymakers to explore the possibility of applying faster procedures to other urgent medical needs. Again, digital technologies are key: improved access to data and knowledge sharing could create significant time gains. The European regulatory assessment process could allow for frequent, early dialogue with researchers and developers ‘in real time’, i.e., while the data is being generated.
The third way in which red tape could be addressed, concerns new technologies. Future innovations in the field of digitalisation, personalised medicines, GMOs and cell and gene therapies promise big steps forward, but regulatory approval mechanisms and intellectual property conditions that are not adapted to this new reality could slow down their development. Setting new parameters regarding the health, safety and environmental effects of for instance GMO-based medicines should facilitate their uptake. Many of these issues will be addressed in detail in the implementation of the Clinical Trials Regulation and the EU4Health programme.
In conclusion, part one and two of this article have shown that the revision of the General Pharmaceuticals Legislation brings both incremental and fundamental changes to the European pharmaceutical landscape. In part one, we saw the two most fundamental changes: the shifts in attitude regarding affordability and resilience. Expect certain restrictions to the intellectual property regime, an increase in the use of conditionality, and an increased effort to get production back to the EU. This part covered the more incremental changes related to unmet medical needs and speeding up the regulatory approval process. Nonetheless, these smaller changes could lead to fundamental shifts in Europe’s global role as a developer and producer of medicines.
At Lykke Advice, we provide advice to companies and associations regarding the latest developments in the European institutions. We help you identify how upcoming legislation – such as the GPL – might affect your organisation. Please contact us if your company or association would like to know more about this legislation, or if you want to influence the political process to make sure that the legislation is fit for purpose and benefits your interests.