EU pharmaceutical policy at a crossroads: A call to EU Institutions and Member States to concretely act now

The role of the European Union (EU) in defining healthcare policy has become more prominent after the outbreak of the COVID-19 pandemic. Since 2020, both EU Institutions and Member States have recognised the importance of a stronger coordination at EU level. This has led to a significant number of new EU healthcare legislative initiatives, at a scale not seen in the previous two decades. While sending signals on the EU’s prioritisation of healthcare, the outcome of such proposals has not always been as positive for the innovative pharmaceutical sector.

On the one hand, many legislations did not provide for a holistic approach that would interlink healthcare and industrial approaches, as well as other policy areas (such as environment or digitisation). This is the case of proposals solely focused on public health and affordability, without taking into account elements to boost EU competitiveness and innovation. On the other hand, innovative companies have been facing fundamental changes that require time before actual implementation of, and adjustment to, the new realities. This has proven especially burdensome to small- and mid-sized innovative biopharmaceutical companies, that EUCOPE represents, and even more for those investing in high-risk R&D areas, such as rare diseases.

Currently, innovative companies are adapting to, or preparing for the application of, several new legislations and requirements. This includes, among others, the revised General Pharmaceutical Legislation (GPL), the Critical Medicines Act (CMA), the European Health Data Space (EHDS), the EU HTA Regulation with the Joint Clinical Assessment (JCA) framework. Moreover, other proposals are currently being discussed, such as the revision of the Medical Devices Regulation (MDR) and In-vitro Diagnostics Regulation (IVDR), as well as the proposed European Biotech Act. Some of these legislations will have a potentially positive impact on the innovative pharmaceutical sector, while others will increase administrative requirements and compliance costs, in addition to other cross-sectoral legislations, such as the Urban Wastewater Treatment Directive (UWWTD).

A landmark legislation is the revised GPL. Some provisions, such as accelerated approval timelines or the introduction of platform technology master files and regulatory sandboxes, will improve the regulatory framework. However, these developments will not offset harmful provisions that the GPL will introduce. In particular, innovative companies will have to face a weaker and less predictable incentive framework, alongside increased obligations (e.g., access requirements, reporting related to shortages and supply, or environment risk assessment) that do not consider the specificities of different kinds of companies and products, but rather follow a blanket approach. Extremely concerning is the new access provision, that could lead to an unrealistic request to launch in a short timeframe in all EU 27 Member States, putting all the burdens in the hands of innovative companies and not recognising the role of other stakeholders, nor the competences of Member States in making decisions on pricing and reimbursement (P&R). This will create significant needpressure and uncertainty especially on smaller developers, who have limited resources and knowledge of the EU market.

The revised GPL is a clear example that legislative proposals without a holistic vision, spanning from health to industrial policy and access, make the EU pharmaceutical sector less competitive and attractive. Unfortunately, the CMA has also followed a similar process: by trying to tackle two completely distinct issues, such as shortages of critical medicines and access to innovative medicines, it risks compromising any successful outcome for both objectives. Measures related to critical medicines are positive, with the strategic projects aiming to promote manufacturing in the EU through administrative and financial support, as well as the introduction of more resilient criteria (beyond the lowest price) in public procurement. On the contrary, the introduction of collaborative procurement mechanisms, with a specific focus on orphan medicinal products (OMPs), creates unnecessary operational burdens and uncertainty. Access pathways for OMPs are complex: a blanket approach, which prioritises giving Member States more bargaining powers and lowering prices, is unlikely to deliver meaningful benefits and will only introduce additional risks. This is even more concerning in the context of ongoing geopolitical shifts, such as the US Most Favoured Nation (MFN) pricing policy, and their potential spillover effects on global reference pricing dynamics.

The EU should leverage more appropriate legislative tools to improve the R&D and access framework – rather than introducing additional hurdles, especially when significant changes are already underway. For instance, the application of the timelines under the Transparency Directive, or the proper implementation of the Cross-border Healthcare Directive and S2 Regulation, would bring far-reaching results, especially for therapies – such as OMPs and ATMPs – where patients populations might be dispersed or excellency infrastructures limited to only a handful Member States. Importantly, any access proposal should recognise the role of Member States, which are the final decision-makers on access to medicines. Their decisions are based on national health priorities and budgets, as well as infrastructure and expertise on some diseases (especially rare ones).

The Biotech Act has the potential to strengthen the healthcare research ecosystem as a whole when seen with a long-term horizon. The proposals follow a holistic and lifecycle approach, from early-stage research to manufacturing, intertwining health, industrial and financial considerations. Strategic projects can support various stages of R&D and manufacturing, and foster (cross-border) public-private partnerships. The review and simplification of the clinical trials framework is a welcome step to attract more clinical trials in the EU – which sometimes is the only way to guarantee access to a therapy, in areas such as rare diseases where no other treatment options are available. The proposal for an SPC extension, although strict in scope, recognises the need to support innovation with IP incentives. Nevertheless, the Biotech Act falls short of addressing the most critical underlying challenges, such as existing structural barriers, and ongoing geopolitical tensions positioning the EU behind the US and China.

Despite positive developments such as the Biotech Act, the innovative pharmaceutical sector faces several challenges: those related to the aforementioned EU legislations, as well as generally burdensome, lengthy (EU and national) processes; reduction in Member States’ healthcare budgets and more restrictive access frameworks; external geopolitical challenges, such as MFN and tariffs, alongside increased competition from other world regions.

Thus, the EU finds itself at a crossroads regarding the present and future EU pharmaceutical policy: acting now, to build a more resilient, competitive and attractive ecosystem for innovation, or continue seeing an increased gap towards other regions. EUCOPE urges EU Institutions and Member States to take bold actions, building on the positive elements and strengths we have, and addressing existing barriers. A long term and forward-looking vision is pivotal to build such a predictable and innovation-friendly ecosystem. It requires coordination across various policy areas and ministries: healthcare, industry, research, finance, environment, digitalisation. Policy actions must target the full spectrum: from early research to development, from regulatory pathways to diagnosis and market access – the latter being crucial to attract companies’ investments in the EU. Particular attention should be given to small and mid-sized companies, often at the forefront of innovation but facing major hurdles, as well as most complex therapeutic areas, such as OMPs, ATMPs and antimicrobials.

The European Commission can play a key role in triggering such ecosystem. For instance, it could support convening a permanent dialogue between various Ministers (e.g., Health, Industry, Finance), Prime Ministers and CEOs, about the needs of the innovative pharmaceutical sector. Moreover, the Commission should explore the use of the European Semester and Economic Governance Framework to support Member States to spend appropriately on healthcare investment; for instance, the Commission could issue annual country-specific recommendations for healthcare systems, which include but are not limited to public investment in, and expenditure on, biotech innovation and rare diseases. Finally, the EU should adopt a switch in its mindset, by not viewing healthcare expenditure merely as a budgetary cost, but as a strategic investment in the EU’s future competitiveness and resilience.

A combination of these EU and national actions can help fill existing gaps and make the EU again more attractive and supportive of an innovative biopharmaceutical sector.

Dr Alexander Natz, Secretary General, European Confederation of Pharmaceutical Entrepreneurs (EUCOPE)

Stefano Romanelli, Government Affairs Associate Director, European Confederation of Pharmaceutical Entrepreneurs (EUCOPE)