HealthIndustryResearch & Innovation

Regulatory modernization to support innovation and growth

Innovation in the pharmaceutical industry requires the right incentives, and such incentives can be diverse. Sufficient regulatory protection and adequate pricing and reimbursement are essential in encouraging innovation; an efficient regulatory system is also key. Companies, especially non-European Union (EU) companies, will not seek EU approval for their innovative medicinal products if, in addition to insufficient protections and a patchwork of increasingly restrictive national pricing and reimbursement laws, the regulatory regime is slow and burdensome. This could be the last straw. The benefits for European patients of attracting innovative products and for the European economy of attracting international investment need no further explanations.

The EU regulatory system is often compared to the US system and considered – rightly or wrongly – slower, more complex, and less amenable to innovation, though of course similar criticisms flow in the other direction.

The European Commission’s legislative proposals contain numerous provisions to improve our regulatory system, many of which are inspired by the “exceptional” regulatory measures adopted to approve COVID-19 vaccines. However, do they go far enough for the EU to remain attractive for foreign companies, their innovative medicinal products and their investment?

The EU regulatory system is slow1 since the average approval time is longer than in the U.S. This is speculated to be due to FDA’s more intense use of accelerated pathways. Meanwhile, FDA’s accelerated approval authorities are growing, with reforms enacted in December 2022.2

The EU pharmaceutical legislation already includes expedited approval mechanisms: accelerated assessment, conditional marketing authorization (MA), and MA under exceptional circumstances. While the US system does not have conditional marketing authorization, it does offer an array of expedited programs, including breakthrough therapy designation, fast track (including rolling review) and priority review, and accelerated approval.

The Future Regulation adds to the EU armory by codifying PRIME and instituting a rolling review.3 Their scopes however is limited since PRIME is restricted to certain medicinal products such as those likely to address unmet medical need or expected to be of major public health interest, and the rolling review to products likely to offer an exceptional therapeutic advancement related to a life-threatening, seriously debilitating or serious and chronic condition. This arguably would be similar to the current US regulatory environment, where breakthrough designation is limited to drugs intended to treat serious conditions with supportive preliminary evidence and fast track is limited to drugs intended to treat serious conditions with potential to address unmet medical need.

While the Future Regulation is a step in the right direction, broader scopes for PRIME and the rolling review would be welcome. That said, the Future Regulation cannot secure more approvals on an expedited basis if the issue comes from EMA’s reluctance to use expedited pathways or lack of resources to handle more expedited applications (which could only be resolved by increasing EMA’s permanent staff and number of national experts working on centralized procedures, both of which seem unrealistic at present).

The EU regulatory system is complex and therefore burdensome. Complexity takes several forms, most of which flow from the nature of EMA which, unlike FDA, is not an integrated agency.

EMA does not have its own assessors but rather relies on a network of national regulators grouped in scientific committees (where all Member States are represented) and working parties. Nor does it have any decision-making power for approvals since they are decided by the European Commission in collaboration with the Member States (through the Standing Committee).

The Future Regulation reduces the number of EMA’s scientific committees and transforms the abrogated committees into working parties. This may not be sufficient but, again, this is a step in the right direction of simplifying and improving EMA’s structure and functioning. Reliance on working parties rather than formal scientific committees should ensure that scientific experts are appointed based on their scientific credentials rather than their nationality, which strengthens the scientific capabilities of the regulatory system and permits the creation of multidisciplinary working parties to tackle more complex issues.

A step further could be to lower the number of CHMP members in charge of assessing and concluding on the quality, safety, and efficacy of Union medicinal products but to appoint those (fewer) CHMP members based on the characteristics of the product or disease concerned.

In any case, it is essential that Member States support allocating resources from national Medicines agencies to, and ensure that sufficient resources are available for, EU assessments.

Furthermore, all aspects of drug development are not in EMA’s remit (clinical trials, for example, are still authorized at the national level) whose only material scope is medicinal products. EMA’s limited role seriously impacts the efficiency of the EU regulatory system, especially as innovative products are now less frequently in the form of chemical tablets but are becoming increasingly complex—such as biological combination products integrating cutting-edge technologies. An integrated approach is essential for such products.

Since an integrated European agency is not an option for now, the Future Regulation expressly sets out more coordination and interaction with other EU bodies. This approach is useful, provided that cooperation and interaction are mandatory, start at an early stage in drug development, and do not unreasonably delay approvals.

Finally, the EU regulatory system is not flexible and technology-oriented, which prevents the quick approval of more complex, technological medicinal products. Of course, in some scenarios, FDA is still seen as too risk averse, too reluctant to permit novel technologies, and too intent on requiring large volume data sets. But in other scenarios, FDA seems to better

deal with innovative, cutting-edge products than the EMA. So, FDA faster releases guidance addressing new, emerging issues (such as the FDA’s recent discussion paper on the use of AI/ML in drug and biologic development) and that guidance often is broader and less prescriptive than EU guidelines (for example, FDA guidance on digital health generally focuses on process rather than product).

The legislative proposals seek to make the EU regulatory system future-proof as illustrated, among other modifications, by the new concepts of regulatory sandbox and platform technology. However, those new features will only reach their objective if the EU regulators interpret and apply them both with the spirit and objective of their adoption in mind and by adopting a risk-based approach. Like expedited approval pathways, flexibility to embrace novel products requires not only adequate rules but also regulators’ adequate mindset.

Overall, the legislative proposals show the European Commission’s willingness to modernize the regulatory system in many ways. Further steps however could be taken, which will hopefully be brought during the legislative process. Otherwise, international companies will move away from the EU and bring both their innovative medicinal products and investment to more hospitable, i.e., more flexible and less risk-adverse, countries.

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1 The article focuses on the centralized MA procedure because innovative medicinal products are typically approved through that procedure, which involves the European Medicines Agency (EMA) and the European Commission.

2 FDORA (Consolidated Appropriations Act, 2023, Pub. L. 117-328, 117th Cong., §§ 3001–3631 (2022) (“Food and Drug Omnibus Reform Act of 2022”)). See client alert (https://www.kslaw.com/news-and-insights/not-quite-the-titanic-the-food-and-drug-omnibus-reform-act-rescues-some-fda-policy-initiatives )

3 The Future Regulation also reduces the official approval time, formalizes an automatic withdrawal of MA applications, etc.

Genevieve Michaux, Partners at King & Spalding (Brussels)
Eva Temkin
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Partners at King & Spalding (Washington D.C.)