On April 26th, the EU Commission released the much-anticipated draft of its general pharmaceutical legislation reform. In its most sweeping overhaul of regulations in 20 years, EU’s DG SANTE is looking to reform everything from access to medicines to shortages and supply chain security. 

Since a leaked version appeared in late 2023, Brussels has been awash with talk of sticks and carrots and whether the final draft will have, to quote German MEP Peter Liese “less stick and more carrot.” It doesn’t.  Hewing closely to the previous leaked version, some of the most significant provisions are:

  • Reduction in market exclusivity from 10 to 8 years for most branded drugs. Companies will be able clawback 2 years if they can launch and supply the drug in all 27 EU countries.
  • Added 6 to 12 months in market exclusivity if a drug fulfils an unmet need or a manufacturer runs a head-to-head trial with a competitor or develops a drug that treats multiple diseases.
  • Provisions that may allow countries to override patents and data protection during an “emergency” to beef up or maintain supply by allowing generics to enter the market. 
  • Reform the EMA application process to simplify steps and reduce time to approval.

The Reaction

Many industry experts view the reforms as more “sticks,” or “sticks dressed up as carrots,” and have swiftly voiced concerns. EFPIA, pharma’s heavyweight EU trade body, called it, “legislation that risk’s sabotaging Europe’s life-science industry.” EUROPABIO, the voice of biotech in Europe, said, “a number of provisions may undermine the predictability and stability of Europe’s incentives regime.”

Healthcare CEOs have been more emphatic in their pushback. Denmark’s Novo Nordisk’s CEO called the proposals “poison for innovation and competitiveness in Europe.” UK’s GSK’s CEO said that Europe should “regulate for growth and competitiveness, because obviously we have choices on where our capital and resources are focused.”

Still, there is support for the reforms by public health focused organizations such as EPHA, which called the reforms “an opportunity to put patients over pharma profits,” and the generics trade group, Medicines for Europe, which said this legislation provided, “incentives for equity of access across the EU.” 

What does this mean?

The gloves are off. The EU’s opening bid and industry reaction shows that the bloc is gearing up fora fist fight. Following a very costly pandemic, EU leaders now face competing pressures to reactively tackle climate change, inflation, budgetary pressures, warfare on EU soil and the rise of AI.

Considering this, it’s understandable that the EU is willing to take a proactive stand on pharmaceutical policy. And given the industry’s bump in reputation during the pandemic years has faded, the bloc is willing to reach for sticks over carrots to effect change on matters of equity, access, affordability and supply.

The same story is playing out in other regions.  In the UK, the government is reforming the Voluntary Pricing Access Scheme, much to the chagrin of some in the industry. Across the Atlantic, U.S. lawmakers are using heavy policy artillery, such as the Inflation Reduction Act, to address concerns on pricing.

The jury is still out on whether these policies will work and lead to desired outcomes, but one thing is for sure:  policymakers in the U.S., UK, and U.S., representing the biggest markets in the industry, have moved past talk and started taking significant action.

What should the industry do?

The future of the draft legislation the EU Commission unveiled yesterday is far from certain. IEU Council and Parliament will now debate the proposal, where there are several opposing views. Powerful countries like Germany aren’t too keen to roll back exclusivity incentives, while countries such as Netherlands are in favor of the reforms. Given pending EU parliamentary elections in 2024, it is likely that the reform will not be finalized before the election is completed in June 2024, and that this fight will go the full 12 rounds.

As important as the actual reform is, the larger implication for the industry is that this debate is here to stay in both the EU and other regions. Coupled with ongoing push in the U.S. Senate to further tighten the screws on the industry, and the upcoming 2024 elections in the U.S., the industry needs to be ready to exchange blows in the public domain.

Here are some suggested communication strategies:

  • Re-evaluate the “vote with your feet” message and reemphasize commitment to patients: Threats of disinvestment, although understandable, are not new and risk alienating the industry instead of building allyship with patients. Leaving a prosperous market of 400+ million people is unlikely, and disinvestment in jobs and infrastructure, unless truly radical, takes time. This is an opportunity to advance the message that “we are here to stay and serve our patients,” making it clear that the industry, while perhaps opposed to the current policy, will not alienate the patients that need their medicines. 
  • Map out your footprint in the EU: It is vital to bring the right statistics to this debate to emphasize the economic and social value each company adds to the EU. Statistics like the value of investments, number of R&D sites, people employed, patients treated, number of trials help remind stakeholders of the investments and commitment already made.
  • Double down on solutions: Last year, EFPIA put forward concrete solutions that addressed issues on equity of access, pricing/ability to pay, and transparency. This solution-oriented approach gives non-industry voices that are not happy with the EU’s current language something to rally behind, setting up a contrasting debate. It is time to build this coalition. 

About the Author:

Aneeb is part of the Syneos Health Communications Reputation and Risk Management Practice, where he helps clients navigate the impact of public policy on corporate reputation and business decisions. He has a background in politics and healthcare policy and brings vast experience working on global pharma value and access campaigns. Mark heads the Value, Access and Reputation practice across Europe and International markets, based out of London. His Public Affairs background across media, advocacy and policy supports clients prepare markets for transformative innovation while curating strong reputational brands. Mark graduated from graduated from Manchester Metropolitan University before completing his Masters and PhD at the University of Exeter.