Assessing the EU Pharmaceutical Package – Positives, negatives and the impact on smaller pharma and biotech companies

nRavel, precision medicine, cancer

After several delays, the EU Pharmaceutical Package was published on 26 April 2023. This is the first significant review in over two decades of the foundational legislation which governs the authorisation and assessment of all medicines in the European Union. It impacts every therapy launched in the EU, ranging from evidence generation to regulatory pathways, approval timelines and incentives.

Overall, the European Commission‘s proposal continues to be very concerning. Despite the delay in publication, a number of open questions remain, for instance about how certain provisions or concepts will be interpreted, especially regarding High Unmet Medical Need (HUMN) and concepts such as exceptional therapeutic advancement or ‘meaningful’ reductions in morbidity and mortality. These provisions could have significant negative implications for industry and the pricing and reimbursement ecosystem.

Welcome Additions

We’ll start with the positives as there are a number of welcome changes being introduced by the EU Pharmaceutical Package. The Commission has maintained a separate Directive and Regulation. There has been a push for updates and streamlined EMA working methods, such as strengthened scientific advice and regulatory support for developers of Orphan Medicinal Products (OMPs) as well as small and mid-sized companies. A number of the regulatory provisions will help to accelerate regulatory approvals such as the reduction of the timelines for EMA approvals to 180 days. The introduction of the regulatory sandbox, and an openness to adapted clinical trials and real-world evidence (RWE) could all play an important role in future-proofing the Regulation.

Impact on orphan drug developers

A key change to the orphan system is a reimagination of the orphan market exclusivity (OME) framework – the incentives awarded to a developer that markets a therapy for an orphan indication. Venturing away from a one-size fits all approach, where all orphan therapies receive 10 years of OME, the proposal introduces a modulated incentive system. The new approach proposed by the Commission does not address the core challenges that would encourage the development of therapies for the 95% of rare diseases with no authorised treatment. Instead, we would suggest another modulated approach, based on the investment case and chance of therapeutic success, developed by the multi-stakeholder OD Expert Group.

The Commission has proposed to link orphan incentives to the concept of HUMN. With its restrictive definition, this concept risks stifling innovation, overlooking patient populations, and really limits the longevity of the legislation. HUMNs evolve with science and society, thus a definition in legislation would not stand the test of time. A modulated approach that reflects the probability of therapeutic success would actually encourage developers to continue to invest and launch within the EU. Beyond the modulation itself, it creates a de facto ranking of patients, and ‘stamps’ therapies with a label at a very early stage of development. Those products without a (H)UMN stamp are likely to face significant downward pricing pressures or reduce their commercial viability.

EU Pharmaceutical Package

One of the Commission’s main objectives is to facilitate the development of therapies for patients with no authorised treatments. Their introduction of a single marketing authorization for each active substance, effectively a ‘Global Orphan Marketing Authorization (GOMA)’ goes against this objective from our perspective. The GOMA would provide only one extra year of additional exclusivity for moving into a new orphan indication, which would be capped at two years. This proposal should be carefully considered as developing a new therapeutic indication requires many years of research and clinical trials, and will not be sufficiently rewarded with only one additional year of exclusivity. This mechanism will, therefore, hamper incremental innovation.

Orphan drug developers should be encouraged to maximise the impact of the research and knowledge they develop, and find additional uses for existing compounds, especially if this opens the door for those patients with no other options. Orphan developers build up a lot of knowledge on how diseases and therapies work so we should take advantage of this, and reward their scientific innovation, not restrict it.

Launch Conditionality

In an effort to drive access, the Commission has put forward its ‘launch conditionality’, meaning developers will only receive the full period of exclusivity if they launch a therapy in all 27 Member States in two to three  years. This will be virtually impossible for many orphan and ATMP developers, and more so for small and mid-sized companies. For certain therapies such as OMPs and ATMPs, the necessary infrastructure, patient populations or scientific expertise typically do not exist in all Member States.  The Commission has not taken into account that health technology developers are not the only stakeholders involved in pricing and reimbursement discussions, and national policies will inform access decisions. In order to achieve the Commission’s goal of getting treatments to patients faster, improvements to the EU’s cross-border framework would be of greater assistance to the cause. 

Impact on ATMP developers

The EU Pharmaceutical Package will indirectly shape pricing, and hopes to improve the lacklustre adoption of outcomes-based risk-sharing and payment models, especially for Advanced Therapy Medicinal Products (ATMPs). A key regulatory improvement for ATMPs developers is related to genetically-modified organisms, or GMOs. This will help to reduce major barriers to multi-national clinical trials and play a role in shaping Europe’s global competitiveness in this space. GMO requirements have now been folded into the Environmental Risk Assessment (ERA), meaning that marketing authorizations (MA) for medicinal products containing or consisting of GMOs shall be accompanied by an assessment identifying and evaluating potential adverse effects on human health and the environment. The Commission has already acknowledged the high burden the national GMO provisions placed on ATMP developers. We would like to see the Commission go further, and provide a full derogation of GMO requirements for therapeutic ATMPs.

What’s next

The proposal now moves to the next phase of the legislative process and will be discussed and debated by the European Parliament and Council of the EU. This will be a long process due to the size of the EU Pharmaceutical Package and the controversial nature of the provisions. The legislation will take several years before being adopted and start applying, and is unlikely to happen before 2027. However, it will have an impact on all health technology developers – small, medium and big – for at least two decades after its entry into application.

Aiming to improve access, affordability, availability and innovation, a number of proposals mentioned above are incredibly concerning for small and mid-sized health technology developers. There is a move towards increased unpredictability and risk, in addition to decreased incentives.

The environment in Europe can be summarised by an increasing focus on healthcare system sustainability, while advocating for lower pricing and a continued interest in novel therapies. However, pricing considerations regrettably often win out over the promise of innovative therapies. This increased effort to apply a downward pressure on pricing in the EU, will have major consequences on the ability and willingness of companies to bring products to the market and shape research priorities for decades to come.

The European Confederation of Pharmaceutical Entrepreneurs (EUCOPE) is Europe’s trade body that gives a bigger voice to small and mid-sized innovative companies working in the field of biopharmaceuticals and medical technologies. Through its members, EUCOPE represents 2600+ health technology companies that are researching, designing, developing, supplying, manufacturing, and deploying the next generation of pharmaceutical innovation and therapeutic solutions around the continent. 

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Images courtesy: EUCOPE

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