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In the coming weeks, the EU will decide if the degree of protection offered to drug firms by research incentives such as the SPC are really in the interests of patients and society. Reflector reports.
What goes around comes around in keeping competitors away from profitable medicines, just as in anything else. And now Europe is locked in a battle over whether to roll back some of the protection it gave drug innovators in the last century.
It is a good bit more than a quarter of century since European drug industry bosses, fearful of the way that lengthening pre-approval processes were eroding their patents, started pushing European Union legislators to give them some relief. And it is just 25 years ago that they won the first in a series of victories, with the grant of a supplementary protection certificate that offered restoration of up to five years of a patent term. Over the intervening years, the supplementary protection certificate (SPC) has itself been supplemented by other EU legislation similarly intended to protect the rights of innovators to profit from their efforts-notably the orphan medicines scheme.
But in the coming weeks, the EU is going to have to decide if the degree of protection it has provided is really in the interests of patients and society-or just gives drug firms an easy ride. Some of the SPC could be shaved off. And the benefits under the orphan medicines scheme may be squeezed.
The driving forces include concern among national paying agencies and their government ministers about the costs of healthcare, growing public distrust of the drug industry's ethics, and a wider societal shift in attitudes to enterprise, innovation and reward. All three elements came together in the influential conclusions reached by European health ministers in 2016 that it was time to review some of the benefits that the EU had been handing out.
New medicines may pose challenges "regarding the assessment of their added value, the consequences for pricing and reimbursement, (and) the financial sustainability of health systems," the ministers agreed. In particular, they pinpointed the need to ensure that incentives for innovation, including SPCs, data exclusivity, market exclusivity and protocol assistance, were "proportionate"-and should not "encourage inappropriate market behavior of some manufacturers and/or hamper the emergence of new or generic medicinal products". And they noted concerns that "this system may be imbalanced and that it may not always promote the best possible outcome for patients and society."
In consequence, ministers told EU officials to ensure a "fair distribution of incentives and rewards and if necessary consider revision of the regulatory framework". Nearly two years after that instruction was given, that is the task that health and industry officials in the European Commission are bringing closer to completion, with the publication due shortly of a comprehensive study. The stakes are high. And the discussions are generating a lot of heat.
As the European Public Health Alliance (EPHA) remarked recently, "For the Commission, the current study is too big to fail. That the EU ministers asked for it from the Commission sets a precedent which cannot be overlooked. Such a study was politically inconceivable three years ago. It underlines the severity of the affordability problems faced by health systems."
Organizations such as EPHA, with a tradition of skepticism about drug industry behavior, have lined up with those governments keen to rein in any "inappropriate market behavior" by drug firms-such as The Netherlands, which was one of the principal influences on those 2016 conclusions. Understandably, the research-based drug industry has been energetically arguing the case for retaining incentives as a necessary prompt for innovation. In the middle ground are EU countries-such as the UK and Germany-with strong domestic drug industries that help support jobs and exports, who defend the concept of an effective intellectual property environment "for supporting and promoting access to innovative, safe, effective and quality medicinal products".
But the debates have become all the more complex because the increasingly powerful European generics industry has come out strongly in favor of chopping back the SPC-setting it on a collision course with its colleagues engaged in research. Some of this was set out in PE's sister paper, Pharmaceutical Technology Europe, last December (29 (12) 8–9 (2017))-which highlighted the conflicting views on the impact of introducing a Bolar-style waiver to allow generic competitors to manufacture stocks prior to the expiration of the SPC on an original product they wished to copy.
The battle rages on with a seemingly endless stream of position papers, briefing documents and backgrounders littering the streets of Brussels, each offering a further permutation on the consequences for jobs, sales, profits, research and competition both within the EU and beyond, based on one or another option being adopted at the level of the EU or by national governments (archetypically, in the EU, decisions on what sort of SPC waiver may be granted to generic firms is decided at national level).
The Commission, which has been repeatedly accused of dragging its feet in completing its task, has even brought the public into the picture with the recent announcement of a consultation on the linked question of how the man in the street feels about EU support for orphan research-accompanying a targeted consultation of member states, NGOs, business, health technology assessment bodies and academia, with a conference scheduled for early 2019.
So far officials are giving little away about which way they are leaning in this debate. A recent formal document indicated that their evaluation is covering the strengths and weaknesses of the incentive schemes, separately and combined, "focusing on the outputs/results in products catering for a real unmet medical need". It will include cost-benefit analyses of the overall effect and the specific effect on patients, industry, and payers, and will give "an insight on how the various incentives that are related to the legislation have been used, and the financial consequences," while "taking into account…changing business models". The Commission says it will then have a better evidence base from a "public health and a socio-economic perspective" on the desirability of any changes.
Meanwhile, the conflict between patent-holders and generic companies continues unabated at the level of individual firms. Sandoz secured a small victory in January in its bid to break through Johnson & Johnson's SPC on its Prezista HIV so that it can start manufacturing it in advance of a generic launch. Its action in a UK court has led to a referral to the European court for a ruling on the scope of the SPC. The ruling should bring some clarity to a very grey area-and since Prezista's sales worldwide are close to $2 billion, the significance of the outcome will have immediate as well as general implications.
The eddies of the European debates on incentives are reaching the other side of the Atlantic too. The US pharma industry has asked the Trump administration to muscle in to shore up intellectual property protection in Europe. The Washington-based drug industry association, PhRMA, says it is "very troubled by the potential future direction of an ongoing European Commission review of protections and incentives for innovative biopharmaceuticals". It has called on the U.S. Trade Representative for "a focused effort by the U.S. Government to promote strong intellectual property protection and enforcement policies throughout the European Union and its member states." The review "could result in proposals to reopen critical parts of Europe’s intellectual property framework and potentially weaken existing incentive mechanisms that support biopharmaceutical innovation," it warns, with damaging effects on "American exports and jobs."
The intervention has not gone down well with Europeans seeking radical change in the current EU framework. The Netherlands-based Health Action International group, a vigorous civil society organization, described it as an attempt at "intimidating EU institutions" and "the latest in the string of attacks, originating from the US, on global efforts to improve access to medicines". And Yannis Natsis at EPHA said the PhRMA action "is alarming and equates to bullying on behalf of pharmaceutical companies." He said: "Governments should not be dissuaded by this sort of threats".