Who’s Going to Choose Where to Launch a Drug?

Are drug firms going to be forced to launch their products in even the smallest EU markets? For years now, the smaller countries in Europe-and there are many of them-have grumbled about not having access to the full range of medicines that are on the market elsewhere. Why, demand regulators and patients in Cyprus or Lithuania or Slovenia, should they not benefit from the same treatment possibilities as are enjoyed by Germany or France or other big countries? The arguments have become increasingly heated recently, and have fused questions of availability with questions of price in a high-octane political cocktail.

Sometimes the absences are the result of not being able to afford the price the manufacturer seeks-many of Europe’s smaller countries are also its less wealthy countries (although Luxembourg offers a striking exception). Sometimes companies defer launching in countries with lower prices where such a move would risk their price being dragged down in other markets through the reference pricing system widely practiced in Europe.

And sometimes the logistics of launching in a small market-which will usually require tailor-made packs in one of Europe’s multiple local languages-discourage launch. Overall, smaller countries routinely complain that manufacturers simply don’t take the trouble to market everywhere.

Growing attention

Concern over this European patchwork quilt of availability has elevated the subject to strategic review by the European Commission-and added intensity has been brought by the current controversies raging over high-priced new medicines, and by the blame-game underway over the growing European problem of drug shortages.

The basis for the Commission involvement is that products authorized through Europe’s central procedure via the European Medicines Agency (EMA) are subject to obligations over launch. The Commission’s aim is to arrive at a clearer definition, with a view to seeing if companies can be compelled to market their products in every EU country. So it has set up a working group to explore the subject, and commissioned a study by Ernst & Young (EY), which is now nearing completion.

At the heart of the discussion are the provisions in the EU’s 2004 legislation (Regulation (EC) No 726/2004)

covering market launch of centrally authorized products, and particularly its clauses on validity of marketing authorizations. This specifies that in general “a marketing authorization shall be valid for five years,” may be renewed after five years on the basis of an EMA reevaluation, and once renewed, “shall be valid for an unlimited period” unless safety issues are raised. At the time, this was something of a novelty: until then, manufacturers had been obliged to renew every authorization every five years.

There are other conditions too, however-notably a “sunset clause.” An authorization which is not followed by the actual placing of the medicinal product for human use on the EU market within three years “shall cease to be valid,” says the legislation. The cessation of validity is automatic, with no particular decision or administrative action required. Similarly, even when a product has been placed on the market, if subsequently it is no longer actually present on the market for three consecutive years, the authorization shall also cease to be valid.

But the precise scope of those obligations has never been fully defined. What is under debate now is whether the sunset clause can be invoked as a threat against companies who fail to market their products everywhere in the EU. The precise scope of the obligations to launch has never been fully defined, so the arguments turn on the grey areas in the legislation. Notably, agreeing just what placing a product on the market entails: whether a launch is just a part of the EU market qualifies, or if the entire EU market must be covered. And how many pack sizes or presentations must be available to meet the requirement?

Launch-law interpretation

But the underlying intentions of the legislation are also in question: just what did EU legislators want to achieve with the rules they put in place years ago? The initial logic behind the provision, according to the Commission’s working group, is that the sunset clause was a quid pro quo for granting manufacturers virtually unlimited validity on their authorizations. It was a device to prevent the authorities suffering the administrative burden of maintaining authorizations for products not actually marketed.

The sunset clause gave the authorities a sort of get-out clause to intervene where manufacturers were not making use of their unlimited authorizations. But the working group also admits that there might be additional reasons, which play into the separate debates over pricing and over shortages. Was the motive of legislators also, suggests the working group, to encourage companies to place a product on the market in a timely manner after the authorization, or to avoid long interruptions of supply.

That’s complex enough as a series of discussions. But in a classic example of the complexities of EU lawmaking, a further wrinkle was introduced when the legislation was being unveiled, nearly two decades ago. In effect, late changes to the rules provided something like a get-out clause for companies from the get-out clause for the authorities. The European Parliament and national ministers in the EU Council demanded changes that would allow the authorities to ignore their obligation to cancel unused authorizations “in exceptional circumstances and on public health grounds.” The circumstances can be, for instance, a product intended to treat a sporadic disease, which will not be sold until that disease breaks out; or leeway might be allowed to smaller firms that may need more time to find a partner for marketing a new product. As a result, authorities’ absolute power to invalidate an authorization for failure to launch was curtailed. This meant that companies could be free-with the blessing of the authorities-to persist with an authorization even without any launch.

Changes in order?

After studying the situation on the ground and working through all the permutations of the legislation in practice, the working group has reached an interim conclusion: there is “a flexible approach toward marketing authorization holders, who are in principle allowed to launch and cease marketing as they see fit.”

This doesn’t mean that the law is entirely neglected. Companies are obliged to inform EMA of the actual marketing of an authorized product, and the agency has put in place a system to monitor the marketing status of centrally authorized medicinal products. When a three consecutive-year period without marketing has elapsed, EMA notifies the Commission accordingly.

Some of the terms used in the sunset clause have-in distinct cases-been clarified by court interpretations, including what constitutes placing a product on the market. But because the clause itself has so far not been subject to an authoritative interpretation by the EU courts, which are the ultimate arbiters of EU legislation, there is still plenty of margin for debate about its power and its limits.

The presumption so far has been that the EU market is served as soon as and as long as the product is placed on the market somewhere in the EU, which allows manufacturers to choose where and when they launch their products. But the working group has highlighted the need to see this the broader context of the legislation’s objectives-and it cites the Commission’s identification as the top priority of “a high level of public health protection, notably by making safe, innovative products available to patients as quickly as possible.” It goes on: “The flexibility provided should be read in the light of the general objectives of the regulation and cannot lead to situations which go against those objectives…assuring a high level of health protection (which includes availability).”

The impending EY report is keenly awaited, as it is likely to influence the working group’s thinking on how the current rules should be changed.

Reflector is Pharmaceutical Executive’s correspondent in Brussels