Europe is attempting to play mediator in a politically charged, high-stakes disputes involving one of the most powerful industries i.e, the drug lobby. The pharmaceutical industry has a host of intellectual property rights to choose from to protect its novel medicines from competitors once they are approved for sale. These include patents,additional protection once patents have expired, and European laws that reward the companies for developing drugs for rare diseases or for children by preventing competition.

Healthcare campaigner, the generic drug industry, and some EU countries argue these protections have gone too far, causing drug prices to skyrocket while patients struggle to access the latest treatments and cures. In addition to the 20 years old patent, Dutch health minister Edith said that several top-ups have been introduced, supplementary protection service, data protection, and market exclusivity. Health campaigner points out the example of Novartis Cancer drug Glivec, as overprotection to the pharma industry. Glivec was licensed incrementally for six rare diseases and each time protected by 10 years of market exclusivity. The company also benefited from a protection designed to reap back lost market exclusivity while the drug was still in the development. Global sales for the medicine peaked at $4.75 billion in 2014. Since it was launched in 2001, Novartis has earned $50.42 billion from the drug.

Any changes to Europe’s law on protection and rewards could have a big impact on. The pharmaceutical industry argues each of the protection is needed to reap back the high costs of developing much needed new medicines. Its a carefully balanced ecosystem that has been fine tunned overtime was said by Nathalie Moll, Head of European Pharmaceutical Industries. She further added that Changing any part of the framework risks undermining the innovation process that patients, healthcare system, and society are relying on to address the challenge they face.

But after broad support in European Council, last summer determined Dutch presidency to investigate how this protection is increasingly being used, and potentially abused, the industry may have an uphill struggle on its hands. The European Commission is now assessing whether the pendulum has swung too far in favor of the pharma industry while potentially penalizing the generic sector, governments and other players and patients. The stakes are high. Any changes to European’s law on protection and rewards could have a big impact on the pharmaceuticals industry’s presence in the region.

The Assessment

The Commission first began investigating certain incentives for the pharmaceutical industry in 2015. It is now carrying out five studies into various protection and their impact on competitions, health care budget, and how they encourage the development of innovative products.  This includes supplementary protection certificates, additional five years protection awarded to approved medicines whose patents began before the date of approval for sale. They designed to claw back lost market exclusivity while the product was still in development. These certificates also prevent the generic firms from manufacturing copycat drugs during this period.

The Generic lobby is called manufacturing waivers since this certificate prevents companies from exporting or stockpiling generic drug, ready to hit EU market as soon as the protection expires. A waiver would lift the restrictions and make the Europeans generics sector more competitive globally, the sector argues. The review is also looking at how these certificates are being granted across Europe. They were initially intended to award up to five years of extra market exclusivity per product, but a European court ruling in 2012, opened the door to numerous additional protections per drug. Approximately 20,000 of these protections were filed in Europe between 1991 and 2015, according to the Commission. In 2014, there were about 1,650 applications in member countries.

The commission is also analyzing the use of an existing exemption for generics drugmakers to manufacture products for research purpose when the drug they are copying remains protected by a patent or other certificates. It is called Bolar Exemption. The exemption is an EU law but was issued as directives, leading to different interpretation across EU countries. For example, the Dutch and the U.K. allowed generics to be manufactured for testing only to obtain EU license, while Germany applied the exemption to manufacture generics and originator products to obtain a license anywhere in the world. The U.K. has since increased the breadth of the exemption, more in line with Germany. Finally, the Commission is also looking at whether protections for rare disease drugs, known as orphan drugs, such as Glivec, plus rewards for testing medicines in children, are fair and balanced.

Orphan Drug

Medicines are increasingly targeted at small patients population and win orphan drug market protection, a trend labeled the “orphanisation” of the drug. The pharmaceutical industry says scientific development has led to more targeted medicine. But healthcare advocates and EU government worry the system has gotten out of hands. Out of 20 biggest selling drug in the world, 19 are orphan drugs, demonstrating the pricing pressure these medicines are having both on health systems.  There are additional protections for testing medicines in children. If a company studied a drug in children and shared that data with its product information, even if the study results were negative, the company will receive an extra six months of market exclusivity. If a product is an approved orphan medicine and it was studied in children, the company earns an extra two years of market exclusivity. And if a medicine is developed specifically for children, the company is eligible to apply for a license specifically to treat children, which guarantees 10 years of market protection as an incentive.

Europe’s power

Though the Commission’s overarching assessment is at the early stages of Europe’s zigzag bureaucratic processes, it could ultimately result in significant change to the landscape of incentives for the sector.

“The Commission’s impact is potentially huge. However, this would only occur if the Commission legislates,” said Adrian van den Hoven, head of Medicines for Europe, which represents the generics and biosimilars industries.

While the Commission holds the power to investigate, the impact of the final reports rests on the shoulders of EU leaders and lawmakers. Van den Hoven thinks the reports will be “rather wishy-washy with recommendations hidden between the lines.” He said the “main issue” will be how the Council and European Parliament react.  The studies will all need to be taken back to the Council next year and debated. This could result in further studies being requested. Then, in 2019 will be the European election, which means everything will stop and a new Commission put in place. Therefore few people expect anything to happen before 2020. Meanwhile, the pharmaceutical industry believes this is entirely the wrong discussion to have with regard to the affordability and sustainability of healthcare systems.