White smoke for the EU Pharma Law reform: Council and Parliament’s agreement reached after 32 months of negotiations

After 11 hours of intense talks, this morning at 5 am the EU co-legislators announced a deal on the controversial reform of EU Pharma Law, initiated by the European Commission on 26 April 2023. Both Council and Parliament have shown their firm intention to deviate from the Commission’s proposal on several topics, primarily on the length of regulatory data protection (RDP) and market exclusivity (ME) for new active substances. Playing with figures, one could say that last night it took one hour to agree on each year of RDP+ME.

From the proposed modular system of (6+2+0,5+0,5+1+2= 12 years max.), the two institutions landed on a simpler and more user-friendly system of (8+1+1+1 = 11 years max.), listening to the concerns expressed by many stakeholders on the reduced attractiveness of the EU pharmaceutical ecosystem, which faces significant challenges by both China and the US (including, but not limited to, the Trump administration’s tariffs and their threat of applying a “most-favoured-nation-like” clause, referred to pricing of medicinal products).

One of the conditions to get an additional year of ME in the Council’s Proposal of 4 June 2025, ie the submission of a marketing authorization application in the EU first or no later than 90 days from its submission to other regulators outside the EU, seems to have been backed up by an extra year of ME if the newly approved product is placed on the EU market within 90 days of approval. This sounds like a concession to the Commission, which had pushed to facilitate access to drugs by promising 2 more years of RDP if the product were launched in the whole territory of the Union: however, we reserve to read the final text before confirming whether the launch in one Member State only may satisfy that condition or not.

For orphan drugs, the co-legislators agreed to grant 11 years of ME to “breakthrough orphan drugs”, ie when there is no medicinal product authorised in the Union for a life threatening or severely debilitating disease; and to grant a fixed period of 9 years instead to all other orphan products, ie those introducing a clinically relevant improvement in efficacy, or in safety with at least comparable efficacy vs a previously approved product. This pragmatic development was steered by the Danish Presidency, in exchange for the suppression of the vague concept of “high unmet medical need” that the Commission had strongly supported in 2023.

Repurposed products, previously approved for one or more therapeutic indications and eventually clinically tested and approved for a new indication, will get 4 years of RDP.

Should a Member State request a marketing authorization holder (MAH) to supply a product enjoying RDP in sufficient quantities to satisfy patient needs in that country, the MAH shall comply with such request within three years or otherwise lose two years of ME in that territory. A partial victory for the supporters of the “access” concept, that was one of the “triple A” pillars of the Commission’s proposal.

The European Parliament obtained an important concession in respect of the “Netflix model” supported by consumers’ associations and by the 14 “rebel” Member States which authored a “non-paper” against the TEV concept back in November 2022: national governments may now decide to pay upfront fixed yearly amounts to have access to a new “priority antimicrobial” (likely to be defined by EMA in ad hoc guidelines) under development, irrespective of the market evolution and sales of the product.

Another good news is the confirmation of the extra year of RDP for any existing product in the portfolio of a marketing authorization holder who accepts to develop a priority antimicrobial. This transferable exclusivity voucher (TEV) is a significant advantage for industry, not available elsewhere in the world and previously refused even by the US Congress during the “REVAMP talks”. There are conditions attached to the issue of a TEV:

• The new antibiotic shall address a multi-drug-resistant organism causing a severe or a life-threatening infection, for which the preclinical and clinical data underpin a significant clinical benefit with respect to antimicrobial resistance.
• It must have a distinct mechanism of action vs. other authorised antibiotics and contain a new active substance, whether alone or in combination with another active substance.
• The applicant shall demonstrate its capacity to supply the new AB in sufficient quantities to meet the demand in the EU.
• If used for another MP, a transferred voucher can only be used in the fifth year of its RDP period, and only if the MAH demonstrates that the annual gross EU sales of that product have not exceeded EUR490 million in any of the preceding 4 years.
• The voucher shall expire if not used within 5 years of grant.

On other matters:

• an extended “Bolar exemption” was confirmed: it will be applicable also to regulatory and pricing/reimbursement procedures, without prejudice to IP rights but without introducing a patent linkage in the EU legislation;
• anticipated shortages of a product shall be notified to the EU and national authorities at least 6 months in advance;
• the streamlined governance of EMA committees and the reduction to 180 days of the timeline to conclude a scientific assessment at CHMP level are both confirmed.

After formal approval by the Member States and the European Parliament, the new Directive and Regulation shall be published in the EU Official Journal and become fully effective after 24 months of publication (as opposed to the 36 months requested by the Council in June). This means that the new rules shall apply most likely from January 2028, giving sufficiently ample time to industry to adjust their strategies and prepare for the new competitive scenarios on the market field.

The compromise vowed by the Danish Presidency and Commissioner Varhelyi concludes 2.8 years of uncertainty for the pharmaceutical sector and is thus very welcome. It should be read in close connection to the Commission's proposal for a Critical Medicines Act, the Life Sciences Strategy and the upcoming Biotech Act. However, we need to underline that many aspects will need fine tuning at technical level, with risks of judicial challenges (eg on the definition of the appropriate comparator in clinical trials; on the identification of “priority antimicrobial”; on the concept of “immature/incomplete” applications, showing “critical deficiencies” that can be stopped 90 days after validation; on the use of real world evidence to support an application, particularly when the results of randomized clinical trials cannot be obtained, such as in the rare disease field).

Therefore, we anticipate that the Court of Justice will be asked to clarify important aspects of the reform soon after its entry into effect and play the role of a “judicial co-legislator”, a trend already shown by some recent important rulings and Advocate-General opinions (Tecfidera; Hopveus; EG Labo/Theramex France).  

For further information please contact Stefano Marino and Marco de Morpurgo.