European Policy Called Out as Threat to Drug Trade and Investment

The powerful US lobbyist group, Pharmaceutical Research and Manufacturers of America (PhRMA), has pinpointed a host of factors that threaten the pharma sector’s innovative capacity not just in the US but also in Europe and beyond. It is concerned by perceived weakening of intellectual property protection and by the perennial challenge of pricing controls, with both anxieties intensified by the imminent legislative review in Europe, which the US industry views as more of a threat than an opportunity.

“PhRMA and its member companies are concerned by the direction of the European Commission’s Pharmaceutical Strategy for Europe and options under consideration regarding IP and other incentives for all medicines, which could weaken IP rights in one of the world’s largest markets, “ the group says in the first paragraph of its denunciation of European conditions in a submission to the US Trade Representative. “Troublingly,” it goes on, these proposals could limit regulatory data protection, research exemption mechanisms and incentives, and condition IP incentives on product launches in all EU member states.

This comes on top of the EU’s recently-introduced waiver to allow copying of products that are still covered by a supplementary protection certificate that could also “encourage other countries to maintain or even weaken their already-low patent protection standards.” There are new fears, too, that the EU is on the brink of departing from the “long-standing position that compulsory licenses should be a measure of last resort.”

The risk that PhRMA sees is of the creation of “an unlevel playing field for transatlantic medicines trade and investment.” The bottom line for PhRMA is the risk to the US economy—that “failure to effectively safeguard these incentives in one of the world’s largest markets for innovative medicines would harm US exports and jobs.”

In addition, the group continues, its member companies face “national government restrictions across Europe that jeopardize incentives for biopharmaceutical innovation.” European countries “continue to seek additional cost savings at the expense of the innovative biopharmaceutical sector, thereby not carrying their fair share of costs to research and develop new medicines, as well as undermining US biopharmaceutical competitiveness.”

Many countries in the region “set prices of patent-protected innovative medicines based on policies that restrict availability, limit patient access, and fail to recognize the value of state-of-the-art medicines for patients and societies,” states PhRMA. It believes those rules are aggravated by “rigid health technology assessment interpretations of value.” Worse, even where prices are granted, there are long delays for medicines launched in Europe—an average of 511 days, it says, with the consequence that just 46% of new drugs launched globally since 2012 are available in EU member states, compared to 85% in the US. The criticisms are not merely general. PhRMA gets down to cases at national level.

According to the group, Hungary’s grant of a compulsory license on a COVID-19 treatment “raises significant rule-of-law concerns” and damages the environment for investment and ease of doing business in an EU member state.” And PhRMA is “concerned about the rising interest in the Netherlands regarding the use of compulsory licensing as a way to lower spending on medicines”—with potentially “devastating effects on innovation and the R&D environment more generally.”

The PhRMA document (view here: https://onphr.ma/3lkreoI) is a veritable alphabet of affront, from Austria—“one of the wealthiest countries in Europe, but sets relatively low prices on new medicines and imposes controls on utilization;” to Sweden, with its “frequent reassessments of reimbursed medicines that commonly result in price cuts;” Belgian turnover taxes and claw-backs; the Czech Republic’s “rigid cost-containment regulations;” Denmark’s price caps; and Finland’s “restrictive” pricing and reimbursement environment. France is “characterized by a notoriously slow market access process,” and Germany sees no additional benefit for 71% of potential patients, when “many of these treatments have been widely recognized as important and even breakthrough therapies in the US.” PhRMA touches on the climate in Greece, Italy, Poland, Romania, and Spain as well.

“PhRMA member companies and their innovative products disproportionately bear the brunt of these measures as they undermine the financial incentives for privately sponsored R&D,” it contends. “Not only does this threaten the development of new treatments and cures, it also directly threatens the competitiveness of the US biopharmaceutical industry and its workers.”