EU Regulatory Plan Targets Big Pharma Competition, Mergers

By Kevin Stawicki
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Law360 (November 25, 2020, 8:05 PM EST) -- The European Commission on Wednesday adopted a plan to develop a regulatory framework by 2022 to increase access to cheap generic drugs by cracking down on anti-competitive behaviors by pharmaceutical companies across the European Union.

In a plan dubbed the "pharmaceutical strategy for Europe," the commission said new regulations will help patients access cheaper medicines by forcing pharmaceutical companies to be transparent about their research costs and engage in generic and biosimilar competition.

"A new EU approach is needed to ensure we have a strong, fair, competitive and green industry that delivers for patients, and which draws on the potential of the digital transformation of health and care, driven by technological advances in fields such as artificial intelligence and computational modeling," the commission said in the report.

The plan comes in response to calls by European Commission President Ursula von der Leyen to strengthen the European Health Union in light of deficiencies that have been exposed during COVID-19.

"The coronavirus pandemic has highlighted the vital need to strengthen our health systems," von der Leyen said in a statement. "The strategy adopted today will ensure that Europe and Europeans will continue to benefit from such medicines. I call on member states and the parliament to endorse this approach."

One of the top priorities of the new regulatory strategy to be rolled out over the next two years will be developing new legislation and pilot programs to increase pharmaceutical companies' transparency about research costs.

"There is a lack of transparency (in particular in R&D costs) and consensus on costing principles," the report said. "Better understanding and greater clarity are fundamental as a basis for policy debates on the pricing of niche medicines and 'fair return' on research contributions."

The commission said it wants to review companies' incentives to delay market launches of generic drugs by getting more details about clinical trials on patented products being considered for marketing authorization applications. Recent reports on industry competition show that pharmaceutical companies maintain the strategic goal to hinder access to generics, the commission said.

Pharmaceutical companies will also be expected to demonstrate the clinical value and cost effectiveness of new health technologies through the "health technology assessment regulation" that will help determine reimbursements and pricing decisions, the report said.

New policies are in the works to increase competition by bolstering enforcement of the EU's antitrust laws and completing more robust reviews of pharmaceutical company mergers. 

Other parts of the strategy are an attempt to expand upon the so-called European Green Deal and the EU's goal to reach a "toxic-free environment" by attempting to reduce greenhouse emissions in value chains.

The commission also announced Wednesday that it will roll out an "intellectual property action plan" that seeks to streamline the EU's pharmaceutical intellectual property system by helping companies finance new inventions and creating a system of third-party reviews to lower litigation costs.

EU competition chief Margrethe Vestager said in a speech Wednesday that the action plan will "help companies make the most of their inventions and creations."

"In the short term, the commission will facilitate industry-led initiatives to reduce frictions and litigations among players in specific sectors," Vestager said.

--Editing by Abbie Sarfo.

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