The New EU “Pharma Package”: Regulatory data protection – A comparison of Commission/Parliament/Council positions

The New EU “Pharma Package” Series

In our first alert in our new weekly series on the EU Pharma Package, we provided some important background and general information about the status of the Pharma Package and how the trilogues work. In this second alert, we will discuss the respective positions of the European Commission, the European Parliament and the Council of the European Union with respect to one of the most debated and anxiously anticipated topics on the table, the regulatory data protection (RDP).

Alert 2: Regulatory data protection – A comparison of Commission/Parliament/Council positions

The current "8+2(+1)" regime grants originators a data exclusivity of eight years during which the data package submitted to obtain a marketing authorization (MA) cannot be referenced by generic or biosimilar manufacturers in their own MA application. This period is followed by two years of market protection during which generic or biosimilar manufacturers can use the data package to obtain their own MAs, but their products cannot yet be placed on the market. This market protection can be extended by one additional year in case of approval of a new therapeutic indication with significant clinical benefit for the originator product.

The RDP framework runs in parallel with the patent and supplementary protection certificate (SPC) framework. With its maximum protection period of 11 years, the EU currently has the longest RDP for medicinal products in the world. These forms of protection are intended to reward originator companies for their R&D efforts and protect their return on investment. There are, however, conflicting studies as to whether a long regulatory protection actually encourages or discourages more R&D investments in the EU. A long RDP period also has a significant impact on the public health budgets of the EU Member States, as generic and biosimilar manufacturers can only market their more affordable versions of the medicine after both forms of protection have expired.

A baseline protection with a modulated system of extensions

The EU institutions have each attempted in their respective positions to find the right balance between incentivizing innovation and addressing unmet medical needs, and promoting access and affordability. Although all the EU institutions propose some kind of reduction in either the data exclusivity or market protection baseline period, they vary in their suggestions regarding a modulation system that would allow certain extensions of the baseline period: 

• • The Commission had proposed reducing the baseline data exclusivity period from eight to six years, but with a modulation system of possible extensions.
    The Commission’s modulation system is based on the premise that not all originator medicines “deserve” the same protection. It is intended to incentivize originator companies to satisfy certain conditions, and it rewards those who “go the extra mile”, for example, by submitting the results of comparative clinical trials for new active substances, addressing an unmet medical need, using the transferable exclusivity voucher (TEV) (see our next client alert in this series) and, most notably, launching (within two years) and continuously supplying the medicine in question in all Member States (the so-called access conditionality – which will also be discussed in more detail in a future alert).

All these extensions can be accumulated and there is no maximum cap foreseen on the data exclusivity. In addition, the Commission suggests maintaining the current two-year market protection period but moving the +1 extension for new therapeutic indication to be part of the data exclusivity period.

The total potential protection period under the Commission's proposal would be 12 years (or exceptionally 13 years in case of the TEV), which is one-two years more than the current maximum protection period.

• • The Parliament increased the baseline data exclusivity period to 7.5 years (but now with a cap of 8.5 years), added another possible extension for conducting R&D in the EU together with a public entity, and proposed to keep the 2(+1) market protection as is. The Parliament also delinked the access conditionality from the incentives of the RDP framework.

The total potential protection period under the Parliament's proposal with a capped data exclusivity of 8.5 years and a 2(+1) years of market protection could amount to 11.5 years, which is six months more than the current maximum protection period.

• • The Council proposes to simplify the RDP framework by restoring the current eight years of data exclusivity without any extension possibilities (except for the rare case of the TEV), but reducing the market protection to one year with a limited number of possible modulations which could extend the market protection up to three years maximum.

Under the Council’s position, the market protection period can be extended by one year for a new therapeutic indication. This extension can be accumulated with either (i) one additional year if the medicine meets an unmet medical need, or (ii) one additional year if, cumulatively, (a) the medicine contains a new active substance, (b) comparative clinical trials were conducted, (c) efficacy clinical trials were conducted in more than one EU Member State, and (d) the MA application in the EU is the first in the world or is submitted in the EU no later than 90 days after the first MA application in a third country. In other words, the Council’s proposal boils down to a 1(+1)(+1) system instead of the current 2(+1) system. The Council also supports the Parliament with respect to the delinking of the access conditionality and the incentives.

Overall, the total potential protection period under the Council’s proposal would remain 11 years as is the case now (or exceptionally 12 years in case of the TEV).

It is, however, unfortunate that the Pharma Package does not effectively tackle the notion of Global Marketing Authorization (GMA) as detailed currently in Article 6 of Directive 2001/83/EC, and its repercussions on RDP. Article 6 establishes that all strengths, pharmaceutical forms, routes of administration, and presentations of a given active substance, together with any extensions and variations, are regarded as part of a single GMA. Consequently, the RDP period runs from the date of the first MA of any medicinal product containing that active substance, irrespective of subsequent MAs for other versions. Granting a new MA for, for example a different pharmaceutical form, does not trigger a new RDP period if it contains the same active substance. The intention is to prevent companies from extending exclusivity by making minor modifications or launching new versions of existing medicines. However, the recent DMF case (CJEU 16 March 2023, Joined Cases C‑438/21 P to C‑440/21 P) demonstrates that there is ongoing debate regarding the scope of Article 6, particularly in situations where a new MA is sought for a single-dose product while the original RDP related to a fixed combination product containing that single dose. The GMA concept will be discussed in more detail in a future alert.

A new protection for repurposed medicines

All three institutions support and agree on a standalone data exclusivity period of four years, which can be granted once per product, for “repurposed” or “value-added” medicinal products. Drug repurposing is not defined in the Pharma Package, but is generally understood to mean identifying new on-label therapeutic uses for existing, off-protection medicines outside the scope of the originally approved product, for example to address unmet medical needs. It is considered a typical form of “generic-side innovation”.

In order to benefit from these four years of data exclusivity, the prerequisite is that (i) adequate clinical and non-clinical (where relevant) studies have been carried out demonstrating a significant clinical benefit of the new therapeutic use and (ii) the medicine in question has already been authorized for at least 25 years or is a generic, (bio)hybrid or biosimilar medicine that has not previously benefited from RDP.

The introduction of this new incentive is to be applauded, as it fills a longstanding gap in the rewarding of different types of innovation, whereby drug repurposing is considered an important complement to the development of novel therapies but was previously left out of the incentives framework.

No clarity on enforcement of RDP rights

It is regrettable that the Pharma Package does not provide specific provisions on the nature or enforcement of RDP rights. This leaves several important questions unanswered which are currently the subject of ongoing legal proceedings and could potentially result in divergent outcomes across different Member States.

For example, if an authority were to grant an MA in breach of data exclusivity, there are opposing views on the sanction. Can or must an authority withdraw the MA? If this is not possible, is the sanction then only that the holder of the reference product’s MA might have a claim for damages against the authority and/or the generic or biosimilar MA holder? There is also the possibility that there is no sanction at all if an authority fails to respect data exclusivity, as is suggested by the German Federal Administrative Court in its judgment of 10 December 2015 (ECLI:DE:BVerwG:2015:101215U3C18.14.0).

Furthermore, the law is silent on whether market protection is a private right enforceable only by the initial MA holder, or whether it is a public right up to the authorities to enforce this protection ex officio.

Conclusion

It remains to be seen what compromise the EU institutions will reach, but looking at the proposals, it appears fairly certain that some form of modulation (beyond the current 2(+1) of the market protection) will be introduced.

Although originators would have to make a greater effort to maintain and extend this protection beyond the baseline, the modulation system under all three proposals would result in an effective increase in the maximum protection afforded when taking into account the TEV. Granted, the TEV is intended to be a “rare” creature (with a maximum of 5-10 to be granted across the EU in total), but as we will discuss in a future alert, the economic impact thereof on the industry – and therefore the public health systems and patients as well – should not be underestimated.

In any event, it is important for all stakeholders that the agreed modulation system be clear, predictable and transparent. There must be clear, timely disclosure of which product benefits from which extensions, so that companies can predict and anticipate the “day-one” launch of generics and biosimilars. For generic and biosimilar development and manufacturing, schedules are often determined years in advance, and the average time required to obtain an MA is 18 months. This means that the Council’s proposal to lower the market protection baseline to one year could have little effect in practice if the generic or biosimilar manufacturer is allowed to launch its product one year earlier, but is still going through the MA application procedure at that time. Furthermore, even a six-month extension of the data exclusivity for the originator product could lead to a severe delay in launching the generic or biosimilar product – especially if (i) a company is able to wait until the end of the baseline period to file for certain extensions and (ii) generic and biosimilar companies are not made aware of the extension as soon as it is granted.

Both the Council and Parliament have proposed a transparency mechanism. The Parliament’s proposal is to include the applicable RDP period in the Union register for medicinal products for centrally authorized products; the Council proposes that the national competent authorities publish on their website an overview of the applicable RDP periods for the medicinal products for which they have granted a national MA. In our opinion, both of these proposals should be adopted, and there should be transparency for all medicinal products, regardless of the authorization pathway. Ideally, the modalities (such as timing) for these transparency mechanisms should be clearly specified in the legislative texts.

Finally, the RDP system continues to raise significant questions about how data exclusivity and market protection are to be enforced, what remedies are available if these rights are ignored, and who is responsible for upholding them. The absence of clear guidance leaves both reference product holders and generic/biosimilar applicants in a state of legal uncertainty.