New EU Proposals to Regulate Pharma Duck the Difficult Questions

So they’re out—the brand new plans for what is being hailed as a “once-in-a generation” update to the European Union’s (EU) rules on pharmaceuticals. It’s been three years since the intention to make some changes was announced—and the most optimistic prediction is that it will be at least another three years before any legislation actually emerges.

The overall ambition is stated clearly enough.¹ The European Commission­—the EU body that is responsible for initiating legislation—has delivered 364 pages of proposals that aim to “make medicines more available, accessible, and affordable,” and also to “support innovation.” But it remains to be seen whether the recommended mechanisms are adequate to bridge these inherently contradictory goals. They amount to little more than modifying the incentives for innovation to encourage more focus on “unmet medical need,” urging greater cooperation to reduce the incidence of product shortages, or inducing research into the discovery of new antibacterials.

Now it is the turn of the legislators, themselves—the European Parliament, the EU’s directly elected body, and the Council, where the member states send their ministers to make decision. If talks go smoothly—which is the least likely scenario since there is so much at stake for both the pharmaceutical industry and for its critics—an outline agreement on the way ahead might be reached before next summer to allow final legislation to be agreed during 2025 or 2026. If things get bogged down—as well they might—the process will be interrupted by the EU’s own internal timetable. 2024 will see the election of a new European Parliament and the appointment of a new European Commission. What ensues will depend on the predilections and priorities of the new intake of MEPs and senior officials.

But alongside that uncertainty, there is also one element that was conspicuous in the first outline of this legislative tsunami but that has since slipped away into oblivion—and it was arguably the most significant element. When she initially announced the plans for European healthcare reform back in 2020, European Commission President Ursula von der Leyen said in a ceremonial “state of the union” address that “it is clearer than ever that we must discuss the question of health competencies.” That was indeed a mold-breaking concept, one that has for decades enchanted some and enraged others in the complex European debate about pharmaceutical provision.

The “question of health competencies” boils down to whether the EU can tell national governments which drugs to provide, at what price, and under what conditions. The strongest advocates of such a move have traditionally been found among healthcare campaigners, the organizations paying for medicines, and left-wing members of the European Parliament. They argue the need for greater force to confront what they often depict as a rapacious profit-obsessed drug industry exploiting the negotiations on prices and reimbursement, and strong-arming individual member states into buying medicines of dubious merit at inflated prices.

Historically, the industry has been firmly opposed to the idea of such far-reaching EU powers, and it has consistently highlighted the incongruity of subjecting anything as sensitive as the distinct national medical cultures in a diverse Europe to a centralized bureaucracy. Industry has been backed most of the time by national governments who resent the idea of having anyone other than their own local politicians deciding what medicines their patients can and can’t receive. It isn’t just a question of prices—tangled as it would be to implement a centralized price in a bloc with such wide disparities in national wealth.

Competencies also touch on judgements about the authorization of a drug. At present, this is an area where a centralized decision is made based uniquely on the European Medicines Agency’s recommendation on a product’s quality, safety, and efficacy. How well it compares to other medicines is specifically and explicitly excluded from that judgement—and every member state is left free to make its own separate evaluation as to how an authorized medicine should be priced or reimbursed within its own jurisdiction.

Back in 2020, von der Leyen described her vision of a shift in competencies as “a noble and urgent task.” But the subjugation of national autonomy that it implies is still a step too far for the EU’s member states. So, the EU remains condemned to yet another cycle of inconclusive debates over how to reconcile the ultimately irreconcilable objectives of a prosperous and innovative industry and the universal provision of cheaper medicines.

Reference

1. European Health Union: Commission Proposes Pharmaceuticals Reform for More Accessible, Affordable and Innovative medicines. European Commission. April 26, 2023. https://ec.europa.eu/commission/presscorner/detail/en/IP_23_1843