Panelists discuss European pharmaceutical trends and how to stay ahead of the game

EU pharma law package

Following last year’s proposals by the European Commission, earlier this year, the European Parliament adopted its position on the proposed EU pharma law package. Both versions of the proposals stand to substantially change the incentive schemes for regulatory data protection (RDP), orphan market exclusivity (OME), and pediatrics extensions for medicinal product approvals. The proposals also provide for an environmental risk assessment by marketing authorization holders (MAH) and solutions to address medicines shortages by increasing supply chain security. Our discussion focused on the impact these amendments could have, even on existing pipeline products With stated goals of ensuring access to affordable medicines and fostering innovation, including in areas of unmet medical need (UMN), a fundamental reduction in exclusivity rights remains a likely outcome for many medicinal products absent often complex conditions for extensions beyond the proposed standard RDP/OME terms. 

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European market access and pricing strategies

Building an overarching European market entry and pricing and reimbursement strategy remains challenging given the diversity of the health systems across the EU Member States and UK. Key considerations include opportunities for early access reimbursement, the impact of health technology assessments (HTA), reference pricing and launch sequence, and other reimbursement limitations. For example, launch sequence may depend on where payment under local reimbursement can be obtained swiftly and early. Our panelists highlighted some of the distinctions and challenges at the EU Member State level, and debated the impact that the UK’s Voluntary Scheme for Branded Medicines Pricing, Access and Growth (VPAG) will have on companies’ overall launch approaches. Manufacturers and their launch partners should design an overall European pricing and reimbursement pricing and reimbursement strategy early on, including future launch countries in the region.

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Pharma supply chain challenges

Impact of European ESG standards

The EU Corporate Sustainability Due Diligence Directive (CSDDD or CS3D) was formally adopted earlier this year, adding to the risk of Environmental, Social, and Governance (ESG)-related compliance and litigation issues as companies are increasingly held responsible for human rights and environmental risks and violations in their deeper global supply chains. Our panelists discussed how, for pharma companies, CS3D is but one of many significant challenges in ensuring safety and sustainability in the manufacturing supply chain. Increasingly strict ESG standards are expected to continue to impact operations while continued rising energy and materials costs and the transition to sustainable production considerations will likely introduce additional cost pressures. This combination is leading to rising supply chain compliance and litigation risks for companies in the pharma sector.

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Supply chain: Special considerations for Switzerland

The theme of supply chain considerations and risk is also under scrutiny via the proposed EU pharma law package, which includes strengthened requirements for marketing authorization holders regarding supply chain shortages. In part to address perceived vulnerabilities and risks of shortages for critical medicines, the proposals include an obligation to have in place a shortage preventing plan. However, the Court of Justice of the EU has also made clear in another context that a wholesaler in the EU may not obtain medicinal products from others than holders of an EU wholesale license. These developments may require creative thinking when it comes to a non-EU but European market such as Switzerland to ensure compliance when considering both the financial and physical flow of goods, and our panelists shared their insights on best practices. Supply chain structures for the import and distribution of medicinal products in the EU should be set up taking into account regulatory, customs, logistics, and tax considerations.

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Increasing litigation risks: New Product Liability Directive

Earlier this year, the European Parliament adopted an updated Product Liability Directive, which is scheduled to be transposed into national law by 2026. Among other important changes, the PLD expands the definition of “product” to also include software – including artificial intelligence systems – and digital manufacturing files while making it easier for claimants to comply with the burden of proof, including presumptions of causation and/or defectiveness in the event that a defendant fails to disclose relevant evidence of the product. Our panelists discussed the implications for pharma manufacturers and (for manufacturers based outside the EU), their authorized representative: the new PLD will likely extend the list of potential defendants and increase the complexity of product liability defenses. Pharma companies must be prepared to disclose technical documents in court proceedings to a more extensive degree than previously, and should engage with their insurers to assess risk.

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A global view on AI applications for pharma

European Health Data Space (EHDS)

While a number of (planned) regulations will impact Europe’s digital future, the European Health Data Space (EHDS), which seeks to create a comprehensive framework for sharing electronic health data and aims to standardize digital health practices across Member States by 2028, is of special interest to pharmaceutical companies. With expected benefits including improved patient care, enhanced research capabilities, and cost savings and efficiencies, our panelists discussed the challenges that nevertheless remain for pharma stakeholders. For example, the interaction between EHDS and data protection laws including the General Data Protection Regulation (GDPR) remains to be clarified. They also discussed the many interoperability challenges that will have an impact on  facilitating integration, as well as the continued need to balance data localization requirements with international data sharing.

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China perspective

Compared to other areas of the world, China’s general regulatory landscape around AI is currently relatively vertical, scattered, and more focused on service providers. Within the life sciences sector more broadly, key considerations include requirements for oversight and registration when a product includes an AI software that would qualify as a medical device. Our panelists also discussed the many challenges due to an evolving regulatory framework, including no clear definition of AI, no unified People’s Republic of China (PRC) AI law. In addition, they highlighted some key distinctions of the current PRC framework compared to the EU AI Act, such as the lack of applicable legislation and guidance on morality and ethical review (on which the EU AI Act places high importance), as well as the imposition of “ideology”, “national security”, and “social order” measures in addition to other challenges posed by the AI. Stakeholders should be aware that other specific rules are on the way towards a draft PRC AI Law and strong government support for the use of AI in health applications.

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Looming concerns in the U.S.

Turning to the U.S., our speakers also continued on the theme of patchwork legislative and policy frameworks and the impact these will have on risk-benefit analysis of incorporating AI for life sciences companies. While there is no federal AI law, they noted, policies are emerging, including state-by-state legislative efforts of widely varying scope. This means that as pharma companies grapple with AI integration and compliance, they will need to assess whether the AI tools they seek to use are fit-for-purpose in evaluating risk and potential mitigation strategies. Cross-functional supports within an organization, including evaluation of privacy and cybersecurity, bias mitigation, and data quality assurance/quality integrity will be key in implementing a robust AI governance approach across the life cycle of any product that incorporates AI-enabled technologies.

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Next steps

While there are local differences that pharmaceutical stakeholders must carefully consider in order to optimize patient access to their life-saving therapies, many strategic considerations for product development and manufacturing will require coordination across geographic regions. Our global team of Life Sciences and Health Care lawyers frequently collaborate to provide strategic, commercial, and tailored advice across the EU Member States and the UK, Asia-Pacific, the U.S., and beyond.

If you would like to request a copy of the presentation, please contact our team.

Please contact the authors or the Hogan Lovells attorneys with whom you regularly work for guidance on your organization’s specific planning needs.

Authored by Álvaro Abad, Giuseppe Aminzade, Melissa Bianchi, Ina Brock, Charlotte Damiano, Christian Di Mauro, Patrice Navarro, Christian Ritz, Fabien Roy, Mikael Salmela, Jörg Schickert, Jane Summerfield, Arne Thiermann, Hein van den Bos, Jessie Xie, and Lowell Zeta.