Pharma industry fights in Europe over competition in world markets :-: Politics
Brand-name drugmakers and the companies that make copycat versions of their medicines are split over a proposal that one side says could take a bite out of its revenue and the other says could foster jobs.
The clash is over a waiver of a special type of intellectual property protection given to medicines developed by the companies who are the first to bring drugs to the market.
This protection, the so-called supplementary protection certificate, can last up to five years. Allowing a waiver of the certificate for manufacturing purposes would give generic drugmakers the chance to compete head-to-head with the drugs they mimic, at least in countries outside of the EU.
The disagreement has reached flashpoint as both sides await a European Commission decision on the waiver before the end of the year.
“This has been my No. 1 issue since I arrived at the association four years ago,” said Adrian van den Hoven, director general of the European generics lobby Medicines for Europe, which is working hard to see the waiver become reality.
In Europe, branded drugmakers get a patent for 20 years when they discover a new drug. But this is just the beginning of their work.
The Commission says its underlying goal is to boost manufacturing and jobs in the EU and inject competition into select industries, as it outlined in its October 2015 plan to upgrade the EU’s single market. The manufacturing waiver was proposed as a chief possibility because “it could allow the European generic … medicines industries to create thousands of high-tech jobs in the EU and many new companies,” the Commission said.
The certificates are essentially an extension of branded drugmakers’ patents. In Europe, branded drugmakers get a patent for 20 years when they discover a new drug. But this is just the beginning of their work. They still have to test whether a drug is safe and effective for treating specific diseases. Once all of that is figured out, the company applies to the European Medicines Agency for approval to sell the drug.
These testing and application processes can take up to a decade. That leaves drugmakers with about 10 years to recoup their investment in the drug. So the EU introduced supplementary protection certificates of up to five years to give branded drugmakers as long as 15 years to make their money back, and some profit on top of that, from the drug they developed.
During this timespan, generics manufacturers can’t produce a copy of the branded drugmaker’s medicine within the EU. They can only produce their versions outside EU borders, where the supplementary protection certificate holds no sway.
Generic drug store at the Victoria Hospital in Bangalore, India | Manjunath Kiran/AFP via GettyImages
The waiver the Commission is considering would allow generic drugmakers to manufacture those protected drugs in the EU during the time covered by the supplementary protection certificate, though they could still only be sold to countries outside the bloc. That means copies of medicines to treat diseases like cancer, psoriasis and HIV could be produced in the EU and exported, according to van den Hoven.
Medicines for Europe argues this is a win for them and for Europe: Producing drugs on EU soil would generate jobs and revenue and allow them to better compete with huge generics manufacturing countries such as India and China, where similar protections for name-brand pharmaceuticals don’t exist.
A study published in 2014 in the Journal of Generic Medicines calculates the benefit of the manufacturing waiver at almost 9,000 new direct jobs generated in Europe and some 35,560 new indirect jobs.
The generics lobby also says the waiver wouldn’t harm brand name drug companies in Europe.
Drugmakers investing in the research and development that yields the drugs that generics producers mimic beg to differ.
Their lobby group, the European Federation of Pharmaceutical Industries and Associations (EFPIA), worries about the impact of competition from European-made generics in non-EU countries where the protection certificates don’t apply.
So-called originator companies already have to compete with generics manufactured outside the EU. If generics made in Europe fare better on the market that those made in India or China, patients could end up buying the cheaper versions instead of brand-named drugs.
“There are potential export losses to European originator companies resulting in a drop in export value for the EU,” EFPIA said. A loss in exports to world markets could result in job losses for branded drugmakers on the Continent, according to a report by QuintilesIMS commissioned by EFPIA.
And the lobby group says its member companies would have a hard time ensuring that generics produced in Europe through the manufacturing waiver end up only in the countries where EU protection doesn’t apply.
As a result the waiver would “have a significant impact on innovative, originator companies both in the EU and in export markets, for example with regard to the complexity and the costs required to monitor and enforce the policy,” it said.
EU trade policy argues against using intellectual property rules to favor domestic production of medicines, but the introduction of the manufacturing waiver would see it do just that, according to EFPIA. A European Commission official who was not authorized to speak on the record said EU trade policy generally doesn’t support measures that discriminate between EU and domestic producers of any kind, but current EU rules give a competitive advantage to foreign generic companies over EU-based producers.
“Improving a level-playing field would certainly not contradict in any way the EU trade-related intellectual property rights policies,” the official said.
Manufacturing plant of generic drug producer Teva Pharmaceuticals | Uriel Sinai/Getty Images
EFPIA points to a study published in January, also in the Journal of Generic Medicines, that disputes the 2014 study. It says the number of jobs created in Europe by the waiver would be much smaller: roughly 2,000 direct jobs, and some 6,642 indirect jobs.
Waiting for the Commission
Generics industry lobby Medicines for Europe is not giving up. The industry association fought back with a list of “myths to be dispelled” about the manufacturing waiver.
It counters that original drugmakers already face competition in third countries where the protection certificate doesn’t apply. It’s just not from European-made generics, but from medicines produced in countries like China and India, or even the U.S., where the protection can expire earlier than that granted by the EU.
“The SPC manufacturing waiver intends to allow European producers to compete on a level playing field with non-EU competitors,” Medicines for Europe said.
Preventing exports of high-quality generic and biosimilar medicines to third countries also gets in the way of giving the broadest group of people real access to medicines, the generics lobby says, arguing poor countries cannot afford brand-name versions of the medicines because of their high prices. In the EU, the Commission generally supports the use of lower-cost generic medicines when they are available, to ensure national health systems spend money efficiently.
And enforcement of intellectual property rights would not change with the waiver, in Europe or abroad — generic drugs couldn’t sneak into markets where the name brand drugmakers are protected, Medicines for Europe said.
“The more we delay, the more very big molecules come off patent, and the production is outsourced to Asia” — Adrian van den Hoven, director general of Medicines for Europe
Both sides are now waiting to see what the Commission decides to do next.
Introducing the manufacturing waiver is among the primary changes the Commission is considering to legislation governing the protection certificates, according to a plan published in February. Other options include modernizing the EU law regulating the certificates and creating one that would apply across the bloc, rather than nationally, as is the case now. An EU-wide certificate would be beneficial to branded drugmakers because they wouldn’t have to apply for the protection from 28 different national patent offices.
A Commission analysis looking at the pros and cons of all these options is supposed to be completed by the end of the year. That timeline may be ambitious, given that a public consultation linked to it hasn’t yet started.
Generics lobby boss van den Hoven said he would like the Commission to introduce a legislative procedure targeting only the manufacturing waiver rather than packaging it with other legislative changes that could drag the process.
“The more we delay, the more very big molecules come off patent,” he said, “and the production is outsourced to Asia.”
This is part of a special report on the future of pharma incentives.