EU outlines plan to take control of medicine production in health crises

The EU is planning a compulsory licensing system to allow it to take control of the manufacture of drugs and vaccines during a public health emergency, despite calls from pharmaceutical groups to protect patents.

Brussels wants the ability to act swiftly to manufacture vital treatments across the bloc during health crises such as Covid-19. The draft proposal from the European Commission and seen by the Financial Times is part of a sweeping reform of pharmaceutical regulation that has already unnerved the industry, and could change before publication on Wednesday.

Compulsory licensing allows a government to force a drugmaker to share a product’s intellectual property and technical knowhow with other companies for a fee so they can manufacture it, increasing volumes and potentially lowering costs.

Most legal systems worldwide allow for compulsory licences. But governments are loath to issue them lest they damage relationships with drugmakers and no comparable system exists at EU level.

“Compulsory licensing can provide a solution to allow the rapid manufacturing of products needed to tackle a crisis,” says the draft proposal. “However, to guarantee that such products can freely circulate within the internal market and reach all those in need, the compulsory licensing shall be granted at EU level.”

It says there is a “patchwork of different national rules and procedures” and products licensed in one country often cannot be supplied to another.

The commission said the threat of compulsory licensing would also make it easier to make voluntary deals with businesses.

But the pharmaceutical industry will argue that they alone should retain the ability to expand production of their own products, and would be reluctant to give up control to third parties. One industry insider said the threat of compulsory licensing would discourage future investment and not address problems such as stretched supply chains that developed during the Covid-19 pandemic.

At the height of Covid-19, amid severe drug shortages and before vaccines became widely available, many campaigners argued compulsory licences should be awarded to allow nations to make drugs independently from their original manufacturers. One such compulsory licence was issued by Israel for Kaletra, an HIV drug that eventually turned out to be ineffective against Covid-19.

In 2020, Germany, Canada, Australia and Chile had all taken steps or closely considered issuing compulsory licences more easily.

The EU did not seize control of vaccines or medicines. But the commission became anxious about its supply of Covid-19 jabs, particularly after delays receiving orders from AstraZeneca. The commission sued AstraZeneca, demanding billions of euros in damages if it failed to hit its delivery target. It later settled the dispute.

Ellen ‘t Hoen, director of research group Medicines Law & Policy, said the establishment of EU-wide compulsory licensing during a crisis would be “very important progress, not in the least because the regulation suspends data and market exclusivity — barriers to effective use of compulsory licensing in the EU”.

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However, ‘t Hoen noted that a “general”, EU-wide compulsory licence system was still missing. She said the powers should be expanded so it could be used outside of extraordinary situations, for example to prevent a crisis, counter high prices or provide life-saving medication.

Sergio Napolitano, general counsel at lobby group Medicines for Europe, said the increase in voluntary licensing agreements during Covid, for example between rival manufacturers, had proved to be the right tool to strike a balance between innovation and access.

Napolitano said the move should be complemented by measures aimed at making Europe more competitive, including by encouraging EU manufacture of active pharmaceutical ingredients, or APIs, used to produce drugs.

An early draft of Wednesday’s package suggested market exclusivity for drugs should drop from 10 to eight years unless companies marketed them in all 27 member states within two years of launch. Germany argued this would deter investment, while six other member states led by the Netherlands have called for the commission to hold firm to benefit patients.

It will also attempt to tackle the shortage of drugs, with measures obliging stockholders to declare what they have and encouraging new production capacity. The proposals will require the approval of member states and the European parliament.

The commission did not respond to a request for comment.

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