Switzerland is closely following the revision of regulations for pharmaceutical companies in Europe. This is becoming a showdown between industry, which wants more incentives to innovate, and Member States, who want cheaper medicine.
This content was published on May 05, 2023
The EU Commission published its long-awaited Draft law regulating pharmaceuticalsexternal link on April 26th. The revised rules are an attempt to get drug prices under control, increase access to innovative medicines such as gene therapies, and stem drug shortages that have been growing in recent years.
The proposals cover a wide spectrum. They range from a reduction in the approval time for new drugs to more transparency regarding public funds in drug development to faster delivery in emergencies.
Reactions within the European Union were mixed. The pharmaceutical industry argues the new rules will stifle innovation in the EU, while some Public Health Activistsexternal link Recognizing progress but finding key points have been watered down by pharmaceutical lobby groups.
Even in Switzerland, the draft was greeted with cautious optimism. NGOs, politicians and industry groups said they welcome the much-needed update, but expressed differing views on whether the rules go far enough to address the issues.
“The intention to strengthen the continent’s competitiveness and to prepare for the future of the European regulatory framework has been well received in the industry,” wrote René Buholzer, head of the Swiss pharmaceutical industry association Interpharma, in one opinion postexternal link in The weather. “But the resulting proposal risks complicating the regulatory framework and weakening incentives to invest in innovation.”
The draft law is the first revision in about 20 years. It comes at a time of fierce debate about how to drive innovation without skyrocketing prices and pushing the healthcare system to the limit.
The carefully crafted language reflects the delicate balancing act as the EU Commission tries to keep the pharmaceutical industry in check without expelling it. Have multiple business leaders those fearsexternal link increased because they argued that Europe risks lagging behind in innovation if the rules are too strict.
In February, Novartis CEO Vas Narasimhan told the media that cost-cutting measures in Europe are a major concern and that they are threatening the attractiveness of the innovation ecosystem.
Following the publication of the draft law, the Roche media office said by email that the company hopes any “new EU legislation on medicines will ensure that Europe remains a focal point for life sciences investments as competition around the world rapidly increasing”.
A tug of war
This balancing act can be seen in how long a company will have a monopoly over the sale of a drug. If the draft law prevails, companies will only have eight years of exclusivity instead of the current ten years. This is advantageous for patients and payers such as health insurance companies, because cheaper versions of the same medicines are likely to come onto the market earlier. Industry is vehemently opposed to these changes.
But EU rules would stipulate that if a product is sold in all EU member countries and various conditions are met, the exclusive sale can be even longer than ten years. This reflects a compromise, says Patrick Durisch, head of health policy at the NGO Public Eye. “The EU could have been much stricter to take measures for access and to offset the profits that companies make thanks to their monopolies.”
The pharmaceutical industry is still skeptical. Nathalie Moll, who heads the trade group of the European Federation of Pharmaceutical Industries and Associations, said: “Punishing innovation when a drug is not available in all member states within two years is fundamentally flawed and represents an impossible goal.”
Switzerland offside?
Swiss politicians and industry are closely following the discussion about the new rules. The EU is not only an important market for Swiss companies, but also a reservoir for workers.
Roche has around 44,000 employees in Europe and invests around six billion Swiss francs in research here. That’s about 20% of the workforce and about 40% of global development spending.
But Switzerland has its own balancing act. The Swiss government does not want to reject the new regulations and thus burden relations with the EU. These have already been on shaky ground since Switzerland broke off negotiations for a framework agreement that was meant to replace more than a hundred bilateral treaties.
The ongoing talks about joining Horizon Europe, the research program with a budget of almost CHF 90 billion, are a high priority for Switzerland.
There are several areas in which Switzerland is dependent on the EU, such as safety protocols or coordination in the event of drug shortages. The Swiss pharmaceutical companies also want to retain unrestricted access to the EU market.
At the same time, Switzerland pays attention to its own competitiveness. The country grants drug sales exclusivity for up to 20 years, which helps attract innovative companies. The adoption of EU rules that shorten these deadlines would be a disadvantage – also because production costs are lower elsewhere in Europe, they say some politiciansexternal link.
Industry associations argue that Switzerland could position itself as an alternative to the EU if the EU were viewed as less innovation-friendly in the future: “Switzerland now has the opportunity to strengthen its good reputation as a place of innovation,” wrote Buholzer.
The draft law will next be discussed by the European Parliament and Council. No deadline has been set for the determination and implementation of the new rules.
Edited by Virginie Mangin. Translated from English: Benjamin von Wyl
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