EU Pharmaceutical Legislation to be Reformed After 2 Decades

The European Council and European Parliament reached a provisional political agreement, on a comprehensive overhaul of the EU pharmaceutical legislation, the first major reform in more than two decades. The agreement establishes a modernized regulatory framework designed to balance innovation incentives with improved patient access while strengthening the competitiveness of Europe’s life sciences sector.

Data Protection and Market Exclusivity: The New 8+1(+1+1) Framework

The agreement establishes eight years of regulatory data protection as the baseline period, representing a compromise above the Commission’s initial proposal of six years but retaining the current standard. This is coupled with one year of market exclusivity following marketing authorization, during which generic and biosimilar manufacturers cannot market reference products.

Companies can qualify for additional market protection extensions totaling up to three additional years, provided they meet specific criteria:

• One additional year if the product addresses an unmet medical need
• One additional year if the product offers significant clinical benefit compared to existing therapies
• One additional year if a new active substance includes clinical trials conducted across multiple EU Member States

The combined maximum protection period is capped at 11 years across data protection and market exclusivity combined, creating what negotiators describe as a conditional exclusivity model that incentivizes targeted innovation.

Orphan Drug Provisions and “Breakthrough” Designation

For orphan medicinal products, the baseline market exclusivity period decreases from the current ten years to nine years. However, a new category of “breakthrough orphan drugs”, defined as products for conditions with no existing treatment in the EU that demonstrate clinically relevant reduction in morbidity or mortality, receives extended protection of up to 11 years of market exclusivity.

This EU pharmaceutical legislation restructuring aims to maintain incentives for developing therapies for rare diseases while accelerating market entry opportunities for competing treatments in therapeutic areas with existing options.

Antimicrobial Resistance Voucher: Targeting Priority Antibiotics

Recognizing antimicrobial resistance as a critical public health threat, the agreement introduces a transferable exclusivity voucher (TEV) mechanism for priority antibiotics. The voucher grants manufacturers one additional year of data protection applicable to either the antimicrobial product itself or another authorized medicine within the same company’s portfolio.

A critical limitation restricts the voucher’s application to smaller-volume products, excluding medicines with annual gross sales exceeding €490 million calculated across the preceding four years. This “blockbuster clause” aims to prevent windfall gains on high-revenue products while maintaining focused incentives for therapeutic areas with lower commercial potential but significant medical need.

Bolar Exemption: Accelerating Generic and Biosimilar Entry

Aiming to strengthen access to essential medicines, the agreement also proposes an exemption enabling the market entry of generic and biosimilar products, commonly known as the Bolar exemption.

This measure permits manufacturers to conduct studies and compile regulatory submissions on a patented medicine without facing patent-infringement claims, provided the work is limited to securing future marketing approval and does not involve any commercial sale.

Shortage Prevention and Critical Medicines

The package strengthens reporting and prevention requirements for prescription medicines, with marketing authorization holders obligated to develop shortage prevention plans addressing supply chain vulnerabilities. The Commission will establish a list of critical medicinal products subject to enhanced information and cooperation obligations, enabling coordinated supply management during disruptions.

Unmet Medical Needs and Indication Expansion

The package explicitly prioritizes development of therapeutics for currently untreated conditions, rare diseases, pediatric medicines, and new antibiotics through conditional protection mechanisms. Negotiators emphasized that the incentive architecture encourages companies to develop clinical evidence demonstrating significant benefit over existing therapies and to conduct multi-national trials supporting broader EU evidence bases.