Optimizing your business development of pharmaceuticals in the EU: some regulatory changes you should know

21 June 2006

Paule Drouault-Gardrat, Juliette Peterka

In March 2004, the EU adopted a package reforming the European pharmaceutical legislation comprising Directive 2001/83/EC of 6 November 2001 of the Community code relating to medicinal products for human use and Regulation 2309/93/EC of 22 July 1993 establishing Community procedures for the authorization (the centralized procedure) and supervision of medicinal products for human and veterinary use and establishing the EMEA.

The main objectives of this reform are to develop the pharmaceutical industry and trade of medicinal products in the Community and, at the same time, safeguard a high level of human health protection.

Directive 2004/27/EC dated 31 March 2004 amended Directive 2001/83/EC. Directive 2001/83/EC codified and consolidated in a single text all the previous directives on medicinal products for human use in the interest of clarity and rationalisation; no amendments were made to the text of the directives which were codified. This Directive applies to all medicinal products which are authorized by national procedures or the mutual recognition procedure.

Regulation 2309/93/EC was replaced by Regulation 726/2004/EC dated 31 March 2004 laying down Community procedures for the authorization and supervision of medicinal products for human and veterinary use and establishing a European Medicines Agency. Any marketing authorization obtained under the centralized procedure is a single authorization which is valid throughout the EU.

These changes brought by Directive 2004/27 had to be implemented by the EU Member States into their national law no later than 30 October 2005 and main parts of new Regulation 726/2004 came into effect on 20 November 2005[1].

Some of the amendments brought to the European pharmaceutical legislation may be of interest to those involved in licensing work and in generally contracting negotiations for the pharmaceutical industry.

As lawyers and due to how we understand your needs, we have picked up some aspects which might be useful to you either for your economic evaluation of the product concerned or for the drafting of the corresponding agreement.

1. Important aspects influencing the financial valuation of the projects:

1.1. “Bolar provision”

One main question is whether the patent rights protecting a medicinal product prohibit a generic company from proceeding to clinical trials. The response to this question is crucial for innovative companies. Indeed, if the generic companies must wait for the expiration of patent rights to conduct clinical trials, the commercialization of a generic product is delayed for several years. The situation was not harmonized on this point within the EU.

Directive 2004/27 introduced a new article 10(6) which provides a harmonized Community wide provision that allows studies and trials to be undertaken without infringement of patent rights or supplementary protection certificates in any MemberState. Consequently, this so-called “Bolar Provision” enables pharmaceutical companies to start studies and clinical trials necessary for MA approval procedures of a generic product, even before the reference product’s patent has expired. The generic products will then be available on the market immediately after the expiration of the patent/SPC protection of the reference product and will not have to wait for the expiration of the reference product’s protection to begin the MA approval procedure.

This may change clinical trails location in the future from a current situation.

During the review procedure of Directive 2001/83, the European Commission considered that there must be a balance between the 10 year-period of data exclusivity for innovative products and a “Bolar provision” for generics in order to allow studies and trials needed for the MA to be carried out during the period in which the products are protected by a patent right[2].

1.2. Harmonization of data exclusivity

An issue of particular relevance to pharmaceutical companies is the protection of data submitted to regulatory authorities in order to obtain an MA for a new product.

When applying for an MA, the company has to submit evidence of the efficacy and safety of the pharmaceutical product by supplying results of toxicological and pharmacological tests and clinical trials. This data of great economic importance belongs to the company. Due to the period of exclusivity granted to such data, a subsequent company seeking to bring the same product on the market must generate its own data.

Data exclusivity was introduced in EU law by Directive 65/65/EEC and is in accordance with article 39 TRIPS. Indeed, under TRIPS, this data has to be protected against unfair competition.

This exclusivity is granted to the product in addition to and independently from any patent protection.

At the expiration of the data exclusivity, a company may file an abridged MA application for a generic product. This means that this application will only refer to the data contained in the MA file of the princeps product.

Since the development of generic products is linked to data exclusivity period, the duration of such data exclusivity constitutes a major issue for innovative companies.

According to the current provisions of Directive 2001/83, this exclusivity period commences from the date of first MA of the princeps product and lasts for 6/10 years in the EU according to the choice of the country[3].

Directive 2004/27 amending Directive 2001/83 provides a harmonized data exclusivity period for all the Member States. The data exclusivity period is now of “8+2+1 years” for both products authorized through the centralized procedure[4] and through the mutual recognition or decentralised procedure.

Protection of “8+2+1 years” means that the innovative company will be protected for ten or eleven years. The protection is extended to a maximum of eleven years if during the first eight years of the ten years of protection, the MA holder obtains an MA for one or more new therapeutic indications which are held to bring a significant clinical benefit[5].

A generic applicant can already apply for a generic product if it demonstrates that its product is a generic of a reference product which is or has been authorized for no less than eight years in a MemberState. However, the generic product authorized cannot be placed on the market until ten years have elapsed from the first MA of the reference product. In practice, this provision provides to the generic companies a period of two or three years to prepare to commercialization of a generic product.

Furthermore, article 10a specifies the rules applying to bibliographic application: the applicant shall not be required to provide the results of pre-clinical tests or the results of clinical trials, if he can demonstrate that “(…) the component(s) of the medicinal product have a “well-established use” within the Community for at least 10 years, with recognised efficacy and an acceptable level of safety in terms of the conditions set out in Annex I. In that event, the test and trial results shall be replaced by appropriate scientific literature”. New article 10 (5) provides for a one-year period of protection for well-established substances in the case of an innovative indication.

The new data protection periods provided by Directive 2004/27 amending Directive 2001/83 will not apply to reference products for which an application for an MA has been submitted before 30 October 2005[6].

1.3. Definition of generic medicinal product

Article 10(2)(b)of Directive 2004/27 introduces in Directive 2001/83 a definition of a “generic medicinal product”. The term “essential similarity” is replaced by the distinction between “generic medicinal product” and “reference medicinal product” in order to provide for more clarity. However, the elements of the definition of “essential similarity[7] can be found in this definition of a generic product.

A generic medicinal product is defined as“a medicinal product which has the same qualitative and quantitative composition in active substances and the same pharmaceutical form as the reference medicinal product, and whose bioequivalence with the reference medicinal product has been demonstrated by appropriate bioavailability studies. The different salts, esters, ethers, isomers, mixtures of isomers, complexes or derivatives of an active substance shall be considered to be the same active substance, unless they differ significantly in properties with regard to safety and/or efficacy. In such cases, additional information providing proof of the safety and/or efficacy of the various salts, esters or derivatives of an authorised active substance must be supplied by the applicant. The various immediate-release oral pharmaceutical forms shall be considered to be one and the same pharmaceutical form. Bioavailability studies need not be required of the applicant if he can demonstrate that the generic medicinal product meets the relevant criteria as defined in the appropriate detailed guidelines”.

This definition takes into account the scientific definitions commonly accepted by the Member States within the Notice to Applicants and the case law of the European Court of Justice. This definition should allow and prevent data exclusivity being afforded to insignificant changes in the original product.


New Article 10(1) introduces a novelty in Directive 2001/83. It is now possible to have, as reference product, a product which has not been authorised in the MemberState where the application for the generic is submitted. In such a case, the applicant has to indicate in the application form the MemberState where the reference medicinal product is or has been authorised.On request of the competent authority of the Member State where the application is submitted, the competent authority of the other Member State shall transmit within a period of one month a confirmation that the reference medicinal product is or has been authorised together with full composition of the reference product and, if necessary, other relevant documentation.

1.4.Provision on biological medicinal products

The review of Directive 2001/83 inserted a regulatory framework for generics of biological medicinal products in the EU legislation.

Article 10(4) adopted provides that: “Where a biological medicinal product which is similar to a reference biological product does not meet the conditions in the definition of generic medicinal products, owing to, in particular, differences relating to raw materials or differences in manufacturing processes of the biological medicinal product and the reference biological medicinal product, the results of appropriate pre-clinical tests or clinical trials relating to these conditions must be provided. The type and quantity of supplementary data to be provided must comply with the relevant criteria stated in Annex I and the related detailed guidelines. The results of other tests and trials from the reference medicinal product's dossier shall not be provided.”

This provision provides a case-by-case approach since appropriate preclinical tests or clinical trials will have to be provided to demonstrate that a biological product is similar to a reference biological product.

Directive 2003/63/EC dated 25 June 2003 amending Directive 2001/83 on the Community code relating to medicinal products for human use already established a new Annex on the required content of an MA application for a similar biological medicinal product.

The EMEA furthermore released guidelines for consultation and concept papers applicable to bio-similar medicinal products. While the generic companies seem satisfied by the present new framework, these guidelines and concept papers are still under discussion.

It seems that MA applications for biosimilar products have already been filed with the EMEA. Consequently, MAs for biosimilar products should be granted in the near future.

It is interesting to note that on 14 January 2004, Sandoz GmbH brought an action against the European Commission before the European Court of First Instance regarding the decision of the European Commission to refuse the MA application of the product OMNITROP, a bio-generic. Sandoz GmbH filed the MA application with the EMEA in 2001. The Committee for Proprietary Medicinal Products (CPMP) issued a favourable opinion in June 2003. However, the European Commission decided not to grant the MA, on the basis that the legal conditions for the application of the procedure were not met. In the present case, the dispute relates to the interpretation of the provisions relating to bibliographic applications based on the well-established medicinal use of the product. Even though a regulatory framework has now been established for bio-generics, this litigation will be closely followed by the pharmaceutical industry.

1.5. MA renewal and invalidity

Article 24 of Directive 2004/27 modifies article 24 of Directive 2001/83[8]. It provides that a new granted MA is now valid for five years. The MA may be renewed after five years on the basis of a re-evaluation of the risk-benefit balance by the competent authority of the authorising Member State. To this end, the MA holder must provide the competent authority with a consolidated version of the file in respect of quality, safety and efficacy, including all variations introduced since the MA was granted, at least six months before the MA ceased to be valid.

Once renewed after the first 5 years period, the MA is valid for an unlimited period. However, article 24 provides for an exception: “unless the competent authority decides, on justified grounds relating to pharmacovigilance, to proceed with one additional five-year renewal”.

Moreover, article 24 of Directive 2004/27 introduces a new provision in Directive 2001/83 according to which an MA can cease to be valid, if:

- it is not followed by the actual placing on the market of the authorised product in the authorising Member State within three years of its granting or

- an authorized product previously placed on the market is no longer actually present on the market for a period of three consecutive years.

This is one more reason to closely follow-up the signed licensed agreement.

1.6. Compassionate use

Another novelty is the introduction in the EU legislation of a compassionate use procedure. This procedure enables to make a medicinal product available in advance before it is authorized.

A group of patients “with a chronically or seriously debilitating disease or whose disease is considered to be life-threatening and who can not be treated satisfactorily by an authorized medicinal product” will be allowed to have access to products that are still under review by the centralized procedure or undergoing clinical trials.

When MemberState makes use of this possibility of the compassionate use procedure, the EMEA must be notified.

The Committee for Medicinal Products for Human Use within the EMEA, after consulting the manufacturer or the applicant, will then adopt opinions on the conditions for use, the conditions for distribution and the patients targeted. The opinions of the Committee are published on the EMEA website.

Finally, where a compassionate use program has been set up, the applicant shall ensure that patients taking part have access to the new medicinal product during the period between the moment when the MA for this product is granted and the placing on the market. This obligation has for purpose to avoid any treatment interruption.

2. Optimizing the drafting of your agreements

2.1. Reinforcement of pharmacovigilance

Directive 2004/27 reinforces the provisions relating to pharmacovigilance. The Directive provides that “pharmacovigilance and, more generally, market surveillance and sanctions in the event of failure to comply with the provisions should be stepped up”. The preamble of Directive 2004/27 furthermore states that “in the field of pharmacovigilance, account should be taken of the facilities offered by new information technologies to improve exchanges between Member States”.

Regarding the exchange between Member States, Article 102now provides that the Member States will have to operate a pharmacovigilance system. This system will be used to collect information useful in the surveillance of medicinal products, with particular reference to adverse reactions in human beings, and to evaluate such information scientifically. Member States shall also ensure that suitable information collected within this system is communicated to the other Member States and EMEA. The information collected must be recorded in a specific database of the EMEA permanently accessible to all Member States and without delay to the public.

Furthermore, regarding the market surveillance, Directive 2004/27 modified the periodicity of theperiodic safety update report in order to reduce the time-period between each report.[9]

Another example of the reinforcement of pharmacovigilance is given by the provisions of new Article 107, according to which where urgent action to protect public health is necessary, the Member State concerned may suspend the MA of a medicinal product, provided that the EMEA, the Commission and the other Member States are informed no later than the following working day. Acting on the basis of an opinion prepared by the Committee for Medicinal Products for Human Use (former CPMP), the European Commission may request all Member States in which the product is being marketed to immediately take temporary measures.

Drafting the pharmacovigilance clause has to be done accordingly.

2.2. Extension of the scope of the centralized procedure

From November 2005, the centralized procedure will be mandatory for biotechnological products, orphan medicinal products and medicinal products for the treatment of AIDS, cancer, neurodegenerative disorder or diabetes.

Moreover, from 20 May 2008, the centralized procedure will be mandatory for medicinal products for the treatment of auto-immune diseases and other immune dysfunctions and viral diseases.

On the other hand from November 2005, the centralized procedure is only optional and not mandatory for generic products of which the reference medicinal product has been granted an MA under the centralized procedure or medicinal products which represent a therapeutic innovation or which benefit to society or to patients.

2.3. Acceleration of the authorization procedure

The review of Directive 2001/83 also aims at accelerating the authorization procedure. Indeed, some of the time periods of the authorization procedure have been shortened. For example, the time periods in case of objections of a MemberState have been reduced.

Cuts in deadlines are also provided by Regulation 726/2004.Article 14(9) of Regulation 726/2004 provides for an accelerated assessment procedure for medicinal products for human use which are of major interest from the point of view of public health and in particular from the point of view of therapeutic innovation. The time-limit of 210 days is then reduced to 150 days.

Moreover, in addition to the Mutual Recognition Procedure which now applies when a product has already been approved in one or more EU Member States and approval is sought in one or more additional Member States, Directive 2004/27 introduces a new procedure called the “decentralized procedure”, which will accelerate the authorization process since the applications are filed simultaneously in all concerned Member States.

The “decentralized procedure” applies to cases where the medicinal product has not received any marketing authorisation at the time of application.

The applicant shall then submit an application based on an identical file simultaneously in the chosen Member States and shall request one Member State to act as reference Member State. The reference Member State shall prepare a draft assessment report, a draft summary of product characteristics and a draft of the labelling and package leaflet within 120 days after receipt of a valid application and shall send them to the concerned Member States and to the applicant. Within 90 days of receipt of these documents, the Member States concerned shall approve them and inform the reference Member State accordingly. Each Member State shall adopt a decision in conformity with the approved assessment report, the summary of product characteristics and the labelling and package leaflet as approved, within 30 days.



A good knowledge of the regulatory aspects is important in the business development negotiation and will help you optimizing the situation and, later, your profitability.

* (Paule Drouault-Gardrat is the partner in charge of the Life Sciences Department of the Paris office of Bird & Bird and Juliette Peterka a senior associate working with her).

[1]Article 90 of Regulation 726/2004 provides that the Regulation came into force on 20 May 2004 (the twentieth day of its publication in the Official Journal of European Union). However, provisions of Title I “Definitions and scope”, Title II “Authorization and supervision of medicinal products for human use” and Title V“General and final provisions” will apply from 20 November 2005 and point 3, fifth and sixth indent of the Annex (regarding auto-immune diseases and other immune dysfunctions and viral diseases) will apply from 20 May 2008.

[2]Article 10.6 of Directive 2004/27 reads: “Conducting the necessary studies and trials with a view to the application of paragraphs 1, 2, 3 and 4 and the consequential practical requirements shall not be regarded as contrary to patent rights or to supplementary protection certificates for medicinal products

[3] Under the current legislation, a 10-year period of exclusivity is conferred for medicinal product in Belgium, France, Germany, Italy, Luxembourg , Sweden, The Netherlands and the UK whereas the period of exclusivity is of 6 years in Austria, Denmark, Finland, Greece, Ireland, Iceland, Norway, Portugal and Spain.

[4]Under the current regulation, all medicinal products authorized under the centralized procedure benefit from a 10-year period of exclusivity.

Article 14 (11) of Regulation 726/2004 now reads: “Without prejudice to the law on the protection of industrial and commercial property, medicinal products for human use which have been authorized in accordance with the provisions of this Regulation shall benefit from an eight-year period of data protection and a ten-year period of marketing protection, in which connection the latter period shall be extended to a maximum of 11 years if, during the first eight years of those ten years, the marketing authorization holder obtains an authorization for one or more new therapeutic indications which, during the scientific evaluation prior to their authorization, are held to bring a significant clinical benefit in comparison with existing therapies”.

[5]Article 10.1 of Directive 2004/27 reads: “By way of derogation from Article 8(3)(i), and without prejudice to the law relating to the protection of industrial and commercial property, the applicant shall not be required to provide the results of pre-clinical tests and of clinical trials if he can demonstrate that the medicinal product is a generic of a reference medicinal product which is or has been authorised under Article 6 for not less than eight years in a Member State or in the Community.

A generic medicinal product authorised pursuant to this provision shall not be placed on the market until ten years have elapsed from the initial authorisation of the reference product.

(…) The ten-year period referred to in the second subparagraph shall be extended to a maximum of eleven years if, during the first eight years of those ten years, the marketing authorisation holder obtains an authorisation for one or more new therapeutic indications which, during the scientific evaluation prior to their authorisation, are held to bring a significant clinical benefit in comparison with existing therapies.”

[6]Article 2 of Directive 2004/27 reads: “The periods of protection provided for in Article 1, point 8, which amends Article 10(1) of Directive 2001/83/EC, shall not apply to reference medicinal products for which anapplication for authorisation has been submitted before the date of transposition referred to in Article 3 first paragraph.”

[7]According tothe minutes of the meeting of the Council of Ministers in December 1986 at which Directive 87/21/EEC was adopted, and following an interpretation delivered by the European Court of Justice in its Case C-368/96 which, reconfirmed and refined the definition given in that minutes, a medicinal product is essentially similar to an original/reference medicinal product where it satisfies the criteria of having:

- the same qualitative and quantitative composition in terms of active principles/substances,

- the same pharmaceutical form and,

- of being bioequivalent

unless it is apparent in the light of scientific knowledge that it differs significantly from the original product as regards safety or efficacy.

[8]See Article 14 of Regulation 726/2004 for similar provision.

[9]Article 104(6)of Directive 2004/27 reads:Unless other requirements have been laid down as a condition for the granting of the marketing authorisation, or subsequently as indicated in the guidelines referred to in Article 106(1), reports of all adverse reactions shall be submitted to the competent authorities in the form of a periodic safety update report, immediately upon request or at least every six months after authorisation and until the placing on the market. Periodic safety update reports shall also be submitted immediately upon request or at least every six months during the first two years following the initial placing on the market and once a year for the following two years. Thereafter, the reports shall be submitted at three-yearly intervals, or immediately upon request. The periodic safety update reports shall include a scientific evaluation of the risk-benefit balance of the medicinal product.”