Europe’s Threat to Drug Patents
By The Editorial Board April 27, 2023 6:34 pm ET European Commission headquarters in Brussels Photo: Yves Herman/REUTERS Never underestimate the democratic West’s capacity to commit self-sabotage. Witness the attack Europe launched this week against pharmaceutical intellectual property with the tacit approval of the Biden Administration. The European Commission’s draft legislation is billed as the biggest overhaul in the continent’s pharmaceutical regulation in 20 years, but please don’t call it reform. While ostensibly aimed at expanding access to new drugs, reductions in IP protection will do the opposite while driving away investment. For starters, the proposed rules reduce the market exclusivity period that drug makers receive before generics can be sold to eight years from 10. The comm
European Commission headquarters in Brussels
Photo: Yves Herman/REUTERS
Never underestimate the democratic West’s capacity to commit self-sabotage. Witness the attack Europe launched this week against pharmaceutical intellectual property with the tacit approval of the Biden Administration.
The European Commission’s draft legislation is billed as the biggest overhaul in the continent’s pharmaceutical regulation in 20 years, but please don’t call it reform. While ostensibly aimed at expanding access to new drugs, reductions in IP protection will do the opposite while driving away investment.
For starters, the proposed rules reduce the market exclusivity period that drug makers receive before generics can be sold to eight years from 10. The commission dangles an additional two years of protection if companies launch new products in all 27 European Union countries within two years of their approval.
But this almost never happens. Some countries drag out price “negotiations”—typically a take-it-or-leave-it offer—or demand discounts based on what other countries pay. Drug makers won’t launch a product in a country if they can’t recoup manufacturing costs. Many government-run health systems also don’t pay for new drugs that are similar to those already in their formularies.
About 85% of new medicines are reimbursed by public health plans in the U.S. compared to only 61% in Germany, 43% in France, 37% in Spain, 33% in Austria, 19% in Poland and 12% in Lithuania. Bureaucrats in Brussels want to use the threat of losing IP protection to extort drug makers to offer treatments in all EU countries at steep discounts.
The difference between eight and 10 years of market exclusivity is often the difference between a profit or loss on a drug—especially drugs that treat small patient populations or that initially launch as third- or fourth-line therapies. Reduced IP protections will discourage companies from selling some drugs in Europe. Period.
The commission is also copying compulsory licensing rules that the World Trade Organization (WTO) adopted for Covid vaccines during the pandemic. These rules let low-income countries suspend pharmaceutical IP protections to make knock-offs. Now Europe wants to let its members do the same during future public-health emergencies.
Recall how the Biden Administration endorsed the WTO’s IP heist in 2021 under pressure from the public-health left and over the opposition of European leaders. Angela Merkel, German Chancellor at the time, said “the protection of intellectual property is a source of innovation and it must remain so in the future.”
While Berlin and drug makers have pushed back against Europe’s IP assault, the Biden Administration hasn’t. GSK CEO Emma Walmsley
For now that includes the U.S., but who knows how much longer? Progressives are urging the Administration to invoke the Bayh-Dole Act to confiscate patents on drugs developed in part with government funds. The Administration has already broken with the tradition practiced by Presidents of both parties of supporting stronger IP protection globally.
These assaults on patents will embolden China to do the same. If Western countries don’t care about protecting their own IP, why should Beijing?
Wonder Land: Republicans need to decide if their support for Taiwan and Ukraine is real or not. Images: Bloomberg News/Shutterstock/Getty Images Composite: Mark Kelly The Wall Street Journal Interactive Edition
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