Forty-second Report of Session 2019–21 Contents

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4EU Pharmaceutical Strategy17

This EU document is politically important because: it suggests changes to EU pharmaceutical legislation with which Northern Ireland must remain aligned; this is an area of regulation where the EU and UK agreed to cooperate under the terms of the EU-UK Trade and Cooperation Agreement; any EU changes to incentives for the production of medicines could have implications for the competitiveness of the UK pharmaceutical industry if the UK did not adopt a similar approach; and research is an important element of the Strategy and is an area where the UK has negotiated continuing participation in an EU programme. Action Write to the Minister. Draw to the attention of the Business, Energy and Industrial Strategy Committee, the Health Committee, the Northern Ireland Affairs Committee and the Science and Technology Committee.

Overview

4.1The objective of the Commission’s Strategy is to ensure patients have access to innovative and affordable medicines and to support the competitiveness, innovative capacity and sustainability of the EU’s pharmaceutical industry. It is founded on the hypothesis that incentives for pharmaceutical companies to innovate are not aligned with the interests of patients and thus need to be reviewed.

4.2The Strategy is directly relevant to the UK as it suggests changes to the “pharmaceutical legislation”18 and other pieces of legislation such as Regulations on paediatric19 and orphan20 medicines, all of which Northern Ireland must remain aligned under the terms of the Northern Ireland Protocol annexed to the Withdrawal Agreement. There may also be wider UK relevance in terms of: competitiveness if the EU and UK pursue different approaches to incentives; research endeavours given that the UK has secured participation in the EU’s research framework for 2021–27; and international collaboration, particularly as that type of regulatory cooperation on medicines is foreseen in the EU-UK Trade and Cooperation Agreement.

The Commission’s Strategy

4.3The Commission notes that while strong progress has been made in developing innovative medicines to tackle some of the leading causes of disease and life-threatening illnesses, many patients do not benefit from that innovation, because medicines are either unaffordable or unavailable. There is also greater awareness of the need to ensure that use of pharmaceuticals is sustainable.

4.4There are four work strands identified in the Strategy. The first concerns unmet medical needs and ensuring accessibility and affordability of medicines:

• noting that the development of novel antimicrobials or alternatives is a prime example of unmet need, the Commission suggests further research and legislative measures to restrict and optimise the use of antimicrobials;
• revise paediatric and rare diseases legislation to address unmet needs (such as treatments for paediatric cancer) through more tailored incentives;
• integrate the European Medicine Agency’s (EMA) priority medicines scheme (PRIME)—a voluntary scheme to enhance support for the development of medicines that target an unmet medical need—into the regulatory framework; and
• review the system of incentives and obligations, taking into account the relationship with intellectual property rights, and to address market competition considerations, improving access to generic medicines and improving affordability.

4.5The EU’s current system of pharmaceutical incentives, including market exclusivity and extended patent protections, was summarised and reviewed in 2018 and will form the basis of the Commission’s further work in this area.21

4.6Second, the Commission aims to support a competitive and innovative European pharmaceutical industry through a number of initiatives, including:

• introduce a new “European Health Data Space”, enabling better healthcare, health research, innovation and evidence-based decisions;
• revise the pharmaceutical legislation to adapt to innovative developments;
• implement fully the clinical trials regulatory framework, which supports innovative trial designs and a more patient-oriented medicine development; and
• simplify the pharmaceutical legislation.

4.7The third strand of the Communication focuses on “resilience”, including supply and sustainability. Suggestions include:

• revise the pharmaceuticals legislation to introduce stronger obligations for supply and transparency, earlier notification of shortages and withdrawals, enhanced transparency of stocks and stronger EU coordination and mechanisms to monitor, manage and avoid shortages;
• strengthen the environmental sustainability requirements in the pharmaceutical legislation; and
• propose an EU Health Emergency Response Authority to strengthen the coordination of operations across the whole value chain and develop strategic investments for research, development, manufacturing, deployment, distribution and use of medical countermeasures.

4.8The fourth strand concerns the EU’s international work in this area, with suggestions actions including:

• work at global level, with the EMA and the network of national regulators, in international fora and through bilateral cooperation to promote regulatory convergence to ensure access to safe, effective high-quality and affordable medicinal products globally; and
• advance international harmonisation by proactively proposing topics in line with the latest scientific developments; promoting the uptake and implementation of international standards, and ensuring a level playing field for operators on the international market by enhancing the EU’s bilateral and multilateral relations.

The Government’s position

4.9In his Explanatory Memorandum (submitted prior to the conclusion of negotiations on the EU-UK Trade and Cooperation Agreement), the Minister of State for Health (Edward Argar MP) noted that any changes to legislation on medicinal products would “likely be subject” to the Northern Ireland Protocol (NIP), and products that would automatically be authorised in Northern Ireland would need to comply with the regulatory requirements of the EU legislation for the duration that the Protocol will be in force.

4.10The Minister adds that, while it is anticipated that the Strategy will support international collaboration between the EU and other countries, as well as advance international harmonisations standards for medicine regulation, it is unclear how this would be of benefit to the UK’s relationship with the EU. The aim of the strategy, noted the Minister, is to promote EU interests in both multilateral and bilateral relations with other countries especially in enhancing regulatory convergence of medicines globally where possible. Such an objective, said the Minister, was contrary to the Government’s position that any agreement on the future EU-UK relationship must respect the autonomy of both parties and it could not therefore include any regulatory alignment.

The EU-UK Trade and Cooperation Agreement

4.11The EU and UK have provisionally applied a Trade and Cooperation Agreement, which includes an Annex on Medicinal Products. This aims to facilitate the availability of medicines in each Party’s territory and to promote public health by safeguarding patient safety and animal health and welfare, as well as to protect high levels of consumer and environmental protection, where relevant, by promoting regulatory approaches in line with the relevant international standards.

4.12Standards for medicinal products should be in line with standards, practices and guidelines developed by the World Health Organization (WHO), the Organization for Economic Cooperation and Development (OECD), the International Council for Harmonisation of Technical Requirements for Pharmaceuticals for Human Use (ICH), and the International Cooperation on Harmonisation of Technical Requirements for Registration of Veterinary Medicinal Products (VICH).

4.13The parties agreed to regulatory cooperation with a view to strengthening, developing and promoting the adoption and implementation of internationally agreed scientific or technical guidelines including, where feasible, through the presentation of joint initiatives, proposals and approaches in the international organisations and bodies highlighted in the preceding paragraph.

4.14Finally, the TCA established a Working Group on Medicinal Products to support the implementation of the Annex on Medicinal Products.

Our assessment

4.15The Strategy is relatively high-level, but it nevertheless signals a clear intention to change the system of incentives in place, including intellectual property protection, to encourage innovation. This could represent a substantial shift for the pharmaceutical sector and, similarly, would lead to a divergent approach between the UK and the EU to the development of innovative, affordable and accessible medicines. For that reason, we ask the Minister in his response to set out the Government’s response to the Commission’s fundamental hypothesis that incentives for pharmaceutical companies to innovate are not aligned with the interests of patients and thus need to be reviewed.

4.16In the event that the EU and UK approaches to pharmaceutical innovation diverge, there may be implications for decisions made by pharmaceutical companies as to where they develop, and seek to market, new medicines. We will invite the Minister to identify any risks or opportunities that arise for the UK.

4.17In terms of opportunities for the UK arising from other elements of the Strategy, we note that the Commission’s Strategy contains initiatives relating to research in this area. Given that the UK and EU agreed in the Trade and Cooperation Agreement that the UK could associate to the EU’s research programme (Horizon Europe), we will ask the Minister what opportunities the Government sees for EU-UK research cooperation in the development of pharmaceutical products.

4.18At a regulatory level, it is of fundamental significance that the Commission intends to present amendments to the pharmaceutical legislation and legislation on orphan and paediatric medicines. This is all legislation with which Northern Ireland must remain aligned. The pharmaceutical legislation governs the placing of medicines on the EU and Northern Ireland markets and it follows that any changes could affect the nature of medicines placed on the Northern Irish market and speed of doing so. In the event of substantial regulatory divergence between Great Britain and Northern Ireland, it is at least possible that a medicine authorised for use in GB is not authorised for use in Northern Ireland and vice versa. While the UK Government could temporarily suspend the use of a medicine on the Northern Irish market, it could not do so indefinitely as the EU would ultimately decide.22 Only under emergency circumstances could the UK Government currently place on the NI market a medicinal product that was not already authorised for use in the EU.23

4.19In reality, therefore, the Commission’s suggestions are possible changes with which the Government must engage as it will need to be mindful not only of the direct implications for Northern Ireland, but also of the impact of regulatory divergence between Great Britain and Northern Ireland concerning medicinal products. We will require from the Minister an outline of the Government’s intentions in this regard in terms of both analysis of the regulatory options and implications and intended engagement with the European Commission. If the Government has no such plans, it is imperative that the Minister explains why that might be the case.

4.20The Minister’s EM was notably defensive in tone, which was arguably understandable at the time it was signed as the UK and EU were in the last fortnight of negotiations on the Trade and Cooperation Agreement. As it transpired, the EU-UK TCA respected the autonomy of both parties and did not include any regulatory alignment. It did, however, provide for regulatory cooperation between the parties, including within international fora, and it links medicinal product standards to those developed globally.

4.21In his original position—submitted prior to the TCA’s political agreement—the Minister was lukewarm on the EU’s proposals concerning regulatory cooperation, suggesting that the EU’s agenda was to promote its own interests and ensure regulatory convergence. As the UK then went on to agree to regulatory cooperation with the EU on medicinal products, including within international fora, we will ask the Minister to update his position and seek clarity on the UK’s own objectives for its international engagement, both with the EU and others. It would be helpful to understand if the UK sees any benefits for the UK of third countries being encouraged, whether only by the EU or by the EU in partnership with the UK, to strengthen their regulatory and intellectual property standards.

4.22Concerning international engagement in this area, the UK is—alongside the EU—a member of the International Coalition of Medicines Regulatory Authorities. Unlike the EU, it is not listed as a member of the International Council for Harmonisation of Technical Requirements for Pharmaceuticals for Human Use (ICH) nor of the International Pharmaceutical Regulators Programme (IPRP). Membership of the IPRP and ICH includes the EU but extends to many others including the US, Canada, New Zealand and Australia. We note that the TCA provides that the ICH standards are part of the baseline for the respective EU and UK approaches to pharmaceuticals regulation. We will invite the Minister to explain why the UK is not a member and also to set out the range of international partnerships in which the UK is engaged in this area.

4.23Finally, we will request information on the Government’s own ideas to resolve the challenges identified in the document, such as: addressing unmet medical needs and ensuring accessibility and affordability of medicines; and promoting innovative, sustainable and patient-oriented pharmaceutical development.

Action

4.24For the reasons identified in our assessment above, we are reporting this document to the House as politically important.

4.25We are drawing it to the attention of the Business, Energy and Industrial Strategy Committee, the Health Committee, the Northern Ireland Affairs Committee and the Science and Technology Committee.

Letter from the Chair to the Minister for Health (Edward Argar MP)

We considered your Explanatory Memorandum (EM) on the above document at our meeting of 24 March 2021.

While the Strategy is high-level, it nevertheless signals a clear intention to change the system of incentives in place, including intellectual property protection, to encourage innovation. This could represent a substantial shift for the pharmaceutical sector and, similarly, would lead to a divergent approach between the UK and the EU to the development of innovative, affordable and accessible medicines. What is your response to the Commission’s fundamental hypothesis that incentives for pharmaceutical companies to innovate are not aligned with the interests of patients and thus need to be reviewed? If the EU and UK pursue divergent approaches to pharmaceutical innovation, what risks and opportunities might arise for the UK? We would welcome any of its own ideas that the Government may have to resolve the challenges identified in the document, such as: addressing unmet medical needs and ensuring accessibility and affordability of medicines; and promoting innovative, sustainable and patient-oriented pharmaceutical development.

In terms of opportunities for the UK, we note that the Commission’s Strategy contains initiatives relating to research in this area. Given that the UK and EU agreed in the Trade and Cooperation Agreement that the UK could associate to the EU’s research programme (Horizon Europe), what opportunities does the Government see for EU-UK research cooperation in the development of pharmaceutical products?

Turning to regulation, it is of fundamental significance that the Commission intends to present amendments to the pharmaceutical legislation and legislation on orphan and paediatric medicines. This is all key public health legislation with which Northern Ireland must remain aligned. In our view, the Commission’s suggestions are possible changes with which the Government must engage as you need to be mindful not only of the direct implications for Northern Ireland, but also of the impact of regulatory divergence between Great Britain and Northern Ireland concerning medicinal products. We require from you an outline of your plans in this regard in terms of both analysis of the regulatory options and implications and intended engagement with the European Commission. If you have no such plans, we ask you to explain clearly why that is the case.

In your EM—submitted prior to provisional application of the Trade and Cooperation Agreement between the EU and UK—you questioned the value to the UK of the EU’s proposals concerning regulatory cooperation, suggesting that the EU’s agenda was to promote its own interests and ensure regulatory convergence. The UK then went on, however, to agree to regulatory cooperation with the EU on medicinal products, including within international fora. We therefore ask that you update your position, setting out clearly the UK’s objectives for its international engagement in this area, both with the EU and others. Do you see any benefits for the UK of third countries being encouraged, whether only by the EU or by the EU in partnership with the UK and others, to strengthen their regulatory and intellectual property standards as far as medicinal products are concerned?

On the detail of international engagement on pharmaceutical regulation, we note that the UK is—alongside the EU—a member of the International Coalition of Medicines Regulatory Authorities. Unlike the EU, it is not listed as a member of the International Council for Harmonisation of Technical Requirements for Pharmaceuticals for Human Use (ICH) nor of the International Pharmaceutical Regulators Programme (IPRP). Membership of the IPRP and ICH includes the EU but extends to many others including the US, Canada, New Zealand and Australia. We note that the TCA provides that the ICH standards are part of the baseline for the respective EU and UK approaches to pharmaceuticals regulation. Could you please explain why the relevant UK body is not listed as a member and could you also set out the international partnerships within which the UK is engaged in this area?

We look forward to a response by 14 April.