On 11 December 2025, the Council of the European Union and the European Parliament reached a provisional political agreement on the long-anticipated comprehensive reform of EU pharmaceutical legislation coined the "pharma package". This package is poised to improve patient access to medicine, make the EU’s pharmaceutical sector fairer and more competitive, and strengthen security of supply to prevent and manage shortages.
Whilst the provisional agreement requires formal endorsement by both the Council of the European Union and the European Parliament before formal adoption, it provides a reliable roadmap for how the EU intends to recalibrate innovation incentives, timely generic competition, and ultimately the resilience of supply.
EU pharmaceutical regulation seeks to balance public health with innovation. Market access requires proof of quality, safety and efficacy and innovators receive time-limited protection to recoup R&D investment; upon expiration, generic and biosimilar competition restores price competition and broadens access.
For reference, patents generally grant up to 20-year exclusive rights from filing date. Supplementary protection certificates provide for protection post-patent expiration, meant to compensate innovators for time consumed in obtaining regulatory approval prior to market entry.
Nowadays however, this balance was under pressure from three parallel trends:
Competitiveness
Industry groups have warned that Europe risks losing R&D and manufacturing investment to other jurisdictions absent policy change. The European Federation of Pharmaceutical Industries and Associations has publicly cautioned that, without rapid reforms, activity is increasingly likely to be directed towards other jurisdictions such as the United States.
Shortages
Critical medicines shortages have become a recurring public-health risk and have exposed vulnerabilities in manufacturing and supply chains. The European Court of Auditors has described critical shortages as a frequent threat across the EU and highlighted structural weaknesses that go beyond short-term crisis fixes.
Antimicrobial Resistance
Antimicrobial resistance (“AMR”) is now treated as a health-security issue. The European Centre for Disease Prevention and Control estimates resistant infections cause more than 35,000 deaths annually within European Economic Area with the World Health Organization attributing 1.27 million global deaths to AMR in 2019. Paradoxically, several pharmaceutical companies have ceased developing new antibiotics because off-patent antibiotics are priced too cheaply, driven by generic competition, to justify investment. This market failure means the products most needed are often least profitable to develop.
Regulatory data protection and market protection
The agreement aims to establish eight years of regulatory data protection plus one year of market protection for new medicines. A conditional extension mechanism allows a further year for medicines meeting two of three criteria: addressing unmet medical needs, delivering significant clinical benefit through new indications, or demonstrating EU-focused development. This brings potential total additional protection to eleven years, recognising that a portion of the 20-year patent term is consumed by regulatory approval processes.
Orphan medicines
The baseline orphan market exclusivity is nine years; "breakthrough" orphan medicines (where no EU treatment exists and outcomes materially improve) receive eleven years.
Clarified “Bolar” exemption
The agreement clarifies the exception allowing entities producing generics and biosimilars to take preparatory steps before patent or Supplementary Protection Certificate (“SPC”) expiry. This explicitly permits submissions for procurement tenders, regulatory authorisations, health technology assessments, and pricing applications conducted while the originator's patent or SPC remains in force. These pre-expiry activities do not infringe patents or SPCs.
Obligation to Supply (Article 56a)
A new Article 56a to the centralised procedure regulation will be promulgated which empowers member states to require companies to supply protected medicines in sufficient quantities to meet patient needs. This aims to preserve profit incentives while ensuring availability and preventing market failure where low prices render European manufacturing uneconomical.
Shortage prevention and notifications
The European Medicines Agency (“EMA”) highlights stronger shortage-related obligations, including advance notifications and shortage-prevention plans for prescription medicines. Practitioner summaries add a reported requirement to notify anticipated shortages at least six months in advance, subject to justified exceptions.
AMR incentive: the transferable exclusivity voucher
A new transferable data exclusivity voucher grants one additional year of data protection for a pharmaceutical product of the company's choice when a "priority antibiotic" is developed. The voucher is fully transferable allowing companies to license or sell this right to other entities. This creates market value for antibiotic developers even when their antibiotics lack commercial appeal, addressing the fundamental market failure in antibiotic development. A "blockbuster clause" limits use on products above €490 million annual gross sales, preventing application to already-profitable medicines.
Efficiency and transparency
EMA expects the reform to reduce standard assessment time from 210 to 180 days. Practitioner reporting also points to new transparency duties to publish information on direct public or philanthropic funding supporting relevant R&D.
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Authors: Dr Terence Cassar & Dr J.J. Galea