The pressing need to have a coherent and solid legal framework to support innovation in the life sciences sector

This article is part of our Biotech Review of the Year - Issue 12 publication.

It is obvious to many that the biotech and pharma industries require a favourable regulatory environment for them to thrive. In Europe, though, the legislator is making it very difficult for the industry to reach its full potential. The reason is a series of legal instruments that make R&D much more difficult. This article examines some key legislation that affects the biotech and pharma industries and the way in which their design and implementation is negatively impacting innovation and the sector as a whole.

Introduction

Change is a constant and adaptability is a key characteristic that defines the biotech and pharma industries. 

In the last decade or so, the industry has had to adapt significantly to changes in the European legal framework to the detriment of innovation. This is not a statement I make lightly. We see it every day with our clients, who have to navigate this uncertainty to bring innovative products to market.

The list of key pieces of legislation that have profoundly (and negatively) impacted the way in which the industry advances is long: the General Data Protection Regulation (GDPR), the clinical trials legal framework, the reform to the medical devices system, the new European Health Data Space, and more. These adversely impact the industry not only because their intrinsic limitations but also because of the lack of a holistic approach that results in isolated pieces of legislation that are not integrated. Here are some thoughts on some of the problems with the legal framework, shaped by our experience navigating it.

Difficulties in developing medicines in the European Union 

Despite having renowned key opinion leaders across the region and first rate infrastructure from hospitals to labs, carrying out clinical trials in Europe is overly complex to the point that sponsors prefer other friendlier, more predictable jurisdictions. Figures speak for themselves: according to a report carried out by IQVIA for EFPIA released in October 2024, while commercial trials are growing globally (by 38% in the last decade), there has been a sharp decline in clinical trials sponsored by biotech and pharma companies the EU/EEA resulting in a drop in global share from 22% in 2013, to 18% in 2018 and to 12% 2023.

The reasons for the decline are multiple, but the lack of a favourable and predictable regulatory environment in which conduct trials and the slow trial start-up times are key. For years we have suffered a fragmented, national system to get clinical trial authorisations trials in the EU. Despite the legislator wanting to put an end to this as early as June 2014 with the introduction of the Clinical Trials Regulation, it was not until 31 January 2022 that this much needed piece of legislation started to apply due to the delays with having a fully functional EU clinical trials portal and database. 

The system has been in place for two years now, but it remains to be seen whether the greater level of harmonisation (based, amongst other things, on the introduction of procedure based on a single submission of a clinical trial application leading to a single decision) will be enough to overcome the lost opportunities. 

In any event, the level of harmonisation achieved by the Clinical Trials Regulation, although welcomed by all, is only partial. Crucial aspects of the approval are still left to the Member States where the clinical trials take place, including aspects related to personal data. This brings us to the next topic: the lack of alignment between the GDPR and the clinical trial regime. Paradoxically, the GDPR has translated into increased fragmentation of data protection rules in Member States as a result of the opening clauses contained in articles 9.2 and 9.4 of the GDPR. Issues like the legal basis for the collection, processing and further uses of the data collected in clinical trials and the fragmentation in relation to whether and when the different stakeholders involved in a clinical trial are data controllers or processors constitute a deterrent for conducting trials in the EU. 

In 2019, shortly after the GDPR came into effect, the European Data Protection Board issued an Opinion¹ regarding the interplay between the Clinical Trials Regulation and the GDPR. The opinion concluded that consent was not the appropriate basis for processing personal data generated in a clinical trial. Despite this, a number of Member States mandate that consent must be the lawful basis. This oddity makes it difficult to conduct pan-European clinical trials. This should have been resolved years before the GDPR came into effect and should have been harmonised from the outset, just like the issue related to the roles of data controllers and processors in clinical trials. EFPIA’s long awaited GDPR Code of Conduct on Clinical Trials and Pharmacovigilance will hopefully bring much-needed clarity to these thorny issues. 

The new Regulation on the European Health Data Space (EHDS Regulation²) is an attempt to thaw the chill caused by the GDPR. Amongst other things, it establishes an onus in favour of making clinical data available for secondary use for research purposes. While this is welcome in principle, again the proposal has added new uncertainty as regards the application of the new framework. 

Indeed, despite the advances in making the data protection system more compatible with life sciences research, the EHDS Regulation will put additional burdens on sponsors of clinical trials. This is because of the obligation to make broad categories of data available and the threats that the new system poses to the IP rights and trade secrets of innovators. In July 2024, EFPIA published a Position Paper identifying a number of apparently inadvertent consequences which it would like clarified to avoid companies electing to conduct trials outside the EU. 

Medical devices

The adoption of the Medical Devices Regulation (MDR) and the in vitro diagnostics Medical Devices Regulation (IVDR) back in 2017 brought profound changes to the relatively well-established regulatory frameworks for medical devices and in vitro diagnostic medical devices (IVSs) that are still felt today. 

The reform caused, and continues to cause, havoc not only to the medical devices industry but also the biotech and pharmaceutical sector. Some of the reasons are the lack of grandfathering of CE marks issued under the previous regulatory regime, a blatant shortage of notified bodies, unrealistic implementation timetables and delays issuing guidance. Published guidance has failed to clarify key issues due to its ambiguity. This environment has not helped companies to comply with the enhanced obligations placed on manufacturers and other economic operators involved in the design, development and supply of medical devices and their components.

The poor implementation of the MDR and IVDR has proven to be a barrier to the development of medical treatment. Whereas a decade ago novel medical devices and IVDs tended to be launched in Europe (and therefore available to clinicians and patients) before the US, Japan or any other jurisdiction³, this advantage has now been lost and we see companies de-prioritise European “approvals”. This is so much so that almost all stakeholders have voiced the need for a reform of the system, recently and perhaps most notably at the December 2024 Health Council (EPSCO) meeting, when many EU Member States highlighted the pressing need to reform the MDR and IVDR. So far, the European Commission (EC) has provided a timid response by issuing a public consultation launched in the framework of a targeted evaluation of the system. The public consultation is open to feedback until 21 March 2025 but it remains to be seen what the EC will do with it.

Changes to the EU pharmaceutical law regime

EU institutions have a golden opportunity to take steps in the right direction with the much-spoken about reform of the pharmaceutical law regime. The starting point, consisting of a much-awaited and several times delayed proposal from the EC, disappointed most. It was disliked by both innovators and developers of generics and biosimilars, not to mention Member States, so hopes are not high that this reform will bring the changes we need.

Instead of solidifying the regulatory data protection system known as the “8+2(+1)”, which in general terms works well because of its reliability and familiarity as far as developers of new medicines and generics and biosimilars are concerned, the EC proposed a complex, unpredictable and unrealistic system that has been criticised by industry and even Member States. The introduction of the possibility of extending the protection period by two years if a product is launched in all Member States within two (or three, for less experienced holders of MAs) years of receiving approval shows a lack of understanding of what it takes to launch a medicinal product. What is the point in introducing an incentive that is plainly unachievable? 

Another example of the shortcomings of the legislator is the attempt to improve the scope of the Bolar exemption. Leaving aside clear mistakes in the drafting of the relevant provision that makes it unworkable (perhaps as a result of a rushed drafting exercise), the EC proposal fails resoundingly in its attempt to improve the construct of the Bolar provision.

Rumour has it that Member States are conscious of what is at stake with this reform and are not willing to rush the EC’s conclusion on the EC’s controversial proposal. With some Member States manifestly opposed to some of the changes proposed by the EC, it will not be easy to reach consensus amongst the members of the European Council and it will take a respected and apt country in the Presidency of the European Council to come up with a joint position.

Not all is negative and there is some hope

We cannot and should not lose hope. Despite the difficult legal environment, some institutions get it and we are lucky to have one of the leading regulators in the world. Indeed, the European Medicines Agency is a top class agency that understands and supports the development of novel medicines without losing sight of the need for them to benefit patients in the EU. 

Even in the field of legislation, not all is negative. The EU AI Act is a revolutionary piece of legislation that will harmonise rules on AI models and systems across the EU. Despite the need for guidelines and secondary legislation to be adopted, the risk-based approach adopted in the EU AI Act is welcome news for all. It remains to be seen, however, how software medical device will comply with the requirements of the EU AI Act. 

Even if the AI Act allows for a single conformity assessment under the MDR or IVDR and the EU AI Act, we envisage some practical challenges, some of which will be similar to the challenges caused by the MDR and IVD described above. 

Despite all of the above, we must be hopeful that the biotech and pharmaceutical industry will find a way to bring to market some of the exciting and large amounts of innovation thanks to the constant advances in research, now accelerated exponentially by the use of AI.

Footnotes

_{^{1https://www.edpb.europa.eu/our-work-tools/our-documents/opinion-art-70/opinion-32019-concerning-questions-and-answers_en}}

_{^{2 At the time of publishing, the EU Council has formally adopted the EHDS Regulation. Once it is formally signed by the EU Council and the European Parliament, it will enter into force 20 days after publication in the EU’s Official Journal}}

_{^{3 In some cases novel products could be available three to five years earlier than other jurisdictions. This led the industry body (now called MedTech Europe) to launch the “DontLoseThe3” campaign}}