Why the European Commission’s Proposal is a Prescription for Disaster

Each year, the EU biopharmaceutical industry invests upwards of €35 billion in new medical treatments and cures for patients in need. It supports more than 700,000 high-value jobs, of which 118,000 are employed directly in research and development. Unfortunately, this investment and these jobs – and the socioeconomic benefits that stem from both – are under threat.

This week, the European Commission (Commission) proposed the introduction of a supplementary protection certificate (SPC) waiver, which would make void the rights promised by SPCs. The move would nullify the very rights that fuel medical innovation in Europe.

SPCs assure innovators that they are able to recoup the costs associated with their products and fund future biopharmaceutical breakthroughs. When inventors patent a new discovery, an SPC promises them that some of the patent life lost during lengthy but necessary testing and regulatory processes will be restored. In short, the SPC mechanism is a strong incentive to take risks on new ideas as a safeguard against long-term lack of profitability.

Without the SPC mechanism, an integral piece of EU’s broad intellectual property (IP) framework, the delicate innovative biopharmaceutical ecosystem will suffer.

The 2018 International IP Index shows that economies with strong IP systems are twice as likely to be conducive to biotech innovation. These economies host 12 times more clinical research on innovative biologic therapies and 21 times more early-phase clinical trials than their counterparts with weaker IP systems. Additionally, in economies with robust IP protection, it’s 42% more likely that a discovery will be supported by venture capital and private equity.

The introduction of an SPC waiver jeopardizes the EU IP system, and thus threatens the future of innovative biopharmaceutical activity in Europe. But the brunt of the impact will be absorbed not by the biopharma industry, but by patients waiting for medical breakthroughs.

According to EuropaBio, healthcare biotechnology products account for more than half of all medicines in the market and currently in the pipeline. The innovative healthcare biotech industry serves more than 350 million patients worldwide and serves more than 30 million in Europe with rare conditions.

At the heart of these treatments and cures is the intellectual property infrastructure – including the SPC mechanism – that enables risky, complex, long-term research and development.

It’s clear that patents – and an effective IP framework – serve patients. The EC’s proposal, on the other hand, is a prescription for disaster. We urge the EC to rethink its approach and restore confidence in the EU innovation environment.

Ellen Szymanski is the is the executive director of international policy for the U.S. Chamber of Commerce Global Innovation Policy Center.

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