Europe’s pharma recalibration: what regulatory reform means for innovators and follow-on competitors

Expected adoption of the EU pharma package

The upcoming year will likely see the formal adoption of significant changes in EU pharmaceutical regulation. The Council and European Parliament provisionally agreed on the EU ‘pharma package’ in December 2025, with formal adoption expected in 2026.
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The pharma package introduces changes to regulatory data protection (RDP) and market protection (MP) for new medicinal products. RDP prevents competitors (such as generic or biosimilar manufacturers) from utilising an innovator’s clinical data, while MP prevents regulators from approving competing products. Current EU law provides for 8 years of RDP and 2 years of subsequent MP, with the possibility of an additional year of MP for medicines providing significant clinical benefit in a new therapeutic indication (the “8+2+1 rule”). Thus, an innovator bringing a new drug to market benefits from at least 10 years of protection from generic competition.
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The revised pharma package reduces the base MP from 2 years to 1. To regain this lost year, the medicine must either address an unmet medical need or be a new active substance that meets specific criteria regarding clinical trials being performed in Member States or early EU filing. The potential for an additional year of MP for new therapeutic indications remains significant. Thus, the 8+2+1 rule will become 8+1+1+1.
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The pharma package also introduces transferable exclusivity vouchers (TEVs) to encourage innovation in the antimicrobial market. No new class of antibiotics has reached the market since the 1980s, partly due to challenges in generating profit. Companies that develop new antibiotics would receive a TEV, exchangeable for one additional year of RDP for a chosen pharma product. To limit impact on healthcare budgets, TEVs will not be usable for products with annual gross sales exceeding 490M EUR over the previous 4 years. However, TEVs should be sellable assets, providing an additional incentive for development.
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Orphan drug protections are also revised. Orphan drugs are either for treating rare diseases or disease areas where sales would not justify the investment. Presently, such drugs receive 10 years of orphan market exclusivity (OME), preventing approval of competing products for the same indication unless a competitor demonstrates clinical superiority. The revised pharma rules now separate orphan drugs into ‘standard’ and ‘breakthrough’ products, with the latter for diseases with no approved EU treatments. Standard products will receive 9 years of OME, while breakthrough products will receive 11.
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Currently, the EMA cannot grant a marketing authorisation (MA) to a generic or biosimilar before the 10-year OME expires. OMEs therefore benefit from a de facto ‘extension’, reflecting the time taken for the generic/biosimilar product to achieve MA. The revised pharma rules will allow generic/biosimilar manufacturers to submit MA applications within the last 2 years of OME, enabling immediate launch upon expiry.
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Of final interest here, the pharma package harmonises and expands the Bolar exemption. This exemption currently allows generic/biosimilar manufacturers to conduct experimental trials of a generic or biosimilar product to prepare an MA application before patent or supplementary protection certificate (SPC) expiration without risk of infringement. However, such exemptions are inconsistently applied across EU Member States. The pharma package standardises and expands these rights, covering manufacture, pricing and reimbursement applications, procurement tenders and health assessments. These amendments aim to allow immediate generic or biosimilar launch following patent/SPC expiration.

Potential changes for SPCs?

We will also be looking towards the Court of Justice of the European Union (CJEU) this year for developments in SPCs. SPCs provides additional, time-limited protection for an authorised medicinal product after the underlying patent has expired to compensate for delays in regulatory approval. An SPC can only be granted on the basis of the first marketing authorisation for a product, thus preventing patent holders from ‘chaining’ SPCs on a single product.
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The CJEU has been asked to determine whether an SPC may rely on a veterinary marketing authorisation when the same active compound previously obtained a marketing authorisation for human use (or vice versa) in the same indication. Highlighting differing national approaches, the application of interest was previously granted in Czechia but refused in France and the Netherlands. A CJEU ruling could therefore provide needed clarity and harmonisation across the EU.

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