It would be fair to say that all eyes are on the US, as many try to anticipate US president Donald Trump’s next moves. Just a few days ago, the country postponed importation tariffs on Canada and Mexico for the second time.
The tariffs were originally set to start at the start of February, but they were halted, much to the relief of the healthcare industry, as it was believed that such an economic decision would deepen the drug shortage crisis.
Now, Europe is also preparing to brace for the potential impact, as Trump has indicated his plans to impose 25% tariffs on the region. This includes pharmaceuticals, a move that would infringe the World Trade Organization’s agreement, which normally excludes medication from tariffs.
Tariffs would hurt the off-patent drug industry on both sides of the Atlantic Ocean, as the two regions are important suppliers of generic drugs and active pharmaceutical ingredients to each other.
But, most importantly, patients would be the ones that would be harmed the most, Medicines for Europe’s director general Adrian van den Hoven told Generics Bulletin at the sidelines of the association’s 23rd Regulatory Affairs Conference in Amsterdam at the end of February.
“Generic companies cannot absorb a 25% tax,” he said, noting that additional costs would be reflected in increased drug prices. “Who’s going to pay that 25%? It’s going to be either the patients or indirectly the patients to higher insurance premiums.”
Van den Hoven also highlighted the fact that the European market regularly fills in the gap in US hospital medicine shortages, which, in some cases, are caused by natural disasters.
“Imagine a scenario where we are in some kind of trade war, and then somebody has a shortage, and we have to do this kind of coordination. How well is that going to work? And then you’re going to pay on top 25% tax for helping out in a shortage? I think this doesn’t sound very good,” he said.
Overall, the US is very dependent on other regions for importing API, regulatory starting materials, and pharmaceuticals. While the prime sources for the latter in 2021 were China, Mexico, India, and Canada, the rest of the top 10 countries were European.
Some European countries are also very much dependent on exporting to the US, with some media outlets recently reporting on Ireland’s case. In 2023, the US bought products worth €54bn ($58.5bn), of which €36bn were related to pharmaceuticals and chemicals, making the US the number one client for Ireland, reported Politico.
“We sincerely hope that no tariffs will be imposed,” van den Hoven urged, highlighting the mutual trade between the US and EU.
FDA Staff Turbulence Could Affect Cooperation, But It’s Too Early To Say
There has also been a lot of disruption at the US Food and Drug Administration, as hundreds of employees, namely probationary staff, were dismissed in February. The following week, some of the laid-off staff were called back. Now, the agency has introduced an early retirement program, while staff still fear further layoffs that are expected to be more widespread.
Over the past few years, the FDA and the European Medicines Agency started working on a collaborative scheme to improve scientific convergence for complex generics but saw a slow uptake.
When asked if disruption at the FDA could undo the progress made between the two agencies and their collaborative initiatives, Beata Stepniewska, deputy director general and head of regulatory affairs at Medicines for Europe, said it was too early to predict.
“I don’t think we should take any position or comment on this at this stage, because this is clearly what we don’t want to see,” she cautioned, but agreed that if staff were significantly reduced, the FDA would have to shift and choose its priorities where it wants to engage.
Stepniewska also said it would be a pity if the disruption at the FDA were to affect its “important role” on the international stage, namely the International Council for Harmonisation of Technical Requirements for Pharmaceuticals for Human Use.
“It’s not like ICH will disappear, but in a sense of speed, energy, and resources dedicated, that will be really harm[ful]. That’s a pity because it’s a great body for harmonizations and US expertise and resources are very important,” she highlighted.
Hindered Cooperation May Impact International Development
And, if there is no cooperative advancement in regulatory approvals of complex products, some originator products will not have generic and biosimilar versions at all, as it would be too costly and complicated for off-patent firms to do so in multiple jurisdictions, cautioned van den Hoven.
“Here in Europe, but we also know in the United States, the only way to generate lower cost of medicines is to bring competition,” he said, adding that if there are no advancements in this area, there will be “molecules with no competition, and governments will just have to pay those higher prices. “
This all boils down to the concept of a single development program, something that the European and US off-patent drug trade groups have suggested in the past for complex products.
As Stepniewska said, it would be difficult to blame companies for making a strategic decision not to develop certain products if there were no business case or return on investment.
“Instead of developing and having a scale for outreach and access, we limit. Instead of extending, improving or enlarging access, we reduce it,” she said, highlighting the importance of using the same data package in multiple markets.
Preparing Ukraine For EU Integration
Another notable topic on the political scene is Ukraine, as the country recently marked the third year of Russia’s invasion. Recently, Medicines for Europe sent a letter to the European Commission backing Ukraine’s integration into the EU.
While Ukraine should first and foremost focus on the ongoing war, there are steps that could be taken to prepare its pharmaceutical market to align with the EU before the formal accession, which Medicines for Europe “firmly believes will go forward,” said van den Hoven.
One of the first steps would be to reform its “old-fashioned” regulatory control body, making it the standard model that most EU member states have. Poland has already stepped up to help Ukrainians establish an agency that would be suited to how the EU works, with van den Hoven encouraging other countries to join in as well.
Next is connecting Ukraine to some of the regulatory systems with certain firewalls or limitations prior to accession. For example, Europe has an anti-falsification system, and, given that Ukraine wants to set one up as well as the country battles falsified medicines, it would make sense to familiarize it with the European platform.
“We think this kind of thing could be done so that the Ukrainians don’t invest in one system and then in five years have to invest in a completely different system for compatibility,” van den Hoven said.
Tested Process But Needs Time And Resources
Also, this is not the first time such preparations would be taking place. Remembering the accession of Poland and other member states, Stepniewska said there was no need to reinvent the wheel.
“The knowledge is there. What needs to be done has already been tested on many newcomers to the club,” she added.
As the EU works on revising the pharmaceutical legislation, Ukraine should follow and monitor the changes so it would not go in a contradictory direction. Also, the new agency should define its priorities and identify how to train its assessors and what role it wants to play in the EU.
“It simply takes time and resources.”
Beata Stepniewska
“Maybe the easiest is to start with training assessors to think about entering the procedures for generics [as a] first step to go to the European systems, instead of being immediately rapporteur for advanced therapy products at the EMA,” she said.
Moreover, it is important to be realistic about the changes and not to harm the local industry. For example, Poland had a strong industry, but it needed time to synchronize requirements such as documentation.
“There has to be very careful consideration of how long the transition period should be and what should be deliverable at every stage. Otherwise, there is a risk that the local industry might not be able to absorb it in a short time. It simply takes time and resources,” Stepniewska advised.
