LONDON – The European Commission has published details of the latest developments in moves to promote regulatory cooperation between the FDA and EMA as part of the Transatlantic Trade and Investment Partnership (TTIP) that currently is under negation between the two trading blocs.

The proposed pharmaceutical cooperation would include mutual recognition of good manufacturing practice inspections to avoid FDA and EMA doing the same job twice; allow the exchange of confidential and trade secret information to enable joint assessments; and a reciprocal agreement for the two agencies to support each other in developing regulatory science to support faster and cheaper approval of innovative medicines.

It is proposed that a working group is established to oversee the regulatory cooperation and set out a joint work plan.

While neither the U.S. nor the EU impose any tariffs on pharmaceutical imports, the industry bodies PhRMA and EFPIA (European Federation of Pharmaceutical Industries and Associations) have long argued that market access could be improved by reducing regulatory barriers. (See BioWorld Today Feb. 11, 2015.)

The two have published a joint document setting out what they consider will be the main benefits to flow from a comprehensive free trade agreement, and earlier this week EFPIA released an independent study it has commissioned assessing the likely impact of regulatory harmonization on the EU pharma sector.

EFPIA was lukewarm about the latest details coming out of what is now the 13th round of talks in the TTIP negotiations, saying there is a need to further tackle unnecessary regulatory barriers and red tape within the transatlantic pharmaceutical marketplace.

While acknowledging progress in the mutual recognition of GMP inspections, a move it is estimated will reduce the joint workload by 40 percent, EFPIA said further proposals are needed if TTIP is to deliver "ambitious outcomes."

In particular, there should be streamlining of FDA/EMA procedures in pediatric studies to reduce the number of children taking part in clinical trials, the harmonization of clinical trials data fields and a common approach to addressing post-approval variation submissions for manufacturing changes.

"This would go hand-in-hand with ensuring that TTIP remains a living agreement in the years to come, addressing new issues as they arise and as science evolves," EFPIA said.

MORE NEEDED

In addition to pressing for greater regulatory harmonization, EFPIA wants TTIP negotiations to be expanded to include efforts to align intellectual property rights systems and market access.

Aligning regulatory regimes and ending cost duplication will increase EU pharmaceutical exports by €9 billion per annum and generate 19,000 new jobs in the sector and a further 60,000 jobs in related industries, according the study that EFPIA commissioned from an independent consultancy, Copenhagen Economics.

The study is based on the same global economic model as that used by the European Commission in the TTIP negotiations.

To scope the impact of TTIP on the pharma industry it is important to recognize that the sector already is highly interconnected across the Atlantic, with eight of the top 10 pharmaceutical companies located in the EU or U.S. and the EU and U.S. combined carrying out 75 percent of global R&D in life sciences, according to the study.

In addition, more than 80 percent of global pharmaceutical sales are in U.S. and EU markets, with 60 percent of pharmaceuticals imported to U.S. coming from the EU.

THE COST BURDEN: 14%-19%

Given this, aligning the marketplace, reducing regulatory divergence and lowering the cost of trading will benefit companies and citizens, the study reported.

Although there are no tariffs on pharmaceuticals, the cost of the non-tariff barriers in the form of disparate regulations and duplicate costs are high, imposing a cost burden on EU pharma companies equivalent to a tariff of 19 percent and on U.S. companies exporting to the EU of 14 percent.

As a result, TTIP can make for more efficient use of regulatory resources on both sides of the Atlantic and free up pharma company resources that currently are swallowed up in ensuring compliance with two different regulatory systems.

Ensuring good market access, which TTIP would, at least in part achieve, is critical to continued export growth and job creation, according to Martin Thelle, managing director of Copenhagen Economics and one of the authors of the study. "Country analyses . . . show that the pharmaceutical industry is the number one industry when it comes to delivering jobs and welfare gains from TTIP by quite a wide margin," Thelle said.

The impact of TTIP will vary by country with Germany, which accounts for 20 percent of total EU pharma production and 31 percent of EU pharma exports to the U.S., seeing the greatest benefit.

The benefits extend to third countries, with aligned FDA/EMA regulation likely to become the de facto global standard, reducing trade barriers for U.S. and EU companies elsewhere in the world.