A single European pharmaceutical market: Does maximum harmonization enhance medicinal product innovation?

Abstract

The pharmaceutical sector in the European Union is innovative, but not innovative enough to compete on the world market. This article addresses this issue from the perspective of market harmonization, since the European Commission perceives – according to the ‘European 2020 Flagship Initiative – Innovation Union’ – market fragmentation to be one of the major causes of the lack of innovation. In order to establish if maximum harmonization benefits innovation, two distinct legal regimes in the pharmaceutical sector will be compared. The general rules for medicinal products are weighed against the orphan medicinal products scheme. The latter is subject to uniform Union rules specifically introduced to stimulate research and development and has led to the development of a number of new products. The article shows that the most radical positive integration depends to a large extent on the prospect of it yielding revenue for the innovator. Hence, fuller harmonization can benefit innovation, but it is just as important, if not more important, to address other factors such as pricing, reimbursement and patent protection.