EU Trade Policy

Global export of German medicines still continues to be hampered by trade barriers. The European Union strives to remove these obstacles largely by Free Trade Agreements with many countries and regions. A prudent European trade policy can support pharmaceutical manufacturers in making optimal use of their potential.

Trade and investments are the basis for economic growth and employment: In 2016, German pharmaceutical manufacturers exported medicinal products worth EUR 70 billion to all parts of the world. In the same year, German pharmaceutical manufacturers gave jobs to about 116,000 people. Since 2010, this number has grown by 13 percent which is above the average.

Trade policy belongs to the competences of the EU. According the Treaty on the Functioning of the European Union (TFEU), the European Commission conducts trade policy together with the EU Member States and ‘shall contribute […] to the harmonious development of world trade, the progressive abolition of restrictions on international trade and […] the lowering of customs […]’.

Trade barriers for medicinal products

The European Commission has managed to reduce tariff and non-tariff barriers to trade and to achieve better access to markets. Notably, non-tariff barriers to trade are major obstacles for pharmaceutical companies. The term means barriers to foreign trade other than tariffs, levies or export subsidies. It comprises predominantly costly and time-consuming marketing and registration procedures which German pharmaceutical companies have to pass in different countries as well as, for example, unnecessary costs for multiple inspections of manufacturing plants. These financial consequences particularly affect small and medium-sized enterprises.

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Harmonization leads to greater efficiency, efficiency saves costs

To harmonize rules and standards and to avoid double work are the key objectives of free trade agreements. Pharmaceutical manufacturers place great hopes on the transatlantic free trade agreements between the EU and Canada (Comprehensive Economic and Trade Agreement, CETA) and between the EU and the United States (Transatlantic Trade and Investment Partnership, TTIP). TTIP, for example, includes mutual recognition of inspection reports.

Another proposal of the European Commission in the framework of TTIP relates to the mutual recognition of EU and US-marketing authorisations for generic medicines and biosimilars. Generics, often called ‘me-toos’, are medicinal products which are launched to the market after expiry of the patent protection of the originator. Biosimilar medicinal products are manufactured with biotechnological procedures. They are placed on the market as follow-up of biopharmaceutical products which are no longer under patent protection.

It remains to be seen whether the current US government will pursue TTIP further. Irrespective of this question, the Food and Drug Administration (FDA), the competent authority for market approvals of medicinal products in the USA, is already cooperating with its European counterpart EMA to achieve a mutual recognition of GMP-inspections (GMP – ‘Good Manufacturing Practice’).

The reduction of global trade barriers and the harmonisation of regulatory requirements should continue to lead global trade policy. This should, however, not lower existing standards on the EU level. The high level of quality, safety and efficacy of medicinal products should be maintained – for the benefit of patients.