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In the late 1980s/early
1990s the innovative pharmaceutical industry felt that the
"effective patent life" - patent life left once the new
drug reached the European market - had been eroded so much
that it threatened the viability of innovative R&D.
Companies were also facing pressure from governments to
keep drug prices as low as possible. A number of factors
had contributed to this erosion of effective patent life:
- Regulatory authorities asking for more stringent and
larger trials to test efficacy and safety - the R&D
process was taking 10-12 years
- Patent Law in Europe was not, at that point,
harmonised to 21 years from patent priority.
For example, it was 16 years for Irish patents and 18
years in Germany for patents before a certain date
- The registration process in each country in
the early 1990s faced backlogs and could take as long
as 2-6 years in some EU countries, such as Spain,
Portugal, Italy and Germany.
- Some countries, such as France and Italy, imposed
a second hurdle to get over after the drug was registered
- pricing approval
- In most EU countries, but particularly Germany, the
Netherlands and the UK, governments were encouraging
generics as a way to curb prices of older drugs
- In some EU countries, such as the UK, limited lists
were being introduced - which meant that drugs on this
list could only be prescribed generically
- Other countries introduced reference pricing,
which brought off-patent drug prices down - this was
particularly important in Germany, the Netherlands,
Denmark and Sweden.
- Many countries introduced price freezes and cuts
- Parallel Importing was increasing in Germany,
the Netherlands and the UK (started in Denmark in the
early 1990s) and actively encouraged as a way of controlling
government drug bill costs in some countries.
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