EU overhauls pharmaceutical law with sweeping 2026 reform package

The European Union has reached political agreement on a comprehensive overhaul of its pharmaceutical legislation, publishing the final compromise texts of a new regulation and a new directive in March 2026 (which remain subject to formal adoption ). Together, these instruments replace the longstanding Community Code (Directive 2001/83/EC) and the European Medicines Agency (EMA) Regulation (Regulation (EC) 726/2004), as well as the Orphan Medicinal Products Regulation (Regulation (EC) 141/2000). 

The reform touches virtually every aspect of the regulatory lifecycle of a medicine: from how long companies enjoy data protection, to what happens when a product is never launched in a Member State and how it can be advertised. 

New data and market protection model

A commercially significant change is the restructuring of regulatory protection or "data exclusivity". Under the current system, innovator companies enjoy eight years of data protection followed by a further two-year market protection period (the "8+2" model), with a potential additional year for a new therapeutic indication.

The new directive retains the eight-year data protection baseline but reduces the standard market protection period from two years to one year, introducing a new modulated "8+1(+1)(+1)" model in which the additional protection periods are no longer automatic but must be earned.

Under Article 81 of the new directive, two further one-year extensions of market protection can be obtained where, among other things, the medicinal product addresses an unmet medical need (as defined in Article 83), the clinical trials use a relevant and evidence-based comparator in accordance with EMA scientific advice, or the product is developed by a small and medium-sized enterprise (SME), a not-for-profit entity, or an undertaking that has not yet obtained more than five centralised marketing authorisations (MAs).

A separate additional one-year extension of market protection can be obtained if, during the data protection period, the holder obtains a new therapeutic indication bringing significant clinical benefit in comparison with existing therapies.

Launch and supply obligations

The new framework introduces a direct and enforceable link between market protection and actual market access.

Under Article 56a of the new directive, a Member State may formally request the marketing authorisation holder (MAH) to make a product available and supply it continuously in sufficient quantities to meet patient needs in its territory. If, within three years of that request, the MAH has not complied, the market protection conferred under Article 80(2) of the directive ceases to apply in that Member State – removing the regulatory barrier to generic or biosimilar market entry in respect of that territory.

​For companies accustomed to deferring launches in smaller EU markets, this introduces a genuine and enforceable regulatory consequence. The access-conditionality mechanism is further reinforced by Article 82 of the new directive, which expressly conditions eligibility for the additional one-year market protection extensions under Article 81 on the product being released and continuously supplied into the supply chain in sufficient quantities and in the presentations necessary to cover patient needs in all Member States in which the MA is valid.

Shortage prevention plans and critical medicines

The new regulation introduces a dedicated chapter on the availability and security of supply of medicinal products.

MAHs will be required to notify the EMA and relevant national competent authorities in advance of any anticipated supply disruption, temporary suspension, or withdrawal from the market, and to maintain a mandatory shortage prevention plan for prescription medicines.

The regulation also empowers the Commission to establish and maintain an EU-wide list of critical medicinal products, which will be subject to enhanced monitoring and governance coordinated at EU level through the Medicines Shortages Steering Group (MSSG, the EMA body responsible for managing medicine shortages and supply security).

Bolar exemption and generic entry

The new directive expressly broadens and clarifies the scope of the Bolar exemption in Article 85 (the rule permitting use of a patented invention for the purpose of obtaining regulatory approval, without that use constituting infringement).

Under the existing framework, generics and biosimilar companies could conduct studies and trials needed for regulatory approval during the patent or supplementary protection certificate (SPC) term, but implementation has been inconsistent across Member States. The new text extends the exemption to cover not only MA activities but also health technology assessment (HTA) procedures, pricing and reimbursement approvals, and the submission of applications on procurement tenders – to the extent that the submission does not entail the actual sale or offering for sale of the product during the protection period. The new directive is explicit that intellectual property rights cannot be used as grounds to refuse, revoke or suspend decisions relating to those Bolar-exempt activities.

The objective of the broadened exemption is to enable generics and biosimilars to be positioned for market entry on day one of patent expiry, having already completed the full pre-launch regulatory, reimbursement and tendering cycle. Companies may want to note, however, that the wording of Article 85 uses the phrase "in particular" when referring to generic, biosimilar, hybrid and bio-hybrid products, which could potentially leave room for diverging national interpretation as to whether the exemption also extends to originator products – a point that would remain to be resolved through national implementation and case law.

Orphan market exclusivity

The new regulation replaces the current fixed ten-year orphan market exclusivity with a tiered system based on the clinical profile of the product, with additional years available for breakthrough orphan medicinal products addressing conditions for which no authorised treatment exists and which bring a clinically relevant reduction in disease morbidity or mortality, and a shorter period for products authorised on the basis of bibliographical data.

Two further one-year extensions are available: one where the MAH has supplied the product across all Member States in sufficient quantities, and one per new orphan indication authorised – capped at two such extensions.

The six-year review mechanism has been abolished, and generic and biosimilar MA applications may now be submitted and assessed during the last two years before orphan market exclusivity expires.

Antimicrobial vouchers

To address the well-documented market failure in antimicrobial research and development, the new regulation introduces transferable data exclusivity vouchers (TEVs) for priority antimicrobials: those addressing multi-drug resistant organisms and demonstrating significant clinical benefit with respect to antimicrobial resistance.

A TEV grants one additional year of data protection, which can be used either for the priority antimicrobial itself or for any other centrally authorised medicinal product, whether held by the same or a different MAH.

Where the voucher is used for a product other than the priority antimicrobial, it may only be applied in the fifth or sixth year of that product's data protection period, and only where the product's annual gross sales in the EU did not exceed €490 million in any of the first four years following the grant of its MA. This is an anti-blockbuster safeguard designed to prevent the voucher from disproportionately benefiting large-selling products. The voucher is valid for five years from the date it was granted. The TEV scheme is time-limited.

Faster EMA assessments and streamlined procedures

The new regulation shortens the standard EMA scientific assessment timeline from 210 to 180 days, with a reduced timeline of 150 days available under the accelerated assessment pathway. The Commission's decision-making period following the EMA's opinion will also be shortened, from 67 to 46 days.

These reductions form part of a broader simplification of the EMA's committee structure: the current five-committee model will be replaced by two main scientific committees for human medicines (the Committee for Medicinal Products for Human Use and the Pharmacovigilance Risk Assessment Committee) supported by working groups drawing on pools of expert knowledge.

MAs under the centralised procedure will, as a general rule, be valid for an unlimited period, removing the administrative burden associated with renewals unless the EMA determines that a time-limited authorisation is warranted on safety grounds.

These changes come as the agency is also set to assume a broader coordinating role in medical devices and diagnostics under a separate European Commission legislative proposal.

Combination products

One of the most forward-looking aspects of the reform is the introduction of explicit provisions for products that combine a medicinal product with a medical device or with a product that is neither a medical device nor an in vitro diagnostic. The new directive creates a structured regulatory framework that for the first time provides dedicated statutory pathways for these categories in EU pharmaceutical law.

For integral combinations (where the medicinal component is principal and the device component ancillary, or where a non-reusable device is used to administer the medicinal product) the MA applicant must submit data establishing the safe and effective use of the combination as a whole, and the competent authority must assess the benefit-risk balance of the entire product. Compliance with relevant Annexes to the recently revised Medical Devices Regulations must be demonstrated for the device component, while the MAH bears overall responsibility for the whole combination.

The framework also provides for combinations of a medicinal product with a product other than a medical device where the competent authority may request an opinion from the authority responsible for supervising the non-device component. This is a category that could potentially encompass software, digital tools and other novel constructs. For companies developing drug-device and drug-technology combinations, this is a significant development which signals a more unified and innovation-friendly regulatory environment for complex products that do not fit neatly within existing legislative categories.

Removal of time-limited MAs as a default

Both the new directive and the new regulation establish that MAs shall be valid for an unlimited period as a general rule. The current five-year periodic renewal cycle – a significant administrative burden for companies managing large portfolios – is abolished as a default. A time-limited authorisation remains possible only where warranted on safety grounds.

Lifecycle environmental requirements 

The new framework significantly strengthens environmental risk assessment obligations. An environmental risk assessment is now mandatory for all MA applications, including those for generic and biosimilar products.

A MA must be refused where the environmental risk assessment is incomplete, insufficiently substantiated, or where identified environmental risks have not been sufficiently addressed through appropriate risk mitigation measures.

Post-authorisation, competent authorities may also prohibit supply or withdraw products from the market where a serious environmental or public health risk has been identified and not sufficiently addressed by the MAH.

For medicinal products with an antimicrobial mode of action, the environmental risk assessment must include an evaluation of the risk for antimicrobial resistance selection in the environment caused by the entire manufacturing supply chain (both inside and outside the EU) as well as by the use and disposal of the product.

For products authorised before 30 October 2005 that have not previously been subject to an environmental risk assessment, the EMA will establish a prioritisation programme to identify those products that are potentially harmful to the environment and require a retrospective assessment, using a risk-based approach.

Advertising, promotion and marketing

The new directive updates the provisions governing the advertising and promotion of medicinal products, revising and consolidating the existing regulatory framework that currently sits in the Community Code.

Companies should note that the advertising provisions have been amended in the final compromise text and will require a review of existing promotional materials and compliance practices once the text is formally adopted. This includes interactions with healthcare professionals.

Regulatory sandboxes 

For the first time in EU pharmaceutical law, the new regulation introduces regulatory sandboxes as a formal legislative tool.

A sandbox may be established by the European Commission at the suggestion of the EMA where a medicinal product cannot be developed and authorised under standard regulatory requirements due to its inherent scientific or technical characteristics. Areas envisaged include personalised medicines, advanced therapy medicinal products (ATMPs), products incorporating artificial intelligence (AI) or digital health tools, and innovative antimicrobials such as phage therapy.

The sandbox provides a controlled, supervised environment in which targeted adaptations to current regulatory requirements are permitted, with the objective of converting lessons learned into permanent regulatory rules that reflect scientific progress.

Interplay with other EU legislation

The reform sits at the intersection of several other EU legal frameworks.

Most concretely, Article 177 of the new regulation amends the Clinical Trials Regulation by introducing a new Article 5a, which establishes a centralised assessment procedure for the environmental risk assessment of investigational medicinal products containing or consisting of genetically modified organisms.

The broadened Bolar exemption expressly covers HTA activities as defined in the HTA Regulation, creating a direct and legislatively confirmed link between the pharma package and the EU's joint clinical assessment framework.

The combination product framework in the new directive engages the Medical Devices Regulation and the In Vitro Diagnostics Regulation, requiring demonstration of compliance with relevant general safety and performance requirements of these legislations for the device component.

Companies developing medicinal products that incorporate AI or digital health tools will need to navigate two separate regulatory sandbox frameworks: the pharma package sandbox established under the new regulation, and the AI Act sandbox regime under the AI Act as strengthened by the Digital Omnibus proposal. These are distinct legal mechanisms with no formal cross-reference between them and both frameworks may be of relevance when AI-enabled products are developed in life sciences.

The pharma package also sits alongside the proposed European Biotech Act, as part of a broader Commission effort to reinforce the European life sciences ecosystem.

Compounding and hospital exemption

The new directive tightens and partially harmonises the rules on pharmacy compounding.

Member States retain the ability to allow compounding for individual patients but the circumstances in which non-authorised products may be prepared in advance of prescriptions (so-called population-level compounding) are more narrowly defined in the final compromise text. Such preparation is permitted only where there is a genuine shortage situation, or where no relevant authorised medicinal product is available; purely financial considerations are expressly excluded as justification. Any broader use of compounding as a substitute for authorised products must be interpreted narrowly and must never be aimed at distorting competition.

​The hospital exemption for ATMPs is subject to new data collection, reporting and annual review obligations. The EMA is required to produce a report assessing whether an adapted regulatory framework should be developed for certain less complex ATMPs developed and used under the hospital exemption.

Osborne Clarke comment

The EU Pharma Package is the most significant overhaul of European pharmaceutical legislation in over two decades. Its breadth is striking: in a single legislative cycle, the EU is attempting to restructure regulatory exclusivity; tighten the link between authorisation and genuine market presence; strengthen the hand of generic and biosimilar developers through a broadened Bolar exemption; reform orphan incentives; introduce antimicrobial vouchers; update the rules on advertising and promotion; and create new pathways for combination products and innovative regulatory tools such as sandboxes, while raising the bar on environmental obligations.

The package's clearest message is that MA and commercial strategy can no longer be managed in silos. The access-conditionality mechanism and the supply-linked conditions for market protection extensions mean that regulatory exclusivity is increasingly tied to genuine commercial presence across the EU.

Similarly, the amended advertising and promotion provisions, the strengthened environmental risk assessment regime, and the new shortage prevention obligations introduce compliance dimensions that touch functions well beyond regulatory or quality teams: from legal professionals, marketing and medical affairs to supply chain management and portfolio planning.

For companies developing products at the intersection of medicines, devices and digital health, the combination product framework and the regulatory sandbox mechanism open new possibilities – though both will require careful navigation alongside parallel legislative regimes, including the Medical Devices and In Vitro Diagnostics Regulations and, where applicable, the EU AI Act.

Formal adoption is expected in the coming months, with the new instruments becoming applicable in 2028. The compromise texts are now sufficiently stable to begin assessing their implications across product portfolios, development pipelines and commercial strategies .