For the first time since 2006, the European Union found itself on the Watch List of USTR for a variety of alleged deficiencies in the protection which it affords to intellectual property rights, chiefly in the pharmaceutical sector (pages 83-84 of the Special 301 Report).

USTR Complaints

USTR takes aim at a range of EU measures in relation to copyright, trade marks, and geographical indications, but its main concern involves the intellectual property and regulatory protection for pharmaceuticals.

First, it decries the new rules governing regulatory data and market protection that form part of the draft EU pharmaceutical package which was agreed upon in December 2025, was made publicly available in March 2026, and is expected to become law at the end of the year. While these rules will retain the current eight-year data protection baseline for new medicines, they will reduce the standard market protection from two years to one and provide that additional market protection will not be automatic but will have to be earned (see, Van Bael & Bellis Life Sciences News and Insights of 20 May 2026). According to USTR, some of these conditions, such as seeking market authorisation in the EU within 90 days following the first global submission, are “beyond an innovative pharmaceutical company’s control or are otherwise unreasonable”.

Second, USTR takes issue with the substantial broadening of the Bolar exemption, which, in its future form, will not only cover studies, trials, and other activities conducted for the purpose of applying for a marketing authorisation but will also permit the obtaining of such a marketing authorisation, the securing of pricing and reimbursement decisions, and the participating in public tenders (see again, Van Bael & Bellis Life Sciences News and Insights of 20 May 2026). USTR regards some of these newly legitimate activities as commercial in nature and liable to “undermine a patent owner’s established patent rights in the EU”.

Third, USTR also expresses concern at what it refers to as a “EU patent package”, a series of proposed measures whose legislative progress has stalled. USTR mentions the unitary Supplementary Protection Certificate for medicinal products, a proposal which the pharmaceutical industry broadly supports.

Consequences of Watch List Designation

While being placed on the Watch List does not carry immediate consequences for the EU, it creates political pressure and serves as a precursor of possibly more concrete and dramatic steps, including Section 301 investigations. As such the move must have been welcomed by the pharmaceutical industry which generally laments the lack or insufficiency of support for a sector that is critical to the EU economy and societal wellbeing.

At the same time, the Watch List designation piles further pressure on the EU whose pharmaceutical industry faces the adverse effects of the Executive Order of 12 May 2025 in which the US President directed pharmaceutical companies to bring US pharmaceutical prices in line with prices prevailing in “comparably developed nations”.

This “Most-Favoured Nation Pricing” threatens price increases and delayed product launches in Europe. The threat is compounded by tariffs imposed on the import into the US of pharmaceutical products originating in Europe (see, Van Bael & Bellis Life Sciences News and Insights of 22 August 2025). This arrangement has not yet been finalised but already has a dampening effect on European exports and offers a new incentive for pharmaceutical investment in the US at the expense of European projects.