Real-world experimentation of new pharmaceuticals is gaining increased importance, and it requires the implementation of a new reference framework to better define from the regulatory point of view the structural features to be put in place in order to ensure full compliance of trials. Real-world experimentation is not limited to the pharma sector, as it is becoming a widely diffused approach for the testing of many new technologies, especially in the digital field. 

Regulatory sandboxes are the tool envisaged by the European legislator to achieve this objective; they are intended to allow – for a limited time and in a limited part of the area under regulatory supervision – the real-world experimentation of innovative technologies.

The European Council adopted on 16 November 2020 its conclusions on the role regulatory sandboxes and experimentation clauses are expected to play in an innovation-friendly, future-proof, sustainable and resilient EU regulatory framework. The conclusions are part of the Council’s effort to support the availability of transparent, simple and highly efficient regulatory tools as one of the key drivers for Europe’s future growth. The request to the European Commission is to implement a broader use of experimentation clauses on a case-by-case basis during the drafting and reviewing of all new legislation. Results of the ex-post evaluations and fitness checks based on an exchange of information on existing experimentation clauses between member states should be presented in the first half of 2021 under the Portuguese Presidency, suggests the Council, while final results and practical recommendations on the possible future of regulatory sandboxes and experimentation clauses at EU level may be released in the second half of 2021, under the Slovenian Presidency.

The main objectives of the regulatory sandboxes

An agile and evidence-based framework to support the recovery of European businesses in the post-Covid — with a particular attention to small and medium sized enterprises (SMEs) – is identified by the Council as a fundamental instrument needed to achieve a fully functioning EU Single Market, and preserving at the mean time both citizens and businesses. 

In the design of regulatory sandboxes, the “Innovation Principle” should pair with the subsidiarity, proportionality and precautionary ones to inform and review European policies in all domains. To this instance, sharing of best practices among member states and the Commission should follow the example put in place in 2017 by the Maltese Presidency of the Council, is the suggestion. The final goal would see the availability of a new, flexible, future-proof regulatory ecosystem able to fully sustain European competitiveness and growth, as well as technological sovereignty and sustainability. This direction of future development was already highlighted by the November 2019 “Study supporting the interim evaluation of the innovation principle” and the Commission’s Science, Research and Innovation Performance Report 2020. Pilots of regulatory sandboxes were also encouraged by the Commission in its Communication on the new SME Strategy.  

A new framework to test innovative products and services

Regulatory sandboxes are expected to provide a structured context for the real-world experimentation of innovative technologies and services, especially those related to digitalisation. The new approach should involve just a selected part of the target sector for a limited period of time, in order to guarantee the appropriate safeguards and regulatory supervision. 

The legal basis for regulatory sandboxes is represented by experimentation clauses (already used by many member states), to be activated on a case-by-case basis in order for the authorities to guarantee flexibility. This is especially true in the case of emerging and potentially disruptive technologies, where regulatory sandboxes may prove the best tool to test early stage approaches and develop real-world knowledge to be used to draft new policies.

The Council’s communication suggests the use of experimentation clauses and the impact of regulation on innovation to be assessed by the Regulatory Scrutiny Board. An overview of the main existing experimentation clauses already existing in the EU law should be also carried out by the Commission, as a preliminary exercise to identify new possible areas and regulations where to implement this legal instrument. The Fit for Future platform (F4F) or targeted consultations are the tools suggested to involve member states in the development of the new approach.

The central role of digital technologies

Artificial intelligence and blockchain technologies have become the new normal in many different sectors, and their role is gaining increased importance also in healthcare management in order to support the availability of improved services for patients while safeguarding the sustainability for governments and payors. 

According to the Council’s document, a first pan-European blockchain regulatory sandbox developed by the EU Commission in collaboration with the European Blockchain Partnership may become operative in 2021/22. Other regulatory sandboxes are also planned to be activated in Greece, Estonia and Poland within the structural reforms managed with the supervision of the DG for Structural Reform Support and the European Bank for Reconstruction and Development.