According to the European Federation of Pharmaceutical Industry Associations (EFPIA), North America accounts for close to 46% of world pharmaceutical sales compared with approximately 31% for Europe.1 The EFPIA has also highlighted that the pharmaceutical industry is the leading contributor to the EU 27 trade balance of any hightechnology sector, with approximately €38 billion contributed in 2008.1 As a result, it has been calling for the establishment of a more business-friendly environment for its member companies.
Pricing pressureTo an extent, pharma feels that it must differentiate pricing across the EU to deal with the nuances of each market, as well as to minimise profit losses that can come from countries with low sales potential. Therefore, there has never been a great desire by companies to establish a single European price for their products. Although the introduction of the euro eased business by having a common currency across a number of countries, it has also led to unexpected complications, particularly as European prices are now much more transparent to consumers and healthcare providers. Although it has always been an easy task to convert currencies, the pricing differences among member countries could previously be defended because of "currency fluctuations". It could also be argued that pricing comparisons were invalid because they depended on which rates were used for the analyses. However, such arguments can no longer be used now the euro has been established — or at least not to the same degree.
Most companies are unhappy with current pricing systems that exist across the EU because they believe they stifle their ability to innovate. Furthermore, as changes are routinely introduced by governments, companies must constantly monitor pricing systems. Unfortunately, there is no clear official guidance on how to harmonise the different pricing systems across the EU, and perhaps improve them. The EC Transparency Directive (89/105/EEC) simply states that the member states' procedures regarding the regulation of prices for medicinal products must be "based on objective and verifiable criteria" and justified accordingly.2 The Directive also sets the time limits for pricing and reimbursement decisions at a maximum of 180 days, but a number of countries have failed to meet this target. Perhaps the only positive point for the pharma industry is that the Directive also states that decisions "must be open to judicial appeal at national level".
To make matters worse for the industry, European governments have been known to impose dramatic price cuts. For example, in 2006, the Italian government decided to impose a 5% price cut on drugs used by the country's public health service, Servizio Sanitario Nazionale, to recoup money because of a 2005 spending deficit. This angered the national pharmaceutical association, Farmaindustria, which claimed that some products ended up being 40% cheaper than in other EU markets.3 Recently, the UK has experienced similar direct government intervention; in 2009, prices of prescription drugs to the UK's National Health Service were reduced by 3.9%, with an additional 1.9% price cut set for February 2010.4