Pharma and Europe 2017: A Year of Greater Uncertainties

Dec 21, 2016

2016 has been the year of the unpredictable — and the uncertainties that this has generated will multiply in 2017 and dominate the agenda in Europe, in pharmaceuticals as much as in healthcare, and in the broader — and highly influential — world of politics.

For pharmaceuticals, the greatest uncertainty is how far Europe is going to remain a market that innovative companies wish to engage with. The business climate, which for many years has been rather benign, despite the frequent cries of "wolf" from drug industry bosses, is now deteriorating rapidly.

All drug companies are faced with tougher pricing negotiations that are driven by ever-tighter controls on national health system funding across Europe. And in 2017 it will get tougher, as individual European countries combine their strength to negotiate jointly with drug firms on prices for new medicines. Ireland is set to join with Austria, Belgium, the Netherlands and Luxembourg in a new coalition to boost their collective bargaining power, and similar schemes are gathering impetus in the Nordic countries, the Balkans, and in central and eastern Europe.

At the same time, innovators are increasingly challenged by a rising tide of scepticism — shared now by many senior politicians, as well as by the customary critics in the health activist community. Even the European Union's normally sedate health council has called for a review of incentives for drug research, alarmed by allegations of rapacious drug firms bending the rules to extract unfair advantage from patent term extensions and market exclusivity deals granted to orphan drugs.

Meanwhile, the fragile attempts that had been underway to build a consensual approach to future drug development and regulation — at the European Medicines Agency, in the EU's public-private research venture IMI2, or in closer links between payers, patients and regulators — are being undermined by the accelerating fragmentation of Europe's own political structures.

The most obvious and immediate imponderable is Brexit — the planned UK withdrawal from the European Union. Not only will this exclude one of the continent's biggest buyers from the EU's single market as from 2018 (and consequently oblige companies to start obtaining separate marketing authorizations for products there). It will also remove the expertise of UK government officials (with their traditionally industry-friendly attitudes) from EU deliberations on pharmaceutical policy. And at the practical level, it will oblige EMA to quit its London headquarters and relocate elsewhere in Europe — a prospect that is an administrative nightmare in itself, but also, as its bosses openly admit, that is already damaging staff motivation and impeding recruitment, with obvious implications for operational efficiency.

Brexit will also require major readjustment to existing and pending European initiatives on everything from clinical trials regulation to health technology assessment, and from digital health to modernized pathways to medicines authorization. What will happen, for instance, to longstanding European attempts to unify the scattered clinical trial authorization procedures that have bedevilled the start-up of multi-country new-drug investigations? The finishing touches are being put to a single procedure designed to come into effect across the EU, dependent largely on mutual trust among national regulators, and backed up by a legislative framework. Since the UK is the site of so many international clinical trials, and the generator of as many too, its departure from the EU makes the outlook for a single system now look like a lost dream.

The same will be true for the increasingly troubled bid to modernize European drug authorization procedures — the adaptive pathways project spearheaded by EMA officials, which has enjoyed strong support from the UK. Take the UK away from those deliberations, and the field will be open for countries with a more conservative stance — notably Germany — to block the process. The same fate is likely for the current attempts to find common ground across Europe on health technology assessment, where the UK's national reimbursement organization, NICE, has been at the forefront in seeking greater coordination — often in the teeth of objections from other member states.

But Brexit will also have wider consequences, in the way that it has reinforced a centrifugal trend in the European Union. The sense of common purpose that has driven European integration for more than 50 years was already losing momentum in the wake of the 2008 economic crisis, which set richer countries against poorer. A migration crisis and a growing terrorist threat have added fuel to popular disenchantment with the entire European concept in many parts of the continent. Brexit is turning those fault-lines into fractures, reversing half a century of European construction. The EU itself, and its own institutions, are accordingly losing a sense of purpose and the authority that goes with it.

The European Commission, once the proud defender of EU law, is now unpopular with member states increasingly resentful of being told what to do, and who now also flirt with the idea of going their own way. The Commission, thus embattled, is increasingly hesitant in tackling national governments that ignore legislation for their own national purposes. In, for instance, the controversial (and economically significant) case brought by the drug industry against France and Italy for officially substituting cheaper cancer treatments for more expensive eye medicines, will the Commission now lack the courage to deliver its long-awaited ruling? And in the face of widespread disenchantment with its mission to stimulate cooperation, will it still dare to promote cross-border care and the planned European network of specialized research and treatment centres, or to push for common approaches to personalized medicine or the orderly development of digital health?

The unquestioned opportunities for major developments in health and medicine as the world moves into 2017 will be taken up in some parts of the world. The potential of new science and the deeper understanding of disease processes offer unprecedented hope for health, and will be seized on with both hands by many players. The question for Europe in 2017, however, is whether those opportunities will also still be seized by Europeans, or whether Europe has lost its way and will revert to the parochialism of nationalist views and to division and dissension — and consequently miss out on its future.

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