EU Pricing Dilemmas - Pharmaceutical Executive


EU Pricing Dilemmas

Pharmaceutical Technology Europe

A new headache

During the past decade, a new headache has emerged for companies in the form of cost-effectiveness reviews, often referred to as 'fourth hurdle requirements'. These consider factors other than safety, efficacy and quality in approving new drugs for marketing or reimbursement. Manufacturers must submit scientific dossiers and economic reports, and are increasingly being asked to show price data from other countries. Much of this information is a repeat of data used for product approval and as a result, companies consider the process to be bureaucratic and lengthy. The systems differ from country to country, but it is put in place to control product pricing; if a product is not deemed to be costeffective, pressure is placed on the company to reduce its price.

The UK was the first EU member state where this type of system had a major impact. In 1999, a pharmacoeconomic body – the National Institute for Clinical Excellence (NICE) – was established in the UK as part of the country's National Health Service (NHS). Its stated role is to provide patients, health professionals and the public with authoritative, robust and reliable guidance on current best practice. The institute conducts technology appraisals on the use of new and existing medicines, and other treatments within the NHS in England and Wales, based on a review of clinical and economic evidence.

NICE's creation was an immediate concern for pharmaceutical companies. The industry claimed that although the organisation was a good idea in principle, it had been set up with unrealistic timescales that would affect patient choice and doctors' freedom. There is still a feeling within many pharmaceutical companies that NICE guidance is premature as many companies believes that the full economic review of a drug cannot be conducted until it has been used over a period of time in a wider population than in the numbers involved in clinical trials.

Companies have frequently challenged decisions by NICE, with the support of patient groups. For example, Eisai and Pfizer challenged NICE's negative decision to ban certain anti-dementia medicines, including Eisai and Pfizer's Aricept, for NHS patients with newly diagnosed mild Alzheimer's disease — a move that has received strong backing from patient groups, such as the UK's Alzheimer's Society. The legal challenge forced NICE to reveal full details of the economic model it used to make the assessment. Subsequent independent analysis revealed the model to have errors, but NICE did not alter its ruling. As new economic data are reportedly being considered for NICE's next review, the companies have opted not to appeal and instead have asked for an expedited decision.

Will we soon see a EuroNICE?

As cost containment is a healthcare policy being pursued by many European governments, there has been speculation that an EU equivalent of NICE could be established,5 which is often referred to in the press as 'EuroNICE'. However, it is unlikely that such an organisation could be formed in the foreseeable future; one initial obstacle is politics as EuroNICE would involve redefining EU responsibilities for healthcare. Currently, healthcare is controlled by each member state's own government, but for Euro-NICE to work in the same way as the UK organisation, a European government and an EU Minister of Health would need to be established — a move that is likely to be strongly opposed by many Europeans. Even if this highly controversial step took place, there would still be numerous problems in ensuring that the EU-wide analyses yielded comparative data, because approaches to diagnosing and treating disease vary widely across the EU. When it comes to economic analyses, there is also the problem that not all member states in the EU use the euro.

With the EU constitution already having posed a problem for many European politicians, who are seeking reelection, it is highly unlikely they would suggest establishing EuroNICE, which would prove highly damaging with their electorates. There would also be technical problems in ensuring that EuroNICE could work, but the principal concern would be running healthcare policy through a central EU body.


Although, in principle, the pharmaceutical market in Europe has grown as the EU has expanded, the pharma industry believes that the region is underperforming because of different pricing regulations and a high level of bureaucracy among member states. There is no sign that this is going to change and so companies will need to be prepared for further government interventions to drive down spending on pharmaceuticals.

Faiz Kermani is a freelance consultant and President of the Global Health Education Foundation, a charity that supports medical education and medical research projects in development countries. He is a member of Pharmaceutical Technology Europe's Editorial Advisory Board.


1. EFPIA, The pharmaceutical industry in Europe: key facts and figures (2008).

2. European Commission, Transparency Directive 89/105/EEC (2009).

3. HIS Global Insight, National Health Service Price Cuts Rattle Drug-Makers in Italy (2007).

4. Pharmaceutical Field Magazine, Budget's price cuts are bad news for branded pharmaceuticals (2009).

5. Anon., European Health Technology Assessment: time for Euro-NICE? Eurosante/Euro-health (2009).


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