OR WAIT 15 SECS
In the hothouse atmosphere of European governments' anxieties over ever more expensive medicines, recent weeks have seen perspiration breaking out on the brows of ministers, officials and drug company executives, writes Reflector.
I make no apologies for returning to the subject of drug pricing. In the hothouse atmosphere of European governments' anxieties over how they are going to afford ever more expensive medicines, recent weeks have seen perspiration breaking out on the brows of ministers, officials and drug company executives.
The most sensational intervention came from an unusual quarter-the European Union's competition watchdog. Margrethe Vestager, the Commissioner responsible for anti-trust, announced a formal investigation into Aspen Pharma's pricing policies. This is the first time the Commission has ventured into this field. Until now, the EU has left drug pricing decisions firmly in the hands of national authorities, since EU law leaves each member state sovereign in how it organizes and pays for its health service. An Italian court already fined Aspen last year for increasing its prices sharply.
Vestager justified her unprecedented move with "concerns that Aspen Pharma has engaged in excessive pricing concerning five life-saving cancer medicines". Citing allegations of price-gouging backed by blackmailing threats of product withdrawal, she said: "When the price of a drug suddenly goes up by several hundred per cent, this is something the Commission may look at."
Her reasoning opens up a whole new territory for European discussion of prices. The implicit rejection of reliance on market forces delights many health officials hard-pressed to stick within budgets, as well as European Parliament members and health campaigners who have long called for a complete re-think of the current logic behind commerce in medicines. But it also raises - at an official level-some questions that until now have been voiced only informally, if loudly and repeatedly over the last few years: notably, the concept of an "excessive" price can exist only if there is a concept of a "fair" price-and that is a subject of perpetual disagreement in European discussions. What the Commission decides in the course of its investigation will have an impact much wider than the revenues of just one company.
Another significant highlight of the last few weeks was the opening of a legal battle at the level of the EU's Court of Justice on whether Roche and Novartis broke EU competition rules by colluding to protect cannibalization of the sales of the Lucentis eye-treatment by the cheaper (and unlicensed for that indication) Avastin. The companies are appealing an Italian ruling that they were operating a cartel, and again the outcome matters more than just whether these two firms can win exemption from the verdict-and the multi-million euro fine-that Italy imposed on them.
Here the issue is price-related insofar as upholding the Italian ruling would expose many more products and companies to official substitution by cheaper (but unlicensed) alternatives. National authorities keen to make savings in their drug bill could over-ride the need for a medicine to be authorized for a particularly costly indication, and give a free pass to a cheaper product that claimed the same effect. Unsurprisingly, the European research-based industry is strongly opposed to such an approach, and has already asked the Commission to intervene to protect the concept of indication-specific marketing authorizations. But so far, the Commission is keeping out of the battle.
In a related-and equally significant-development, the European consumer organization BEUC, one of the most influential health campaigners in Europe, took advantage of the court hearing to launch a demand for more intrusive Commission action to contain drug prices. It wrote to Vestager urging her to open investigations into Roche and Novartis, as well as into Gilead’s pricing strategy for hepatitis C drug Sovaldi, and Aspen’s pricing of its oncologicals. The BEUC letter was issued before Vestager announced her Aspen investigation-and although the consumers' intervention was not the trigger for her initiative, the pressure being exerted on the EU institutions by critics of drug pricing should not be underestimated.
Already the health ministers of the member states asked the Commission last June to intensify investigation of "potential cases of market abuse, excessive pricing as well as other market restrictions specifically relevant to the pharmaceutical companies operating within the EU". BEUC naturally cited this invitation in its letter to Vestager-and health campaigners are determined to keep issuing reminders to the Commission that it has been asked by ministers too to do more. Analogously, the Italian ruling on the Avastin/Lucentis case was the consequence of a complaint by the Italian consumers organization. And consumers were also influential in the Aspen case in Italy-a precursor to the action against the firm now taken at EU level by Vestager. Campaigners are raising their game-and their influence-all the time.
Another potentially disruptive development still in the background is that Commission has also-and again at the urging of health ministers-initiated a study into whether current intellectual property rules governing medicines are operating against public interest and giving drug firms scope to abuse incentive schemes by charging unjustifiably high prices for orphan drugs and other innovations.
And by coincidence, May also saw a date set for the opening of another drug industry case in the European court that bears indirectly on pricing. Servier is appealing a Commission ruling (and heavy fine) for a patent settlement deal-one of a clutch of similar rulings against drug firms for 'pay-for-delay' agreements with generic competitors. Drug firms involved say these settlements are often the best way to avoid lengthy and costly court cases, in everyone's interests. But the Commission has taken the view that the public interest is damaged because generic competition can be deferred, with costs to health budgets obliged to continue purchasing higher-priced originator products. Last year Lundbeck, another casualty of a Commission 'pay-for-delay' ruling and fine, lost an appeal in the European court's lower chamber, and is now taking that case to the top court.
Meanwhile, drug prices continue to feature prominently in the background chatter across many other parts of Europe. In her final address to the World Health Organization in Geneva in mid-May, outgoing director general Margaret Chan identified fair drug pricing as a priority for her successor. WHO came out strongly against the research-based drug industry's favorite mantra of "value-based pricing" at a "Fair Pricing Forum" in Amsterdam just days before, which was hosted by the Dutch government. The Netherlands is the member state that did so much to press for tougher action on drug prices during its turn in the EU's rotating presidency last year, and was one of the prime movers behind the coalition with Belgium, Luxembourg and Austria to present a more united front in negotiating with drug firms on prices.
May also saw the health ministers of Malta, Portugal, Cyprus, Greece, Spain and Italy emulate the so-called BeneluxA agreement by signing a cooperation agreement of their own in Valletta-hosted by the current EU presidency. This committed them “to cooperate in a fair, supportive and transparent manner” in designing mechanisms for joint negotiation and procurement in accessing medicines.
It is likely to be a long hot summer in drug pricing.