Europe: What Price Medicines? The Subject That Won't Go Away

May 4, 2016

The dilemma continues: Which medicines should Europe's health systems pay for – and how much should they pay?

It's the subject that just won't go away. Which medicines should Europe's health systems pay for – and how much should they pay?

No apologies for returning to the issue, because Europe's authorities have seized on it once again, putting drug pricing at the top of the bill at a meeting of Europe's health ministers in mid-April. Pharmaceutical executives never tire of the discussion either - because they know that if it goes the wrong way, they could be out of a job, and that in the current tough economic climate, nothing can be ruled out.

Even Sanofi's CEO Olivier Brandicourt, the strong man of France's drug industry, was ready to admit - on his home turf, at a meeting in Lyon, on the eve of the health ministers' meeting - that he was "not optimistic" that the industry was getting its message across.

That's not surprising when you consider what's happening in his own country. Health minister Marisol Touraine pointed out in Lyon that prices of innovative new drugs coming onto the market are unsustainable over the long run. And she wants countries to share data on the therapeutic value of new medicines in real-world use, to help decisions to pull reimbursement for them.

French Green MEP Michèle Rivasi has called for compulsory licensing to bring an end to the “casino economy” she says that pharmaceutical firms enjoy. A change in the law has  already imposed tougher requirements on the use of expensive cancer drugs in hospitals, including demanding information about pricing levels in other leading European countries. And France's President, François Hollande, has promised to seek agreement on regulation at international level at the G7 summit in Japan in late May to,  in his own words, "fight soaring medicine prices."

France is in no way alone in its anxieties. Just take a look at what some of the leading authorities have been saying recently in other countries. In Brandicourt's previous home - he was CEO of Bayer Healthcare until a year ago - German health insurers are out to get a handle on what they say are exploitative prices of new drugs on the market, and have won some support from the government, which is planning curbs on companies' liberty in setting launch prices. The boss of the UK evaluation agency, NICE, has challenged drug firms to show more restraint in pricing – or face price cuts. The head of Italy's competition authority  has urged EU action to control drug prices. And Belgium, the Netherlands and Luxembourg are now working together to seek a common approach to their negotiations with drug firms.

So there is fertile ground for the health ministers' discussions of pricing - clothed in the modest figleaf of "Innovations for the benefit of the patient", as a concession to the traditional member-state insistence on keeping these decisions at national level. And Dutch health minister Edith Schippers scattered plenty of seed in advance of the meeting, with a hard-hitting paper outlining the need for action.

"The current pharmaceutical system is out-of-balance", it says, and "It is time to set a new course." Explicitly and with no apology for its radical break with tradition, it says baldly: "We should take measures to better control the price of medicines."

The paper highlights the problems that governments face. "Member states deal on an individual basis with global pharmaceutical companies, in a context of great information asymmetry between governments and industry," it points out. "Companies benefit from fragmented procurement and budgeting of medicines in Europe," and patients, people who are insured, and taxpayers throughout the European Union "are the victims." So one of the main aims should be for cooperation that can increase information-sharing and transparency about products, markets and prices, and can make better use of joint health technology assessment for reimbursement decisions is also fruitful. "If member states work together more closely," says Schippers' paper, "the imbalance at the negotiation tables can be reduced."

The industry is the culprit, despite its often helpful innovations, the paper makes clear. "The profit-oriented industry does not make drugs pricing very transparent," and  "this makes a sensible discussion regarding socially acceptable drugs prices much more difficult." Drug prices no longer take account of anything else, it suggests. "The relationship between innovation and a reasonable, socially acceptable price is absent." In addition, the industry's enthusiasm for maximizing profits leads it to make "undesirable use or even misuse" of protection mechanisms linked to intellectual property.

The result, the paper alleges, is that essential medicines - including orphan medicines and oncolytics - are not affordable or not even marketed in some countries, demonstrating how "commercial interests prevail over public interest." This, says the paper, can be considered as market failure. And it provides the justification for something akin to a declaration of war: "We should therefore aim at achieving a stronger negotiating position for the purchaser in order to compel that the price of a product better reflects its actual development cost and added value."

The mechanisms envisaged are not so clearly spelled out. But the paper before ministers speaks of European cooperation as "an important condition for a system of sustainable provision of medicines" and a way of taking a stance "to bring about the necessary changes in the market authorization framework, in regulations governing supplementary market protection in addition to patent law, and reimbursement."

This isn't going to be a straightforward confrontation between governments and industry, either. The background to the debate is the growing chorus of complaints and criticisms from patients and influential civil society organisations, to which governments - ever alert to the grass-roots, and ever sensitive to the need to placate the voluble - have been paying increasing heed.

The European Public Health Alliance, the European Social Insurance Platform and Association Internationale de la Mutualité have written to Europe's health ministers backing virtually every aspect of Dutch minister's views on EU collaboration to tackle high prices. "This is the right moment for political action", they say. "We need a discussion on an EU level on how to tackle this problem." Their letter concludes: "By agreeing on concrete next steps for collaboration in this field, you, as health ministers, can ensure access to affordable medicines, an attractive drugs market and the right care for all patients for the long term. We count on you."

Similar points are made in a statement from the European AIDS Treatment Group, Health Action International, the International Society of Drug Bulletins and another half-dozen health campaigning groups.  Without transparency of the R&D costs and on the actual prices paid for medicines across the EU, any discussion about fair medicine prices remains impossible, they say. Their statement "strongly supports the Dutch presidency’s critique of the current over-protection and misuse of intellectual property and related rights for pharmaceuticals."

Even the usually mild-mannered European Patients’ Forum has come out fighting on this issue. Its president, Marco Greco, said in a statement prior to the health ministers' meeting: “There is an urgent need to identify effective and concrete actions and collaboration at EU level to close the current gap on health inequalities, to enhance access to high-quality, affordable treatments – I think we all recognise the current situation is unacceptable and untenable. Solutions must be found without delay”. His remarks are backed up by a lengthy document replete with expressions of concern over "lack of transparency on the real costs of medicines," “price-gouging,” and pricing "based on what the market can bear." The solution, says EPF, lies in drug firms pricing new medicines "responsibly", and governments showing "political will and leadership."

And how well, amid all this, is the industry getting its message across? Watch this space… but don't hold your breath!