Is National Drug Pricing Freedom in Europe Nearing its Expiry Date?

April 1, 2013

Pharmaceutical Executive

Pharmaceutical Executive, Pharmaceutical Executive-04-01-2013, Volume 0, Issue 0

The European Union's attempt to update its transparency rules sparks new debate.

For more than 50 years the basic EU rules about medicines have been clear. Each member country is free to determine the price of medicines sold in its territory, and what level of reimbursement it will provide. An observer of the European Parliament discussions in February wouldn't think so, listening to the discussions on the current attempt to update the EU's so-called "transparency" rules on drug pricing and reimbursement. Many of the interventions adopted a much broader—even tangential—approach.

Let's be clear. These transparency rules—introduced 20 years ago—don't have any impact at all on the basic freedom of member states to make their own decisions. They merely set out how those decisions are reached: timeframes, criteria, information requirements, etc. The aim of the rules is to make it possible to see that decisions (whatever they may be) are reached fairly— to provide transparency about the national mechanisms used.

The update now envisaged to these rules makes it equally clear that it is not in any way attempting to encroach on those national rights about what level prices should be set or what to reimburse. It is merely trying to ensure national authorities keep to deadlines and provide information about their systems. So how, an impartial observer might ask, is it possible that so much of the debate turned to a completely different agenda?

Even allowing for political passion, it is, on the face of it, inexplicable that Alda Sousa, a left-wing Portuguese MEP, should insist that greater transparency is needed because "we should know what we are paying for and why." The state should not be "victims of the pharmaceutical industry, which always demands a high price for its medicines," he declaimed. "Manufacturers should not be allowed to impose prices unilaterally," he said, and "seek to underline member states' powers." A Polish right-wing MEP, Zbigniew Ziobro, criticized drug firms for "abusing the situation by driving prices higher in some countries and trying to influence pricing authorities."

They must know—or certainly should know—that the debate related only to technical aspects of price and reimbursement decisions, and not to the decisions themselves. So why should they waste their energies inveighing against what they see as misdeeds in entirely different terrain? Andres Perrello Rodriguez, a Spanish socialist MEP, was similarly marching to a different drum with his remarks during the debate that member states should "take account of the old and the unemployed in setting prices." That may or may not be desirable, but has nothing to do with the debate about the transparency directive. Nor does his aspiration—possibly noble in its sentiment—that "European drug pricing systems should be above and beyond financial interests, and more human."

It was to little avail that French centre-right MEP Françoise Grossetête sought to remind her colleagues that the legislation under discussion had "no impact on sovereignty," and was directed only at "removing red tape." Even her centre-right colleague Miroslav Mikolasik, from Slovakia, chose to insist that "protecting human life must be the foremost consideration, and all barriers to access must be removed"—even if this meant EU-level intervention to require standardization of prices across Europe. It is, he said, "unacceptable that prices vary from country to country." Other centre right MEPs shared some of Mikolasik's wider aspirations: "Any medicine authorized should be accessible to every citizen in all member states," demanded Petru Luhan from Romania, while his compatriot Elena Basescu said the aim should be "cheaper access for all citizens."

João Ferreira, a far-left MEP from Portugal, expressing sympathy for the plight of old people in his country faced with cuts in reimbursement levels, contended that there was "too much of a market in medicines," and the system was tilted "too much in favor of drug firms." His solution was that all medicines prescribed through the national health service in Portugal "should be free to all users," and for this reason, the EU should leave national authorities well alone, so that they would be free to implement such a policy.

Cynics might be tempted to conclude that interventions in European Parliament debates are much more about theater than plot, and that MEPs have long shown a lamentable tendency to play to the gallery rather than to follow logic. Those even more cynical might advance a theory that some MEPs are simply too lazy or stupid to grasp what is under discussion, and that their interventions are accordingly misspoken. But there is another dynamic at play here, too, which even the cynics may find difficult to dismiss.

Underlying the calls for cheaper drugs, wider access, and tighter controls on the drug industry is a new momentum that comes not just from those automatically hostile to drug firms, but from a still more influential community: Europe's ministers of finance and economic affairs. These fresh and even more formidable pressures are evident in a strategy document released by the European Commission later in February, entitled "Investing in Health." This provides an insight into an EU-wide reflection now underway at a senior level among all 27 member countries on "effective ways of investing in health for modern, responsive, and sustainable health systems." It aims to draw conclusions by the end of 2013 on "responses to health system challenges, in particular in relation to integrated care and the use of pharmaceuticals," with special emphasis on "measuring and monitoring the effectiveness of health investments."

To support these processes, the commission is setting up a multisectoral, independent expert panel to advise on effective ways of investing in health. As part of the exercise, it has commissioned studies on forecasting EU pharmaceutical expenditure, external reference pricing of medicinal products, reimbursement systems of medicinal products, the economics of primary healthcare financing, and the evaluation of public-private partnerships in healthcare delivery. The results of most of these studies, which are being financed by the EU program on health, are expected to become available in the course of 2014, says the commission document.

This review outranks the debates on the merely administrative questions envisaged in the update of the transparency rules. It is part of a broader consideration of health in the context of the EU's recovery plan for jobs and growth, and takes its strength from new EU powers over national budgets, ceded as part of the escape plan in response to the sovereign debt crisis. The accent is on "evaluating and modernizing current social policies to optimize their effectiveness and efficiency," and on "reforming health systems to ensure their cost-effectiveness and sustainability." The strategy document opens with the conviction that "there is considerable potential for efficiency gains in the healthcare sector," and goes on to speak at length of "using health technology assessment more systematically," and "increasing the use of less expensive equivalent (generic) drugs." It is full of predictions of sharply-reduced drug spending and ever-more rigorous product assessment in terms of outcomes and utility. The hitherto sacrosanct national prerogatives over drug pricing and reimbursement decisions are, by implication, falling under the same EU shadow that has in recent months imposed unprecedented limits on what were equally sacrosanct national prerogatives over setting national budget priorities and macro-economic strategy.

So, paradoxically, the apparently marginal contributions to the European Parliament debate on the transparency rules may prove to have caught the spirit of the age more sharply than the remarks of those who stuck more closely to the plot. All that sovereignty in drug pricing that is prized by member states could, after half a century, be entering its final days.

Reflector is Pharm Exec's anonymous columnist, a commentator so close to the action in Europe that his identity must be secret.