Seeing Through the Transparency Directive

May 1, 2011

Pharmaceutical Executive

Pharmaceutical Executive, Pharmaceutical Executive-05-01-2011, Volume 0, Issue 0

The EU is largely powerless when it comes to policies over pricing and reimbursement

For such a big subject, it is receiving studiously little public attention. No matter how much pharma executives eulogize the heady prospects for personalized medicine or the protean potential of pharmacogenomics, and no matter how often health authorities intone mantras about access to medicines and equality of care, everything all comes down, at the end of the day, to money. So when the European Union opens up the Pandora's box of its rules on pricing and reimbursement of drugs—the so-called "transparency directive"—you might expect a tidal wave of high-profile comment.

Yet no major debate has exploded across Europe, despite the consultation that the EU launched in March on how those rules might be tweaked to fit the 21st century. Of course, the specialized press, with its keen interest in pharma affairs, revels in exploring how the EU is going to update its 1989 requirements that member states come clean on how they make decisions on pricing and reimbursement. And of course the corridors of Brussels (and most European capital cities with a significant pharma industry presence) are hearing constant mutterings. But for all the importance of pricing and reimbursement, this remains a discreet discussion, away from the glare of TV lights and front-page headlines in the mass-circulation media. Even the usual suspects that journalists routinely turn to for a comment on new developments in European pharma policy have remained oddly silent this time around.

Why is this?

Drumroll Please

One reason may well be battle fatigue. The drug industry depicts itself as (and often, these days, is) at the vortex of malevolent European forces. Certainly it has taken a battering in terms of recent pricing and reimbursement decisions in nearly every country across the continent. And the announcement of a lengthy bureaucratic consultation process on EU rules does not amount to a promise of instant salvation—particularly since the transparency directive has, it must be admitted, only a marginal on-the-ground influence on the fate of most products.

This, of course, is an obvious second reason for the apparent indifference. The ambition of the transparency directive is limited. Its essential purpose is not to guarantee that drug firms get decent prices. It was designed merely to oblige the member states to provide clarity on their national procedures and criteria, and to observe time limits for reaching decisions. So even if the directive was working well—and for the last 20 years it certainly hasn't— it would not be a determinant influence on the health of the industry. And since most of the EU's 27 member countries (nearly twice the number of members in 1989, when the legislation was adopted) frequently ignore its requirements, the chances are slim of nirvana resulting from a review of its functionality.

Another possible reason for the low-key response is that the initiative springs from the much-criticized European commissioner responsible for industry, Italy's Antonio Tajani. This man is widely perceived as overpromoted and underachieving, and many in the pharmaceutical industry are hesitant about engaging too closely in any of his projects. Those who, for good or ill, are obliged to study these things will recall that Tajani was robbed of responsibility for pharmaceuticals in the last big reshuffle of the European Commission. Ever since then he has tried to recoup some of those losses (the pharma sector is, after all, one of the jewels in the crown of European industry).

But some of his interventions have proved difficult to comprehend, even for those with years of weary experience of reading the Brussels runes. He has, for instance, embarked on a curious venture into pharmaceutical industry territory that claims simultaneously to combine corporate social responsibility with access to medicines in Europe and medical assistance to the third world. All worthy goals, no doubt, but it is no surprise that European pharmaceutical executives are keeping a cautious distance from the initiative at present. That sentiment may well be conditioning industry's response to his consultation on the transparency directive.

The Band Marches On

However, whether the pharma industry in Europe chooses to trumpet its views or not on the transparency directive, and whatever its motivations, the consultation is going ahead, and a brief glance at the substance is not altogether out of place.

The primary formal rationale for the consultation is, as the EU itself spells out, that "pricing and reimbursement measures can affect the capacity of pharmaceutical companies to sell their products in national markets and are, therefore, susceptible to create barriers to trade within the EU."

Barriers to trade are anathema in the EU—in principle anyway (although pharma is not the only sector to still be hindered by them, even decades after the so-called single market was so-called completed). So the official aim of the transparency directive is, in the EU's own words, to "limit the potential impact of such national measures on the internal market."

And since, as the EU admits, "National policies to control pharmaceutical expenditure have considerably evolved," now it is time, it goes on, to seek input into its reflections on "consistency between the directive and the current policy environment."

The consultation itself consists of a lengthy series of detailed questions on discrimination between domestic and imported products, speed and transparency of pricing and reimbursement decisions, availability of legal remedies, effectiveness of sanctions for non-compliance by national authorities, access to medicines for patients, and the competitiveness of the pharmaceutical industry. This is not the place to rehearse them—the consultation is available here: http://bit.ly/PublicConsult.

But the impression given by the questionnaire is not entirely neutral. It makes a reference, for instance, to the pharmaceutical sector inquiry of 2008, which the innovative industry still feels was an unwarranted intrusion into the world of patent licensing, driven by an ideological determination to promote generic medicines.

Similarly, the questions relating to how the EU might have a greater role in assessing incentives to increase generic use or to comply with global prescription budgets strikes an unwelcome chord with those suffering interventionist measures to massage downward the value of the pharmaceutical market. And the anodyne reference to the "considerable evolution" of national policies hardly does justice to the near-calamitous meltdown of economic conditions in many of Europe's major drug markets.

Tajani's own remarks, when he announced the consultation, did nothing to inspire confidence. When he spoke about "rejuvenating the existing framework," he carefully made the point that "transparency in pricing and reimbursement procedures" can "help diminish the strain on public health budgets."

Who Conducts the Power

But the clincher in industry distrust of, and distaste for, the entire exercise may well lie in the consultation's own circumscription of its scope.

"It must be emphasized that any initiative of the Commission to update the existing regulatory framework shall respect the responsibilities of the member states in the area of pricing and reimbursement," the consultation document says.

The document loudly and clearly confirms that, "Member states are competent for the definition of their health policies and for the organization and delivery of health services and medical care. Their responsibilities include the allocation of resources assigned to healthcare." Consequently, it goes on, "national or regional authorities have competence to determine the procedures and conditions under which medicinal products are priced and financed by their health insurance system."

Expressed in simple terms, this is an unquestioning acceptance that the EU is largely powerless over the decisions that its member states make in this area.

Respondents are invited by the consultation "to focus their comments on aspects related to the actual objectives of the directive." But any issues falling within the scope of national competence—such as national policies and the capacity of member states to make their own pricing and reimbursement decisions—"will not be addressed in the framework of the present initiative," it says.

So the bottom line of the Trappist-like hesitancy to discuss the consultation may not be a conspiracy of silence, but merely a pragmatic response based on the melancholy reflection that this is no more than—to misquote a famous headline—a small earthquake in Brussels, not many changes.

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

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