Pharmaceutical & Health Care Politics

Access to medicines:
Own Initiative Report underway!

A lot of ink has been spilled on matters surrounding “Access to medicines” since the beginning of the new legislative term. This fundamental concern in the public health domain is expected to spark intense debates in the second half of the year, particularly in the European Parliament following the launch of the own initiative report on “EU options on how to improve access to medicines.”

More transparency as a prerogative for better “access”

It can be anticipated that the report will tackle pricing (in-) transparency, given the fact that current debates are held against the backdrop of high prices of medicines. The confidential contracts agreed in the price negotiations between local social security authorities or payers and manufacturers lead to market inefficiencies. These contracts are to the credit of “Big Pharma” while the social insurances and patients have to foot the bill. In this vein, one should expect that the report will push towards the renewal of the Transparency Directive (89/105/EEC), which would certainly bring more clarity in this regard. The Commission had scrapped its original plans for a renewal after deadlock in the Council.

Targeting smooth supplies

“Access” is not to be strictly limited to affordability of medicines. It is to be dealt with also in terms of the supply of pharmaceuticals. According to the European Medicines Agency, pharmaceutical shortages are particularly driven by inconsistencies in the manufacturing process, as demonstrated on the most recent case of bottlenecks that occurred for example in Austria. Increased manufacturers’ intervention in the supply chains by imposing import quotas that limit the volumes sourced to the markets may also result in shortages. The obligation to supply the market, the socalled Public Service Obligation, has to be therefore adhered by both, distribution and also manufacturers as foreseen by the EU law in Article 81, Directive 2001/83/EU. In this view, the right of the distribution to be supplied by manufacturers has to be maintained in order to secure stable deliveries (see page 4).

The parliamentary report on “Access to medicines” is by nature legally non-binding; it will, however, send a strong political message. The European Parliament is therefore urged to protect the interests of society and patients over those of “Big Pharma“.

The Slovak EU Presidency:
What solutions for shortages?

The small Member State at the heart of Europe will overtake the rotating presidency of the Council of the EU for the first time in the second half of 2016. In the health care sector, the country has been particularly struggling with increasing debts of providers and the modernisation of the system. Following the parliamentary elections earlier this year, further structural reforms are foreseen with the view to increase the overall efficacy of the system.

Slovak health care system: in dire need of more sustainability  

The Eurostat data shows that the life expectancy at birth in Slovakia (76,6 years) falls under the EU28 average (80,6 years). The out-of-pocket spending (paid with the own money of patients) is at 26% of total health spending relatively high compared to the OECD average 19% (OECD 2015).

More than 10 years after the major reform which introduced profit-making and hard budget constraints into the system, a new wave of further structural changes targeting the efficacy and efficiency is anticipated. Modification in the financing along with the shortening of the waiting times for specialised treatments is in discussion. On the top of that, review of the legislation addressing the pharmaceutical undersupplies is underway.

Targeting the shortages

Pharmaceutical shortages are subject to heavy discussion in Slovakia. Therefore, it doesn’t come as a surprise that the matter will be of particular importance also at the health agenda during the upcoming Slovak EU Presidency. At the national level, the situation is to be tackled by further limitation of the re-exports as indicated by the Slovak Health Minister. The initiative comes, however, at the time when the European Commission is already proceeding against the current law from 2013 that enables the ban of exports and imposes upon the distributors an export notification of 30 days. These measures were recently deemed by the European Commission as disproportionate in terms of the limitation of the free movement of goods.

Particularly Slovakia is in crying need of measures that lower the high indebtedness of the health sector. Parallel trade may play an important role in bringing such needed savings to the system due to increased number of players; and enhanced competition. With this in mind, the real driver of indebtedness and shortages should be addressed instead of targeting the wrong.

European Commission demands loosening up of export restrictions:
the case of Portugal & Slovakia

Similarly to Slovakia, the European Commission has been proceeding against the export restrictions of pharmaceuticals also in Portugal where the distributors are obliged to notify the intention to export pharmaceuticals that are on the list of “potentially not available products.”

In parallel to Slovakia, the European Commission has in May addressed to Portugal a letter of reasoned opinion urging the country to deploy less restrictive means in regards to export restrictions of pharmaceuticals. These measures are hindering the free movement of goods and are, hence, contrary to the Single Market. In both cases “the Commission considers that these notification procedures do not set out clear and transparent criteria for determining the medicinal products that may be at risk of a potential shortage due to parallel trade. “ The measures are therefore classified by the European Commission as disproportionate and unjustified. The note further states that the measures increase administrative effort for the exporters. Both Member States have now two months to come up with less restrictive means; otherwise the Commission may forward the case to the European Court of Justice.

Austria: Interruption in production causes bottlenecks in supply

Austrian hospitals were experiencing hard times with the procurement of highly effective analgesics which are essential in the area of anaesthesiology and intensive care. The situation emerged due to inconsistencies in the production of these pharmaceuticals in the GlaxoSmithKline (GSK) factory in the Italian city of Parma which is also used by Janssen-Cilag. In mid-April, Jannsen reported temporary interruption in the production, while GSK informed the respective national authority about restrictions in availability toward the end of April.

According to the spokeswoman of GSK Austria, the temporary interruption in the production occurred due to “complications in the area of data monitoring.”  This situation affected particularly the supplies in Central Europe. Pursuant to media reports, some Austrian hospitals were in pressing need as their stocks sufficed only for up to six weeks.  The Austrian authorities solved the situation by obtaining the pharmaceuticals in short on the markets outside the EU. In the meantime, the production is up and running again. It may, however, take some time to satisfy the demand.

Expert opinion

Supply of the pharmaceutical market:
EU law not implemented

Matters around “Access to medicines” have been subject to intense debates across Europe and particularly also in the European Parliament. The pharmaceutical supply chain has been subject to practices from the side of manufacturers which intent to overtake the control of the pharmaceutical supplies. Measures like notification systems, export bans, or dual pricing along with other supply management   schemes (Direct-To-Pharmacy, quotas) lead to the reinforcement of the market power of manufacturers instead of addressing the actual “Access to medicines” issue.

A pharmaceutical company is supplying wholesalers within the limits of a quota decided unilaterally. Manufacturers also reduce the volume, which leads to shortages and higher prices. As a result of these new developments in the supply chain, the public service obligation (PSO)-the obligation upon both the manufacturers and distribution to supply the national market in the first place- cannot be properly fulfilled as stipulated by Article 81 of Directive 2001/83/EC which was amended in 2004.

Most member states have not implemented the PSO. So far, DG Competition has commissioned an external study in 2012 summarizing the following:

“Generally PSO relate to the obligation on wholesalers and distributor to supply the domestic market. In many cases they do not apply to manufacturers supplying the distributors. This is of particular relevance in instances where manufacturer quotas may result in availability problems. Although the text of the article (81 Directive 2001/83/EC) does name marketing authorization holders, according to wholesalers, obligations relating to manufacturers may not necessarily be transposed at a national level (emphasis added).”

The study also highlights that stakeholders have disregarded this obligation arguing that it does not need to be transposed into national law.

Important to mention that at least some Member States have actually imposed PSO upon manufacturers. In this regard, France is a good example of a correct implementation of the Directive. The “Décret no 2012-1096 du 28 septembre 2012 relatif à l’approvisionnement en médicaments à usage humain” has reinforced obligations on pharmaceutical manufacturers.

“Big pharma” has shown a complete disregard to the content of this article. Manufacturers unlawfully benefit from the incorrect implementation of the Directive and prevent the correct functioning of medicinal distribution within the internal market. In its “Policy proposals to minimize medicine supply shortages in Europe”, EFPIA´s argumentation in favour of the obligation to supply the market remains “unclear”.

But how can a Member State impose a PSO only on the distributors and not on the patent holders (manufacturers)? If a Member State decides to impose a PSO upon the pharmaceutical supply chain, the burden has to be imposed at two levels: on wholesale distributors and on pharmaceutical producers. “Access to medicines” can only be achieved if the EU law is correctly implemented at national level.

Author:     
Oliver Luksic, EAEPC, Head of Government Affairs

Prior to his current position as Head of Government Affairs at EAEPC, Oliver Luksic held the post as Director European Affairs at VAD, the German association of leading importers of pharmaceuticals, along with several other posts as management consultant. In the period 2009-2013, he served as a member of the Parliament in Germany for the Free Democratic Party (FDP). He obtained Master degree in European Studies from Sciences Po, Paris.