Pharmaceutical & Health Care Politic

What are the options for improving access to medicines?

This question is high on the agenda of EU politics. In January, the Council of the European Union agreed in strengthening its ambitions together with the Commission to find suitable answers. Furthermore, the EU options on improving the access to medicines have been anchored in the Own Initiative Report of the European Parliament, following several months of debates. The report, which has been adopted in the Plenary in March, reflects the uneasy status quo on the pharmaceutical markets resulting from the growing dominance of Big Pharma.

Strengthen the Public Service Obligation 

The European Parliament report calls, amongst others, on the European Commission and the Council of the European Union to analyse the causes of medicinal shortages, particularly referring to supply quotas. Policy remedies are expected to be enforced, such as the use of the Public Service Obligation (PSO), which obliges both manufacturers and distributors to safeguard the supplies in national markets. The report highlights that in many cases the PSO is not applied to manufacturers supplying the distributors. Furthermore, other business strategies deployed by some manufacturers are being criticised, such as the withdrawal of effective medicines from the market as well as the „pay for delay“ arrangements, which result in restrained access to medicines.

Choosing the right options to limit shortages

Pharmaceutical companies must make their medicines accessible to all the European citizens. The parallel distribution industry therefore fully supports the intention to examine the real reasons behind temporary under-supplies as called upon by the European Parliament report. As a responsible stakeholder of the pharmaceutical supply chain, the parallel distributors stand ready to contribute to the sustainability of Europe’s healthcare systems by providing pharmaceuticals in competitive prices.

2017 Building a true Single Market for Europe

Boosting growth and investments into the real economy are amongst the top priorities set within the European Commission´s Work Programme for 2017. The European Single Market has been recognised in this respect as a basis for Europe‘s economic power and prosperity. The European Commission therefore intends to enforce a deeper and fairer Internal Market during the year of 2017.

Exploiting the potential of the Single Market

The parallel distribution of pharmaceuticals is an example of how the Single Market can be beneficial to the EU citizens. This practice brings competition to the highly monopolised and fragmented pharmaceutical markets and hence leads to lower prices and savings for the healthcare systems. Nonetheless, this practice has been jeopardised by export restrictions exercised in some Member States. The European Commission has deemed in recent cases that such restrictions are disproportionate and contrary to the free movement of goods.

Export ban is not the solution to structural problems

Within a wider enforcement package mostly targeted to the provision of crossborder services, the European Commission will particularly empower National Competition Authorities in order to be able to enforce rules that guarantee the existence of lawful competition in the market. Export restrictions are imposed due to claims that parallel distribution leads to shortages. However, both manufacturers and distributors of medicines are obliged to supply in the first place the national markets within the remit of the Public Service Obligation, which is often not fulfilled by manufacturers (see the glossary). The role of the National Competition Authorities, in this case, is to support National Health Authorities in the enforcement of the Public Service Obligation in order to balance the supply on the markets.

Being one of the few elements of the competition, parallel distribution plays a significant role in securing better access to medicines. Consequently, the Single Market rules are to be reinforced in every aspect, especially in the pharmaceutical sector.

Discussing the benefits of parallel distribution in London

The UK capital hosted Europe’s leading Conference on Parallel Distribution in the beginning of February. This year’s edition particularly reiterated the positive effect of parallel distribution on the mitigation of prices. According to the representative of the privately owned pharmacy chain in Sweden, parallel distribution is the only competitor to the branded medicines sector. It leads to immediate competition and consequently price reductions in the country.

The much-contested topic of pharmaceutical shortages has been equally mentioned. Oliver Luksic, Head of Government Affairs at the European Association of Euro-Pharmaceutical Companies noted that research provided by academics has shown that most shortages are caused by production problems. The representative of the Danish medicines supplier further outlined the reality on the ground.  Limited supplies from manufacturers to wholesalers equally result in shortages. The Danish supplier further referred to the fact that wholesalers normally procure from several Member States in order to safeguard the balance supplies throughout Europe.  “Parallel distributors can even help sometimes when there are shortages“, by  evening those out, he added. The markets in Northern Europe have been gradually benefiting from the parallel distribution. As a responsible stakeholder within the pharmaceutical supply chain, parallel distributors can help to lower the prices, while simultaneously catering for balanced supplies.

Pharmaceutical pricing: savings needed more than ever

Similarly to Europe, the USA are also faced with pressure regarding the sustainability of its healthcare system. This is partly a result of increasing prices of pharmaceuticals. The new administration intends to make changes in the health insurance framework favouring amongst others the expansion of the access to prescription medicines. This will impose even greater pressure to the mitigation of pharmaceutical expenditures.

The new administration intends to reduce the costs through changes in bidding procedures by the U.S. government, which does not get involved in the negotiation or regulation of the price of pharmaceuticals so far, a practice that is very rare amongst the industry nations. As in Europe, the issue is of a complex nature and as such, any substantive moves will take time and will be mostlikely opposed by manufacturers. In Europe, the prices can be mitigated, for instance, by the parallel distribution, which is based on the Single Market rules and allows for significant savings for the health care systems through the convergence of prices to the lower level. As pharma expenditures are increasing, such practices are needed more than ever before.

expert opinion

A European approach to medicines´shortages

The free movement of goods is one of the four fundamental freedoms of the European Union. Medicines, as one of the goods, are generally freely traded within the EU. However, the pharmaceutical industry has been implementing measures aiming to restrict parallel distribution.

The European Court of Justice (ECJ, C468 / 06 of 16/09/2008), however, has emphasised in consecutive rulings that general restrictions on parallel distribution are not allowed. The Court has previously held, that a pharmaceutical company in a dominant position has abused this position if it refused to carry out normal orders from wholesalers in order to prevent parallel exports. The ECJ has further noted, that in case there is a supply shortage on the national market, it is not relevant whether the company was in a dominant position. Additionally, the ECJ has ruled that the national authorities have the competence to protect public health in accordance to the obligations arising from Article 81 of Directive 2001/83 / EC.

The European legislation has reacted to shortages without overruling the fundamental freedom of trade. The ´Public Service Obligation´ obliges wholesalers to sufficiently supply the national market and then proceed to exports. However, the public service obligation is hardly applied in practice. In addition, there is a lack of information about the causes of supply shortages. It is unclear whether supply shortages can be attributed to wholesalers who export too many medicines or whether they are relevant to the price-pressure and the amount of production. The European Parliament has recently asked this question in order to achieve greater transparency (2016/2057 (INI) of 2 March 2017).

In this context, the EP calls on the EU Commission and the Council of the EU to analyse the reasons behind medicines´ shortages in the national markets. Towards this purpose, additional data are required and further studies may have to be commissioned. The objective should be to ensure that the Member States and the European Medicines Agency (EMA) are aware on which medicines are faced with shortages and what the reasons behind these shortages are. This will assist in maintaining a continuous and safe medicinal supply.

Petra Spielberg, is working as a freelance journalist for Health and Social Policies
in Wiesbaden