Pharmaceutical & Health Care Politics

Cyprus endorses parallel distribution as an ally of Competition

In the beginning of April, the Auditor General of Cyprus published a report on the lack of competition in the procurement of medicines and the pharmaceutical pricing system in Cyprus. The Auditor General urged the Cypriot health ministry to adopt new measures, one of which is the parallel distribution of pharmaceuticals, in order to tackle the lack of competition and the existence of monopolistic conditions in the pharmaceutical market. These phenomena have led to an increase in medicines´ prices, damaging the public interest.

Cyprus joins Mediterranean coalition on access to medicines and pricing

Cyprus has recently signed the Valletta Declaration together with five other Mediterranean countries (Greece, Malta, Italy, Spain and Portugal). More countries are expected to join with Ireland and Romania being the first candidates. The first technical meeting is expected to take place in June and will be hosted by Cyprus. The Mediterranean coalition is an attempt to strengthen the voices of the Mediterranean countries for more access to medicines with fairer prices vis-à-vis the pharma industry.

Parallel Distribution as the solution to the problem

One viable solution would be to change the way the average wholesale price is currently set. The best solution however, would be to simplify the procedures for importing pharmaceuticals through parallel imports in order to increase competition. Cyprus follows the rhetoric of other countries such as Germany, Scandinavia and the UK in squeezing costs by supporting parallel distribution of medicines. In order to increase the positive results of parallel import of medicines to the country, parallel distributors are advised to submit lower bids in public competitions in order to give pharmacies better prices.

Striving for Sustainability of Healthcare systems

Other Member States are encouraged to follow the Cypriot example by endorsing parallel distribution in order to cut down the prices while providing access to high-quality medicines. The parallel distribution manifested itself, once again, as the Guardian of competition placing the interest of the consumers and the sustainability of the healthcare system at its core.

Estonian Presidency:

Digitalising healthcare

One of the newest EU Member States will overtake the rotating presidency of the Council of the EU in July. Estonian citizens’ life expectancy has increased by 6 points over the period 2000-2012 (EU28 80 years; Estonia 77 years). Looking at the WHO statistics from 2015, the population is susceptible to non-communicable diseases such as heart diseases and diabetes.

Presidency agenda focused on cross-sector digitalisation and alcohol policy

Looking at the Estonian Commissioner´s agenda it is no wonder that Estonia will address the digitalisation of healthcare during the upcoming presidency. The eHealth topic will include data ownership as well as cross-border sharing of patient-data. A Ministerial conference on eHealth will take place on 16-18 October. Estonia will also focus on reframing the alcohol policy and addressing taxation measures and labelling. There will be an informal meeting in Tallinn in July.

…on the access to medicines debate

Access to medicines is another big issue for the country since it is commercially less attractive for the big manufacturers and has experienced medicines´ shortages. In an attempt to tackle the shortages, the country has introduced the “Restriction for medicinal products Act” enforced by the Estonian Medicines Agency, but it has not been implemented. The Presidency feels that the debate should move on to the expert level in order to reach viable solutions.

… on the Falsified Medicines Directive implementation

Estonia aims to organise a conference on the implementation of the Falsified Medicines Directive together with the Estonian pharmaceuticals association in Tallinn as a follow-up on the adoption of the Directive. The conference will provide the opportunity to the participants to share best practices and address the practical issues that can hinder the implementation of the Directive on the national level.

Romania´s export bans threaten the EU´s Internal Market

Since March 2017, the Romanian authorities have introduced new export bans on medicines included in the national programs of treatment. This is another false attempt to address the country´s supply shortages. Such a practice constitutes an infringement of Regulation No 2679/98 on the free movement of goods. The European Commission has been notified regarding the situation. In any case, the parallel distributors can sue a state, which disrupts competition in the Internal Market. Currently, there are close to 400 medicines in danger of limited supply from the market “due to the current pricing policy and the clawback tax” according to Mr. Vasile Barbu, president of Romania´s National Association for Patients Protection. “Banning the parallel export would solve the problem only on short term,” he concluded.
The Romanian Competition Council has warned against the practice of parallel export ban. The European Association of Euro-Pharmaceutical Companies has welcomed any dialogue with national and European authorities in order to find a better-balanced approach on shortages.

Pharma Industry in the spotlight for abuse of dominant position

The European Commission has launched a formal investigation on Aspen Pharma regarding allegations on excessive pricing in life-saving medicines and abuse of market dominance. Aspen has threatened to withdraw the medicines in question in some Member States and has done so in certain cases. European Commissioner for Competition, Ms. Margrethe Vestager, commented that it is alerting for the Commission when the price of a medicine increases by several hundred percent.

In 2016, the Italian Competition Authority fined Aspen Pharma for abuse of its dominant position. A number of NGOs have also notified the Commission during 2016 that Aspen pharma has been fixing unfair prices for certain medicines. Some of the products in question are also included on the list of notification in Spain that has been approved by the Commission. The case of Aspen demonstrates the pharma industry´s common practice of causing artificial shortages of medicines as a tool for unfair pricing negotiations. In order to force the Member states to accept extremely high prices on life-saving medicines, the pharma industry, either threatens to remove the product completely from the market or reduces the supply drastically. These practices threaten the lives of the patients that are dependent on these medicines. Aspen Pharma has confirmed that the European Commission is currently investigating on its practices, but did not comment further regarding the allegations

E X P E R T  o p i n i o n

Focus on the Pharma Industry

The European Commission has initiated an official investigation into the manufacturer Aspen Pharma from South Africa (with subsidiaries in the EU) based on suspicions of excessive pricing for five cancer medicines. ´There are indications of sudden price increases of several hundred percent´, mentioned Competition Commissioner Margrethe Vestager recently.
In order to make an impact, Aspen has threatened to remove the products from the market in some EU countries. In certain cases, the company even did so. Commissioner Vestager will now examine this practice closely: „When we get sick, we may depend on specific medicines to save or prolong our lives…But when the price of a medicine suddenly goes up by several hundred percent, this is something the Commission may look at. More specifically, in this case we will be assessing whether Aspen is breaking EU competition rules by charging excessive prices for a number of medicines.“

If the products actually disappear from the market, physicians would have less treatment options for often-fatal diseases. This can be extremely problematic.

Obviously, in the case of Aspen, the issue is not only the highly increased prices, but also the artificial shortages of medicines on national markets. In order to affect pricing, the industry either threatens to take the product off the market or reduces the supply drastically. A temporary national shortage of an important medicine is acceptable. However, increased exports to other countries have been repeatedly blamed as the causes of medicines´ shortages. In the past, various Member States have imposed export restrictions or a temporary export ban.

The logical consequence of the „Aspen“ case would be that the Commission also investigates all export restrictions and ensures the free distribution of goods. Unfortunately, some national governments are still hindering competition and opting for export restrictions, although shortages are often not caused by increased exports but by monopolistic behaviors. The case of Aspen demonstrates that competition in the pharmaceutical market is necessary in order to keep medicines affordable, while protectionist measures only weaken competition in the long-term as well as the security of supply.

Mr. Haber, is Professor at the Danube University Krems, Austria,
with an in-depth expertise on health economics.