Pharmaceutical & Health Care Politics

EU to step up against excessive pricing and lack of medicines

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EP Louise WEISS building © Architecture Studio

2018 is already underway, promising decisive developments in the EU´s health policies. In the meantime, the Member States are still struggling under the burden of excessive pricing of medicines which is imposed by some Big Pharma companies. The availability of medicines remains a key topic on the EU´s agenda and the European Commission warns that shortages of pharmaceuticals can have negative consequences for the health of patients.

European Commission urges Member States to apply the Public Service Obligation

The European Commission has reacted to the increased phenomena of artificial shortages caused by the malpractices of the manufacturers. The Commission has requested from Member States to discuss the implementation of Article 81 of Directive 2001/83/EC of the pharmaceutical legislation which introduces the Public Service Obligation (PSO), a principle that obliges manufacturers and wholesalers to provide a continuous supply of medicinal products on the market. The European Commission wishes to take stock of the measures implemented by the Member States with the aim of finding examples of best practices which could be shared with the rest of the Member States.

European Commission urges Member States to apply the Public Service Obligation

Manufacturers still enjoy strong negotiation position in the price-setting as EU pharmaceutical markets are separated. The recent “Aspen case” has triggered the European Commission´s interest in investigating further the anti-competitive practices followed by the pharmaceutical industry. Excessive pricing on life-saving medicines is a big issue for a number of Member States that see shortages in their stock or even the complete withdrawal of such products from the market. Such practices could ultimately affect the public health safety and for that reason Member States are more and more sensible to this topic.

EU focuses on the high prices of pharmaceuticals

The Member States are reacting against excessive pricing and the artificial shortages caused by the Big Pharma. 2018 has proved so far that it is the year when the European Commission and the Member States unite in order to build up pressure on the Pharmaceutical Industry to accept fair pricing of medicines and cease artificial shortages which threaten the access to medicines and ultimately patients´ lives.

Post-Brexit scenarios for Parallel Distribution of medicines

Photo: istock/ miriam-doerr

The UK´s exit from the EU will bring many changes in healthcare and health policies which will affect all the stakeholders across the supply chain. UK has been so far one of the most important parallel importing countries in the EU with 9% parallel imports of pharmacy market sales at consumer prices in 2015. Parallel distribution has led to direct savings of 986.2 million euros for the National Healthcare System (NHS) in the period 2004-2009. The suggested indirect savings indicate that the prices of medicines in the UK are at least 3% cheaper than they would have been without the practice of parallel distribution.

Exhaustion of patent rights within the EU/EAA

Among the scenarios that are presented by the British Association of European Pharmaceutical Distributors regarding the impact of Brexit on the British market, the first one highlights the danger in case the UK loses the benefit of rights within the EU/EEA. If that were the case, the prices would rise as the only competition to the monopoly of the manufacturers would be lost. Since wholesalers and retail pharmacies would not have access to cheaper products through parallel distribution, the level of clawback would become unsustainable. The loss of parallel imports could ultimately lead to the loss of community pharmacists. Moreover, the prices of medicines could rise also for the EU citizens due to the change in parallel import law conditions.

International Exhaustion of Intellectual Property rights

An alternative scenario would be for the UK to adopt an international exhaustion for the Intellectual Property (IP) rights. This scenario could compromise the relationship within the EU regarding the parallel exports from UK into the EEA. Moreover, the need to align measures in order to secure patient safety and prevent counterfeit medicines would create regulatory issues which could make the exhaustion of rights with non-EEA countries difficult.

Protecting patients´ rights for access to life-saving medicines

The ultimate goal in the bilateral negotiations between the EU and the UK should be the patients´ interests and their right to have access to medicines. For this reason the existing benefits should remain as it appears to be the most viable option in order to ensure that the competition created by the parallel distribution of pharmaceuticals which leads to direct and indirect savings will not be compromised and that patients´ access to life-saving medicines is secured.

Access to medicines for UK pharmacies in disarray 

Photo: istock/ AmandaLewis

The fear of medicines´ shortages in the UK has forced pharmacists to pay heavy prices for generic medicines, while the British Department of Health is delaying the reimbursement of contractors. Community pharmacies are in danger of being emptied. Many reasons have been suggested in order to explain the increase in the prices, including the UK´s imminent exit from the EU. Supply issues are another reason, following the withdrawal of manufacturing licences by certain manufacturers that did not comply with the manufacturing practices as laid down by the European Medicines Agency (EMA).

The Healthcare Distribution Association (HDA), alongside the British Generic Manufacturers believe that certain wholesalers and independent pharmacist wholesalers are stockpiling excessive quantities of generic medicines, in order to create artificial shortages and release the medicines on the market once the prices rise due to the excessive demand. Certain proposed government regulations can act as the remedy for this situation requiring manufacturers, importers and wholesalers to provide more information regarding sales and purchases of generic medicines on a quarterly basis.

Bulgaria: Parallel Imports benefit Patients’ Interests

Photo: istock/ Anton Donev

Amidst the Bulgarian Presidency to the Council of the European Union, the Bulgarian parallel distributors´ association has published an opinion, highlighting the benefits that parallel import of pharmaceuticals can bring to patients in Bulgaria.

First and foremost, parallel distribution allows low-income patients to purchase high quality medicines in reasonable prices. Moreover, parallel distribution acts as the competition to the monopoly created by the pharmaceutical industry, thus making the price effect beneficial for the consumers. The Ministry of Health however is encouraged to continue the checks and controls over the activities of wholesalers. More precisely, the competent authorities are encouraged to penalise illegal medicine trade as wholesalers are obliged to export only the surplus quantities. The Bulgarian parallel distributors endorse the fight against bad practices and encourage the Ministry of Health to follow the successful paradigm of many other Member States that have benefited from parallel imports of pharmaceuticals.

Expert opinion

25 year of European Internal Market: Mission (not yet) accomplished

by Jo Leinen

Photo: Jo Leinen

Citizen’s support for the European project might not always be the strongest, since – as a wise man said – it is hard to fall in love with an internal market. However, citizens do appreciate the fundamental freedoms of the EU’s internal market. In fact, free movement is the advantage of a united Europe that people often experience first-hand, through traveling, buying goods abroad, using a single currency or visiting a doctor who comes from a different EU country. 25 years since the “official” birth of the internal market on the 1st of January 1993 with the treaty of Maastrich it is still at the heart of European Integration. After 60 years of the existence of the European project starting with the Treaty of Rome in 1957, it is often the loss or restriction of obvious achievements, which brings back to memory the value of free movement.

After a quarter of a decade, the internal market has matured, but constraints are still visible. An EU internal market for medicines is not yet a reality. The development in this sector has not been linear, but characterised by setbacks due to lack of enforcement by the Commission and due to trends of national protectionism by the Member States. The Commission has attempted to abolish bureaucratic hurdles to an EU-wide trade of pharmaceuticals. Its 1998 Communication on the internal market in pharmaceuticals and the 2008 Communication on “Safe, Innovative and Accessible Medicines: a Renewed Vision for the Pharmaceutical Sector” argueing for a free market. It is stressed that an internal market for medicines should be completed despite the specific characteristics of the pharmaceutical sector. Member States should implement measures to remove obstacles that restrict EU-wide imports and exports. Ten years later, an internal market has still not become a reality.

Several Member States obviously fear shortages on their own pharmaceutical markets and want to prevent their lower-priced products from being exported to Member States with higher prices. Of course, in the sensitive health sector, a careful balance is needed between safeguarding a functioning European market with free movement of goods on the one hand and ensuring sufficient supply of important medicines to the consumers on the other. In theory, the EU’s public service obligation from 2001 could strike exactly this balance, ensuring sufficient supply in a Member State while allowing for competition thereby offering attractive prices to consumers. Again, Member States have not been consequent in implementing the obligation while the Commission has been cautious in its enforcement. As the Commission is currently looking into the degree of implementation to draw consequences, the European Parliament should become more outspoken on this issue. The Parliament has been an advocate not only for citizens’ rights but also for a functioning internal market without undue barriers. A clear follow up of the Commission’s survey could be a suitable starting point for a new discussion on the free movement of medicines. After 25 years, completing the internal market is still at the heart of European Integration, but also a mission yet to be accomplished.

Jo Leinen is member of the European Parliament within the Group of the Progressive Alliance of Socialists and Democrats.