Pharmaceutical & Health Care Politics

Member States step up the fight against falsified medicines

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EP Louise WEISS building © Architecture Studio

With less than half a year to go, 2019 will prove to be a significant time for the fight against falsified medicines as 2019 remains the final milestone for full implementation of the EU’s Falsified Medicines Directive (FMD). The implementation of rules regarding the identification of individual medicine packs under the EU’s FMD aims to discourage the existence
of illicit and fake medicines in the supply chain. Combating fake medicines remains a key topic for the EU.

European Commission publishes study on penalties for falsified medicines

Directive 2011/62/EU amended Directive 2001/83/EC in order to include measures aimed at preventing the entry of falsified medicinal products into the legal supply chain. Article 118a of the Directive includes the requirement for Member States to introduce penalties related to the falsification of medicinal products, active substances and excipients. The European Commission has published a study in early 2018, which assesses the sanctions that have been put in place by the Member States.

Member States impose strict sanctions against falsified medicines

The study of the European Commission reveals that all Member States have sanctions in place. Most Member States apply criminal sanctions for the production and distribution of falsified medicines. In particular, in 21 Member States the manufacturing, distribution, brokering, import, export and sale at a distance of falsified medicines are sanctioned as criminal acts. In seven Member States, some of the activities attract civil penalties in the form of fines rather than criminal sanctions.

Commission assesses the implementation of the FMD

The Commission has also assessed that Member States have implemented the FMD in a satisfactory manner even though some Member States could include further administrative or civil sanctions. Within a presentation of the study in the European Parliament’s ENVI committee, a Commission representative has also highlighted that in order to facilitate enforcement, it would be easier to introduce sanctions that penalise falsification per se without having to prove that products have caused harm to human health. The European Parliament has expressed its satisfaction on the progress that the Member States have made.

Austrian Presidency: A healthcare system that protects – at high costs

The EU’s overall policy will be driven by the two predominant discussions on Brexit and the EU budget (Multiannual Financial Framework – MFF). Still, the Austrian presidency of the Council will be trying to revolve the debate around the core topic “A Europe that protects”. This results in one pillar of the presidency being security and migration policy, another one stability in the EU neighbouring countries and last but not least competitiveness and digital issues. Recalling the national debate on skyrocketing medicine pricing that took place in Austria in 2017, it is not improbable to assume that a protective Austrian presidency would be open to consider this issue as well. The debate followed a joint event on the topic by the association of Austria’s social insurers (Hauptverband der Sozialversicherungsträger, HV) and the Federal Ministry of Health, and drew harsh criticism from the pharmaceutical industry. A general focus is expected to be on subsidiarity, explicitly “doing less more efficiently”. With a newly elected government, the full intentions remain unclear for the moment.

Federal health care system

According to Eurostat data, life expectancy in Austria in 2016 was at 81.8 years. A figure higher than the EU-28 average which remains at 81.0 years. Over the past 30 years, life expectancy has increased by more than eight years while infant mortality has decreased by more than 75 %. While on the one hand, life expectancy is increasing, on the other, fertility rate is falling. These demographics pose a huge threat to the Austrian healthcare system, already subject to overly complex regulation.

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.

A complex system ready for reform?

The Austrian Federal Ministry of Labour, Social Affairs, Health and Consumer Protection plays a central role in preparing laws, having the responsibility to craft both public health and health policy, playing the role both of the decision maker and the supervisory authority. The federal government lays down the legislative framework while the provinces are then in charge of defining legislation, enforcement and implementation. Federal, provincial and local authorities jointly provide public health services and administration.

All individuals not only receive publicly funded care, but also have the option to purchase supplementary private health insurance. The system is complex due to its multi-level governance structure while the numerous social health insurance carriers continue to operate in silo structure – a structure that drives healthcare costs to the top compared with other European countries. The government has thus agreed on reforming the healthcare system.

Priorities of the Austrian Presidency

The Austrian Presidency has set its priorities on continuing the discussions regarding the recent proposal on Health Technology Assessment (HTA) and the upcoming review of the Supplementary Protection Certificates (SPCs). In addition and following the initial ambition from the Estonian presidency, the digitisation of health care systems is expected to be of high priority. Built on the Bulgarian presidency, the Austrian presidency does also want to ensure the availability of life saving access to medicine for patients.

Possible Antitrust Probes for Parallel Imports

Photo: istock/Cecilie_Arcus

In the past antitrust infringements in the pharmaceutical parallel import sector have attracted significant fines. The European Commission continues to conduct in-depth investigations into business practices that affect parallel trade. According to a recent article by the law firm Hogan Lovells, the Commission is currently looking into several parallel import cases, with possible formal antitrust investigations to follow. The targeted industries include diverse sectors such as e-commerce, consumer electronics and brewery products as well as at least one case from the pharmaceutical sector.

According to a leak referenced by Hogan Lovells, the company seems to be under scrutiny for the dual pricing of pharmaceuticals sold through national social security systems as well as the open market. Pharmaceutical companies continue to be among the highest priorities of antitrust agencies around the world and in Europe. The European Commission maintains a dedicated info page for antitrust enforcement in the life science sector, and national authorities in the Netherlands and Belgium have named antitrust in pharma as priorities for the coming years.

 France: Parallel-import as the Solution to Medicines’ Shortages

France has been experiencing difficulties regarding access to medicines for the past ten years. A recent dedicated reportage in French national TV, TF1 evening news identifies as the main cause for shortages the internationalisation of the production chain of pharmaceuticals. According to this reportage, the lack of raw materials as well as the lack of upgraded infrastructure can lead to manufacturing problems for the pharmaceutical industry.

In order to tackle the shortages, France parallel-imported medicines destined for the UK. The fear of shortages still remains however. Currently there is no legislation that sanctions the lack of proper supply of pharmaceuticals in the market. The healthcare community has expressed its concerns over the efficiency of the current legislation which does not guarantee the access to medicines and hence the safety of patients.

Expert opinion

A new shot at a Transatlantic Agreement

by Nadja Hirsch

Ever since President Trump has launched his reckless attack on our liberal trade order, restrictions to the market in the shape of import tariffs on steel and aluminium have already been implemented, levies on German cars are on the table. Staunch allies of the United States such as the European Union and Canada are facing unjustified claims that their exports are threatening US national security.

Only due to the immense specialisation of our national economies, today’s world economy manages to produce goods in a much more cost-efficient and resourceefficient way than ever before. Comparative advantages provide the foundation for economic prosperity, both within the European Union and on a global scale. With its current approach, the US is only sliding into a dangerous spiral of isolation. In a rare moment of truth, Larry Kudlow, Trump’s top economic advisor, admitted that the tariffs imposed could indeed jeopardise his country’s current high in economic growth.

Eventually, Mr Trump has to face reality and show willingness to negotiate compromises and to present sustainable solutions to the underlying challenges our global trading system is currently confronted with, first and foremost China’s stateorchestrated overcapacities. Everything indicates that import tariffs on steel and aluminium are noncompliant with WTO rules. However, the countermeasures the Commission has come up with so far, namely tariffs on an array of US products such as whiskey or motorcycles, are no definite solution.

What we have to do is to fundamentally rebuild our trade relations with the Unites States in order to be able to return to a rule-based free trade system. It is imperative to resume comprehensive trade negotiations so both sides can resolve their issues as equals, leaving childish rhetoric and unnecessary accusations behind.

Open trade flows entail prosperity, progress and peace. National budgets are bolstered, jobs are created. Non-trade barriers need to be dismantled, while at the same time our high standards in human rights, occupational and food safety as well as environmental protection need to be maintained. We European Liberals continue to push for free trade agreements with our partners worldwide: digitalisationproof and value-based. We call for a new Transatlantic Agreement – an accord much sought after in times of global insecurities and volatile economic cycles. A first step would be for the Commission to present detailed guidelines for trade talks in the near future: inclusive, transparent and ambitious.

The European Commission is now charged with the tricky task to step up to Trump’s ideological protectionism while firmly opening the door to a “fresh start” in trade with the US. After all, cooperation beats retaliation by a landslide.

Nadja Hirsch is Member of European Parliament, Liberal Party