Ausgabe 77 (März 2022)

    Editorial

    Dear Readers,

    patients access to affordable medicines and
    increasing healthcare budgets are running topics in the European Union. Experts from academia, business organisations and associations gave us their individual look on the pharmaceutical sector. It is common sense that competition is the road to affordability.

    Affordable Medicines Europe took a closer look on the role of parallel trade with pharmaceuticals. The 2020 update of the 2018 reporting once again shows that PI is not a one-way street from low-income to high-income countries. It’s more a multi-direction tool that could benefit every European country in terms of lower prices and as key ally in shortage mitigation.

    Which brings us to the Technopolis Group analysis of medicine shortages in the EU and their root causes. Requested by European Commission the findings and possible solutions will be part of the revision of the pharmaceutical legislation.

    VAD and Affordable Medicines Europe ensure the availability of affordable medicines for European patients and continue to contribute to ongoing debates in health policies. May you discover many informative insights as you read this 77th edition of our Pharmaceutical Dialogue.

     

    Sincerely,

     


    Prof. Edwin Kohl
    Chairman of VAD

    Jörg Geller
    President of AFFORDABLE MEDICINES EUROPE

    Pharmaceutical & Health Care Politics

    Zoom in on solution to the affordability of medicines.

    One of the given goals of the upcoming revision of the EU’s pharmaceutical legislation is improving patients’ access to affordable medicines across the EU. As medicinal products take up an increasing share of health budgets in Member States, a new webinar series sought to zoom in on solutions to the affordability problem. The series consisted of three different webinars, each of which took a deep dive into a specific area that may contribute to increasing affordability by bringing together different speakers from academia, associations, and business organisations.

    Competition as the road to affordability

    On January 11, a first event hosted by Affordable Medicines Europe focused on competition in the pharmaceutical sector and entailed the participation of a panel of outstanding experts.

    Claudia Desogus, Professor at the Bolog­na University as well as a Member of the Italian Competition Authority, kicked off the discussion and dove into the impact of parallel trade on the competition in the pharmaceutical industry. After an overview of the key aspects and characteristics of parallel trade, she briefly discussed the main case law related to it, as well as the different price settings and national legislation promoting PI across EU Member States. By showing examples from the German and the Danish markets, Professor Desogus illustrated the competitive force generated by parallel trade and concluded that the entrance into the market of parallel imported products brings both direct and indirect savings to health systems and patients.

    Next to present was Søren Brenøe, Senior Economist at Copenhagen Economics. Mr Brenøe gave a brief presentation on his recent studies on savings in Finland and Denmark and the main findings. By looking at parallel imports from an economics perspective, Brenøe’ s analysis distinguished between direct and indirect effects of parallel trade. While the former stems from the difference between the manufacturer’s price and the less expensive parallel imported alternative, indirect savings relate to the price reduction of manufacturers’ products derived from the competitive pressure exerted by parallel traders. Søren Brenøe’ s findings have shown that the total savings from parallel imports of pharmaceuticals in 2018 in Denmark amounted to 82 million Euros, which represented the 3% of the total pharmaceutical expenditure. Likewise, Finnish savings equalled 41 million Euros between 2016-2020.

    The final speaker was Ulrich Mohr, Deputy Director of Deutsche Sozialversicherung Brussels, who brought his experience from the payer’s perspective. By discussing market regulations mechanisms in Germany, including import incentives, discount contracts and refund prices, Mr. Mohr noted that imported drugs are an important component in keeping medicines affordable, generating savings for the German health systems, and are, therefore, fundamental for the effective functioning of the market.

     

    A closer look at the flow of goods inspires a reflection on the role of PI in the pharmaceutical market

    A new country by country analysis of the trade flow of imported medicinal products in Europe ranked Germany as the main source of parallel imported medicines and largest exporter for the rest of the EU/EEA and the UK. This is only one of the several findings collected by Affordable Medicines Europe and included in the new Trade Flow Study released last year. Building on the 2018 reporting, the new Study updated to 2020 helps clarify the origin of parallel trade in Europe. Moreover, in the context of the revision of the pharmaceutical legislation, this analysis could pave the way for an in-depth discussion on the role of parallel trade in the pharmaceutical market.

    Investigating the origin of parallel imports

    By confirming the trend documented in 2018, the Study observed that more than half of the parallel imports in Europe are sourced in 10 EU Member States with the highest GDP and that sourcing from high-income countries increased from 51% to 52% since the last reporting. Capturing this key component that was missing in the debate around parallel trade and providing a clear picture of the trade flows of imported medicines is by itself able to unveil the groundlessness of the narrative that parallel trade of pharmaceuticals is a one-way street, where the medicines go from low- to high-income countries. Moreover, understanding where medicinal products actually originate from allows us to reflect on which factors influence the flow of goods in the pharmaceutical market.

    Is price of medicines the sole determinant for parallel trade flow in medicines?

    A common perception is that prices of medicines are necessarily lower in low-income countries than in high-income countries and thus, the price differential has long been considered the sole factor driving lower-priced medicines towards ‘richer’ countries. However, considering price as the sole determinant of parallel import will not be indeed able to explain the market dynamics surrounding the evidence illustrated above and why Germany is the top source of parallel imports in the four other biggest markets in Europe (UK, Netherlands, Denmark, and Sweden). In a market characterized by the existence of supply obligations ensuring that national patients are served first, importantly also the availability of excess stocks drives
    the flow of goods and influences parallel traders’ choices on which country they import medicines from. Thus, even if prices are lower in e.g., Slovenia than in Germany, a given importer will buy the product from Germany rather than Slovenia simply because in Germany an excess stock is available while in Slovenia it is

    not. Finally, it has to be noted that a high GDP-level does not necessarily pair with higher prices of medicines. For generics, it has been proved that Scandinavian countries have significantly lower prices than Greece and Poland, while for on-patent medicines, secret agreements complicate the picture and leave the actual price unknown.

    Parallel import is a multi-sourced tool and a key ally in shortage mitigation.

    This analysis portrays a reinvigorated picture of parallel trade as a multi-direction tool that could benefit every European country. Ahead of the pharmaceutical revision, which has as one of the objectives to deliver on availability of medicines, the flexibility of parallel import makes it the best candidate to handle availability problems in the short term. Data from IQVIA and Technopolis confirmed that the majority of shortages happen nationally or regionally and do not affect the whole EU. In light of this, parallel trade can be used to bring medicines in shortage in one country from another market in which there is a surplus, with full safety assurance for the patient and lowered prices compared to the originator’s product. 

     

    Future-proofing pharmaceutical legislation – the European Commission delivers its new Study on shortages.

    Shortages present an increasing problem for many EU/EEA countries as well as a growing concern of patients and healthcare providers. Ahead of the revision of the pharmaceutical legislation, for which a proposal is expected to land in December 2022, the European Commission requested to the Technopolis Group an analysis of medicines in shortage in the EU and their root causes. Following consultations with key stakeholders, Technopolis Group published the long-awaited Study on shortages in December 2021, outlining key findings and policy recommendations to address different aspects of the problem.

    What are the leading causes of shortages?

    While lamenting that a proper understanding of the root causes of shortages remains substantially challenged by data limitations, the Study concluded that around half of all cases are traced back to issues related to quality and manufacturing, which are, therefore, the main culprit in relation to shortages. Commercial reasons, including market withdrawals, and unexpected increases in demand, are other common causes. Furthermore, according to the Study, shortages can also be linked to supply quotas when wholesalers are not able to fulfil orders because their quotas have been reached. These shortages are thus not caused by an actual insufficient availability of the product but are created artificially by the manufacturers because supply is ‘throttled’.

    And which tools do we have to mitigate them?

    Assessing possible solutions to tackle shortages requires an in-depth understanding of how shortages are distributed across the EU. According to the Study, it is very rare for any medicine to be completely or even largely unavailable everywhere in the EU and 76% of all shortages involve multisource products for which alternatives exist. On this premise, the analysis concluded that one of the possible shortage mitigation tools might be represented by parallel import, through which countries could fill their supply gaps when there is excess product in other Member States. Evidence confirmed that parallel distribution can be used to alleviate shortages, and that some countries, such as Portugal and the Netherlands, have already been experiencing the benefits of parallel trade in tackling availability problems. Likewise, the Study urges to allow greater flexibilities for emergency imports of specific products in case of market withdrawals and other critical shortages, in the wake of what has been done already in some Member States, such as Malta or Latvia, which have established simplified regulatory procedures related to the import, based on the use of Article 126a of Directive 2001/83/EC.

    Based on what emerged from this analysis, the mitigation capacity of parallel import when it comes to shortages should therefore be considered when addressing availability problems in a country when excess stocks are available elsewhere. Hence, in the context of the new Pharmaceutical Strategy, policy makers and legislators should take this into consideration when thinking about solutions to future-proof the pharmaceutical legislation.

     

    How imported drugs contribute to an economical supply of medicines in Germany

    by Ulrich Mohr, Deputy-Director of Deutsche Sozialversicherung Brussels.

    In 2020, the Statutory Health Insurance (SHI) spent around EUR 43.3 billion on supplying its insured patients with medicines. Government regulation is necessary to keep them affordable. Imported medicines play an important role in the realm of regulatory instruments in Germany.
    In addition to the savings target through imported medicines, the regulatory instruments include discount contracts, the refund price procedure based on an early benefit assessment, and fixed prices. Concerning import medicines, the aim is to achieve savings of 2 percent in Germany, based on the import-relevant market of a health insurance fund. The imports must be at least 15 per cent cheaper than the original drug at a price of up to 100 euros, at least 15 euros cheaper between 100 and 300 euros, and at least 5 per cent cheaper above that. If the target is not met, compensatory financial sanctions take effect. The savings for the health insurance fund are thus guaranteed but are significantly lower than the savings achieved via the other regulatory instruments.

    The refund pricing procedure, fixed prices or discount contracts are more financially relevant. Germany is the only country in the European Union (EU) where health insurance funds conclude exclusive contracts with pharmaceutical manufacturers. These contracts – usually multi-partner agreements – contribute to supply security and secure price advantages for the health insurance fund. Importers of medicines are manufacturers who may allow conclusion of discount contracts in the non-generic market in certain cases. At EUR 5 billion per year, the savings from discount contracts are clearly noticeable for the SHI system.

    Imported medicines also play an important role within the framework of the fixed price regulation. With the introduction of fixed prices (“ceiling prices”) in 1989, it was possible to establish a permanent price restraint for pharmaceuticals in Germany. The savings are cumulative and amounted to about EUR 8 billion in 2020 alone. The fixed price is determined by the lower third of the prices of medicines, and also by the sufficient availability of inexpensive medicines in the respective market segment (fixed price group). Imports are included in the fixed pricing procedure and sharpen the instrument with their favourable prices.

    This shows that the importance of imported medicines for an economical supply of medicines in Germany goes far beyond their direct savings potential for the health insurance funds. Ensuring economical supply of medicines in the EU will be of central importance in the pending amendment to the European pharmaceutical legislation. Healthcare systems must not be overburdened. This is partly due to pharmaceutical imports which trigger or intensify price competition. 

    Editorial

    Dear Readers,

    patients access to affordable medicines and
    increasing healthcare budgets are running topics in the European Union. Experts from academia, business organisations and associations gave us their individual look on the pharmaceutical sector. It is common sense that competition is the road to affordability.

    Affordable Medicines Europe took a closer look on the role of parallel trade with pharmaceuticals. The 2020 update of the 2018 reporting once again shows that PI is not a one-way street from low-income to high-income countries. It’s more a multi-direction tool that could benefit every European country in terms of lower prices and as key ally in shortage mitigation.

    Which brings us to the Technopolis Group analysis of medicine shortages in the EU and their root causes. Requested by European Commission the findings and possible solutions will be part of the revision of the pharmaceutical legislation.

    VAD and Affordable Medicines Europe ensure the availability of affordable medicines for European patients and continue to contribute to ongoing debates in health policies. May you discover many informative insights as you read this 77th edition of our Pharmaceutical Dialogue.

     

    Sincerely,

     


    Prof. Edwin Kohl
    Chairman of VAD

    Jörg Geller
    President of AFFORDABLE MEDICINES EUROPE

    News in brief

    The European Commission releases the first results of its consultation on EU pharma legislation.

    The European Commission published the main statistics on the responses it got as part of its consultation on the revision of the EU pharmaceuticals legislation. The hearing, which concluded in December 2021, aimed to collect views of stakeholders in order to support the evaluation of the existing legislation on medicines for human use, and the impact assessment of its revision. Out of 478 responses received, a quarter came from industry (25%), while NGOs submitted nearly 20%. The single biggest country where feedback came from was Germany. Brussels was second place, followed by France, the Netherlands and Italy. 

     

    Affordable Medicines Europe to donate medicines to the Ukrainian Humanitarian Crisis.

    In order to support the Ukrainian people during this unprecedented crisis, Affordable Medicines Europe is focusing on what it does best. Based on a list of prioritised medicines prepared by the Ukrainian authorities, AME Members are supplying medicines, in the form of donations, to be delivered to Ukraine via a large logistics centre in Prague, Czechia. The medicines will, with the help of a Polish Humanitarian organisation and Polish trucks, be brought into Ukraine, where the medicines are most needed. Some first trucks of aid have already arrived in Ukraine from Romania, and more will follow in the coming days from there as well. 

     

    Past and Future of the EU Pharmaceutical Legislation: Technopolis held an evaluation workshop for stakeholders.

    The Technopolis Group has been asked by the European Commission to conduct a study to support the evaluation and impact assessment of the EU general pharmaceutical legislation. As part of this Study, Technopolis organised a stakeholders’ workshop which took place on 19 January 2022. During the workshop, the study team presented the main preliminary findings based on secondary data and responses received so far in the targeted surveys. The workshop breakout sessions aimed to address the main objectives of the legislation, namely safeguarding public health, regulatory attractiveness, advances in sciences and technology, access to medicines, and functioning of the EU market for medicines, and collect advice from stakeholders. The inputs received will inform future policy changes and will be used for finalising the draft evaluation report, which Technopolis is expected to release later this year. 

    Events

    GIRP Supply Chain ­Conference

    Organised by the European Healthcare ­Distribution Association (GIRP), the Supply Chain Conference 2022 will take place in ­Dublin on March 14-15 and will look at how the pandemic affects the approach to healthcare logistics and business strategy, as well as the challenges and opportunities for the supply chain within the green and digital transition. 
    https://scc.girp.eu/

     

    26th Congress of the European Association of Hospital pharmacists

    Vienna will host the 2022 EAHP Annual Congress, which will take place on March 23-25 and marked the 50th anniversary
    of the association. The 2022 edition will ­focused on exploring the changing roles of hospital pharmacists in a changing world and how to guarantee optimal patient care within the available resources. 
    https://www.eahp.eu/

     

    Pharmagora 2022

    March 13 will mark the end of the 2022 ­edition of Pharmagora, the largest pharmacy event in France bringing together pharmacists, healthcare professional, and industry. With more than 400 exhibitions and 130 conference sessions, the event will offer a unique opportunity for experts and opinion leaders to share their knowledge and present practical solutions for the pharmaceutical sector. 
    https://www.
    pharmagoraplus.com/

    Imprint

    VAD e.V.
    German Association of
    Pharmaceutical Parallel DistributorIm Holzhau 8 | 66663 Merzig
    GermanyChairman of the board:
    Prof. Edwin Kohl
    www.vad-news.de

    Affordable Medicines EuropeRue des Deux Eglises 26
    1000 Brussels
    Belgium
    President:
    Jörg Geller
    www.affordablemedicines.eu

    Pictures: kohlpharma GmbH, Affordable Medicines Europe, Ulrich Mohr, sanjagruji/istockphoto.com, Alexandros Michailidis/istockphoto.com