Pharmaceuticals Special Report

Series Title
Series Details 25/10/01, Volume 7, Number 39
Publication Date 25/10/2001
Content Type

Date: 25/10/01

By Laurence Frost

Fabio Colasanti, Director-General of Enterprise answers questions by Laurence Frost

  • QUESTION: What are the main reasons behind the competitiveness gap between the EU and US?

ANSWER: This is a very complex area and there are a number of factors involved. A report commissioned by the enterprise directorate-general last year, Global Competitiveness in Pharmaceuticals: A European Perspective concluded that Europe is lagging behind in its ability to generate, organise and sustain innovation processes that are increasingly expensive and organisationally complex. It found that EU industry is more labour intensive; that there has been a much stronger demand for pharmaceuticals in the US than Europe; that EU industry has been less effective in encouraging the growth of new technology suppliers and innovation specialists; and that there is a lack of competition in some EU national markets.

The report also identified a number of important variables: the size and structure of biomedical education and research systems, labour markets for skilled researchers and managers, intellectual property rights and patent law, and the nature and intensity of competition in the market.

Patent law provides a good example of the differences between the EU and the US. There are long-established national systems of patent law. Nevertheless, a single European patent could help to keep, and develop, an innovative industry. I therefore hope that the Commission proposal for a European patent regulation will be adopted shortly.

Europe is still a major player in pharmaceuticals; it is still developing roughly the same number of new chemical entities as the US and the production value of the European-based pharmaceutical industry is still significantly higher.

  • QUESTION: What are the main ways in which this imbalance might be addressed at EU level?

ANSWER: This issue must be addressed at EU, member state and industry level. We are looking to the 'G10' Medicines Group, whose membership includes health ministers, industry, mutualities and patients, to produce concrete recommendations for action. However, it is already clear that a significant contribution can be made at EU level. Our Review 2001 of pharmaceutical legislation will reinforce harmonisation in the sector and introduce clearer policies by cutting red tape and simplifying procedures.

It is also clear that Europe has not adapted as well as the US to the biotechnology revolution. We must find a way of harnessing, in a more effective way, our existing science base to the needs of industry and public health.

The Commission's recent stakeholder conference on biotechnology, among other issues, looked at ways of overcoming the fragmented nature of the market to allow biotech companies to work more within an EU rather than just a local framework.

There is also the Sixth Framework Programme which is designed to improve the capacity of the science base to support innovation and research, to improve coordination between public and private research and support the creation of European-wide networks and programmes.

As part of the G10 process we plan to develop benchmarking and performance indicators that will help to disseminate best practice and provide measures for assessing the impact of EU and national measurers on competitiveness.

  • QUESTION: Given that most drug companies now operate globally, and many 'EU-based' firms make most of their profit in the US, how meaningful are such comparisons?

ANSWER: It is in the interests of Europe to maintain a vibrant and innovative pharmaceutical industry that is based in the EU. It is the fifth-largest industrial sector in the EU and makes a significant contribution to the EU trade balance (nearly €18 billion).

In addition, there are significant social benefits such as the retention and development of a highly skilled workforce and science base. To develop this, we must know how we are performing in comparison with equivalent markets.

  • QUESTION: Is the drug industry its own worst enemy in terms of public perception?

ANSWER: It is clear that the drug industry can sometimes have a poor public perception, particularly after a drug scare. However, I believe that it is widely recognised that the industry has played a key role in delivering the high, and increasing, standards of public health that we all take for granted today.

  • QUESTION: One of the differences between the US and the EU is that European healthcare providers pay less for their medicines. Is it possible to narrow the competitiveness gap without increasing average drug prices across the EU?

ANSWER: It is difficult to make meaningful comparisons because there are significant differences between EU member states in terms of pricing and reimbursement structures.

Although it is true that drug prices are generally higher in the US than in the EU, the American market is also fragmented with a wide variety of health providers negotiating drug prices with industry. Drug prices are also relatively high in Germany, but there is little evidence to suggest that this has given the German-based pharmaceutical industry a competitive advantage.

  • QUESTION: A study by consumer groups has linked an 84 per cent rise in US drugs spending to the growth of direct-to-consumer advertising. Could the Commission's recent proposal to allow drug firms to provide product information for the public have similar effects on national health budgets in the EU?

ANSWER: We do not think that specific information asked for by patients could have the same effects as direct-to-consumer advertising. The Commission's proposal is very clear on that. We do not want more advertising and we have established clear conditions and criteria for the information to be given.

  • QUESTION: Could it also put doctors under new commercial pressures to prescribe the brands patients want?

ANSWER: The Commission proposal undoubtedly will increase the awareness of patients but it will not have consequences on the prescription rights of doctors. The aim is to provide 'controlled' information, not advertising.

  • QUESTION: How much will accelerated EU drug-approval procedures - proposed in the same package - contribute to an improved regulatory environment for the industry?

ANSWER: In general, the proposal aims to increase the availability and speed of access of medicines to the market. Measures will be taken to facilitate pre-authorisation cooperation between regulatory scientific bodies and industry. We will also do away with the need for a 'renewal procedure' for each marketing authorisation, replacing it with reinforced 'pharma-covigilance' and information sharing.

  • QUESTION: The high-level 'G10' panel set up by Commissioner Erkki Liikanen has been described as a 'talking shop' by some industry figures. What are its goals?

ANSWER: The G10 group was set up by Commissioners Liikanen and Byrne to provide concrete proposals for improving European pharmaceutical competitiveness, while encouraging high levels of protection of public health. These are clearly set out in the group's terms of reference. It is for the group, on which industry is well represented, to deliver these proposals.

There has already been significant progress - the group has issued a consultation document which identifies seven priority areas and includes a number of possible ways forward. The closing date for the consultation is 23 November.

  • QUESTION: The G10 group has echoed earlier proposals from former commissioner Martin Bangemann, calling for increased use of generic drugs to free up national spending for new medicines. What are the obstacles to this approach?

ANSWER: Some member states have a highly developed generics market, others less so. The reasons vary but frequently depend on the pricing/reimbursement structures and incentives for prescribing and/or delivering generic medicines. In some countries it may also be a matter of educating doctors on the benefits of generic prescribing.

  • QUESTION: How might such a 'headroom for innovation' strategy be implemented at Community level? And how could the Commission ensure that the Government' savings were not simply spent on other budgetary categories?

ANSWER: There is more to developing innovation than just finding more money to spend on it. We need to create the right climate for innovation. This will involve finding the appropriate balance between such factors as pricing and reimbursement structure, generic supply, intellectual property, data exclusivity, developing the science base, etc. How member states choose to use any savings generated through generic supply is a matter for them. However, the creation of the G10 group, which contains health ministers from five member states, reflects the importance that they attach to innovation. No one is arguing that there should be less innovation.

  • QUESTION: How can the G10 develop this and other ideas beyond the stage they reached under the stalled Bangemann initiative?

ANSWER: The G10 group is a joint Enterprise/Sanco (health and consumer protection) initiative with a small and balanced composition which is a significant departure from the Bangemann proposal. It is only by ensuring that measures to improve competitiveness are fully compatible with public health objectives that we are likely to get support from all the key stakeholders.

Another important aspect of the G10 process is the focus on concrete and practical measures. Clearly we are not going to solve, in a matter of months, a problem that has eluded experts for years. What we can aim to do is to look at developing a programme of action that can set out measures and objectives for the short, medium and long term.

  • The consultation paper, together with Terms of Reference and other documents, can be found on the G10 Medicines website at:
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