Progress on drug price unity

Date: 05/06/1997

By Tim Jones

PHARMACEUTICAL firms and member states are edging closer to a deal with the European Commission to iron out wild divergences in medicine prices across the EU.

The single European drugs price originally favoured by Industry Commissioner Martin Bangemann has proved unacceptable both to governments and the big pharmaceutical companies.

But all the parties represented in working groups established by Bangemann after a round-table meeting in Frankfurt last year have indicated that they are prepared to accept a minimal level of policy cooperation to plug the widest price gaps.

At the next round-table meeting in Brussels on 23 June, firms and governments will offer guidance to the Commission so that it can draw up a communication aimed at dealing with the problem.

Drugs prices vary hugely in the EU, with the price of best-selling treatments differing by as much as 200&percent; between southern countries where prices are capped and northern member states. This has led to the serious problem of 'parallel imports' - worth as much as 600 million ecu last year - which infuriates the big companies and undermines their profits. As long as they are registered in both member states, drugs can be bought in one country by a wholesaler and sold to pharmacists or hospitals in another.

German manufacturer Bayer has been fined for refusing to supply its Adalat heart drug to French and Spanish wholesalers who wanted to re-export it to the UK, where the price of the treatment was higher.

At the Frankfurt round table, Bangemann made it clear that he wanted to see the abolition of strict price controls because they led to “market distortions” and undermined the creation of a true single market for medicines in Europe.

Apart from removing price controls, he said the market should also become more transparent so that end-consumers as well as health-care practitioners were aware of full product ranges and their real prices.

In February, the Commission agreed to set up two joint working groups - one to focus on 'free-market' approaches to the problem and the other to establish objective means of pricing drugs with reference to the amount of innovation involved in their development or their effectiveness.

Radical thinkers within industry thought a single price for a single product negotiated with either the Commission or the two-year-old European Agency for the Evaluation of Medicinal Products (EMEA) would be the most efficient solution.

“This is in no way acceptable to the industry and absolutely not to member states who are dead keen on keeping control of prices which have a major impact on their health-care budgets,” said a diplomat.

Some in the industry also point out that prices have already started to converge across the EU and argue that, in time, the problem will solve itself.

“That is all very well, but what we do not want is a convergence of prices to the lowest level which could lead to the end of innovation, since it will hardly be worth sinking large amounts of cash into developing treatments,” said one industry official.

It is still possible that a scheme to establish a harmonised mechanism for setting prices, while leaving the reimbursement made to purchasers in the hands of governments, could be agreed - but even this may be too radical.