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European pricing policies could see EU fall behind US and Asia

Sir Andrew Witty says short-term decisions could cause long-term damage to European pharma

Andrew Witty - EFPIA GSK

The European pharma industry has warned EU leaders that short-term cost-cutting measures in medicine and unsuitable drug pricing methods could damage the region in the long-term.

The president of the European Federation of Pharmaceutical Industries and Associations (EFPIA) Sir Andrew Witty (pictured) said that unless EU member states change their policies regarding drug innovation, Europe would lose out to the US and Asia in terms of global pharma influence.

In a letter written ahead of the EU growth summit on June 28-29, Sir Andrew, who is also CEO of UK-based GlaxoSmithKline (GSK), said: “In these extraordinary times for Europe, its economies and its citizens, business as usual - cost-containment policies that create market distortions - will drive investment elsewhere and consign Europe to a gradual decline, to the second rank of the new global order. A more vigorous industrial and innovation policy is needed.”

This should include stronger support of innovation in medicine, said Sir Andrew, and he cited “significant concerns about the implications of pharmaceutical pricing and reimbursement policies that are being implemented across the EU”.

EFPIA has previously criticised Germany's AMNOG system of drug pricing, implemented in 2011, saying that its use of comparison drugs and reference pricing mechanism to determine whether a drug should be available in the country was denying patients access to new medicines.

EFPIA executive committee delegate, and CEO of the Association of the British Pharmaceutical Industry (ABPI), Stephen Whitehead has also voiced concerns about the introduction of value-based pricing in the UK and its detrimental effects on rewarding innovation.

Sir Andrew called such measures “short-sighted” and implied that government policies on access to medicines were contradicting other efforts.

He said: “It is ironic that many EU member states use various incentives to attract R&D and manufacturing investment, but then create hurdles and market distortions that prevent innovative medicines from reaching patients.”

To overcome this, Sir Andrew proposed three points of action for EU leaders to take.

The first is for the exclusion of countries undergoing fiscal restructuring programmes from the set of those used in drug referencing pricing systems. Although, no specific countries were named, Greece has previously been suggested as an inappropriate comparator.

Secondly, countries that are making efforts to achieve “sustainable public finances” can put in place temporary bans on the re-export of medicines to countries with higher drug-pricing to prevent supply shortages.

And the third suggested measure is for a greater focus on the repayment of debt that countries owe to pharma companies for medicines and vaccines. Some companies have already taken action of their own, with Roche limiting supplies in Spain, Portugal and Greece, while Biotest has threatened to exit the Greek market entirely.

These three measures would counter the cross-border impact of an individual country's decisions, according to Sir Andrew, who pointed to the agreed 10 per cent price cut in Greece that cost the industry €299m in the country, but subsequently saw pharma lose €799m across Europe due to pricing systems that reference Greece.

Despite his country being at the centre of much of EFPIA's concerns, Greece's new Prime Minister Antonis Samaras, who heads a three-part coalition committed to implement austerity measures, will not be in attendance at the EU summit as he is recovering from eye surgery.

An inspection from the EU, European Central Bank and IMF to review Greece's progress in meeting bailout conditions has been postponed due to Samaras' health, with a new date to be determined later this week.

25th June 2012

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