1.            Background

Debate between the Dutch government, on the one hand, and representatives and stakeholders of the pharmaceutical industry, on the other, indicates that there is a shift in the discussion on Dutch medicine pricing. The main areas of focus of these conversations are set out in this update.

2.            Legal framework

In general, the main prerequisite for medicines to become part of the national basic health insurance scheme is based on their proven positive effect. However, with regards to more expensive medication, the Dutch Minister of Health, Welfare and Sport (the “Minister”) provided for a more stringent policy in 2015 by introducing an additional approval process with the aim of negotiating a reduction in the price of costly medication on a case-by-case basis. A proposal to amend the Dutch legislation and provide for a general approach to negotiations on medication is pending.

The Minister also sets maximum prices for specific medicines, all listed in the Maximum Prices for Medicines Regulation (Regeling maximumprijzen geneesmiddelen). The prices set in Belgium, Germany, the UK and France are currently used as a benchmark. The Medicine Prices Act (Wet geneesmiddelenprijzen) does not allow pharmacies to purchase medicines exceeding these prices. Health insurers contribute to managing the pricing system usually by way of only compensating the cheapest alternative to the medicine involved, which is known as the ‘preference policy’ (preferentiebeleid).

The pharmaceutical industry is sceptical about the changes in pricing policy suggested by the Dutch government. Several studies have demonstrated that the average research and development costs of a single medicine range from hundreds of millions of euros to amounts exceeding EUR 1 billion. Also, most medicines will not end up on the market because they have little effect or there is insufficient proof of their effectiveness. Industry parties have voiced their opinion that the negotiations on pricing are unfair and one-sided, as developing new medicines involves huge risks for the pharmaceutical company.

3.            Main topics

Apart from the negotiations on the pricing and reimbursement of medicines, stakeholders across the industry and representatives of the Dutch government have suggested several other changes which could lead to a better pricing system. Said changes have become part of the larger pricing discussion.

3.1              Efficient use of medicines

The current system focuses primarily on large groups of patients. Various industry parties have suggested targeting the specific needs of an individual patient instead of an entire group of patients. This would lead to a system in which medicines are only provided to patients with a specific need for such medicine. A more expensive medicine is only prescribed if a cheaper available alternative is insufficient. Consequently, expensive medicines will only be prescribed when the doctor or pharmacist can explain that doing so fulfils specific needs, which cannot be fulfilled with a cheaper alternative. In line with this argument, industry parties plead for a central registration system that keeps track of patients and their use of medicines. With such a system, a better indication can be given regarding a patient’s need for a particular medicine. Issues of data privacy have been addressed in investigating the implementation of such a system in light of the European General Data Protection Regulation (the “GDPR”). To this end, the data should either be anonymized or fall within one of the grounds of article 6 of the GDPR (e.g., the patient giving his/her consent or a legal obligation for processing the data). This means that either a specific legal basis would have to be created or significant investments must be made to allow for fully anonymized processing of patient and treatment data.

3.2              Change in patent system

While the legal framework for obtaining and extending patents can only be changed top-down by the European Commission, some plead for a local change in the legislation of patent rights to provide for shorter exclusive rights periods. This could limit the risk of pharmaceutical companies with long-term monopoly abusing their right to extend their exclusive right to manufacture and market specific medicines. The Dutch government could, for example, set transparency rules with regard to the costs of research and development. To this end, pharmaceutical companies would then be under the obligation to publish the grounds for extending their patents. In view of Europe’s efforts to move to a more uniform patent law system, it is uncertain whether such national deviations will get widespread support in Dutch parliament.

3.3              Avoid time-consuming development process

One of the complaints of the pharmaceutical industry is that the length of the development process generates extraordinary costs. Eliminating steps in the process would lead to a faster and less expensive process that could drive down the price of the marketed medicine. One of the suggestions made is to extend Phase II in clinical studies, while eliminating or minimizing the length of Phase III to lead to a faster introduction of medicines.

3.4              Value-based pricing

Finally, some believe that altering the current system for payment could benefit the pricing and reimbursement of medicines. Instead of paying for the potential effect of a medicine, one would pay for medicines based on the actual effect, i.e., value-based pricing. Again, this would require an adequate registration system of patients and their use of medicines, in line with the existing data privacy laws.

4.            Going forward

Despite the absence of concrete measures at this stage, the current discussions have led to politicians advocating changes with regard to matters including transparency, a system for cooperative purchase of medicines between hospitals and health insurers and, finally, cooperation with other countries with regard to the pricing of medicines. These initiatives will be introduced in the coming weeks and should be regarded as a first step in the potential change of the Dutch legislative process. Several discussions will follow before the House of Representatives, and the Dutch Senate will eventually vote for any proposals of this type to come into effect.

This October, the Dutch coalition agreement has been announced including statements on the pricing and reimbursement of medicines and medical devices. The coalition parties intend to effect savings to the amount of EUR 467 million by decreasing expenses on medicines and medical devices. The pricing policy, as introduced by the Minister, will therefore remain in force. Additionally, coalition parties hope to save EUR 1.9 billion by entering into arrangements with respect to prearranged maximum expenses of hospitals.

The discussion on the pricing of medicines will continue on 22 November 2017 with a general meeting of the members of the House of Representatives in which the above topics will be discussed. In the meantime, if you have any questions, please feel free to reach out to us.