The European Union has released a new report as part of its study of the competitiveness of the pharmaceutical industry through the Pharmaceutical Forum. The report, Analysis of differences and commonalities in the pricing and reimbursement systems in Europe, is aimed at providing an updated picture of pharmaceutical policy practices in the 27 Member States of the EU in order to assess their impact on expenditure, reward for innovation and patient access.

The study was commissioned by the EU's Directorate General Enterprise and Industry and is based on a literature review and survey of countries participating in the Working Group on Pricing of the Pharmaceutical Forum. The Pharmaceutical Forum is a high-level ministerial initiative examining the perceived decline in Europe's leadership in pharmaceutical innovation and aimed at improving the performance of the pharmaceutical industry in terms of its competitiveness and contribution to social and public health objectives.

The report reaches six tentative conclusions:

  • Direct product price regulation is losing ground in Europe. This development is believed to be due to the decreased effectiveness of price controls within the new context of the single European market. It is difficult to implement direct product price controls fairly and efficiently and lowering the prices of innovative products beyond a certain level is claimed to remove the incentives for innovation. International price referencing to countries with similar characteristics may be reasonable for smaller countries with no capacity to impose their own criteria.
  • Cost-sharing has been maintained in most countries. Most drug programs provide for some measure of co-payments or deductibles by patients. Cost-sharing has the greatest impact on low-income patients who frequently need or use expensive services and therefore requires special safeguards for the most vulnerable.
  • "Reference Pricing", with comparison to the same active ingredient, is spreading across Europe. This practice is more commonly known as "Low Cost Alternative" or similar terms in Canada. Only a few countries use therapeutic reference pricing, a policy which generates considerable controversy in light of its possible impact on innovation and generic price competition.
  • Payback is one of the most recent additions to pharmaceutical policies. "Payback" is defined as a system of payments by manufacturers if sales exceed an agreed-upon target. (The report does not specifically address the similar practice of "rebates", i.e. payments that are not based on sales or expenditures targets.) Not much is known to date on how "payback" is applied or what impact it might have. Some countries reported estimated savings between 0.3% and 7% of the pharmaceutical budget. The impact of a "payback" policy on incentives for innovation differs, depending on the specific exemptions taken into account for innovative medicines. Payback (and the similar practice of rebates) facilitates the establishment of a "global" price as it allows low-price countries to accept higher public prices while controlling final expenditures.
  • Most countries provide incentives for more efficient prescribing. Although most provide advice or guidance to prescribers, few use financial incentives. In the absence of financial incentives, the effectiveness of these programs is not clear.
  • There is great variation in generics policies. Because generic policies are often linked to, or impacted by, other policies, it is difficult to separate their impact from other policies. It is assumed that generics policies have no impact on innovation.

The current policies in Europe are similar to those in Canada. In sum, the report provides a comprehensive survey of current practices in Europe and concludes that the impact of these policies on patient access and innovation is not always clear. For more information on the EU's Pharmaceutical Forum and a link to the report, please visit: http://ec.europa.eu/enterprise/phabiocom/comp_pf_en.htm