Is the EU moving towards determining healthcare expenditure?

Something curious is happening with EU health and pharma policies, at a time of the advent of a new European Commission. If one looks at the mission letters of the relevant Commissioners, Vytenis Andriukaitis (Health) and Elżbieta Bieńkowska (Internal Market & Enterprise), the EU health policy agenda is not particularly ambitious. Also, the Commission staff working paper on the pharmaceutical industry adopted in August this year specifically mentions that no legislative instruments will be introduced. But a number of discussions are taking place which may have a profound effect on both national healthcare systems and the pharmaceutical industry’s business model. The key drivers of these discussions are two intertwined subjects: the economic crisis and the price of medicines.

The current Eurosceptic political climate implies less Europe and handing powers back to Member States. Yet while this discussion is very visible, at least in the outcome of the European elections, on a day-to-day technical level we can see a drive for further European integration in a number of areas – including healthcare.

Traditionally, the powers of Brussels regarding healthcare have been rather limited, focussing on issues like prevention. The EU’s remit over the pharma sector, on the other hand, has been more substantial, as the Commission is responsible for marketing authorisations of new products, regulating clinical trials, etc. What was, however, very clear (at least until recently) was that Brussels had nothing to say about matters involving finances and issues like prices of medicines, which were clearly within the remit of Member States. This is changing somewhat, though to what extent remains to be seen.

Firstly, the European Semester – a policy instrument which has in fact existed for a long time – has increasingly been used by the Commission to give Member States precise recommendations for their national budgets. A significant portion of a country’s budget is spent on healthcare. The European Semester recommendations increasingly focus on advising national capitals on how to manage their health budgets, including providing recommendations to cut down expenditure on medicines, how to improve the mix between generics and innovative medicines, how to organise the healthcare system and what tools to use so as to limit expenditure.

Secondly, Member States, under the chairmanship of the Commission, now discuss how they can better control the prices of medicines or at least create more transparency to be in a better negotiating position with pharma companies. As highly priced medicines put pressure on politicians to act, governments have already set the framework for joint procurement of vaccines and other medical countermeasures. The issue of price is also something the European Parliament has picked up as a cause celebre.

There are a number of potential consequences of these trends for EU health and pharma policy.

The new Enterprise & Internal Market Commissioner Bieńkowska will almost certainly initiate another high-level forum for the pharma sector (as most of her predecessors have done) The workshop organised by the European Commission in Rome on 22 October on the role and the competitiveness of the pharmaceutical industry and its importance to public health and the economy in Europe was no doubt one of the first steps. However, what may be new, and perhaps concerning to some, is that one workstream will be on procurement mechanisms of medicines.

In addition, the Commission and Member States will continue to exchange information on medicine prices through different platforms, which could ultimately lead to increased price transparency between Member States or joint procurement of at least certain vital and/or expensive medicines.

The European Semester recommendations are becoming more precise, and focussed on national healthcare recommendations and policy formulations (see, for example, the new Belgian government’s proposed measure for new mothers to stay one day less in hospital after childbirth so as to cut costs – a recommendation from one of the earlier European Semester exercises).

If the issue of the prices of medicines is too explosive – or simply seen as outside the competences of the EU – the Commission could decide to tackle the issue from another angle by a review of the incentives for the pharmaceutical industry. These range from the Orphan Drug Regulation and the incentives for paediatric research to the data protection period (the famous 8+2+1 years formula). All these could be reviewed – and possibly lowered – if the Commission, the Parliament and (certain) Member States believe that they are ‘too successful’ and that this will not do any harm given the (healthy) state of the industry and its investment in innovation (e.g. the industry’s combined pipeline for new oncology medicines alone hovers around 5,000 novel components).

The challenges on the industry are clear and the answer in itself is very simple – but content-wise devilishly difficult: industry needs to find a way to articulate in a comprehensible and trustworthy way the value of its products and to provide a more meaningful price explanation (for example, in simple terms: why 100 Euro and not 80 Euro and how do you arrive at 100 Euro?).

Thomas Bols is a Managing Director at FTI Consulting Brussels

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