Pharmaceutical innovation or entrepreneurship must take priority over the wide distribution of cheaper drugs to ensure that all patients can benefit from an innovative healthcare system in the long run.
In April 2011, the pharmaceutical industry was due to face a drastic dip in its profits as drugs with sales of more than $50 billion would come off patent in 2012 meaning that they would be cheaper to purchase. A worse reality was that R&D spending in the pharmaceutical sector had gradually decreased in Europe since 1998. Figures demonstrated that in the years of 1993 – 97 Europe launched 81 new molecular entities (NMEs) while between 1998 – 2002 this figure was reduced to 44.
As a result of the economic crisis, organisations such as the European Confederation of Pharmaceutical Entrepreneurs (EUCOPE) feel that many member states have failed to implement the Transparency Directive which sought to increase the transparency and objectivity of the Member States pricing and reimbursement systems. Instead, member states have been imposing tougher pricing controls for innovative medicines leading some to believe pharmaceutical companies will terminate innovative research projects that they feel will not be paid for by an EU country.
A revision of this Directive is only expected in the fourth quarter of this year. Thus, in the long- term, only ‘blockbuster’ drugs affecting larger patient populations will be produced as they will generate a guaranteed profit. Meanwhile, there will be no entrepreneurial NME’s created for the smaller patient populations as pricing controls are still not regulated effectively at EU level.
The immediate need for the revision of the above EU Transparency in Pricing Directive was clearly highlighted in this month’s pricing controversy in Germany, a country that previously set an objective pricing standard for global pharmaceutical companies. New 2011 national legislation on tougher pricing measures has now resulted in pharmaceutical companies refusing or delaying the marketing of their drugs in Germany. Prices are determined by the vague, subjective criteria of therapeutic benefit rather than on the objective value that they deliver. Even more, Germany included Greece in their list of reference countries that will determine pricing controls.
If Germany does change its current pricing procedure, it could result in pharmaceutical companies focusing on the distribution of cheaper, generic medicines for patients as innovation will not be rewarded. In the future, fewer new drugs will be produced and generic drugs will not take account of the variety of patient diseases which continue to develop and the pharmaceutical industry will contribute even less towards the EU healthcare and industrial policy.
That is not to say that cheaper drugs have not benefited the poorer patient population in countries like India. This was best demonstrated in the protests against an India- EU trade deal in February 2012 which would stop the flow of cheap drugs to India. However, this highlights another significant problem; innovative drugs/ treatments are not equally shared between developed and developing countries meaning that these patients have to depend on cheaper drugs to save lives. Although the future of the EU looks brighter with a possible revision of the above directive, it is still not clear where patients in developing countries will ever be brought into the long-term investment discussion of medicines.
Cheaper medicines have always been desirable but all countries and patients need to understand that these medicines have been made possible with the past expansion of R&D in the pharmaceutical industry. As research development slows down, it is clear that many future patients will not have a multitude of medicines at their disposal. Those with rarer diseases will have even less if we continue to lose momentum in the pharmaceutical R&D sector. A revised Pricing Transparency directive promises to change this by achieving a balance between innovation and cost containment. However, whether these changes will be carried over to the developing world is another story that still needs to unfold.
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