by Peter O'Donnell
BRUSSELS, 23 Nov (APM) - European spending on pharmaceuticals is criticised for its laxity in a report published on Thursday by the European Commission and the OECD, which counsels countries in the region to adopt stricter controls so as to cut waste and get better value.
Health at a Glance: Europe 2018 claims that "up to one-fifth of health spending is wasteful and could be reallocated to better use”.
Better controls are "critical to achieving efficient and sustainable health systems," it says, urging a mix of policy levers that includes health technology assessment, wider use of generics and biosimilars, rational prescribing and improving patient adherence.
The report is part of an EU initiative to monitor the state of health in 36 European countries, and its recommendations range beyond medicines to issues of mental health, risk factors, and access to and quality of care.
High priority for action
Pharmaceuticals receive particular attention in the report because, it says, after inpatient and outpatient care, they represent the third largest component of health spending, averaging 17% of total health expenditure in EU countries, and as much as a third in poorer countries.It strongly endorses the use of HTA "to inform the selection of covered medicines", so as to avoid displacing high-value products with ones of lesser value to the health system, and also to review the value for money offered by existing therapies and adjust their prices accordingly.
However, in a passing reference to the current HTA debate in the EU, it avoids controversy, noting drily that "member states are currently debating the substance of the proposed regulation, particularly whether (and the extent to which) the cooperation on clinical assessment should be mandatory".
Similarly, in a section on "increasing bargaining power", the report steps carefully past the challenges of setting up the intra- and international cooperation among buyers that it suggests as a way to improve their information and resources.
After a brief outline of the Beneluxa model, it merely remarks that cooperation "has been announced, but not yet implemented" by Bulgaria and Romania, by Poland, Hungary, the Slovak Republic and Lithuania in the Visegrad Group, and by the 10 southern European signatories to the Valletta Declaration.
Generics
The report devotes most of its attention to generics: "The development of competitive generics markets is an important mechanism for reducing expenditure without compromising benefits to patients."To encourage more energetic engagement in promoting generics, it contrasts the high level of generic usage in Germany and the United Kingdom ("more than 75% of the volume of medicines covered by basic health coverage") with the low penetration in Switzerland and Italy ("less than 30%"), and especially in Luxembourg ("less than 15%").
It also cites findings that prices of generics in Switzerland are more than six times higher than in the United Kingdom.
It lays the responsibility for promoting generics firmly at the door of the health authorities in each country: despite all other factors, "generic uptake depends very much on policies implemented at national level".
The report also sees valuable potential for economies in biologics, which it describes as "one of the most rapidly growing segments of the pharmaceutical market, predicted to increase from 25% of global sales (by value) in 2017 to 31% in 2024".
"Opportunities for further savings are substantial" with biosimilars, although overall market penetration currently remains low. It does recognise, however, the challenges of expanding biosimilar uptake, owing to their inherent complexity.
Pricing
Reference prices "can substantially reduce government or other third-party payer outlays", the report declares - although it accepts that "they can also discourage competition and lead to higher prices for off-patent medicines than might be expected".It also recognises that direct regulation of generics prices by imposing fixed discounts relative to originator products (or using reference prices) is less effective in reducing prices than where prices are established through competitive mechanisms such as tendering or negotiation.
The report cautions against accepting industry practices that it sees as contrary to the public interest.
"Rather than offer discounts to government or other third-party payers, to gain market share manufacturers may set their list prices at the reference price level, but offer discounts or other inducements to wholesalers and/or pharmacies," it says.
"Where third-party payers then reimburse the full reference price, significant profits accrue to wholesalers and pharmacies without any benefits flowing to consumers or third-party payers".
It notes that some countries have countered this by imposing ceilings on wholesaler and pharmacy margins or introducing profit-sharing arrangements.
The report does also acknowledge that not all spending is wasteful: "A high level of spending does not in itself indicate waste," it says.
But in encouraging rational use, it notes that efforts to minimise waste in expenditure on medicines can be significantly undermined by overprescribing and inappropriate use.
Particular caution should be exercised by authorities, it says, with respect to medicines that are frequently subject to overprescription and have particular implications for public health: antibiotics and hypnotics/anxiolytics - mainly benzodiazepines.
pod/clg
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