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MEMO/12/148

Brussels, 1 March 2012

Faster access of patients to new medicines – Revised Transparency Directive

Today the Commission adopted the Directive relating to the transparency of measures regulating the prices of medicinal products for human use and their inclusion in the scope of public health insurance systems. The new Directive shall repeal and replace Directive 89/105/EEC ("so-called Transparency Directive"). Reflecting a reality dating back twenty years ago, the Directive needed to be updated so as to take into consideration the evolution of pricing and reimbursement policies in the Member States.

Member States are responsible for healthcare systems

Member States are responsible for the organisation of their healthcare system and for the delivery of health services and medical care. Each Member State can take measures to manage the consumption of medicines, regulate their prices or establish the conditions of their public funding. In the EU, medicinal products can be placed on the market only if they have received a marketing authorisation from the European Commission or from the competent national authorities. Marketing authorisations are granted in accordance with harmonised rules intended to ensure the quality, safety and efficacy of medicines. 1 Once the marketing authorisation is granted, it is up to the Member States to decide whether the medicine is eligible to reimbursement. National authorities use sophisticated methodologies, such as health technology assessments*, to evaluate the added-value or the effectiveness of innovative medicines in view of determining their price and reimbursement conditions.2

Barriers to trade

The described national measures are susceptible to create barriers to trade as they affect the capacity of pharmaceutical companies to sell their products in domestic markets. According to the Treaty, Member States are responsible for the organisation of their own health systems and for the allocation of resources devoted to healthcare (Article 168 TFEU). However, Basic procedural obligations must be met to ensure that the pricing and reimbursement measures are compatible with Single Market rules: in particular, pricing and reimbursement measures must be free of discrimination against imported medicinal products.

The directive does not affect the definition of national pricing and reimbursement policies, nor does it dictate the decisions that Member States should take in this field.

What is the aim of the existing so-called "Transparency Directive"?

The "Transparency Directive" lays down a general procedural framework to ensure the transparency of measures regulating the pricing and reimbursement of medicinal products.

To prevent that national measures do not create barriers within the internal market, the directive lays down a series of procedural requirements applicable to any national measure regulating the prices of medicines and their inclusion in the scope of health insurance systems.

Main obligations of the existing Directive 89/105/EEC (see also figure below):

  • Strict time limits - Rule = 90 days from receipt of application for decisions on prices and 90 days for decisions on reimbursement schemes (or 180 days for both pricing and reimbursement decisions altogether)

  • Reasons for such decisions based on transparent criteria

  • Objective and verifiable criteria must be defined and published;

  • Individual decisions must be motivated in light of these criteria (statement of reasons to applicant)

  • Legal remedies - applicants must be informed of the legal remedies available and timeframe to appeal (independent judicial body)

Reasons for review

Member States have been confronted to a steady rise in pharmaceutical expenditure over the last decades, leading to the adoption of increasingly innovative and complex policies to manage the consumption of medicines in the framework of their public health insurance systems. In particular, Member States’ authorities have implemented a broad range of measures to control the prescription of medicines, to regulate their prices or to establish the conditions of their public funding.

Thus the conditions of Directive 89/105/EEC have fundamentally changed since 1989, for instance with the emergence of generic medicines providing cheaper versions of existing products or the development of increasingly innovative (yet often expensive) research-based medicinal products.

This situation not only results in legal uncertainties but also in a reduced transparency of national pricing and reimbursement measures, which negatively affects the smooth functioning of the internal market to the detriment of European patients and pharmaceutical companies.

Secondly, the time limits for pricing and reimbursement decisions are regularly exceeded by Member States. This leads to delays in the marketing of medicinal products, which in turn slows down the availability of valuable treatments for patients.

One OECD study shows that the number of days from pricing and reimbursement application to decision, during 1997-2001 can reach even 700 days.3 The same study shows that for the same period, six Member States have delays that exceed the 180 day period stipulated by the Transparency Directive.

With regard to generics, the European Generic Medicines Association (EGA) observed that generic companies wait on average 153 days after marketing authorisation to receive pricing and reimbursement status.4 In the case of generics as well, there are delays that can exceed 250 days in some Member States.

Average number of days for pricing and reimbursement decisions – 2004 compared to 1997-2001

Time delays by country for pricing and reimbursement approval

Source: EGA

Time delay (in days) for P&R approval for a generic medicine after granting of market authorisation (2005)

Source: EGA

Proposed changes

Shorter time limits for originator medicinal products

The proposal provides for shorter time limits for the adoption of pricing and reimbursement decisions for medicinal products in general: 120 days instead of 180 days, except for more complex procedures which remain subject to the 180 days rule.

The time-limits laid down in the current directive have been set to reflect a balance between three equally important factors:

  • the need for Member States to assess the (added) value of medicines that may eventually be financed from public funds;

  • the objective of market access for pharmaceutical companies in order to recoup their costs: R&D costs are particularly high for the research-based pharmaceutical industry and any delay in launching a product reduces the period of protection during which investments can be recouped and profits can be earned;

  • the necessity for patients to have access to the medicinal products authorised by the competent EU or national authorities as quickly as possible.

The reduction of time limits for originators is meant to ensure:

  • Earlier patient access to medicines and associated welfare gains.

  • Earlier return on investment for pharmaceutical companies, with potentially positive effects on research and innovation.

    Delayed pricing and reimbursement decisions postpone market access or, at least, defer the availability of medicines under the national health system. Such delays affect patients and research-based companies (see figure below).

Impact of pricing and reimbursement delays – Originator products

Shorter time limits for generic medicines

The proposal provides for shorter time-limits for generic medicinal products: 30 days instead of 180 days.

For new medicines, national authorities use sophisticated methodologies, such as health technology assessments, to evaluate the added-value or the effectiveness of innovative medicines in view of determining their price and reimbursement conditions. However, pricing and reimbursement procedures for generic medicines should logically not require any new or detailed assessment since the characteristics of the product are already well known. Therefore, a dramatic reduction of the time-limits is justified and necessary.

The conclusions of the Pharmaceutical Sector Inquiry pointed to delays regarding the entry of generic medicines into EU markets after the loss of exclusivity of the originator products. The Pharmaceutical Sector Inquiry demonstrated, based on a sample of medicines analysed during the period 2000-2007, that it took more than seven months (on a weighed average basis) for generic entry to occur once originator medicines lost exclusivity.5 It concluded that “savings due to generic entry could have been 20% higher than they actually were, if entry had taken place immediately following loss of exclusivity. According to the in-depth analysis of this sample, the aggregate expenditure amounting to about € 50 billion for the period after loss of exclusivity would have been about € 15 billion higher without generic entry (evaluated at constant volumes). However, additional savings of some € 3 billion could have been attained, had entry taken place immediately.”6

Delays in time to market generic medicinal products affect patients and generic companies, but also national healthcare systems (see figure below).

Impact of pricing and reimbursement delays – Generic products

The reduction of the time-limit for generics is meant to:

  • Ensure earlier market access for generic products, earlier price competition in off-patent market.

  • Achieve significant savings for public health budgets

Other changes:

  • Measures meant to increase the effectiveness of the directive by proposing strong enforcement measures, i.e. in case of non-compliance with the time limits, a Member State has to designate a body entrusted with the powers to take rapid measures such as:

  • adopting interim measures with the aim of correcting the alleged infringement or preventing further damage to the interests concerned;

  • awarding damages to the applicant;

  • imposing a penalty payment, calculated by day of delay.

  • Obligation for MS to regularly report on the actual timing for pricing and reimbursement decisions.

  • Obligation for MS to notify national pricing and reimbursement measures at a draft stage in order to allow the Commission to check compliance with transparency requirements and to prevent problems.

  • Measures meant to ensure legal clarity and consistency with the Court of Justice case-law and clarifying the scope of transparency obligations.

  • Measures meant to address the uncertainties relating to innovative pricing and reimbursement procedures: e.g. exclusion of tendering (covered by public procurement law) and of managed entry agreements (covered by contractual/administrative law) from the scope of application of the Directive.

  • Prohibition of "patent linkage" - The Directive stipulates that the protection of intellectual property rights shall not be a valid ground to refuse, suspend or revoke decisions relating to the price of a medicinal product or its inclusion within the public health insurance system.

Which are the characteristics of the pharmaceutical sector in the EU?

The pharmaceutical sector plays a strategic role in Europe by contributing to public health, scientific innovation and economic wealth. Medicines improve the level of welfare of European citizens. They are also vital to our economy as the pharmaceutical sector relies upon a highly skilled, research-driven industry which generates employment and fuels economic growth. There are approximately 4,000 pharmaceutical companies in the EU, representing 630,000 employees and generating a global turnover close to € 200bn. Roughly three fourth of these companies develop originator medicinal products, while the remaining fourth manufactures generic medicinal products.

The structure of the pharmaceutical sector is specific and unique. It is characterised by a wide variety of market players and a high degree of regulation across the supply chain. Public intervention in the pharmaceutical market is crucial to achieve multiple objectives, which range from ensuring a high level of public health to supporting innovation and keeping public expenditure under control.

In all EU countries, healthcare expenditure is to a large extent subsidised by public budgets and governments seek to ensure the sustainable provision of medicines to their citizens in the framework of public health insurance systems. This is another major characteristic of the EU pharmaceutical market: a large share of pharmaceutical expenditure is publicly financed, with 50 to 80% of the pharmaceutical bill paid from public budgets in the Member States. The share of pharmaceutical expenditure which is not financed by the State is either supported by patients or covered by private health insurance schemes.

Public share of pharmaceutical expenditure in OECD countries

Note: data for Belgium and Greece not available

Source: OECD Health Data 2007 in Pharmaceutical Pricing Policies in a Global Market (OECD Health Policy Studies, 2008).

Since the 1980s, EU countries have been confronted to a constant increase in health and pharmaceutical expenditure. Nevertheless, public spending on medicines has been increasing more than total health expenditure and at a quicker rate than economic growth measured in terms of GDP.

1 :

Directive 2001/83/EC as amended, OJ L311, 28/11/2004, p. 67, and Regulation (EC) N°726/2004, OJ L 136, 30.4.2004, p. 1.

2 :

  • “health technology assessment” means an assessment of the relative efficacy or of the short- and long-term effectiveness of the medicinal product compared to other health technologies in use for treating the associated condition.

3 :

    OECD (2008) Health Policy Studies Pharmaceutical Pricing Policies in a Global Market, pg. 133

4 :

European Generic Medicines Association (2009) How to increase patient access to generic medicines in the European Union.

http://www.egagenerics.com/doc/ega_increase-patient-access_update_072009.pdf

5 :

Commission Communication on the Pharmaceutical Sector Inquiry, Section 2.1.2; Staff Working Document, §191 et seq.

6 :

Commission Communication on the Pharmaceutical Sector Inquiry, Section 2.1.2; Staff Working Document, §217.


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