Adjust prices to save drugs, generics industry tells EU – EURACTIV.com

The generics industry is urging EU and national governments to show “leadership” and take immediate action against rising inflation, which has resulted in drug shortages and has put patients in need to the test.

“We have warned the EU in July and in September that supply chains are under a lot of stress and that the risk of medicines shortages is very high,” told EURACTIV Adrian van den Hoven from Medicines for Europe, the EU generics association.

“There is a lot that we can do with the EU to get through this difficult period, but it will require some leadership,” he added.

Rising costs in energy and raw materials combined with a complex pricing regime have created an explosive mixture for the generics industry and patients.

This resulted in several cheap generic drugs being no longer economically viable to produce and, therefore, becoming unavailable in the market.

Manufacturers say they need some “breathing space” as they have gone through more than 10 years of cost-cutting policies in Europe.

“For example, in Germany, our prices were reduced by 66% since 2009, meaning an average generic medicine costs just a few euro cents per day. To adapt, manufacturers have consolidated supply chains, and there is very limited excess capacity,” van den Hoven said.

Capped prices

The industry says it’s hard to adjust prices to reflect higher costs considering that all EU countries apply capped pricing.

“This means that prices are set according to the lowest or an average of the lowest prices in the market, and then these prices cannot be increased again. So over time with inflation, these prices are permanently in decline,” van den Hoven noted.

The industry has requested a price adjustment for inflation in every EU country, but very few have so far taken any action, such as Portugal.

“In contrast, France and the UK are reducing our prices further through clawback taxes where the whole pharma industry pays for over-spending caused by a few expensive medicines,” van den Hoven said.

Drugs pricing is a national competence and the EU has in theory little room for intervention. But for the generics industry, markets could still be more sustainable “without touching national powers”.

Van den Hoven cited a Commission study on medicine tendering showing that only 24% of tenders include security of supply as a criterion and this is mainly for vaccine tenders.

“For generic medicine, tenders are only based on the lowest price. The study calls for multi-winner tenders and supply resilience criteria in tenders and the member states indicate in the study that they would need more legal guidance to do this”, he said.

The Australian example

In addition, the expert noted that a meeting between the industry and the EU Transparency Committee, which oversees pricing and reimbursement procedures, could be helpful in finding out how all countries can commit to the security of supply for medicines.

“If one country pays for more security of supply, but its neighbour reduces prices further, there will be no improvement in security of supply for Europe because the policies will cancel each other out.”

The expert cited as an example Canada, who applies a “ladder policy” where prices go down when there are many generic manufacturers on the market (like in Europe), and prices increase when there are few producers on the market (unlike in Europe).

“Australia finances rolling reserves of medicines held by manufacturers to increase supply to the market. HERA is exploring this, but it would make more sense to integrate this into national pricing and reimbursement policies,” he said.

The industry’s proposals may seem rational to ensure medicines supply, but the equation is tough considering that member states need to poor additional money despite the benefits for patients.

Healthcare payers agree that some drugs’ prices may increase but insist that no blank check should be granted.

“Increasing the prices of some generics may indeed be necessary to rebalance and boost competition. That is not to say that lower prices are the sole root cause of shortages. The problem is not new, and it is multifactorial,” told EURACTIV Yannis Natsis, director of the European Social Insurance Platform (ESIP), the umbrella organisation bringing together statutory healthcare payers.

“We need to look at prescription practices too. Overall, we must realise that resources are not infinite and signing off blank checks will not resolve the problem,” he commented.

Flexibility in packaging  

In addition to declining prices, generics are also facing practical difficulties, such as shipping costs, disrupted components’ deliveries, and prolonged delays for paper and cardboard, plastics and glass often needed for packaging, mainly due to the war in Ukraine.

In order to send a pack of drugs from one country to another because of a shortage, the industry often needs to re-package and re-adapt the patient information leaflet.

To avoid this extra logistical burden, the industry calls for regulatory flexibility, as was the case during the first wave of the COVID-19 pandemic.

“We want to avoid repacking the medicines in these situations to avoid wasting precious paper. We also want to replace paper leaflets with digital information because this would simplify access to information in different languages and make it much easier for our supply chains to tackle shortages,” van den Hoven said.

EU pharmaceutical legislation

A key document expected to deal with the matter is the much-awaited EU pharmaceutical legislation revision.

An EU source told EURACTIV that generic medicine issues might be covered by the upcoming revision of the pharmaceutical legislation without elaborating further.

EURACTIV was informed that the proposal is expected to be adopted on 14 March, with the caveat that this planning is tentative.

A leaked version of the proposal seen by EURACTIV does not mention anything on generics’ pricing, given its national competence nature; however, it does simplify authorisation procedures for generics and biosimilars.

Yet, an EU list of critical medicines – which may include generics – that require coordinated EU-wide action by EMA is suggested.