Has EU finally found the right prescription for drugs industry?

Date: 19/07/01

The European Commission is proposing a major shake-up in the way the drug industry is regulated. But will it make any difference to patients? Laurence Frost reports

THEIR investment in research and development has doubled to €17 billion over ten years, while their contribution to the EU trade balance has doubled in just five. But Europe's drugs firms warn they are witnessing "clear signs of decline".

Their worries are not falling on deaf ears. The 'G10' group of CEOs, ministers and EU Commissioners established earlier this year by industry chief Erkki Liikanen is one sign that he shares some of the concerns.

Another is the package of proposals adopted yesterday (18 July) for a comprehensive review of the authorisation regime for medicines, and a new role for drugs firms in providing information on their products directly to the public.

The European Federation of Pharmaceutical Industries and Associations (EFPIA) highlights several factors to justify the decline claim, made last month by its president, Sanofi CEO Jean-François Dehecq.

Firms are worried by the erosion of their competitiveness in relation to the US, where they say looser regulatory controls are already creating a better long-term investment and R & D climate for their rivals.

The figures bear this out. Average annual growth in pharmaceutical sales has been below 10% in Europe over the past 10 years, compared to 15% in the US.

As the global pharmaceuticals market has tripled over the same period, Europe's share of that estimated €392 billion has slipped from 32% to 22%; America's has increased from 31% to 43%. And Europe's doubled R & D spending looks altogether less impressive compared to the US - where it has multiplied by five. "We are the most regulated industry in the world," says EFPIA spokesman Chrisophe de Callataÿ. "The profits are being made in the US. The investments are being made in the US. We have 370 million people consuming drugs in Europe, but the drugs they buy are increasingly made or developed in the US."

The European Commission proposals will streamline the authorisation process for certain medicines. Firms will no longer be able to choose whether to seek approval from a national agency or under centralised EU rules; in future all pharmaceuticals will have to be cleared by the London-based European Agency for the Evaluation of Medicinal Products (EMEA).

A fast-track procedure will be introduced for new drugs likely to be of high benefit to patients - such as cancer or AIDS treatments - similar to the 'accelerated review procedure' operated by the US Food and Drug Administration (FDA). "The scientific assessment is the same, but the drug is given a higher priority so that marketing authorisation can be granted in under a year," explains a Commission official involved in drafting the proposal.

Treatments for very severe conditions, where few or no other drugs are available, could now be given 'conditional approval' on a case-by-case basis even before formal trials are complete. And provisions for 'compassionate use' go even further, allowing companies to take responsibility for offering untested but potentially life-saving treatments to consenting patients.

But the proposals have drawn only a lukewarm reaction from industry. EFPIA's director general, Brian Ager, says it is "difficult to say" what impact they might have on the fortunes of the sector. "Everything in there aims to improve the speed of access to market, which will be helpful to some degree," he says.

The review does not attempt to tackle the more fundamental problem facing the European industry: the fragmentation of pricing and drug reimbursement regimes in the EU's 15 autonomous health systems. Improvements to the science-based authorisation process will have no impact on the negotiations with health providers that must follow - often lasting up to two years - before a drug can be prescribed to patients.

Once they do reach the market, radical price differentials between countries give rise to parallel trade, in which other players buy medicines in countries where a low price has been negotiated, such as Spain, and sell them on to higher-spending countries, typically the UK, Germany or the Netherlands. "This is killing our research," de Callataÿ protests.

It is a problem with two obvious solutions: either an exception has to be made to the free movement for goods and services - a Treaty guarantee - or else the influence of national authorities in setting prices must somehow be reined in. Neither of these is easy to envisage, which could explain why, according Ager, the G10 meetings have produced nothing concrete so far.

If there is to be a solution, then, it will be less clear-cut. At the same time, there are signs that pharmaceuticals firms could be more excited about this week's proposals than they are daring to let on.

Buried within the 130-page draft is a move to weaken the long-standing ban on direct-to-consumer (DCT) advertising of prescription medicines, with talk of a new role for drugs firms in providing vetted public information on their products. "If you're trying to lower your cholesterol but your numbers still come up high ... ask your doctor for the lowdown on Lipitor!"

This is a recent example of the kind of product information that pharmaceuticals firms give to US consumers - and which European consumers' organisations warn could be coming soon to a European magazine near you.

Under the proposal, member states can allow drug information to be provided directly to the public by manufacturers, with the consent of patients' groups. At first this will only apply to three kinds of condition: AIDS, diabetes and respiratory illness.

European consumers' federation BEUC believes this is a step in the direction of advertising. "Patients do need more information about drugs, but not from industry," says spokeswoman Catherine Hayat. "They need comparable information about different drugs and their side effects - the negative things as well as the positive. I don't see [drug firms] saying, 'If you're prone to these side effects you should try another product from another company'."

A study by BEUC's largest member, the UK Consumers' Association, suggests that advertising can have drastic effects on health budgets. "In the US drugs spending has gone up 84% over a five-year period," says report author Clara McKay. "That's directly attributable to direct-to-consumer advertising of prescription drugs."

According to McKay, advertising increases spending on new, branded drugs, even when there are cheaper alternatives that are as effective or better.

Some fear such a bottom-up development could force an overhaul of health services in some European countries. "The UK's already struggling to manage the current drugs bill," McKay says. "If it went up by even just 50% that would lead to the whole issue of the way medicines are paid for."

Both the Commission and industry insist the proposed service will have nothing to do with advertising. "That's not what we want and that's not what's being proposed," says EFPIA's Brian Ager. "But if you or I went down with diabetes tomorrow we'd want to go onto the Internet and get all the information available."

Ager denies that raising awareness of new drugs will automatically lead to greater spending. "European member states are very adroit at controlling their spending and health budgets when it suits them - it's completely different from the US. And it's still your doctor who has to prescribe the drugs."

Doctors themselves are sceptical. "It's very difficult for a doctor to deny people the things they have identified and feel they need, even though you may know there is a better choice," says Professor Mike Pringle, chairman of the UK's Royal College of General Practitioners. He points to the publicity surrounding the launch of the impotence drug Viagra, which led to irresistible demands for prescriptions from sufferers who might have benefited more from other treatments. "If a drug's directly marketed to patients those patients expect it and ask for it."

His words find an unlikely echo in a speech by Roche CEO Franz Humer last month. "Patients' empowerment requires a willingness to accept that the physician-patient relationship will change," she said. "A knowing patient may or may not want to follow the treatment course which, according to best practice, would be envisaged."

It remains to be seen whether the promised code on public information, to be worked out in committee with member states, will open the door to something resembling advertising.

Meanwhile doctors, patients, drugs firms and consumers' groups are all waiting to find out whether the Commission's response to industry's calls for "patient empowerment" might contain the seeds of the transformation it longs for.

Major feature. The European Commission is proposing a major shake-up in the way the drug industry is regulated. But will it make any difference to patients?