EFPIA president warns that European pricing threatens medicines supply flow

Europe’s pharmaceutical industry is facing two huge problems: drug reference pricing and parallel trade (the re-exportation of pharmaceutical products from lower-priced to higher-priced countries), which represent a threat to orderly supply of medicines in the region, warned Sir Andrew Witty, president of the European Federation of Pharmaceutical Manufacturers and Associations (EFPIA) in a letter sent to European Union leaders, Commission President Jose Manuel Barroso and Council President Herman Van Rompuy ahead of the June 28-29 summit.

Sir Andrew, who is also chief executive of UK pharma giant GlaxoSmithKline, said EFPIA members fully understand that, in the current financial crisis, countries need to take steps to control public spending and restore fiscal credibility. They have worked with governments to bridge funding gaps. In just five countries (Greece, Ireland, Italy, Portugal and Spain) the pharmaceutical industry has contributed, through price-cuts and discounts, more than 7 billion euros ($8.78 billion) for the years 2010 and 2011. This represents more than 8% of the industry’s turnover in those markets on a yearly basis.

A key concern is the cross-border impact of measures taken. Most importantly, the practice of referral to other countries when setting prices for medicines, results in inefficiencies and sometimes in limited supplies. Where the industry has agreed to temporary price cuts to bridge funding gaps (eg, in Greece or Portugal) other countries not subject to the same financial pressure automatically lower their prices. For example, some 26 countries inside and outside Europe reference their medicines prices to Greece in some way.