EU Drug Pricing: The Implications Of Maastricht

In Europe, a wholesale renegotiation of the social contract is nowunderway, according to Sean Lance, chief operating officer at Glaxo Wellcome. As health care represents as much as 15% of public expenditure in some countries, it will not be immune from government attempts to meet the Maastricht criteria, he told the Financial Times World Pharmaceuticals conference (Marketletter March 31); the demands of monetary union have prompted governments to take steps that would have been unthinkable a few years ago.

The industry went through a lot of pain in the early 1990s as governments sought to make quick savings, he said, but he feels that policymakers now understand the limits of short-termism. They recognize that the search for savings must focus not on nominal prices but on patient benefits and health outcomes. Europe will remain a highly attractive market, but as the ratchet of budgetary pressure turns again, companies which cannot demonstrate their products' clinical and economic benefits will feel the pinch. But for those who base their business on making real therapeutic advances, the future is bright.

The biggest impact on the European drug market will come from European Monetary Union, if and when it is established, said Franz Humer, chief operating officer at Hoffmann-La Roche. The likelihood of a two-tier Europe means the trade distortions which result from apparent tensions between national price controls and the free flow of goods will increase, and the debate on how long the USA will be prepared to finance a larger share of the industry's innovation is real. However, he said, this will force companies to pursue European-wide pricing and, long-term, make planning more predictable due to the expected currency stability.