Yves here. Students in the US often hear stories of Big Pharma’s price hikes, especially for drugs that are important for treating serious conditions. Patients here are often told, with specific examples, how cheap anti-cancer drugs or insulin are in other countries.
While it is generally true that countries that have programs that engage in centralized purchasing or drug pricing negotiations receive better prices than the United States, the article below explains that there are still significant differences between them. On the other hand, drug companies justify their position by pretending to offer volume discounts, since for large consumers they get better breaks. That might make sense if the drug business has high variable costs. But production costs are low and some pretend that questions about their prices demand high R&D costs. Ahem, those don’t change, so how does this justify excluding small countries? However, anyone who has been close to business accounting knows how much freedom there is in allocating overheads, so discussions about high R&D allocations must be taken with a pinch of salt.
Another thing that annoys me, I have to admit, is not knowing that the pharmaceutical players insist that their negotiated prices with different countries be secret. Huh? Why would anyone agree to this? Or maybe to put it another way, what if a big group, like all the EU members, get together and say they don’t play football anymore, they consider this regime of secrecy as unjustified and therefore competitively abusive. A big drug company might think they can look down on even Germany but the whole EU?
By Juliet Ferguson, Eurydice Bersi, and Maxence Peigné. Originally published on openDemocracy
Non-disclosure agreements allow pharmaceutical companies to make billions from secret deals for life-saving medicines, an investigation by Investigate Europe and partners has found.
Governments across Europe don’t know what their counterparts in other countries have paid for the drug – meaning they may pay more for the problem or, in many cases, decide not to buy it at all.
27-year-old Monika Luty from Poland is among hundreds of thousands of patients who have suffered because of these confidentiality agreements.
Luty has cystic fibrosis, a genetic condition that causes abnormally thick mucus to clog the lungs and digestive system. It is a life-threatening disease for which there is no cure. There is, however, a way to control it: a drug called Kaftrio appears to be a life-changing treatment for the disease.
But not Luty.
In 2020, weighing just 37 pounds and with dangerously close to 20% lung capacity, he posted a video online, pleading with Vertex Pharmaceuticals, which manufactures Kaftrio, to give him the drug. Although it had EU approval, it was not on the market in Poland.
His pleading with the company was in vain. But thanks to crowdfunding he was able to buy Kaftrio in Germany. Having seen firsthand how effective it was, he turned his life around to cross the border, landing a job in Frankfurt that allowed him to get a free prescription for the drug.
When he was in Germany, it was “very easy” to reach Kaftrio, he recalls. “All I needed was insurance, a job and a place to live.” In 2022, the drug was found in Poland and Luty was able to return home.
Modern medicine has given hope to patients with diagnoses that in the past would have been a death sentence. Today, we can treat chronic conditions once, extend life expectancy and manage chronic diseases with ease.
But many of these new drugs come with skyrocketing prices – putting European health systems under huge pressure.
In 2018, the percentage of the health care budget spent on medicine ranged from 8% in Norway to 24% in the Czech Republic, according to a study by the IQVIA Institute for Human Data Science, a New Jersey-based think tank focused on health care. In the UK, the National Institute for Clinical Excellence – a public organization that provides guidance on improving health and social care – makes recommendations about which medicines the NHS should buy based on their clinical effectiveness and value for money. Around 9% of the UK’s annual budget is spent on drugs as a result.
Our research in Investigate Europe found evidence that in at least one category of expensive and important medicines, powerful and wealthy countries get better deals compared to countries with smaller populations and weaker bargaining power.
We looked at Vertex pharmaceuticals’ revenue by country, as reported in the company’s accounts, and divided this by the number of patients taken from the patient registry. A treatment that costs about 71,000 euros per year per patient in France will cost 175,000 euros per year per patient in Lithuania – when it is finally available, after many years of delay.
“The pricing of our medicines is based on their innovation and the value they bring to the CF community, caregivers and healthcare systems,” said a Vertex spokesperson. “The return prices quoted in your question are incorrect.” The company declined to comment on individual countries or specify inaccuracies. It added that over the past decade, more than 70% of its operating budget has been spent on research and development.
High-income countries are willing and able to pay, which means they provide an attractive market and have a better bargaining power, while the large budget constraints of low-income countries reduce their bargaining power.
The result is unequal access to medicines across Europe, with life-saving medicines far away in other countries. At the same time, pharmaceutical companies are reporting huge profits, often on drugs that were originally developed with public money. Forbes lists the healthcare industry as the second of the top five sectors in which to invest.
Statista puts global pharma revenue at $1.48trn by 2022, while a 2019 study by the University of East Anglia showed that Amazon, Apple and Google combined accounted for just 56% of pharma revenue .
Independently of the cystic fibrosis treatment, US-based Vertex Pharmaceuticals could bill governments more than €200,000 per patient per year for Kaftrio, according to UK researchers. This is rare: novel drugs (usually new products for unmet medical needs) that treat only 2-3% of patients are expected to cover half of drug costs in high-income countries by 2026, IQVIA found. They have not yet predicted what this means for low-income countries.
In the Netherlands, the Pharmaceutical Accountability Foundation is taking US pharmaceutical company AbbVie to court, claiming it overbilled the Dutch healthcare system by €1.2bn for the arthritis drug Humira. AbbVie denies the allegations, saying it “operates in compliance with all applicable laws and regulations” and remains “totally dedicated to the patients and the needs of the community we serve”.
In the EU, the European Medicines Agency is responsible for determining whether a medicine is safe to sell on the EU market. Each member country is then free to decide whether their health care systems will buy approved medicines or not – and to negotiate the prices they will pay. to them. After rebates and discounts, the final price a country pays for a drug remains a closely guarded secret.
This mixed system allows the pharmaceutical industry to negotiate with each country separately, explains Dutch lawyer and public health advocate Ellen ‘t Hoen. “Keeping them all in the dark gives them great power to play the game of divide and rule,” he told Investigate Europe.
“Hiding prices is considered a key value of the industry,” said Wim van Harten, a Dutch oncologist who has spent years trying to find out how much cancer treatments really cost across Europe.
The lack of transparency means countries are “lowering their purchasing power” according to Sabine Vogler, of the Austrian National Public Health Institute. They go in blind and sit next to a pharmaceutical company negotiator who knows the real prices in every country. “They can increase their negotiating power if they have the full picture,” Vogler said.
A spokesperson for the European Federation of Pharmaceutical Industries and Associations (EFPIA), the industry’s trade and lobbying group, told Investigate Europe: “There is a broad consensus that prices need to reflect a country’s ability to pay for medicines.
“EFPIA and its members are proposing a European system where countries can pay less for medicines, pay less.
“This type of agreement will require solidarity among member states to embed these ‘right principles’ and prevent them from being undermined, for example, by international reference prices or by diversion of goods, where a drug sold at the lowest price in one country is immediately sent to a country with higher prices.”
They added: “The industry supports programs that bring timely access to medicines to patients”. In some cases, they say, this could involve international cooperation.
When the world was raised by the Covid-19 pandemic, the strike to get people vaccinated forced EU countries to act as one. For the first time, the European Commission negotiated and purchased medicines on behalf of all EU member states, as well as countries in the European Economic Area, such as Iceland and Liechtenstein.
According to the Court of Auditors of the EU, “in November 2021, the commission had signed contracts on behalf of member states for the purchase of up to 4.6 billion doses of vaccines”.
Joint procurement of Covid vaccines proved that the method could work, but the prices were still secret. “That was a real missed opportunity,” Vogler said. “If the EU had used its collective forces to disagree with the confidentiality provisions, this would have been a game changer.”
A spokesperson for the EU Commission told Investigate Europe that it “fully supports any exchange or cooperation between member states that can improve the accessibility and affordability of medicines”.
They added that joint negotiations would require some degree of uniformity between state drug systems and pricing and reimbursement processes — though they said “greater transparency around pricing information” could improve these processes.
Giorgos Pamborides, the former health minister of Cyprus, believes that the refusal of European countries to cooperate in drug negotiations is a mistake – describing the confidentiality clauses as “tools to abuse the dominant position that the industry has against its clients, the countries”.
“With little consideration, the EU offers its only advantage: its size,” added Pamborides.
It makes perfect market sense: even the best discounts that the strongest country in Europe can get on its own pale in comparison to what the single market and collective bargaining can get. And it’s people like Luty, who have long-term health conditions, who pay a huge price.
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