Vision of Health Jun02

Let me put your mind at rest and say that I am a pharmacist - a scientist -  first and a politician second. This is the chronological order of my experience and it is also the intellectual basis for my work.

Michael Watts is very kind to invite me to speak on the EU vision of Health Care Delivery. Michael had such a vision long before I did. In 1989, he wrote the guidelines on authorisation for sale, wholesale and retail distribution of pharmaceutical products that was adopted by the European Commission as the EU policy on Health Care Delivery. This was a significant British contribution and we should congratulate Michael for it.

Enlargement of the EU, incorporating Member States with more relaxed legislation on supply of prescription items, substantial expansion of the market for medicines in response to rising patient expectations and varying pricing and re-imbursement schemes in different Member States, have forced the European Commission to review and update legislation that is consistent and sustainable throughout the EU. There is a need to adopt a new architecture for the European Health Service.

The EU reflects 15 different health delivery systems. The funding of public health as a % of GDP varies in each Member State; the ownership of distribution channels - wholesale and retail - reflect historic and economic preferences of each European nation. All 900 pharmacies in Sweden are, like the alcohol distribution shops, state owned; pharmacies in Finland are state owned with an exception made for the University of Helsinki which owns 16 pharmacies; pharmacies in Germany do not sell sandwiches and handbags and none of us could buy a pharmacy in Denmark until an existing owner decided to sell voluntarily. It is relatively easy to buy prescription medicines, without a prescription, from a pharmacy in Greece and Spain. Many European countries have neither a collection system for return of unused medicines, nor a prescribed procedure for disposal of such items. In the UK, we have developed good controls on these aspects of health care whilst retaining a free market for ownership of wholesale and retail distribution.

Therefore, how can the European Commission and the European Parliament reform the different systems of health care delivery that exist in the EU? How can we promote the EU ideal of "an open free competitive single market" for goods and services? How can we meet the expectations of European citizens and deliver a cost-efficient, consistent and sustainable quality of health care service that can be easily regulated?


Let us examine the facts of the drugs market: -

Total sale of pharmaceuticals worldwide amounts to US$ 380bn of which 50% is in the USA with a population of 270 million. The EU, with a population of 360 million, accounts for US$88bn i.e. 23%. Japan accounts for 14%, Asia, Africa & Australasia accounts for 8% and Latin America only 5%. Clearly, selling medicines is big business in the USA and it's no wonder that manufacturers value the US market more than any other!

What are the most important sale categories of drugs by usage?

The top 10 categories account for 30% of all drug sales worldwide i.e. US$110bn of sales are from:-


a) anti-ulcers $20bn (7%)

b) Cholesterol reducers $19bn (6%)

c) Antidepressants $16bn (5%)

d) NSAIs $10bn (3%)

e) Calcium antagonists (plain) $10bn (3%)

f) Antisychotics $7bn (2%)


h) ACE inhibitors $7bn (2%)

i) Cephalosporins $7bn (2%)

j) Systemic Antihistamines $7bn (2%)


Whilst vaccines cure more people, prevent more deaths and are, therefore, most cost-effective, their sale value represents only 3% of drug sales worldwide!

Where do we see the highest rates of growth in sales value and volume?

USA 17%, Europe 10%, Japan 4%, Asia, Africa and Australasia 8% and Latin America only 0.1%.

US legislation encourages and rewards enterprise. Most large manufacturers find it easier to invest in and operate from the USA rather than the EU. The EU is perceived to lag behind in its ability to generate, organise and sustain innovation processes that are increasingly expensive and complex. Consequently, investment in research and development of new drugs is in the USA. This has serious implications for the EU as we are losing financial investment as well as our best scientific brains as they are attracted by more challenging job opportunities across the Atlantic.

How can we in the EU address this? I think the EU needs a radical reform of its legislation affecting investment in R&D; fiscal policies for new drugs, especially vaccines for the diseases of the poor; licensing of new drugs for sale; pricing of drugs that prevents market distortion e.g. parallel trade; guaranteed and uninterrupted distribution from manufacturers to wholesalers and distributors and efficient use of different healthcare professionals, especially our pharmacists and nurses.

Currently, the market for health care is NOT free, open or competitive. Manufacturers negotiate a price and re-imbursement for their drug with each Member State. This results in vastly different prices for the same drug in different countries of the EU. Parallel trade has mushroomed and pharmacies will buy from such sources forcing governments of Member States to assess the extent of such trade in order to set price levels for delivery to patients.

The European Commission has initiated the formation of a working group called the G10 with the representation of 2 European Union Commissioners, the pharmaceutical industry, distributors, doctor and other interest groups. This group has suggested guidelines for the deregulation of drug prices for items not purchased or reimbursed by Member States. It has highlighted the need for creating in the EU an equivalent of the US National Institute of Health that supports R & D of essential medicines that have limited markets in the west but are of great significance in poor countries. It has recommended a scheme to enhance the quality of information to patients, increased penetration of generics in the market and post marketing surveillance.

There is a need to liberalise the market so that ownership of distribution channels is not restricted in the EU. Each Member State should be free to invest what it likes in their National Health Service but it is possible to have a uniform price for all drugs in the EU with differential re-imbursement schemes to avoid market distortion that supports parallel trade. Such a model has been successfully tried in East Germany. I have invited the industry to work closely with me to develop a model that can work and be acceptable to all Member States.

Let me turn to specific proposals of the European Commission that are being discussed now in the European Parliament and which will be part of a new European Directive:-


1.            "Optionality"

The Commission proposes that for all "new active substances" registration for authorisation of sale must be done centrally through the EMEA (European Medical Evaluation Agency) based in London. At present only biotechnology and significantly innovative products are obliged to use this procedure. There is, in my opinion, no justification for this and I intend to persuade colleagues to oppose this.


2.            Mutual recognition procedure (MRP)

The Commission, supported by some MEPs, would like to eliminate national authorisation agencies. Consistent pressure by myself and others has now persuaded the Rapporteur, Mrs MŁller, that national agencies must operate side be side with the EMEA allowing manufacturers to determine the agency they wish to register. This will assist those who wish to restrict sale in limited markets.


3.         Direct to Consumer Advertising

The Commission is in favour of a pilot project to offer extra public information for three specified diseases: AIDS, Diabetes and Asthma. I am against such a proposal as there is already an adequate provision for patients to access information on these diseases. Experience of direct TV advertising in USA has shown a huge increase in both the number of people requesting medication and the quantity used. Clearly, this would not be desirable in the EU.


4.            Abolition of 5 year renewal of licence

The Commission proposes to abolish this rule and expects to enhance pharmacovigilance to protect public safety. I do not have any objection to this.


5.            Withdrawal of Authorisation

The Commission proposes that authorisation of a product would be withdrawn if the product is not marketed for more than 2 years. This is unacceptable as an epidemic could break out soon after a drug authorisation has been withdrawn. My objection has been well received by the Rapporteur, Mrs GrossetÍte, and supported by many MEPs from all political groups.


6.            Prescription for all veterinary medicines

On the continent it is normal practice to consult a vet and secure his prescription for all veterinary medicines. In the UK and Ireland we have national lists of products that are exempt and which can be dispensed by Specially Qualified Persons (SQPs) serving in Agricultural merchant outlets, especially in our rural areas. Therefore, I challenged the Commission proposal and was supported by my British and Irish colleagues. I am delighted that the Rapporteur supports my amendment to secure this derogation for the UK and Ireland.


7.            Wholesale Distribution of Medicines

I am aware of and against the quotas for prescription medicines imposed by manufacturers on wholesalers, especially in certain Member States on the continent. They claim that this is an attempt to curtail parallel import and it does not disrupt the supply for wholesalers to meet genuine commitments to pharmacies and hospitals.

I believe that there should be an uninterrupted supply of medicines from any manufacturer to all registered full line wholesalers and I have submitted an amendment to secure this. I expect wide support from my colleagues.

Wholesalers, including those who own pharmacies, are a crucial link in the supply chain for distribution of medicines. They provide an authentic and regulated supply backed by adequate stock levels and comprehensive data in case of emergencies. They face, at present, difficulty with parallel imports which undermine their services and undercut their prices. It is alleged that some of the smaller wholesalers have set up "sister" companies that are involved in parallel imports. It should be possible to determine the level of parallel trade in any Member State by examining records of supply at each level in the supply chain. It would identify those who buy for re-export to parallel traders.

Parallel trade would not exist without market price distortion. It neither benefits industry that invests in R&D, nor the taxpayers who finance the health service of every Member State. Wholesalers remain reluctant to source their supply like parallel importers for fear of cessation of supply from manufacturers. So why should it continue to benefit only the least deserving?

I have enjoyed working with manufacturers, wholesalers and the Pharmaceutical Society that represents the interests of the retail pharmacists. I will continue to fight hard in the European Parliament to formulate appropriate legislation that will offer the quality, safety and flexibility for health care delivery systems in different Member States. I look forward to working with you and other stakeholders to achieve the best for patients, the healthcare industry and the taxpayers.