Poland - Has the economic crisis affected the Polish pharmaceutical market?

Changes have been made to the reimbursement list due to the economic crisis but the pharmaceutical market will continue to grow.

Whilst many countries have entered recession as a result of the economic crises, Poland’s economy did not shrink in 2009. In fact, it was the only economy in the EU that avoided contraction. Consequently, the impact on the Polish pharmaceutical market will be far less than in other countries of similar development in Central & Eastern Europe, such as Hungary. There will be less of a need to reduce spending on healthcare and the disposable income available for purchasing pharmaceuticals should remain steady, although unemployment is predicted to rise marginally in 2010, which may be detrimental to retail sales.

However, recent changes to the drug reimbursement list do reflect the government’s cost-containment policy that was prompted by the economic downturn. Only two new innovative drugs have been placed on the list, although innovative drugs that had previously been approved for reimbursement were not removed. Over 100 generic drugs were added to the lists, but around 50 were removed. Along with the many medicine price decreases that the MoH has negotiated with several pharmaceutical companies, overall savings are expected to reach 45 million zlotys (US$15.2 million).

Further reading - A detailed analysis of the Polish pharmaceutical market is available from Espicom: The Pharmaceutical Market: Poland (published May 2010)

Croatia - How has the prospect of EU accession affected the Croatian pharmaceutical market?

Croatia has boosted investments in healthcare and updated legislation in preparation for EU membership.

Croatia applied for EU membership in February 2003 and has worked hard to align its legislation with the EU acquis. Following a number of political hurdles, Croatia was able to resume talks on EU membership in October 2009, once neighbouring Slovenia had lifted a block on negotiations. When Croatia becomes a member state, most likely in 2011, the pharmaceutical market will benefit from free access to the larger European market. The prospect of EU accession has increased investments into the Croatian healthcare system, as the country has sought to bring it up to European standards. It has also prompted the authorities to align Croatian law with EU legislation. The Medicinal Products Act came into force in July 2007 and a bylaw was adopted in December 2008 to ensure full harmonisation with EU legislation.

Further reading - A detailed review of the Croatian pharmaceutical market is available from Espicom: The Pharmaceutical Market: Croatia (published April 2010)

Finland - How is the Finnish government attempting to contain the rising costs of pharmaceuticals?

A reference price system has been introduced in an effort to reduce the use of more expensive pharmaceuticals.

Several cost-containment measures have been implemented in the past few years. Generic substitution was first implemented in April 2003 and has generated considerable cost savings since then. In January 2006, the government followed the example of other EU member states, and for the first time statutorily cut the approved wholesale prices for all reimbursable pharmaceuticals by 5%.

The most recent measure is the introduction of a reference price system for medicines, which came into force in April 2009. The new system is expected to reduce the use of more expensive pharmaceutical products, thus lowering the costs for patients and reducing the pressure to raise health insurance payments. A recent study has estimated that the reference price system will reduce the costs of medicines in Finland by 10%, while total pharmaceutical expenditure is also expected to fall by 5%. However, the effect of the reference price system on medicinal costs may be less significant than would normally be expected due to the strong price reductions resulting from generic substitution.

Also in April 2009, generic substitution was extended to include medicinal products protected by analogy process patents, which were previously excluded. This will result in further cost savings, but patented original products are entering the generic price competition phase several years before product patents expire in other European countries.

Further reading - A detailed analysis of the Finnish pharmaceutical market is available from Espicom: The Pharmaceutical Market: Finland (published April 2010)

Latvia - What are the future prospects for the pharmaceutical industry?

The pharmaceutical market in Latvia is expected to grow steadily over the next few years.

Latvia is among the few economies in Central & Eastern Europe that is expected to continue contracting in 2010, due to falling domestic demand. Whilst the economic situation will affect the growth of the pharmaceutical market, a continued increase in the value of imports will result in moderate growth. Imports dominate the market; Latvia has a small number of drug makers which concentrate on former Soviet markets.

The development of biotechnology was seriously hindered in the 1990s with the closure of many large factories and plants. However, the pace of development has picked up since Latvia joined the EU in 2004. Latvia has made progress in biomedicine, but it has not yet reached EU levels. R&D capabilities are strong but public spending on R&D is low.

Further reading - An in-depth review of the Latvian pharmaceutical market is available from Espicom: The Pharmaceutical Market: Latvia (published April 2010)

Spain - How is the current economic environment affecting pharmaceutical sales?

The pharmaceutical industry is expected to overcome the economic crisis in 2011.

Spain is the fifth largest economy in the European Union. However, the economic downturn has affected the country seriously. It is one of largest developed economies expected to experience a negative growth in 2010. The Economist Intelligence Unit (EIU) projects that the GDP will contract by 0.8% in 2010 and is only expected to experience modest real growth from 2011 onwards.

FARMAINDUSTRIA believes that more new pharmaceutical medicines will be entering the Spanish pharmaceutical market in the coming years, together with biologic medicines. The pharmaceutical industry expects to overcome the economic crisis in 2010, but this might be delayed until 2011 considering the current economic outlook.

The pharmacy sector is expected to increase at a lower rate than the hospital sector, but cost-containment policies will affect both sectors. By 2015, the Spanish pharmaceutical market could rank fourth in Western Europe, ahead of the UK. Almirall and Esteve are the best positioned local companies.

Further reading - A detailed review of the Spanish pharmaceutical market is available from Espicom: The Pharmaceutical Market: Spain (published April 2010)

EU - EU Commission Raids Pharmaceutical Companies Suspected of Anti-Competitive Behaviour

The EU Commission carried out raids at several pharmaceutical companies on 6th October 2009, as part of its investigation into anti-competitive behaviour within the industry.

Surprise inspections were confirmed at sanofi-aventis, Teva, Novartis and Ranbaxy Laboratories.

This is the third time that the EU Commission has carried out raids. In January 2008, the EU Commission raided the offices of GlaxoSmithKline, AstraZeneca, sanofi-aventis and several generic competitors, and in November 2008, Teva, Servier and Krka Group were all raided.

In a statement the EU Commission said, “The Commission has reason to believe that the provisions of the EC Treaty prohibiting restrictive business practices and/or the abuse of a dominant market position... may have been infringed.”

However the regulators stressed, “The fact that the European Commission carries out such inspections does not mean that the companies are guilty of anti-competitive behaviour nor does it prejudge the outcome of the investigation itself.”

The raids follow an 18-month inquiry into anti-competitive practices within the pharmaceutical industry, the findings of which were released in July 2009 (see EU - Competition Inquiry Findings Released). The inquiry found that at least 200 settlement agreements between generic and originator companies were known, and that many of these were formed to restrict generic entry onto the market.

The European Commission is already investigating Servier and some generic firms on suspicion of blocking a generic copy of the cardiovascular drug perindopril from entering the market.

Further reading - Pharmaceutical market profiles for all European countries are available from Espicom: Pharmaceutical Market Reports; Europe

EU - European Court Sides with Drugmakers on Pricing Matter

The European Court of Justice ruled on 6th October 2009 that the EU Commission should reconsider whether efforts by drugmakers to prevent traders from exploiting price differences across Europe should be allowed.

Up until now, the EU Commission has opposed companies changing their prices to compensate for parallel trade. Pharmaceutical companies, however, have complained that this undermines their ability to recover the costs of developing new medicines.

The case involved GlaxoSmithKline, who introduced a policy in the late 1990s to put higher prices on a number of drugs sold in the Spanish market, which it had determined were going to be exported. The EU Commission said that the company was restricting competition within the European Union, having long favoured the creation of a single market for goods, including prescription drugs, with the aim of lowering prices.

Many governments buy medicines in bulk in southern European countries such as Spain, and sell surpluses in northern nations such as the UK, where drugs usually cost more. This type of parallel trade helps to cut the price of medicines for their health services.

The traders were disappointed by the verdict. Andreas Mohringer, the president of the European Association of Euro-Pharmaceutical Companies, which represents the traders, commented, “Allowing the system in Spain to stand would mean competition would suffer in Europe with the losers being national social security systems, taxpayers and patients.”

However, the victory for the pharmaceutical industry could be significant at a time when companies face a great deal of price competition.

Further reading - Detailed reviews of the pharmaceutical markets in all European countries are available from Espicom: Pharmaceutical Market Reports; Europe

India - Authorities to Reimburse Costs of Drug Shipments which Avoid EU

The Indian government is to reimburse drugmakers for the extra costs incurred when shipping their products to developing nations and avoiding the European Union (EU), where a number of shipments have been confiscated recently, it was announced in August 2009.

More than 20 shipments of generic drugs, manufactured by companies such as Aurobindo, Cipla and Dr Reddy’s, have been seized in the past 16 months, according to government officials. Shipments were seized in the Netherlands, France, Germany and the UK while on their way to Asia, Africa and Latin America, after claims that they were breaching EU intellectual property (IP) laws.

India is issuing a formal complaint to the World Trade Organisation’s dispute settlement body, claiming that the EU has misused customs regulations to unlawfully seize the medicines. Particularly highlighted is EC Regulation 1383/2003, which is designed to protect the IP rights of EU member states and allows the seizure of shipments infringing IP regulations or if they are believed to be counterfeit.

A group of non-governmental organisations have called for the World Health Organisation (WHO) and the WTO to investigate the issue. They also pointed out that, under WTO rules, IP rights apply at the shipment’s departure and destination locations only, and so represent a violation of TRIPS Agreements.

Meanwhile, the EU, according to Oxfam, is pushing for the rules to be extended globally through free trade agreements and the Anti-Counterfeiting Trade Agreement (ACTA), which is currently being drawn up by 12 nations and the EU. This is due to start its sixth round of negotiations in South Korea in November 2009.

Further reading - An in-depth analysis of the Indian pharmaceutical market, including some background information on intellectual property and TRIPS regulations, is available from Espicom: The Pharmaceutical Market: India (published June 2009)

EU – Competition Inquiry Findings Released

The results of the EU Commission’s 18-month long inquiry into anti-competitive conditions in the pharmaceutical industry were released on 8th July 2009.

The inquiry, launched in January 2008, found that generic medicines take too long to reach the market, and this is often due to drug companies using a variety of techniques to extend the commercial life of their products. Between 2000 and 2007, consumers waited an average of seven months for a cheaper generic medicine once the patent had expired, costing 20% in extra spending. The EU Commission called upon member states to do more to boost the uptake of generic medicines, but will also scrutinise the sector more closely and prosecute any companies which violate the competition law.

The first settlement agreement to be investigated is between French-based Servier and a number of generic companies including Teva, Krka, Lupin, Mylan’s Matrix subsidiary and Unichem’s Niche Generics unit, over “possibly restrictive” practices which may have hindered the entry of the generic versions of Servier’s cardiovascular drug perindopril.

The EU Commission is expected to review around 200 such agreements in the coming months.

The inquiry also found that fewer innovative medicines are reaching the market, and that certain drug company’s practices may be contributing to this. The EU Commission said it will monitor the situation closely to identify the factors contributing to the decline in innovation.

The inquiry also concluded that there is an urgent need for an EU patent and patent-litigation system, which will reduce costs and improve efficiency. It will also reduce uncertainty for drug companies, because at present, 30% of patent court cases are conducted in parallel in several member states, and in 11% of cases national courts reach conflicting judgements.

Further reading - Pharmaceutical market profiles are available for all European countries from Espicom: Pharmaceutical Market Reports; Europe