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A challenging year ahead for the pharmaceutical industry


A vitally important policy debate will mark 2008: the EU needs to create an environment in which the industry can thrive while taking a sensible approach to controlling costs.

Brian Edwards CBE
Emeritus Professor of Health Care Development
University of Sheffield, UK
President, HOPE
(European ­Hospital and Healthcare ­Federation)

Europe’s drug industry faces a challenging year in 2008. The European Commission plans to issue a communication on the future of the single market in drugs towards year’s end; governments will keep trying to drive down costs, and moves to expand technology assessments will accelerate. Pressure on professionals to switch to generics will rise, meaning more government surveillance of generic costs.

For the industry, these changes are a mixed blessing. The industry will welcome the EC’s likely commitment to a strong, competitive research-based industry, which currently employs many scientists and technologists and contributes 18.5% of EU business R&D expenditure. However, the industry says it is losing competitiveness with its main competitors, including China and India, and claims that in 1996−2006 R&D investment grew five times in the USA but only in 2.9 times in Europe. An EC report in 2000 linked loss of competitiveness with “the institutional shock created by cost-containment policies in a context of fragmented institutions and rules”. The industry says EU governments focus overly on cost rather than drugs’ value to society. This may be a fair criticism, but as long as drugs represent some 20% of countries’ health economies, cost control is inevitable. It is true, as the industry observes, that access to new drugs within the EU is uneven due to differing national investment levels. As long as health remains a national competence this will be the case.

Parallel imports are growing and are almost certainly the entry point in the supply chain for many fake drugs.

The industry identifies five challenges for the EC:1
●    To limit healthcare regulation and rationing and judge the value of drugs in the wider health perspective. The artificial silo of the drugs budget must, they argue, be removed.
●    To recognise increased R&D costs, particularly of pharmacogenetics research, which represents a powerful new tool for product development.
●    The rich countries will have to bear R&D costs if the poorer countries are to access new medicines.
●    The EU needs an industrial climate for innovation.
●    The EU needs to help the industry with its public image.

What the industry does not want is EU price regulation. Any national controls should be limited to national territories and parallel trade prohibited. This does seem at odds with the idea of an open market, unless the industry can claim the market is unusual due to domination by governments and their agencies.

The parallel-trade issue will also impact on discussions on supply-chain safety and integrity. The industry believes banning parallel trading would solve most of these problems. Delivering better intellectual property protection standards should be possible, as should reform of the legal framework relating to provision of drug data. There is already a directive on clinical trials, but its impact inevitably appears to have been diminished by Member States taking different approaches to implementation.

This whole issue is crucial to Europe’s drug industry and to health providers. The industry produces the most powerful clinical intervention tools available to health professionals. The EU needs to create an environment in which the industry can thrive while taking a sensible approach to States’ control of healthcare costs. Getting the balance right will not be easy. This is one of the most important EU policy debates for some years. Meanwhile, Sweden’s proposed abolition of the state monopoly on drug sales will reignite debate on
prescription-only drug dispensing controls and the role of the internet. ■

1. European Federation of Pharmaceutical Industries and Associations. The future of pharmaceuticals for human use in Europe. Brussels: EFPIA; 2007. Available online at:

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