Bursting the Bubble

The new Transparency Directive on Regulating Medicinal Products – Blessing or Curse?

17 June 2013 | by

In 2012, the Commission issued a new proposal for a Directive on pharmaceutical goods in order to further foster both the functioning of the Internal Market and faster access for patients to drugs.

Pharmaceutical goods are traded based on Article 114 TFEU, which regulates the functioning of the Internal Market on EU level. But their inclusion in the health insurance systems is a national competence ensured by Public Health Article 168 TFEU. However, due to an evolving market of generics and new technology, the old Directive, in force since 1989, is no longer meeting today’s requirements. Not only industries, but also patients, face trade barriers caused by the 60 extra days, on average, national authorities need to decide on pricing and reimbursement (P&R) measures. Companies lose their exclusivity rights of patents and patients have to wait until the medication is made available. The new proposal foresees a reduced time frame to decide on P&R measures and also takes into account generics.

National systems regulating P&R measures vary across the EU. For example, in France several national bodies are involved in the approval mechanism, which leads to a delay, while Italy is even worse in meeting the deadlines due to its decentralised health system structure. Contrary, the UK and Germany are good examples of avoiding trade barriers as both countries, the only ones in the EU, release pharmaceuticals on the market as soon as they receive market authorisation from either the European Medicines Agency or competent national authorities.

Due to its complicated nature, it may be legitimate to ask if the approach the Commission has chosen is the best option to solve the contradiction at stake since member states (MS) are already failing to adhere to the deadlines set out in the old Directive.

This provocative question was the objective of my master thesis. After having compared the national market authorisation and P&R measure procedures of France, UK, Germany and Italy, and investigating the public consultation as well as the impact assessment conducted by the Commission, I can conclude that this hard law approach will most likely not help in any way to reduce current trade barriers. Besides the question what aims the Commission, especially DG Internal Market as being the leading force in this file, is pursuing in renewing the Directive, the main question remains why the Commission has decided in favour of hard law, which is apparently not the right way to regulate P&R measures.

The European Parliament acknowledges a more realistic approach and amended the proposal in the first reading, claiming for more time to decide on P&R measures. The public consultation has shown that MS will not be able to adhere to even stricter deadlines, while tough penalties as foreseen in the new version will not help reduce the trade barriers at all in case of infringement. It is commonly known that the infringement procedure is a very time-consuming procedure. A decision is often made by the European Court of Justice only ten years after initiating the process. It does not speed up the process.

Therefore, soft law may have been more efficient. For example, the Commission does not have competence to regulate  standards in the policy areas of education and telecommunication, However, here the Commission has chosen a softer way and brought together concerned stakeholders at a round table for discussions. This finally led to a common agreement among the MS to regulate some measures on EU level. With regard to the telecommunication sector, Neelie Kroes, Commissioner for Digital Agenda, is highly ambitious and wants to present a proposal for a Directive setting harmonised standards in certain telecommunication areas throughout the Union in the upcoming two years. Also, Lithuania declared its priorities during the EU presidency, starting from July 2013, where the issue of telecommunication is given high priority in order to foster a common digital market.

In the field of education, a soft law approach helped the EU to support coordination among the MS resulting in several ministerial conferences where the ministers of education agreed that a comparable, more compatible and coherent education systems among the MS is needed. The outcome of this series of ministerial conferences, besides various other activities, is nowadays well-known as the Bologna process.

These two examples show that a soft law approach is also a helpful tool where much, but less obvious, power can be exerted to guide stakeholders in a certain direction to achieve specific targets and goals. The Commission could have taken much more influence to steer the process to its desired policy outcome through acting as the main information streamliner. It also has the expertise and financial means supporting actions necessary to reach the preferred outcome. Unfortunately, the Commission missed an opportunity to shape the policy in an effective way.

As the co-legislator of the EU, the Council of the European Union will vote on the Transparency Directive regulating pharmaceutical goods in June 2013. And the outcome remains suspenseful since the Council represents the interests of the MS.

 

Further information:

European Commission: Healthcare Industries Pricing and reimbursement of Medicinal products

Revised Transparency Directive seeks to improve patient access but more is needed by Member States

MEPs demand more transparency on medicine pricing 

Parliament votes for quicker access to generic drugs

What do you think?