COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Accompanying the document Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL relating to the transparency of measures regulating the prices of medicinal products for human use and their inclusion in the scope of the public health insurance systems /* SWD/2012/0029 - COD 2012/0035 */
COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Accompanying the document Proposal for a
DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL
relating to the transparency of measures regulating the prices of medicinal products
for human use and their inclusion in the scope of the public health insurance
systems
1.
Introduction
The pharmaceutical market is characterised
by its specific structure and by a high degree of public regulation. On the one
hand, EU legislation provides harmonised rules to ensure the quality, safety
and efficacy of medicinal products. Medicines can be placed on the market in
the European Union only if they have received a marketing authorisation from
the European Commission or from the competent national authorities. On the
other hand, pharmaceutical expenditure is largely subsidised by national health
systems in order to ensure the adequate provision of medicines to all citizens.
In this context, Member States adopt measures to regulate the prices of medicines
and the conditions of their public funding. Such measures influence the
prescription and utilisation of medicines in each country. They may create
barriers to pharmaceutical trade within the EU because they affect the capacity
of pharmaceutical companies to sell their products in domestic markets. Directive 89/105/EEC was adopted in the
late 1980s to enable market operators to verify that national measures do not
create barriers to trade incompatible with the provisions of the Treaty
governing the free movement of goods. The directive lays down minimal
procedural requirements to ensure the transparency of national pricing and
reimbursement measures (for this reason, it is commonly referred to as the
Transparency Directive). In accordance with provisions of the Treaty, the
directive does not affect national pricing decisions and social security
policies. Member States are free to adopt their own pricing and reimbursement
decisions, as long as these comply with the procedural obligations of the directive.
These obligations include specific time-limits for individual pricing and
reimbursement decisions (90 days for pricing, 90 days for reimbursement or 180
days for combined decisions). The directive also requires the competent
national authorities to issue a statement of reasons for each of their
decisions, based on objective and verifiable criteria, and to provide
appropriate legal remedies to the applicant companies. This impact assessment examines the need to
update Directive 89/105/EEC more than twenty years after its entry into force.
It focuses on the fundamental objectives of the directive, without putting into
question the responsibilities of the Member States for the organisation and
financing of their health insurance systems.
2.
Problem definition
Since the early 1990s, Directive 89/105/EEC
has played an important role in promoting the transparency of national pricing
and reimbursement measures and facilitating the internal market in medicinal
products. However, the evolution of the pharmaceutical market has created a gap
between the procedural rules laid down in the directive and the national
measures it intends to address. In particular, the market structure has
fundamentally changed,for instance with the emergence of generic medicines or
the development of highly innovative research-based medicinal products. Furthermore,
Member States have been devising increasingly complex and innovative pricing
and reimbursement policies in order to contain rising pharmaceutical
expenditure. The main problems observed are summarised
below. (1)
Delays in time to market medicinal
products The Pharmaceutical sector inquiry carried
out by the European Commission (2008-2009) highlighted frequent delays in
pricing and reimbursement decisions by Member States, both with respect to
innovative (originator) medicines and to generic medicines. These delays
contribute to postponing the entry of medicines in national markets after the
granting of a marketing authorisation. For originator medicines, the time-limits
of 90/180 days laid down in Directive 89/105/EEC are not always complied with
by the competent authorities due to procedural or technical delays. This
situation affects patients, by delaying the availability of authorised
treatments, as well as pharmaceutical companies, which benefit from a limited
period of time (the patent and data protection periods) to recoup their
extensive research and development costs and to generate profits. As regards generic medicines, it takes on
average 140 days in EU countries to obtain a pricing and reimbursement
decision. However, the Pharmaceutical sector inquiry demonstrated that national
procedures could be much shorter because generics contain the same, well-known
active ingredients as the reference (originator) product and the latter is
generally already reimbursed at a higher price than its generic versions. In
addition, the sector inquiry reported specific regulatory approaches or
administrative practices which unnecessarily delay pricing and reimbursement
decisions for generic medicines. These practices include the re-evaluation of
safety features already assessed during the marketing authorisation process and
attempts to delay pricing and reimbursement procedures on the basis of
arguments relating to intellectual property rights (patent linkage).
Unnecessary delays in the pricing and reimbursement of generic medicines affect
healthcare budgets (lost saving opportunities due to postponed price
competition), generic companies (reduced prospects of return on investment) and
patients (deferred access to cheaper medicines). (2)
Adequacy and effectiveness of the
directive in a changing context Directive 89/105/EEC was adopted at the end
of the 1980s in consideration of the market conditions and national policies
which prevailed at the time. The pharmaceutical market as well as pricing and
reimbursement policies have tremendously evolved since then. The following
problems have arisen in this context: (a)
Issues of legal interpretation,
implementation and enforcement Directive 89/105/EEC has frequently given rise
to interpretation controversies, for instance during infringement
investigations initiated by the Commission and in the framework of cases
submitted to the Court of Justice of the European Union (CJEU). Different
factors account for these recurrent interpretation debates: firstly, the
increasing complexity of the pricing and reimbursement mechanisms introduced by
Member States means that national measures do not necessarily match the
processes described in the directive; secondly, cost-control policies now
extend beyond pricing and reimbursement (supply-side measures) to include
measures targeted at health professionals, pharmacists and patients
(demand-side measures); thirdly, several provisions of the directive are
drafted in such a way that they often trigger divergent interpretations. The CJEU has consistently interpreted Directive
89/105/EEC in an extensive manner, on the basis of its general objectives, in
order to ensure its effectiveness. However, Member States tend to advocate a
restrictive interpretation of the directive and regularly dismiss the
application of its requirements to their pricing and reimbursement measures.
Implementation issues also arise when Member States fail to see concretely how
the directive should be applied to their specific national systems. Finally,
the frequent administrative or regulatory changes introduced by national
authorities in all countries have created additional enforcement difficulties. (b)
Relationship with innovative pricing and
reimbursement mechanisms In response to the evolution of pharmaceutical
expenditure, Member States have developed alternative pricing and reimbursement
mechanisms which fundamentally differ from the procedural approaches envisaged
by Directive 89/105/EEC. Innovative instruments include contractual agreements
designed to facilitate access to new medicines under specific conditions agreed
with individual pharmaceutical companies (managed entry agreements) and
tendering procedures used by the social security institutions to determine the
prices and reimbursement conditions of specific categories of medicinal
products. These mechanisms do not respond to the administrative logic of
Directive 89/105/EEC and are also covered by specific rules such as legislation
on public procurement and administrative or contract law. This leads to
uncertainty as regards the legal relationship between these innovative
practices and the directive. (c)
Adequacy to address medical developments The development of new therapeutic approaches
based on patient-specific information (e.g. genetic profile) may create further
challenges for the internal market in the context of pricing and reimbursement
decisions. In particular, “personalised medicines” closely associate medicinal
products with medical devices, such as in-vitro diagnostic tests. This feature
implies that disconnections between pricing and reimbursement decisions for the
medicinal product and for the associated diagnostic/medical device might result
in trade barriers and market access delays. This particular situation was not
foreseen by the current directive. (3)
Transparency of pricing and reimbursement
procedures for medical devices Directive 89/105/EEC only applies to
medicinal products. Medical devices are currently excluded from the scope of
the directive. Despite the specificity of the medical devices market, including
major differences with the pharmaceutical sector in terms of pricing and
coverage by health insurance systems, some medical devices can be subject to
price regulation and administrative reimbursement decisions. The relevance of
Directive 89/105/EEC to these products therefore requires examination.
3.
Analysis of subsidiarity
Pursuant to Article 168(7) of the Treaty on
the Functioning of the European Union (TFEU), Member States are responsible for
the definition of their health policy and the organisation of their healthcare
system, including the allocation of resources assigned to health services and
medical care. Directive 89/105/EEC is based on Article 114 TFEU, which foresees
the adoption of measures for the establishment and functioning of the internal
market. Its provisions provide for minimal harmonisation: they do not affect
national policies on price setting and reimbursement, except as far as
necessary to ensure procedural transparency. The proper functioning of the internal
market requires timely and transparent decisions on the pricing and
reimbursement of medicines. Despite the extensive interpretation of the
directive by the Court of Justice, the notion of procedural transparency is
understood differently in each Member State, so that action by individual
Member States would not provide sufficient guarantees of procedural
transparency for economic operators. Nevertheless, this initiative shall take
into account the responsibilities of the Member States for the organisation and
financing of their health insurance system. It should therefore focus on the
possible clarification of the general procedural rules framing pharmaceutical
pricing and reimbursement. Issues of substance – such as the content of
national policies or the challenges linked to differences in the prices,
availability and affordability of medicines across Europe – are linked to the
exercise of national competences and therefore remain outside the scope of the
analysis.
4.
Objectives
The overall objective of this initiative is
to ensure the transparency of national measures intended to regulate the prices
of medicinal products, to manage their consumption or to establish the
conditions of their public funding in order to avoid obstacles to
pharmaceutical trade prohibited by the Treaty. In light of the situation described in
Section 2, any policy initiative relating to Directive 89/105/EEC should
specifically aim at: (1)
Ensuring timely pricing and reimbursement
decisions for medicinal products (Objective A); (2)
Ensuring the adequacy and effectiveness of the
directive in a changing context (Objective B); (3)
Examining the relevance of the directive to the
medical devices market (Objective C).
5.
Policy Options
Two extreme policy options were discarded
at an early stage, namely: –
the full harmonisation of pricing and
reimbursement measures, which would be incompatible with the rules of the
Treaty recognising the competence of Member States for the definition and
financing of their health policies; –
the mere repeal of Directive 89/105/EEC, which
would represent a step backward in the operation of the single market. Besides the baseline scenario (options A.1,
B.1 and C.1), the following options were examined in relation to each of the
specific objectives outlined above: (1)
Objective A: Ensure timely pricing and
reimbursement decisions for medicinal products · Option A.2: soft law · Option A.3: revision of the directive to improve the enforcement of
the time-limits –
Option A.3/a: financial penalties by national
judges –
Option A.3/b: automatic inclusion of individual
products in the health insurance system after expiry of the deadlines and until
a decision is adopted –
Option A.3/c: obligation to communicate and
publish reports on pricing and reimbursement approval times · Option A.4: revision of the directive to avoid unnecessary delays
for generic medicines –
Option A.4/a: shorter time-limits for pricing
and reimbursement decisions concerning generic products –
Option A.4/b: prohibition of patent linkage and
of the duplication of assessments carried out during the marketing
authorisation phase · Option A.5: shorter time-limits for pricing and reimbursement
decisions concerning originator medicines (2)
Objective B: Ensure the adequacy and
effectiveness of the directive in a changing context · Option B.2: soft law · Option B.3: revision of the directive to align its provisions with
major developments in the pharmaceutical market –
Option B.3/a: minimal revision of the directive
to reflect the case-law of the Court of Justice –
Option B.3/b: extensive revision of the
directive to bring it into line with the current pharmaceutical environment · Option B.4: notification of draft national measures to facilitate
the enforcement of the directive (3)
Objective C: Possible extension of the scope
of the directive to cover medical devices The extension of the directive to the
medical devices market as a whole was discarded at an early stage. Indeed, many
medical devices are not reimbursed as such to the patients: they are instead
covered by health insurance systems as part of the global health interventions
practised by health professionals. One option was therefore examined in
addition to the status quo: –
Option C.2: partial extension of the directive
to cover medical devices subject to pricing and inclusion in reimbursement
lists.
6.
Assessment of Impacts
Given the merely
procedural nature of Directive 89/105/EEC, no environmental impact has been
identified for the analysed options. Economic and social impacts are summarised
below. (1)
Objective A: Ensure timely pricing and
reimbursement decisions for medicinal products Option A.1: Status quo (baseline scenario) || Delays for originator medicines · Originator companies: lost revenues linked to delayed market entry (estimate: 35 to 100 million EUR per medicine), reduced capacity to invest in R&D, viability of SMEs at stake. · Patients: welfare losses due to the delayed availability of medicines (order of magnitude in monetary value: up to 970 million EUR/country/year). · Member States: pricing and reimbursement delays do not necessarily represent a budgetary gain (the reduction in non-pharmaceutical spending resulting from the introduction of a new medicine may be higher than the cost induced by the prescription of that medicine). Delays for generic medicines · Generic companies: lost return on investment and revenues linked to delayed market entry. · Member States: lost savings (estimate: 3 billion EUR for the period 2000-2007 based on a sample of medicines in 17 EU countries). · Patients: additional costs in case of co-payment (depends on the national system). Option A.2: Soft Law || · Stronger basis for the enforcement of existing time-limits but legal certainty will not significantly improve. · Possibly effective to reduce delays for originator products (based on collaborative actions such as EUNetHTA) but success depends on Member States’ cooperation. Unlikely to be successful for generics: guidance provided by the Pharmaceutical sector inquiry has not reduced unnecessary delays in all EU countries. Option A.3/a: Financial penalties by national judges || · Compensation of economic damage for pharmaceutical companies. · Budgetary impact for national authorities depends on their capacity to comply with the time-limits. · Incentive for Member States to comply with the time-limits but effectiveness will depend on the willingness of economic operators to enforce their rights and on the level of sanctions decided by national judges. · Problem of delayed access to medicines for patients is not addressed. Patients even pay twice, first due to delayed access and second due to financial compensations paid by taxpayers’ money. Option A.3/b: Automatic inclusion in reimbursement after expiration of the time-limits and until a decision is adopted || · Pharmaceutical companies: improved market access and additional predictability in the absence of unjustified delays. · Member States: incentive to comply with the time-limits but some Member States may need to streamline or improve the efficiency of HTA procedures. Potentially significant impact on public health budgets (budgetary impact proportionate to the level of non-compliance with the time-limits) but mitigated by specific safeguards (ability to stop the clock) and Member States’ capacity to make the final decision. · Patients: quicker access to medicines in the absence of decision by the competent authorities. · Potential unintended effects: insecurity for patients and companies if the decision issued beyond the time-limits is negative. Option A.3/c: Benchmarking reports || · Public pressure on Member States: facilitates monitoring of compliance with the time-limits and provides a basis for dialogue with competent authorities. · Only effective if Member States provide accurate data and are willing to draw lessons from poor compliance. · Additional compliance costs for public authorities, although very limited if reporting takes place no more than once per year. Options A.4/a and A.4/b: - Shorter time-limits for generics - Prohibition of patent linkage and duplication of assessments || · Originator companies: short-term losses due to earlier competition but encourages the pursuit of innovation. · Generic companies: quicker return on investment and profits due to earlier market entry. · Member States: significant savings for public health budgets (order of magnitude: several hundred million EUR/country if time-limits for the pricing and reimbursement of generics are reduced to 30 days). One-off adjustment costs for public authorities, in particular Member States will long decision-making timeframe for generics, but unlikely to offset long-term savings resulting from earlier price competition. · Patients: possible savings in case of co-payment (depends on national system). Option 5: Revision of the directive to improve market access delays for originator products || · Originator companies: earlier return on investment with potentially positive effects on research and innovation. · Public authorities: significant adjustment costs due to the necessity to streamline and improve pricing and reimbursement procedures. · Patients: earlier access to medicines with associated welfare gains. · Possible unintended effects: non-inclusion of medicinal products into reimbursement in order to respect the shorter time-limits imposed by the directive. (2)
Objective B: Ensure
the adequacy and effectiveness of the directive in a changing context Option B.1: Status quo (baseline scenario) || · Discrepancy between the provisions of the directive and the current pharmaceutical market will remain, leading to persistent problems of legal interpretation, implementation and enforcement. · Pharmaceutical companies: legal uncertainty and lack of business predictability; lack of level playing field with potential effects on competitiveness (reduced pharmaceutical sales, R&D and employment). · Patients: potentially unjustified limitations in terms of access to medicines, with consequences on health and well-being. Option B.2: Soft Law || · Stronger basis for the enforcement of existing obligations but legal certainty would not significantly improve: this option is unlikely to address the persistent issues of enforcement if Member States continue to advocate a restrictive interpretation of the directive. · Important resources required to draft guidelines (e.g. regular cooperation between the Commission and Member States). Option B.3/a: Minimal revision to reflect case-law || · Implementation of the directive by Member States and verification of compliance by the Commission would be facilitated. · Limited improvement in legal clarity and predictability: the variety of pricing and reimbursement policies would not be addressed (e.g. uncertainties regarding tendering procedures and contractual agreements would remain). · Limited flexibility to adjust reegulatory framework over time. Option B.3/b: Extensive revision to align with the current pharmaceutical environment || · Improvement in legal clarity and effectiveness of the directive: unjustified barriers to trade could be more easily detected and deterred or sanctioned. Directive drafted on the basis of general principles would be more ‘future proof’. · Better regulation: clear delimitation between the directive and other relevant legal instruments (e.g. public procurement law, contract law). · Potential delays in pricing and reimbursement procedures relating to personalised medicines could be avoided through better coordination within the competent authorities but approach abandoned because it raises subsidiarity issues and it gathered weak support in the public consultation. · Limited flexibility to adjust regulatory framework over time. Option B.4: Notification of draft national measures || · Preventive dialogue and improved enforcement · Compliance costs for public authorities and risk of financial costs linked to the delayed adoption of national measures (no impact on individual pricing and reimbursement decisions addressed to companies). (3)
Objective C: Possible
extension of the scope of the directive to cover medical devices Option C.1: Status quo (baseline scenario) || · Strong support from Member States and industry for this option. · Maintenance of the regulatory delimitation between medicines and medical devices. · No fundamental impact on the medical devices market: approximately 85% of the medical devices sold in the EU (in value) are not subject to price regulation and to mechanisms of inclusion in reimbursement. Transparency issues in the medical devices sector mostly relate to public procurement (purchasing by hospitals) and can be addressed via other legal instruments. · The segment of the medical devices market subject to pricing and reimbursement decisions is small (15%) and decreasing. · Medical devices are covered by the obligations of the Treaty governing the free movement of goods. Option C.2: Partial extension of the directive to cover a specific segment of the medical devices market || · Early market access for medical devices subject to price regulation and inclusion in reimbursement lists (application of time-limits): benefits for companies in terms of return on investment and for patients due to swift access to health technologies. However, no industry support for this option. · Legal and technical complexity. Increased market fragmentation due to the differentiated treatment of similar products depending on the national rules governing their pricing and reimbursement. · Additional burden/costs for some Member States.
7.
Comparison of Options
The options relating to medicinal products
have been compared against the main criteria of effectiveness to achieve the
objectives pursued, efficiency (taking into account the burden and costs on
Member States), legal certainty and enforcement. On this basis, the preferred options are: –
Options A.3/b, A.3/c, as well as options A.4/a
and A.4/b, to ensure timely pricing and reimbursement decisions; –
Options B.3/b and B.4 to ensure the adequacy and
effectiveness of the directive in a changing context. Performance of options against key criteria – Objective A Objective A: Ensure timely pricing and reimbursement decisions || Effectiveness || Efficiency = Effectiveness vs. burden/costs for Member States || Legal certainty || Enforcement Option A.1: Status quo (baseline scenario) || - || - || - || - Option A.2: Soft Law || ± || + || ± || ± Option A.3/a: Financial penalties by national judges || ± || + || + || ± Option A.3/b: Automatic inclusion in reimbursement after expiry of the time-limits and until decision || + + || ± || + || + Option A.3/c: Benchmarking reports || + || + || + || ± Option A.4/a: Shorter time-limits for generics || + + || + || + || O Option A.4/b: Prohibition of patent linkage and duplication of assessments || + + || + + || + + || O Option 5: Shorter time-limits for originator medicines || + || - || + || O Performance of options against key criteria – Objective B Objective B: Ensure the adequacy and effectiveness of the directive in a changing context || Effectiveness || Efficiency = Effectiveness vs. burden/costs for Member States || Legal certainty || Enforcement Option B.1: Status quo (baseline scenario) || - || - || - || - Option B.2: Soft Law || ± || + || ± || ± Option B.3/a: Minimal revision to reflect case-law || ± || ± || + || + Option B.3/b: Extensive revision to align with the current pharmaceutical environment || + || + || + + || ± Option B.4: Notification of draft national measures || + || ± || + || + + Performance levels: + + Very high + High ± Moderate - Negative O No impact oooo : Preferred options The options
relating to the possible extension of the directive to medical devices have mainly
been compared in terms of general benefits and drawbacks. The conclusion is
that the benefits of extending the directive to the small share of the medical
devices market subject to pricing and inclusion in reimbursement lists do not
counterbalance the drawbacks, in particular the legal
and technical complexities of such an extension as well as the risk of further
market fragmentation. Performance
of options against key criteria – Objective C Objective C: Possible extension of Directive 89/105/EEC to medical devices || Effectiveness (impact on transparency of the market) || Efficiency = Effectiveness vs. burden/costs for Member States || Legal certainty Option C.1: Status quo || ± || + || + Option C.2: Partial extension to a specific segment of the medical devices market || ± || - || - Synergies exist
between the preferred options. For instance, the objective of scrapping
unnecessary pricing and reimbursement delays for generic medicines will be more
effectively achieved by combining different options. However, synergies could
not be quantified as they essentially lie in the mutually reinforcing legal
effects of the recommended options. The main implications of the proposed set
of policy options for each of the main stakeholders are presented below. || Advantages/Benefits || Disadvantages/Costs Member States || · Increased legal clarity and easier implementation of the procedural requirements. · Potential cost savings linked to quicker pricing and reimbursement for generics. · No interference of intellectual and industrial property rights with day-to-day pricing and reimbursement activities. || · Stronger enforcement instruments requiring more systematic compliance. Potential impact on public health budgets in case of non-compliance with the time-limits. · Need to improve or streamline pricing and reimbursement processes (including expert assessments such as HTA). · Shorter time-limits for generics may entail initial compliance costs if national procedures need to be adapted. · Limited administrative costs linked to reporting obligations and notification of draft national measures. Originator companies || · Increased legal clarity, stronger enforcement instruments and more ‘future proof’ legislation will: - bring additional business predictability; - improve market access; - improve competitiveness and foster innovation. · Earlier competition with generics will encourage the pursuit of innovation. || · Automatic inclusion in case of non-compliance with the time-limits may have the side effect of encouraging Member States to issues negative decisions within the deadlines. · Should automatic inclusion occur in practice, potential insecurity if the decision eventually issued by the competent authorities beyond the time-limits is negative. Generic companies || · Increased legal clarity, stronger enforcement instruments and more ‘future proof’ legislation will: - bring additional business predictability; - improve market access; - improve competitiveness and foster innovation. · Shorter time-limits for pricing and reimbursement decisions and clarification of the non-interference of safety and IPR issues with pricing and reimbursement procedures will ensure earlier market entry and more effective competition in off-patent markets. || · Should automatic inclusion occur in practice, potential insecurity if the decision eventually issued beyond the time-limits by the competent authorities is negative. Patients || · Access to medicines not hampered by delays in pricing and reimbursement decisions. · Cost savings linked to earlier generic entry and price competition in off-patent markets (in case of co-payment). || · Should automatic inclusion occur in practice, potential insecurity or even health impact if the decision eventually issued beyond the time-limits by the competent authorities is negative and patients have to switch their treatment.
8.
Monitoring and Evaluation
The monitoring and implementation plans
will mainly rely on: –
Cooperation between the Commission and the
Member States in the framework of the Transparency Committee established by the
directive. The Committee will meet on a regular basis during the transposition
phase to monitor and facilitate transposition by the Member States. –
The proposed pre-notification mechanism to
monitor the adequate implementation of the directive and enable bilateral
dialogue with the Member States. –
Implementation reports to be communicated by
Member States within three years after the entry into force of the directive,
followed by an assessment of the operation of the directive by the Commission
within three years after the date of entry into force. The core progress
indicators and monitoring instruments which will be used to assess whether the
new directive is meeting its objectives are presented below. Objectives || Progress indicators || Monitoring instruments A. Timely pricing and reimbursement decisions: compliance with the time-limits || Observed timing for pricing and reimbursement decisions in the Member States || Annual mandatory reporting on the actual time taken for individual pricing and reimbursement decisions. B. Adequacy and effectiveness: legal clarity and enforcement || a) Changes in national measures and compliance of notified drafts with the directive (compliance rate based on pre-notification system) b) Complaints filed and investigated by the Commission, Commission referrals to the Court of Justice of the European Union || Notification of draft national measures to the Commission Infringement statistics