Insights
A Newsletter Published by the Members of conférence bleue
April 2004 / Issue 15
Table of Contents
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Pharmaceutical Pricing
in Switzerland – a comparison with selected reference countries
Dr.
Peter Bratschi, Lawyer and Ursula Eggenberger Stöckli, Lawyer and Pharmacist,
Bratschi Emch & Partner, Berne, Switzerland
EU ADOPTS ITS FUTURE MEDICINES LEGISLATION
Thomas Tindemans, Esq. and Sasha Lewis, White & Case
incorporating Forrester & Sutton,
Mikaela Lassborn, Esq. and Sasha
Lewis, White & Case incorporating Forrester & Sutton, Brussels, Belgium
Ceiling
in Greece on Promotional Expenses by Pharmaceutical Companies
Yannis Chryssospathis, Esq., M.&P. Law Offices,
PARALLEL TRADE IN GREECE/COURT
JUDGEMENTS
Yannis Chryssospathis, Esq., M.&P. Law Offices,
CHANGE IN PHARMACEUTICAL REIMBURSEMENT PROCEDURE IN FINLAND
Pauliina Tenhunen, Esq. & Anna-Maria
Palmroos, Esq., Castrén & Snellman, Helsinki, Finland
Some Aspects of Latest
Developments in Reimbursement and Pricing of Pharmaceuticals in Germany
Prof. Dr. med. Iur Alexander
P.F. Ehlers, Esq. & Dr. Oliver Sude, Esq., Ehlers, Ehlers & Partner,
Munich, Germany
Pharmaceutical Pricing in
Dr. Peter Bratschi,
Lawyer and Ursula Eggenberger Stöckli, Lawyer and Pharmacist, Bratschi Emch
& Partner, Berne, Switzerland
The Swiss Industry associations, Interpharma and VIPS,
approached IMS Consulting to undertake an analysis of the prices of
pharmaceutical products in
1. Prescription Drug
Pricing in
Prices of reimbursed pharmaceuticals are fixed by the Federal
Office of Social Insurance. The Swiss drug price control is based on
therapeutic comparison within therapeutic groups and on international
comparison with prices of other countries. The price, in general, should not
exceed the average of the prices awarded in
After 15 years on the market, or at patent expiry, the price
of the product is once again compared with prices in
In July 2001, a new margin system has been introduced. Under
the new system, pharmacists receive a fixed dispensing fee per pack, depending
on the manufacturer's selling price, and a fee for services offered (e.g.
patient counseling). This system changed the retail prices of most
pharmaceutical products on the reimbursement list. It has been introduced in
order to remove financial incentives to pharmacists and dispensing doctors to
dispense more expensive products.
2. Results
Prices of the top 100 reimbursed products in
The comparison has been done on different levels and is based
on prices in the second quarter 2003, which have been indexed.
2.1 Public Level Comparison including VAT
At public prices, the analysis reflected the significant
differences between margin structures and value-added tax (VAT) rates charged
by the countries. The comparison between individual countries shows that prices
were the highest in
In terms of the reference price groups, Swiss prices were
lower than the European comparator groups, but higher than the group with the
2.2 Ex-manufacturer
Level Comparison
Findings at ex-manufacturer level show average wholesaler
purchase prices, without the impact of pharmacy and wholesaler margins or VAT.
At this level,
In terms of the reference groups, the group with
2.3 Indexed to
Purchasing Power Parities
Purchasing power parities (PPP) are the rates of conversion
that eliminate the differences in price levels between countries.
At the public price level in the PPP indexed analysis, prices
in all countries except
The including of PPP leads to a significantly difference to
the ex-manufacturer price comparisons excluding PPP, where
3. Conclusions
·
Points to consider
As a whole, the study has been ordered by the Swiss industry
associations in order to show that the Swiss price level is not as much higher
than in other countries as some patient and consumer organizations in
But despite some faults, the report can give an idea on
prices of pharmaceutical products in different countries and on different
levels.
The report as a whole (in English) can be down-loaded from
Interpharma's web-site (www.interpharma.ch -> news).
EU ADOPTS ITS FUTURE MEDICINES LEGISLATION
Thomas Tindemans, Esq. and Sasha
Lewis, White & Case incorporating Forrester & Sutton, Brussels, Belgium
Adoption of the EU’s revised
pharmaceuticals legislation will be finalised before enlargement.
The
review of EU pharmaceutical legislation reached its final stage on December 17,
2003, when the
European Parliament adopted two Directives and a Regulation which will regulate
the pharmaceutical industry in
When the Commission launched its “Pharma Review” in 2001, Enterprise Commissioner Erkki
Liikanen explained that its aims were as follows:
·
to ensure the continued
protection of public health;
·
to improve the single market
in pharmaceuticals and increase the competitiveness of
·
to prepare for enlargement.
The new
Regulation aims to give the European Medicines Evaluation Agency (EMEA) a more
important role, notably by increasing the number of types of medicines subject
to the centralised system for obtaining a marketing authorisation to include
orphan drugs and treatments for HIV, cancer, diabetes and neurodegenerative
diseases. At a later stage, the
centralised procedure will be extended to cover all viral infections and
autoimmune diseases. The EMEA will also offer more scientific and regulatory
advice to the industry. Its procedures will be updated to respond to its
increased responsibilities and the effects of enlargement. A new fast-track procedure will reduce the
time taken to review applications for marketing authorisations by at least two
months. It will be possible to obtain a
conditional authorisation to allow a product to be marketed earlier in the
development stage. Compassionate use of
a product will also be allowed, so that patients successfully treated during
clinical trials can continue to use the product during the authorisation
assessment.
The conflict between ensuring appropriate clinical data
protection for R&D companies, and enhancing the possibilities for generics
producers to develop equivalent products, was one of the most controversial
elements throughout the process of adopting the new legislation. This conflict
was sharpened by the escalating health budgets of the current
Other amendments introduced by the Parliament in second
reading include revised definitions of medicines and certain categories of
pharmaceutical products (homeopathic, generic, biogeneric etc.) with a view to
establishing clearly which legislation is applicable to the product in
question. However, the Commission’s proposals
in the original draft legislation to allow direct information to patients on
treatment for certain specific disease groups (HIV, cancer, immunoviral
diseases) have been dropped from the final texts - predictably, as they aroused
opposition from Members of the European Parliament for fear of opening the door
to advertising of prescription drugs. At
the Parliament’s request, the Commission will now carry out a study of this
issue before deciding whether to propose new legislation.
Once the
Council has given its final approval to the new package and the legislation has
been published in the Official Journal, Member States will have 18 months (i.e.
until 2006) in which to implement the two new Directives on human and
veterinary products. (The Regulation, of
course, has direct effect). Pharmaceutical
companies would be well-advised to monitor the implementation process
carefully, especially in the new Member States. For example, some acceding
countries may seek derogations from the provisions on regulatory data
protection.
AN AGREEMENT TAKES TWO
Mikaela Lassborn, Esq. and Sasha
Lewis, White & Case incorporating Forrester & Sutton, Brussels, Belgium
Like the European Court of
First Instance, the European Court of Justice holds that Bayer and its French
and Spanish wholesalers did not illegally agree to limit parallel imports.
On 6 January 2004, the
European Court of Justice (ECJ) delivered its judgment in the Bayer/Adalat case. (1) It agreed with the Court of
First Instance (CFI) that Bayer had not made an agreement with its French and Spanish
wholesalers to limit parallel exports. Tarius users will recall that a 1996
decision by the European Commission condemned and fined Bayer for limiting
supplies of its product Adalat to certain wholesalers in France and Spain
during the 1980’s and 1990’s. Bayer
supplied wholesalers with quantities which would satisfy domestic demand,
but refused or reduced orders for excess
supplies likely to be used for parallel trade. Bayer’s standard contractual
terms on the basis of which sales were made did not specifically prohibit the
making of exports. However, it was
generally known that Bayer wanted to prevent exports, and its policy was
unpopular with traders, who complained to the Commission. In onsite
investigations, the Commission found documents confirming that Bayer was
conducting a campaign against parallel exports. The Commission therefore
condemned Bayer for infringing Article 81(1) EC Treaty, by concluding with its
(admittedly reluctant) wholesalers an unwritten agreement which formed part of
their continuous commercial relations and had the purpose and effect of
limiting competition, as well as a significant effect on trade between Member
States.
However, the CFI annulled the
decision on 26 October 2000, holding that the Commission had failed to prove
Bayer and the wholesalers had agreed to limit exports, as it had not shown
there was any agreement between them. The existence of an agreement must be
shown from the:
“concurrence of wills between economic
operators and the implementation of a policy, the pursuit of an objective, or
the adoption of a given line of conduct on the market.” (2)
Clearly, before proving that an agreement
restricts competition, it must be shown that the agreement actually
exists.
In the appeal to the ECJ, the main question was
what constitutes an agreement. The Commission claimed the CFI had adopted an
over-restrictive interpretation which went against earlier case-law. However,
Advocate General Tizzano's Opinion on the appeal agreed with the approach of
the CFI. The Advocate General pointed out that in earlier cases there had been
evidence of an agreement, either because the producer’s invoices specifically
indicated that export was forbidden, or because supplies were made on the basis
of individual distribution agreements between the producer and the wholesaler
which included provisions limiting or prohibiting exports. He argued that there must be an (at least
tacit) offer or request to enter into an agreement, and that it would be absurd
to consider that an agreement could be concluded through an implicit
acceptance of an offer which had not (even tacitly) been made. Bayer
had not requested or required the wholesalers to do anything regarding the
final destination of its products, but instead had "developed a method making it possible for
the company unilaterally to achieve the result of eliminating or reducing
parallel imports without the need to cooperate with the wholesalers", by
adjusting its supplies unilaterally to local demand.
The ECJ agreed that an anti-competitive
agreement:
“cannot be based on what is only the
expression of a unilateral policy of one of the contracting parties, which
can be put into effect without the assistance of others.”
In earlier cases, the
manufacturers had sought the cooperation of wholesalers to reduce or eliminate
parallel trade. They had effectively demanded a particular line of conduct by
inserting the words ‘export prohibited’ on invoices, and the wholesalers had
agreed to this by continuing to order products without protesting
about the export ban. However, in Bayer’s case, the combined effect
of a quota system with the obligation on wholesalers to maintain national
stocks, but without an express requirement to limit exports:
“merely
serves to demonstrate the unilateral nature of Bayer’s policy, which could be
carried out without the cooperation of the wholesalers. […] Therefore, the mere
fact that there is a hindrance to parallel imports is not sufficient to
demonstrate the existence of an [anti-competitive] agreement.”
The ECJ added that the
co-existence of an agreement which was competitively neutral, with a measure
restricting competition that was imposed unilaterally, did not result in an
anti-competitive agreement:
“the
mere fact that a measure adopted by a manufacturer, which has the object or
effect of restricting competition, falls within the context of continuous
business relations between the manufacturer and its wholesalers, is not
sufficient for a finding that such an agreement exists.”
The judgment is extremely
important for the pharmaceutical industry, since it clarifies that unilateral
measures to reduce parallel trade which can be implemented without involving
third parties are not necessarily illegal, although they may be if:
“though
apparently adopted unilaterally by the manufacturer in the context of its
contractual relations with its dealers, [they] nevertheless receive at least
the tacit acquiescence of those dealers."
Many pharmaceutical companies
which have introduced or are planning to introduce a quota system will be
somewhat comforted that a unilateral quota system falls outside Article 81 and
can be used as a means to limit the damages of parallel trade. On the other
hand, it should be kept in mind that quota systems are not per se legal. Each system is
different and will have to be assessed on its merits. Bayer/Adalat did not
address the question of whether applying a quota system to products over which
the manufacturer is considered to have a dominant position may be considered an
abuse of dominance. A case on this question is currently pending before the ECJ
in a referral by the Hellenic Competition Committee.(3) The Commission is also starting to look into
the quota systems notified to it. At the
end of 2003 the Commission sent questionnaires to pharmaceutical companies that
had notified quota systems. Clearly the
parallel trade wars are not over yet.
Footnote (1): Joined Cases C-2/01P and C-3/01P. The appeals were lodged separately but dealt
with together by the ECJ.
Footnote (2): Paragraph 173.
Footnote (3): Case C-53/03, Syphate et al v.
GlaxoSmithKline PLC.
Ceiling in
Yannis Chryssospathis, Esq., M.&P. Law Offices,
On May 2002 the Greek authorities published on the
Official Journal a ministerial decision which limits the level of the annually promotional
spending by pharmaceutical companies.
According to the ministerial decision in question a cap
has been provided on promotional spending which constitutes a % on the annual turnover
of the pharmaceutical companies.
The industry reacted immediately by considering the
capping as an unfair treatment among companies, and the ministerial decision as
unconstitutional.
The authorities responded by publishing a new
ministerial decision on December 2002, with which the % on the turnover of the
companies was increased.
Following that the Hellenic Association of
Pharmaceutical Companies lodged on March 2003 an application to the highest
administrative Court, the Council of State, for the annulment of the
ministerial decision on the basis that the restrictions on promotional expenses
is unconstitutional since it establishes a financial ceiling which restricts
economic freedom.
The Court with its decision, which was published
recently, rejected the application on the basis that the situation with other
companies and pharmaceutical companies is not identical, since the latter are
focussing on selling medicinal products, a social good of exceptional
importance for the public interest.
No appeal can be submitted against the decision in
question.
PARALLEL TRADE IN GREECE/COURT JUDGEMENTS
Yannis Chryssospathis, Esq., M.&P. Law Offices,
An arising number of Judgements of the First Instance
Court of Athens issued on 2003 considered as not being unjustified the refusal
of a pharmaceutical company to supply the total quantities ordered by the
wholesalers who suddenly are asking for significantly increasing volumes of
products.
More particularly according to the reasoning of some of
these Judgements, the sued pharmaceutical companies are defending their
financial interests consisting in avoiding the emergence of problems in the
company's organisational structure, over the interests of the suing wholesale companies,
that result from the supply of the products of the sued pharmaceutical company
in Europe.
Further on, according to the reasoning of the
Judgements in question, in case that the refusal of the pharmaceutical company
to sell a product would be considered unjustified, the said company could be
obliged to supply the wholesale company with unlimited quantities of its
products, if the latter might request it, endangering in this way, the whole
trading of the mother company of the sued one.
This could take place since, according to the Judgements;
a major part of the European trade of the particular products would be supplied
through the exports from
The wholesalers lodged appeals against the Judgements
of the First Instance Court of Athens.
It remains to be seen how the Court of Appeal will
handle the matter.
CHANGE
IN PHARMACEUTICAL REIMBURSEMENT PROCEDURE IN
Pauliina Tenhunen, Esq. & Anna-Maria
Palmroos, Esq., Castrén & Snellman, Helsinki, Finland
On
The European Court of Justice noted
that
The Court stated that, by not
adopting any laws or regulations necessary to comply with the Directive as
regards the decisions establishing the categories of medicinal products subject
to a higher-rate of health insurance coverage,
The Court concluded that the existing
procedure, under which the primary decision establishing which medicinal
products qualify for the higher-rate scheme and which was developed by the
Council of Ministers’ and the subsequent decision by the Institute for Social
Security, was not compatible with the Directive. The Court criticized
The latest amendment to the Sickness
Insurance Act (1151/2003) takes into account Council Directive 89/105/EEC and
the decision of the European Court of Justice. The amendment to the Act entered
into force on 1 January 2004.
Subsequently, the reimbursement
proceedings regarding the medicinal products that qualify for the higher-rate
scheme were altered. The determination of the special reimbursability and a reasonable
wholesale price of such medicinal products is now subject to proceedings
initiated upon application to the Pharmaceuticals’ Pricing Board. With certain
exceptions, only the holder of the marketing authorization for the medicinal
product or a contact person based in
The decision of the Pharmaceutical’s
pricing Board to include a medicinal product within a higher rate of insurance
coverage must now be made within 90 and 180 days. The decision of Board will be
in force for a maximum period of five years, and a decision on a product containing
a new active substance will be in force for a maximum period of three years. In
certain instances the Board will obtain an opinion from an established expert
group. As a rule, a medicine may be approved in the special reimbursement
category when it has been included into the basic reimbursement category for
two years. An earlier acceptance is also possible, however, when certain requirements
are met.
Decisions made by the
Pharmaceuticals’ Pricing Board can be appealed to the
Some Aspects of Latest
Developments in Reimbursement and Pricing of Pharmaceuticals in
Prof. Dr. med. Dr. iur Alexander P.F. Ehlers,
Esq. & Dr. Oliver Sude, Esq., Ehlers, Ehlers & Partner, Munich, Germany
In general, pricing by the marketing
authorisation holder is not regulated in
The reference price system was introduced in
1989. The idea behind this system was to establish an upper limit for the costs
reimbursable through the statutory sickness funds. According to § 35 SGB V
(Social Code Volume 5), a reference price is set for each drug based on the
price about products in the group into which they are allocated. The
Gemeinsamer Bundesausschuss (Joint Federal Committee) which consists of doctors
and representatives of sickness funds, classifies drugs into three categories
for the purposes of setting the reference price: pharmaceuticals with the same
medicinal substance (level 1), pharmaceuticals with a comparable medicinal
substance and therapeutically equal (level 2) and pharmaceuticals which are
therapeutically equal, particularly combination products (level 3). The
reference price is the maximum amount reimbursed. If the price is higher, the
patient must pay the difference in addition to the normal co-payment.
In 1996 the former German government
incorporated a patent protection clause in the reference price system. No drug
which received its marketing authorisation after the end of 1995 should be
included in a level 2 or level 3 reference prices until its own patent expires.
On 1 January 2004, the Act on the Modernisation of the Statutory Health
Insurance Funds (Gesetz zur Modernisierung der gesetzlichen Krankenversicherung
– GMG-Act) took effect. One of the main alterations of this reform concerning
the reference price-system is that from now on also patented drugs may be
allocated into level 2 groups (pharmaceuticals with a comparable medicinal
substance and therapeutically equal) provided this group contains at least
three drugs protected by patents. Whereas the pharmaceutical industry considers
this alteration as an erosion of patent protection, the government aims at
further savings within the drug sector and the strengthening of price
competition among patent protected pharmaceuticals.
Another new aspect within the German health
care system with regard to the pricing of pharmaceuticals is the possibility of
negotiating individual contracts between service providers and the statutory
health insurance funds (§ 140 a SGB V). However, these provisions apply only to
the so-called integrated care system. In the past,
Additional Information on the New Quarterly Doctor’s Fee
According to § 28
sec. 4 SGB V (Social Code Volume 5) persons covered by the statutory health
insurance plan who are older than 18 years are required to pay € 10 per quarter
for the first consultation of a physician, a dentist or a physiotherapist
within the outpatient sector. This measure introduced by the Act on the
Modernisation of the Statutory Health Insurance Funds (Gesetz zur
Modernisierung der gesetzlichen Krankenversicherung – GMG-Act) which took
effect on
Disclaimer:
This
Newsletter is intended to provide general information on the members of
conférence bleue and on recent developments of relevance to the pharmaceutical
sector. The information and opinions which it contains are not intended to
provide legal advice, and should not be treated as a substitute for specific
advice concerning particular situations.
Editor
conférence bleue members
Austria: Schönherr Rechtsanwälte, Tuchlauben 17, P.O. Box 41, A-1014
Vienna, www.schoenherr.at
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Germany: Ehlers, Ehlers & Partner, Rechtsanwaltssocietät,
Widenmayerstrasse 29, D-80538 Munich, www.eep-law.de
Sweden: RydinCarlsten, Advokatbyra AB, Norrmalmstorg 14, P.O. Box
1766, SE-11187 Stockholm, www.rydincarlsten.se
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