Innovation Union Partnership on active and healthy ageing One of the seven flagship initiatives proposed by the Commission to take

for-ward the Europe 2020 strategy is the “Innovation Union”,⁶ the aim of which is to improve the innovativeness of Europe and ensure that research is effectively translated into practice in sectors including health. One of the key issues iden-tified is the challenges brought by demographic ageing – while the increasing lifespan of Europeans is an excellent outcome of improving living standards and health systems, it also presents significant challenges, with increasing costs to health and social care systems alongside a relative reduction in the size of the working-age population that can keep working to pay for these systems.⁷ While the relative size of increases in costs to health systems for the coming decades is actually smaller than the average increases in health care spending in the past decades of the EU, this is still a substantial shift and presents a major challenge to countries whose public budgets are already under serious pressure.

The Commission accordingly took this topic of “health and active ageing” as the focus of its first Innovation Union Partnership⁸ proposed as part of the Innovation Union initiative. The aim of this Partnership is to bring together stakeholders and experts across the innovation chain from basic research to practical applica-tion in order to improve health, improve the sustainability of health systems and to create business opportunities for health industries – indeed, the Partnership aims to increase by two the years of healthy life lived throughout Europe by

5 Council of the European Union. Council conclusions on the reflection process on modern, responsive and sustainable health systems. Brussels, European Commission, 2013 (http://www.consilium.europa.eu/uedocs/

cms_data/docs/pressdata/en/lsa/140004.pdf, accessed 4 July 2014).

6 European Parliament, Council, European Economic and Social Committee and Committee of the Regions.

Communication: Europe 2020 flagship initiative innovation union (COM(2010)546). Brussels, European Commission, 2010.

7 European Commission (ECFIN) and the Economic Policy Committee (AWG). The 2009 ageing report:

economic and budgetary projections for the EU-27 Member States (2008–2060). Brussels, European Commission, 2009 (http://ec.europa.eu/economy_finance/publications/publication14992_en.pdf, accessed 4 July 2014).

8 European Commission. European innovation partnership on active and healthy ageing. Brussels, European Commission, 2013 (http://ec.europa.eu/research/innovation-union/index_en.cfm?section=active-healthy-ageing&pg=home, accessed 4 July 2014).

2020. This bold objective, however, does not have any additional resources pro-vided to help to achieve it. Rather, the Partnership depends on existing funding streams at European or national level being voluntarily mobilized to support its priorities, and it relies on the power of its vision to convince actors in the area to take forward the issues that it identifies as priorities. Quite a number of organizations have become involved in the Partnership;⁹ it remains to be seen whether an initiative on this relatively limited scale, with its disparate economic and public health priorities, will have any significant impact on the health and health systems of the EU as a whole.

4.2 Goods

Health-related products are a major part of the internal market and have become one of the most European of sectors, with highly detailed European require-ments governing them. Health has to be ensured for all products, whether they are specifically related to health or not, and this has been reflected in the wider rules for products within the EU.

4.2.1 Pharmaceuticals

Since 1965,¹⁰ the EU has been steadily harmonizing the rules governing the requirements to allow sale of medicinal products in the EU, to the extent where this is now one of the most regulated sectors of the European market.¹¹ Initially focused on setting common standards for national licensing bodies, the EU now has different options for licensing pharmaceuticals at either national or European level. The “centralized” procedure works with one single application for a licence, which is then valid for the entire EU; this route is compulsory for some product types, in particular those derived from biotechnology, and for those containing a new active substance licensed after May 2004 and intended to treat the priority conditions of HIV/AIDS, cancer, neurodegenerative diseases or diabetes. Otherwise, applications can be made to individual national authori-ties, with an approval granted by one national regulator then being recognized by others as and when applications are made to other countries. The European

9 See the Commission’s report on achievements and impact: European Innovation Partnership on Active and Healthy Ageing. Action groups: first year report. Brussels, European Commission, 2013 (http://ec.europa.eu/

research/innovation-union/pdf/active-healthy-ageing/achievements_2013.pdf#view=fit&pagemode=none, accessed 4 July 2014)

10 European Council. Directive 65/65/EEC of 26 January 1965 on the approximation of provisions laid down by law, regulation or administrative action relating to medicinal products. Brussels, European Commission, 1995

11 Principally governed by Directive 2001/83/EC and Regulation (EC) No 726/2004; see also Hauray B.

L’Europe Du Médicament: Politique – Expertise- Intérêts Privés. Paris, Presses de Sciences, 2006. Permanand G. EU pharmaceutical regulation: the politics of policy-making. Manchester, Manchester University Press, 2006.

processes are run by one of the major health-related European agencies, the EMA¹² based in London. The EMA also oversees the systems for monitoring any problems that may become apparent with medicines after they are licensed:

the pharmacovigilance system.

The licensing process for pharmaceuticals is lengthy, with a sequence of three phases of clinical trials required before licensing in order to progressively provide the data necessary about the safety and efficacy of the product for the application to be evaluated.¹³ The conduct of clinical trials is itself regulated at EU level,¹⁴ although this has been controversial, with debate about whether the require-ments imposed are too onerous, in particular for non-commercial applicants.

Following pressure from patient groups, information about clinical trials is itself available through a database at the European level.¹⁵

12 European Medicines Agency [web site]. London, European Medicines Agency (http://www.ema.europa.

eu/ema/ accessed 4 July 2014).

13 World Health Organization. International clinical trials registry platform. Geneva, World Health Organization, 2014 (http://www.who.int/ictrp/glossary/en/index.html for more information about clinical trials, accessed 4 July 2014).

14 European Parliament and Council. Directive 2001/20/EC on the approximation of the laws, regulations and administrative provisions of the Member States relating to the implementation of good clinical practice in the conduct of clinical trials on medicinal products for human use. Official Journal, 2001, L 121, p. 34.

15 European Medicines Agency. EU clinical trials register. Brussels, European Medicines Agency, 2014 (https://www.clinicaltrialsregister.eu/ctr-search/search, accessed 4 July 2014).

Regulating pharmaceuticals in Europe: striving for efficiency, equity and quality Edited by Elias Mossialos, Monique Mrazek and Tom Walley

Oxford University Press, 2004

http://www.euro.who.int/en/about-us/partners/

observatory/studies/regulating-pharmaceuticals-in-europe-striving-for-efficiency,-equity-and-quality The rising cost of pharmaceutical expenditure in many European countries is of concern to governments required to make effective use of health care budgets. Taking a broad perspective that encompasses the institutional, political and supranational aspects of pharmaceutical regulation, this book examines the approaches used to manage pharmaceutical expenditure across Europe and what impact they have had on the efficiency, equity, quality and cost of pharmaceutical care.

European Observatory on Health Care Systems Series

Regulating pharmaceuticals

Regulating pharmaceuticals inEuropeEdited by Mossialos/Mrazek/Walley

Regulating pharmaceuticals in Europe:

striving for efficiency, equity and quality

"This thoughtful and comprehensive book represents the best work I have seen on the current situation concerning medication policies in the EU. It is not just that this is a very up-to-date compendium of facts…the book is also strong on analysis of those facts."

Jerry Avorn, Harvard Medical School

"A valuable and timely contribution to understanding the many debates about regulating industry, medicines and prescribing across Europe."

Sir Alisdair Breckenridge, Chairman of the Medicines and Healthcare Products Regulatory Agency, United Kingdom The rising cost of pharmaceutical expenditures in many European countries is of concern to governments required to make effective use of health care budgets. Taking a broad perspective that encompasses institutional, political and supranational aspects of pharmaceutical regulation, this book examines approaches used to manage pharmaceutical expenditure across Europe and what impact these strategies have had on the efficiency, quality, equity and cost of pharmaceutical care.

Regulating Pharmaceuticals in Europe is an important book for students of health policy, regulation and management, and for health managers and policy makers.

The editors

Elias Mossialos is Brian Abel-Smith Professor of Health Policy at the London School of Economics and Political Science and a Research Director of the European Observatory on Health Systems and Policies.

Monique Mrazek is a Health Economist for the World Bank (Europe and Central Asia region) and formerly a Research Officer in Health Economics at the European Observatory on Health Systems and Policies at the London School of Economics and Political Science.

Tom Walley is Professor of Clinical Pharmacology at the University of Liverpool and Director of the UK National Health Technology Assessment Programme.

The contributors

Julia Abelson, Christa Altenstetter, Vittorio Bertele‘, Christine Bond, Marcel L. Bouvy, Colin Bradley, Steve Chapman, Anna Dixon, Michael Drummond, Pierre Durieux, Edzard Ernst, Armin Fidler, Eric Fortess, Richard Frank, Silvio Garattini, Leigh Hancher, Ebba Holme Hansen, Steve Hudson, Kees de Jonchere, Panos Kanavos, Sjoerd Kooiker, Jean-Marc Leder, Graham Lewis, Donald W. Light, Alistair McGuire, Elias Mossialos, Monique Mrazek, Maria Pia Orru, Govin Permanand, Guenka Petrova, Munir Pirmohamed, Dennis Ross-Degnan, Frans Rutten, Steven Soummerai, David Taylor, Sarah Thomson, Tom Walley.

www.openup.co.uk Regulating pharm… new 22/4/04 9:12 am Page 1

The lengthy process that is required before authorization creates a different chal-lenge, which is that companies developing new drugs have a period of several years between when they patent their potential products and when they are actually licensed and can be sold. Because of this, pharmaceutical products in the EU can have an extension of up to five years on top of the normal 20-year patent protection period.¹⁶ The EU has also attempted to promote the development of drugs for rare diseases (called orphan drugs) through similar mechanisms, providing orphan medicines with 10 years of market exclusivity after they are licensed.¹⁷

So far the regulatory regime resembles that of the world’s other major pharma-ceutical market, the United States. However, once we come to the stage of the pricing, marketing and availability of pharmaceuticals, the EU looks very dif-ferent. This is because, unlike the United States, more than half of pharmaceu-ticals are paid for by public funds, not privately, and the price of medicines and other health care products varies substantially between different EU countries.¹⁸ Therefore, although the EU has a reasonably unified market access regime, its pricing models and markets remain fragmented between the Member States, which take quite different approaches. The most that the EU has agreed on with regard to pricing is that the different regimes for pricing should at least be transparent in terms of providing information about the decisions they make, and should do so within a reasonable time.¹⁹

However, as Member States established their agencies to license pharmaceuti-cals, they also steadily put in place agencies to evaluate the wider utility of such new health technologies.²⁰ These deal with questions such as how well these technologies work, what costs are involved, for whom it works well and how well they work compared with alternative technologies. It seems like a logical area for EU action, since there are obvious economies of scale – how well a par-ticular health technology works and how it compares with available alternatives should not in principle be different in different countries. However, the funds available to pay for such technologies are different, of course, and in practice the methodologies used to make these assessments incorporate cultural values and vary substantially too.

16 European Parliament and Council. Regulation (EC) No 469/2009 of 6 May 2009 concerning the supplementary protection certificate for medicinal products. Official Journal, 2009, L 152, p. 1.

17 European Parliament and Council. Regulation (EC) No 141/2000 of 16 December 1999 on orphan medicinal products. Official Journal, 2000, L 18, p. 1.

18 Ess SM, Schneeweiss S, Szucs TD. European healthcare policies for controlling drug expenditure.

Pharmacoeconomics, 2003, 21(2):89–103; Leopold C et al. Impact of external price referencing on medicine prices: a price comparison among 14 European countries. Southern Medical Review, 2012, 5(2):34.

19 European Commission. Transparency Directive 89/105/EEC: transparency of measures relating to pricing and reimbursement of medicinal products. Official Journal, L 40, p. 8.

20 Velasco-Garrido M, Busse R. Health technology assessment: an introduction to objectives, role of evidence, and structure in Europe. Brussels, European Observatory on Health Systems and Policies, 2005.

Nevertheless, cooperation at European level has been quietly developing since the 1990s, initially through research projects financed by the European Commission.

These have been slowly shifting towards more applied cooperation, with the establishment of the European Network for Health Technology Assessment (EUnetHTA), which now has partners from all the EU Member States as well as Norway and Switzerland²¹ and which is complemented by a network of Member State agencies set up in the Directive on Patients’ Rights in Cross-Border Healthcare.²² It remains to be seen how effective this collaboration is in actually moving towards common assessments of health technologies, although the renewed attention to value for money after the recent financial crisis should logically increase the desire for Member States to assess their health technologies carefully. If such cooperation does prove valuable, a similar issue of sustainability and extension will arise in other areas: can the collaboration move beyond short-term project funding towards some standing structure (such as an agency) for health technology assessment at European level?

Within this picture of a fragmented market for pharmaceuticals, however, there are some areas of European consensus, the principal one being the horror with which European regulators (in particular in the European Parliament) view the widespread direct marketing of pharmaceuticals to consumers in the United States. Such direct to consumer advertising for prescription pharmaceuticals remains prohibited in Europe. There is much ongoing debate about how to reconcile this with the recognized value to patients of having access to accurate information about pharmaceuticals and questions about which sources are likeli-est to provide such information.²³