Parallel trade hurts drugs research, says KPMG
The system of national controls on the price at which medicines are sold in European countries is threatening prospects for the pharmaceutical industry, according to professional services firm KPMG. It claims that national pricing mechanisms are at odds with the EU principle of free flow of goods between countries. Furthermore, grey market trading means that revenues from medicines are being undercut, threatening the funding of vital research and development work based in Europe.
John Morris, KPMG's European head of pharmaceuticals, said: 'Moving medicines from lower priced to higher priced countries is very much favoured by government purchasers in wealthier countries as it provides access to cheaper medicines,' he said. 'However, by persisting with this grey goods (or parallel trade) approach, the EU and key member states are shooting themselves in the foot.'
The loss of revenue could irreparably damage some of Europe's most successful companies, limiting their ability to create the medicines of the future, and undercutting the Commission's stated objective of boosting r&d-based pharmaceutical activities in Europe and halting the exodus to the US, he suggested.
To address the problem, member states should redouble their efforts to restructure the demand side to create an effective single market. For its part, the industry should abandon its rhetoric on 'free pricing' and should seek to establish a single EU list price from which it can negotiate national contracts, incorporating appropriate selective discounts. 'Finally and most importantly, the EU Commission, which speaks with at least three voices - Competition, Enterprise and Health - must get its act together and accept its responsibility for managing,' Morris stressed.
KPMG's warning must be taken seriously before it is too late, says the Association of the British Pharmaceutical Industry (ABPI). 'It is not just unfair to penalise pharmaceutical companies because of the policies of different European governments, it is positively dangerous if we are to maintain our investment in the medicines of the future,' said ABPI director general Dr Trevor Jones. 'Hit our profits in this way and you hit at our ability to research new treatments. This is a political problem that requires a political solution.'