EU expansion could hinder single market for pharmaceuticals

A single European market for pharmaceuticals will be hindered by the recent expansion of the EU, claims a report by Urch Publishing.

According to European Pharmaceutical Regulation - Implications for Competitiveness, Innovation and a Single Market by Patrick Brennan, full integration of a single European market for pharmaceuticals is currently unlikely for three main reasons:

• The entrenched national sovereignty over healthcare policies, compounded by divergent pricing and reimbursement regulation;

• The joint, sunk nature of pharmaceutical r&d, estimated at more than 30% of product cost on a net present value product lifecycle basis. This creates a situation that does not allow for efficient revenue generation under a uniform pricing system, as a certain amount of cross-subsidisation across products and national boundaries will inevitably occur;

• The enlargement of the EU, which expanded the free trade area to a potential 455m customers. This has exacerbated the difficulties of achieving a single drug market, due primarily to the wide difference in economic indicators between the established 15 Member States and the 10 accession countries.

Integrating the pharmaceutical markets raises several issues that have given rise to concern from industry and regulators: a lack of transparency in national pricing and reimbursement regulation; inconsistent and/or incomplete intellectual property protection for innovative medicines; and parallel trade flows that capitalise on price discrepancies in national drug markets across the EU.

'The inclusion of the Central and Eastern Europe countries in the EU presents the formidable challenge of aligning disparate standards and financial means of healthcare systems across an enlarged Union,' said Edwin Bailey, managing director of Urch Publishing. 'This process requires solutions that go beyond the simple extension of EU law through the acquis communautaire, to those that address the key issue of provision of high quality care under the social welfare system in a dynamic market-based economy.'