NICE -- and Necessary

  • by: |
  • 02/02/2006

Long-term thinking at long last in European health policy? Maybe.

European governments seem to be swapping a bludgeon for a scalpel when it comes to cutting the cost of medicines. According to Reuters, drug makers should not expect an end to the overall drive to squeeze prices but there are signs of a more discriminating approach that may actually help “big pharma”, according to industry executives and analysts. Andrew Witty, head of European pharmaceuticals at GlaxoSmithKline Plc said a growing number of governments are now realizing that healthcare reforms must include rewards for innovation.

“There are still a few governments that are very focused on short-term, non-discriminatory cost measures, where they simply cut prices and they donç©° really care if it is an innovative product or an old one, but they are getting fewer,” he told Reuters. ‘There are more and more countries where we are seeing governments get much tougher on the prices of old, off-patent medicines and being prepared to reward meaningful innovation more quickly and more fully.” For companies like Glaxo, which relies heavily on sales of newer drugs, that is good news.

European pharmaceuticals growth is hovering around a 10-year low with sales in the top five markets — Germany, France, Britain, Italy and Spain — rising just 3% in the 12 months to November, according to IMS Health. Yet Merrill Lynch believes the worst effects of European pricing reforms may now be over, with Germany in particular showing signs of recovery. Growth in German pharmaceuticals has picked up to 7%, from 1% in 2004, largely as a result of a cut in mandatory manufacturer rebates to the government, the investment bank said in a report this month.


Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.

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