On 31 March 2020, the Office of the United States Trade Representative (USTR) published its 2020 National Trade Estimates Report on Foreign Trade Barriers (NTE). As USTR notes, in “accordance with section 181 of the Trade Act of 1974, as amended by section 303 of the Trade and Tariff Act of 1984 and amended by section 1304 of the Omnibus Trade and Competitiveness Act of 1988, section 311 of the Uruguay Round Trade Agreements Act, and section 1202 of the Internet Tax Freedom Act, USTR is required to submit to the President, the Senate Finance Committee, and appropriate committees in the House of Representatives, an annual report on significant foreign trade barriers.” (Source: 2020 National Trade Estimates Report on Foreign Trade Barriers (NTE).
The 2020 NTE report numbers 542 pages; 46 pages of this report are devoted to the European Union and its member states. The USTR takes aim at the pharmaceutical pricing and reimbursement policies in the European Union, in particular, Austria, Belgium, the Czech Republic, France, Greece, Hungary, Italy, Ireland, Lithuania, Poland, Portugal, Romania, Spain, and Slovakia. While the NTE report has a broader remit than the USTR Special 301 report, it does serve as a barometer for what to expect in the Special 301 report. USTR provides the following chapeau in its description of non-tariff barriers for pharmaceutical products:
“U.S. pharmaceutical stakeholders have expressed concerns regarding several Member State policies affecting market access for pharmaceutical products, including non-transparent procedures and a lack of meaningful stakeholder input into policies related to pricing and reimbursement, such as therapeutic reference pricing and price controls. Such lack of transparency and due process reportedly creates uncertainty and unpredictability for investment in these markets and can undermine incentives to market and innovate further. These policies have been identified in several Member States as described below. One example is the “clawback system” which requires pharmaceutical companies to pay back a certain percentage of the amount spent by Member States over budgetary limits. Stakeholders have also expressed concerns over inconsistent and lengthy time limits for pricing and reimbursement decisions. Industry has grown increasingly concerned about policies that are being made with little opportunity for engagement. Moreover, recent changes to European Medicines Agency (EMA) policy regarding disclosures of clinical trial data, including potential disclosure of confidential commercial information submitted to EMA by pharmaceutical firms seeking marketing authorization, are also of concern to stakeholders. The United States continues to engage with the EU and individual Member States on these matters.”
2020 National Trade Estimates Report on Foreign Trade Barriers (NTE)
Manon Ress, Ph.D., and founder of the Union for Affordable Cancer Treatment (UACT) provided KEI Europe with the following response to USTR’s targeting of European policies on pricing and reimbursement: “For the Union for Affordable Cancer Treatment (UACT) which is composed of cancer patients, their families and public health experts, in this time of pandemic, the actions of USTR against countries struggling to provide better access to life saving drugs at affordable price to their citizens, are more than ever a show of weakness when the US is influenced by the greed of the lobbyists for the pharmaceutical industries. The USTR disregard for basic national rights as well as human rights would be irrelevant in “normal” time but comes out as despicable today.”
Jaume Vidal, Senior Policy Advisor, European Projects, at Health Action International, provided the following response: “By attacking the sovereign right of EU Member States to set policy in the interest of their own citizens, particularly at a time like this, the USTR needs to wake up to the new reality. It is striking that the report singles out the European Medicines Agency (EMA) stance on transparency of clinical trials, mistakenly warning about the “potential disclosure of confidential commercial information”. This is a case already judged by the Court of Justice of the European Union and found to be within European Union legal framework on transparency and access to documents. We expect a reaction of the European Commission in defence of Member States’ policy choices and the integrity EU institutions.”
Here are excerpts from USTR’s entries for Austria, Bulgaria, the Czech Republic, France, Greece, Ireland, Italy, Poland, Portugal, Romania, Spain, and Slovakia.
Austria: U.S. pharmaceuticals exports to Austria were worth over $1.08 billion in 2018 (latest data available), comprising over 20 percent of U.S. goods expors to the country. Nonetheless, U.S. pharmaceutical companies continue to express concern regarding reimbursement pricing decisions that are not transparent and fail to provide sufficient incentives for innovation. The ongoing reorganization of the statutory social insurance carrier structure has added uncertainty, and it is unclear how the changes will impact reimbursement policies. Industry expresses concerns about lack of engagement over such policies.
Belgium: U.S. companies identified several policies affecting market access, including a turnover tax, a crisis tax, a marketing tax, and a clawback tax. The United States continues to highlight the need for a continued dialogue with the government to address the above as well as meaningful opportunities for stakeholder input into budget and pricing decisions with the aim of safeguarding the access to the best treatment, including new innovative medicines, for Belgian patients.
Czech Republic: U.S. firms have expressed concerns about the Czech Republic’s non-transparent system for determining pricing and reimbursement levels for pharmaceutical products, as well as lengthy approval delays. Specifically, they raise questions regarding the Czech government’s practice of using the three lowest prices in a basket of countries to set maximum medicine prices. The United States encourages these pricing decisions to be made transparently and to include meaningful stakeholder input and will continue to engage with companies and the Czech government on this issue.
France: Pharmaceutical industry stakeholders continue to raise concerns about the French pharmaceutical market, including with respect to the significant tax burden on the industry and the constraints facing the sales of reimbursable medicines. U.S. stakeholders have expressed concern that the process of gaining market access for drugs in France is slower than elsewhere in Europe, resulting from delays in reimbursement approvals of as much as 405 days after marketing authorization, compared to the 180 days required by EU law. The French government announced that it would reduce the length of the delays and meet the 180-day timeline by 2022, but it has yet to implement any major adjustments.”
Greece: Pharmaceutical industry stakeholders face price controls and policies such as clawbacks and rebates which create a challenging business environment. In 2020, the Ministry of Health acknowledged that the clawback is currently too high and plans to reduce it with the intent to eliminate it completely by 2022. U.S. pharmaceutical companies are in contact with the Greek government and hope to address these issues in the short term.
Hungary: Pharmaceutical industry stakeholders express concern that the Hungarian government’s pricing and reimbursement policies, which include a clawback system, extended delays in decision-making and reimbursement, and lengthy processes to make changes to the list of drugs approved for reimbursement, cause considerable unpredictability in the Hungarian market. Industry notes the lack of stakeholder input from the pharmaceutical sector
Italy: U.S. healthcare companies face an unpredictable business environment in Italy, which includes a highly variable implementation of complex pricing and reimbursement policies, including a clawback system. The pharmaceutical companies pay back the clawback amount to the Italian Drug Agency (AIFA), which is in charge of calculating the overspending and collecting return payments. The Italian central government determines the overall annual budget for pharmaceutical products, which is then transferred to each region responsible for managing the healthcare system locally. Industry continues to press the Italian government to address these issues.
Moreover, an Italian law (D.L. 78/2015) applies the clawback system to hospital purchases of medical equipment. That samw law authorized hospitals to renegotiate signed agreements with medical device suppliers in order to reduce the unit price or purchase volume as previously defined in the agreements. Since this law was introduced, the government has not provided further guidance or legislation on its implementation, creating significant uncertainty among U.S. medical device companies operating in Italy.
In addition, AIFA utilizes a system of therapeutic tenders that requires patented medicines to compete against other patented medicines and generics with different active ingredients. U.S. industry has expressed concern that price appears to be the only selection criteria.
U.S. stakeholders also have raised concerns regarding delays in market approval for pharmaceutical products and payments for medical devices, noting that it can take up to 12 months for products to be included in the Regional Registry even after the products have received marketing approval and been accepted for reimbursement. The average payment time from public hospitals to medical devices suppliers in Italy continues to exceed the EU average as well as the maximum period permitted by EU law.
Ireland: Pharmaceutical industry stakeholders expressed concerns over the Irish government’s cost containment measures and delays in reimbursement decisions. Access to new drugs and medicines, some of which are produced in Ireland, may be subject to a lengthy decision process as well as unpredictable funding levels. Industry also notes concerns over Ireland’s price freezes on reimbursed medicines since 2016.
Poland: U.S. stakeholders have expressed concern regarding the opportunity for meaningful stakeholder input into rulemaking as well as regarding the tendering processes and the transparency of reimbursement rules for pharmaceutical products. U.S. industry reports that Poland’s pricing and reimbursement system is backlogged, taking more than 630 days on average from regulatory approval to patient access. Private hospital owners have complained that the hospital network law enacted in 2017 makes it difficult to get reimbursed by the National Health Fund for lifesaving procedures, forcing the closure of some private hospitals, particularly in cardiology. Poland is in the process of drafting a new medical reimbursement law that is still in the consultation stage and carries the potential to bring about major changes to Poland’s reimbursement system. The United States will continue to urge Poland to engage meaningfully with stakeholders to address their concerns.
Romania: Innovative pharmaceutical producers have identified several significant challenges in Romania resulting from the Romanian government’s failure to update, despite repeated requests, the lists of innovative pharmaceuticals that are eligible for reimbursement under the national health system. According to U.S. stakeholders, Romania added 37 new innovative drugs to the reimbursement list in 2018 and 19 in 2019. Numerous applications remain pending, severely undermining the ability of U.S. pharmaceutical companies to introduce newer drugs in Romania because the National Health Insurance House does not reimburse patients for drugs that are not included on the reimbursement list. In addition, both innovative and generic pharmaceutical companies have withdrawn drugs from the Romanian market, as the low official prices set in Romania can fall below production costs. Other barriers include a government policy of not considering reimbursement applications until a new innovative medicine has been granted reimbursement in at least 14 EU countries.
A clawback tax, which reached the equivalent of 25.2 percent of total gross sales during the second quarter of 2019, is another major challenge for U.S. stakeholders. U.S. stakeholders continue to raise concerns regarding a lack of transparency, particularly in pricing and the clawback system, which the Romanian government is reviewing
Spain: Pharmaceutical industry stakeholders note concerns as to cost containing measures affecting the industry, including lack of clarity around criteria for reimbursement, substantial delays in reimbursement processes, price cuts, imposition of mandatory discounts, and uneven patient access across autonomous regions.
Slovakia: The process for marketing approval of new pharmaceutical products in Slovakia reportedly lacks transparency and deadlines are reportedly missed with some frequency. Medicine prices in Slovakia were capped based on the average of the three lowest prices within the EU, which incentivized third parties to re-export pharmaceuticals to other EU markets, where they were sold at a profit, leading to shortages of certain drugs in Slovakia. In 2017, Slovakia to amended its law allowing the Slovak State Institute for Drug Control to monitor and ban the re-export of certain pharmaceutical products. Under the amended law, only the rights holder or distributor can legally export categorized medicines (i.e., medications that are fully or partially covered by health insurance) outside Slovakia.