On 31 March 2022, the Office of the United States Trade Representative (USTR) published its 2022 National Trade Estimate 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: 2022 National Trade Estimate Report on Foreign Trade Barriers (NTE).
The 2022 NTE report numbers 517 pages; 48 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, Bulgaria, the Czech Republic, France, Greece, Hungary, Italy, Ireland, Lithuania, Poland, Portugal, Romania, Spain, Slovakia and Sweden. 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. The 2022 NTE report makes the following observation: “The United States is monitoring potential developments related to the EU Commission public consultation on the EU general pharmaceutical legislation, which was open from September 29, 2021 to December 21, 2021.”
USTR’s chapeau in its description of pharmaceutical products in the 2022 NTE report appears identical the chapeau in the Trump-era 2020 NTE report:
U.S. pharmaceutical stakeholders have expressed concerns regarding several EU 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 creates uncertainty and unpredictability for investment in these markets. 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, 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.
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 price control: “The Union for Affordable Cancer Treatment (UACT) is composed of cancer patients, their families and public health experts. The USTR threats of actions against countries struggling to contain costs for life saving drugs are additional evidence the US is influenced by the greed and power of the lobbyists for drug companies. Patients are the stakeholders that USTR forgets. UACT clearly supports actions by governments to curb and control high prices, including the “clawback system,” which requires pharmaceutical companies to pay back a certain percentage of the amount when spending exceeds budget targets. USTR’s disregard for national measures to control excessive prices comes as the price of treatment is getting more and more exorbitant and harmful for access. The US should emulate the policies of some European countries to control prices and improve access to life saving drugs, instead of acting as if high prices are not a problem.”
Jaume Vidal, Senior Policy Advisor, European Projects, at Health Action International, provided the following comments: “Once again we see how private actors, in this case pharmaceutical companies, use open consultation processes such as the National Trade Estimate Report on Foreign Trade Barriers (NTE) to push their particular agenda. Intent on influencing the US government stance on the policy decisions of sovereign countries regarding transparency, medicine prices and/or intellectual property, pharma affiliates have grown accustomed to fearmongering and disinformation when referring actions taken by European governments in the defense and promotion of public health and the fulfilment of their citizens rights. Such practices are not helpful for the US government nor, in the longer term, for pharmaceutical industry, in US and Europe, that excludes itself from constructive engagement choosing instead a strenuous defense of the status quo.”
Here are excerpts from USTR’s entries for Austria, Bulgaria, the Czech Republic, France, Greece, Hungary, Ireland, Italy, Lithuania, Poland, Portugal, Romania, Spain, Slovakia, and Sweden.
Austria: U.S. pharmaceuticals exports to Austria accounted for over 35 percent of U.S. goods exports to the country in 2021. Nonetheless, U.S. pharmaceutical companies continue to express concern regarding reimbursement pricing decisions by the statutory insurance providers association that are not transparent. The streamlining of the statutory social insurance carrier structure from nine provincial units to one federal entity has not yet led to changes in reimbursement policies sought by U.S. pharmaceutical companies.
Belgium: U.S. companies identified several policies affecting market access, including a turnover tax, a crisis tax, a marketing tax, and a clawback tax. In addition, industry reports that domestically manufactured medicines are permitted a price premium of up to 10 percent on the manufacturing cost component when calculating their manufacturer’s selling price. Imported products, however, are only eligible for up to a five percent price premium. Meanwhile, initiatives intended to lead to faster market access for new innovative drugs have been implemented incompletely and at a slow pace. The United States continues to highlight the need for a continued dialogue with the Belgian Government to address the above as well as meaningful opportunities for stakeholder input into pricing decisions with the aim of safeguarding the access to the best treatment, including new innovative medicines.
Bulgaria: U.S. firms have expressed concern with Bulgaria’s Deficit Compensation Mechanism (DCM), under which companies must refund a portion of their profits when demand for specified pharmaceutical products exceeds the Bulgarian Government’s quarterly budget allocation for that medicine. Industry predicts that approximately 80 percent of 2021 associated profits will return to the government under the DCM
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. Stakeholders have reported on improvements in the government’s meeting deadlines under the pharmaceutical approvals process. The United States will continue to engage with companies and the Czech Government on this issue and urge that pricing decisions be made transparently and include meaningful stakeholder input. U.S. companies have also voiced concerns over their inability to offer innovative medicines for rare diseases on the Czech market. A new law allowing for easier access for orphan drugs entered into effect on January 1, 2022.
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 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 566 days after marketing authorization, compared to the 180 days required by EU law. According to industry, the French pharmaceutical federation Les Enterprises du Medicament, which includes U.S. firms, and the French Government signed an agreement in March 2021 to shorten the reimbursement process. In addition, the French Government announced that it would reduce the length of the delays and meet the 180-day timeline by 2022. In June 2021, the French Government also announced a new fast-track procedure, which would simultaneously carry out both market access authorizations and price negotiations with the pharmaceutical industry. Implementing legislation for this fast-track procedure was adopted at the end of December 2021.
Greece:Pharmaceutical industry stakeholders face policies such as clawbacks, which create an uncertain business environment. The Greek Government passed reform measures, including legislating an increase in the budget for vaccines with an exemption from clawbacks and abolishing a mandatory 25 percent fee for new pharmaceutical products entering the market. However, clawbacks continue to present an uncertain environment. U.S. pharmaceutical companies are in contact with the Greek Government and hope to establish a memorandum of understanding to collaborate on further structural reforms. The government has committed to implementing reforms, including a reduction in clawbacks by 2025.
Hungary: Pharmaceutical industry stakeholders express concern that the Hungarian Government’s pricing and reimbursement policies, which include a clawback system, delays in decision-making and reimbursement, and lengthy processes for making changes to the list of drugs approved for reimbursement, cause considerable unpredictability in the Hungarian market. It can take several years before patients have access to innovative products. Pharmaceutical industry stakeholders note the lack of opportunity to provide input into the decision-making process. Pharmaceutical companies are allowed to deduct part of their research and development costs in Hungary from their clawback payment obligations under an incentive system, but only if these costs exceed certain thresholds.
Italy: U.S. healthcare companies face an unpredictable business environment in Italy, which includes highly variable implementation of complex pricing and reimbursement policies, including a clawback system. Pharmaceutical companies pay any clawback amount to the Italian Drug Agency (AIFA), which is also in charge of calculating any overspending and collecting any return payments.
In addition, U.S. companies have expressed concerns as to the clawback system as it relates to public hospital pharmaceutical purchases. Specifically, if the Italian Government overspends its allotted budget for hospital pharmaceuticals, this system requires pharmaceutical companies to refund to the government 50 percent of the budget overrun through AIFA. According to industry, some improvements were introduced in the 2021 Budget Law that shifted additional budget to the hospital and direct purchase channel, but industry has noted a number of additional steps that could be taken to improve the functioning of the system.
U.S. medical device companies have also reported uncertainty due to the Italian Government’s lack of guidance in relation to the clawback system for hospital purchases of medical equipment.
In making price and reimbursement determinations, AIFA utilizes a system of therapeutic tenders that requires patented medicines to compete against other patented medicines and generics. U.S. industry has expressed concern that price appears to be the only selection criteria utilized by AIFA, rather than taking into account such factors as quality and therapeutic efficacy. In September 2020, AIFA published draft guidelines on their pricing process. These draft guidelines include potentially useful elements on how AIFA chooses medicines used in its competitive comparisons. The United States will continue to monitor this situation.
U.S. stakeholders have also raised concerns regarding reimbursement delays for pharmaceutical products and delayed payments for medical devices. For example, it can take 12 months for products to be included in the Regional Registries even after the products have received marketing approval and been accepted for reimbursement. Moreover, the average time Italian public hospitals take to pay medical device suppliers continues to exceed the EU average as well as the maximum period permitted by EU law. Industry continues to press the Italian Government to address these issues
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 and highlights that the Irish Pharmaceutical Healthcare Association and the Irish Government, which allocated additional funding in its 2021 and 2022 annual budgets, are looking to put into place a new multi-annual agreement featuring the principle of joint funding for new treatments.
Lithuania: The United States continues to engage with the Lithuanian Government regarding pharmaceutical market access issues. Discussions between the Lithuanian Health Ministry and U.S. stakeholders have made little progress to add innovative drugs to the Lithuanian Government’s reimbursement list. Stakeholders remain concerned about the lack of transparency in the pricing and reimbursement process for innovative drugs
Poland: U.S. stakeholders have expressed concern over the lack of an opportunity for meaningful stakeholder input into Poland’s rulemaking and tendering processes, as well as the transparency of reimbursement rules for pharmaceutical products. Addressing these concerns would enhance business predictability. U.S. industry reports that Poland’s pricing and reimbursement system is backlogged, taking more than 820 days (based on the WAIT study by the European Federation of Pharmaceutical Industries and Associations) 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. In November 2020, a Medical Fund Act entered into force, which has the potential to bring about major changes to Poland’s reimbursement system, including by providing financing for highly innovative drugs and drugs of proven clinical value. In 2021, the Polish Government proposed amendments to its Reimbursement Act. While some potential improvements appear to exist in the draft amendments, the draft amendments also increase clawbacks above certain caps, decreasing the predictability of the pricing and reimbursement system. The United States will continue to urge Poland to engage meaningfully with stakeholders with respect to their concerns
Portugal: Multiple U.S. pharmaceutical companies have expressed concern about delays in payments for medicine from public hospitals that at times far exceed the legal 90-day payment period. In addition, the companies face delays in approvals for the introduction of innovative products, with the average approval taking two years. The companies linked the payment and approval delays to budgetary constraints on the national health care system and noted they affected domestic firms as well. The United States has been working with U.S. pharmaceutical representatives to raise these issues with the Portuguese Government.
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. Numerous applications remain pending, severely undermining the incentives for 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 Member States.
In 2020, the Romanian Government enacted changes to a clawback tax, which creates uncertainty for U.S. stakeholders. In May 2020, the government revised the clawback tax and introduced caps based on categories: a 25 percent cap for innovative medicines; a 20 percent cap for generics; and a 15 percent cap for locally produced medicines. U.S. stakeholders welcomed the tax revision as a measure improving predictability and patient access to medicines, but continue to raise concerns regarding a lack of transparency
Spain: Pharmaceutical industry stakeholders continue to note concerns as to cost containment measures affecting the industry, including lack of clarity around criteria for reimbursement, substantial delays in reimbursement processes, and uneven patient access across autonomous regions
Slovakia: U.S. stakeholders report that processes for marketing and reimbursement approvals of new pharmaceutical products in Slovakia lack transparency, and deadlines are sometimes missed. The Slovakian Government created a new Health Technology Assessment Agency at the Ministry of Healthcare in July 2021. The government has also proposed legislation to accelerate the approval and reimbursement of innovative medicines. The United States will monitor the impact of this proposal
Slovakia was a frequent source of pharmaceuticals that were re-exported by third parties in the private sector to other EU markets, where they were sold at a profit, leading to shortages of certain drugs in Slovakia. In 2017, Slovakia 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.
Sweden: Pharmaceutical industry stakeholders have raised concerns about Sweden’s increasingly challenging and non-transparent environment with regard to pricing and reimbursement. For example, when manufacturers submit a proposed price to the Dental and Pharmaceutical Benefits Agency, the application is often either accepted or rejected in a non-transparent fashion, with restrictive appeal options.