EU Pledges New Agenda for Drug Industry

June 2, 2005

The European Union's (EU) industry commissioner, Guenter Verheugen, has pledged to create a new high-level forum to enhance the competitiveness of Europe's drug sector. Verheugen claims that the industry is "under threat" from harsh pricing structures, declining innovation, approval delays, and competition from emerging producers such as India and China.

However, it is unclear how problems posed by some EU governments' harsh price controls will be resolved in view of Verheugen's pledge to examine pricing issues "without sacrificing any capacity of member states to protect their healthcare budgets." Nevertheless, one encouraging proposal is to lift price controls for drugs that are distributed outside the state healthcare sector.

The EU has pledged positive measures for the drug industry in recent months, outlining plans to extend patents on drugs that are newly tested for paediatric indications and to create a package of US-style incentives for orphan drugs.

Despite these positive moves, European drugmakers including Roche have cited one severe problem directly related to EU trade structures, that of parallel imports. European pharmaceuticals association EFPIA estimates that the practice amounts to 5% of all European drug sales and is worth EUR4bn (US$4.9bn) annually. UK drug major GlaxoSmithKline recently attempted to restrict supplies in Greece in light of a growing re-export threat, but the European Court of Justice has now declared itself ineligible to intervene in the dispute.