Belgium hopes to cut drug prices with pharma deal

Belgium and groups representing branded and generic pharmaceutical companies signed a complex four-year deal on Monday aimed at approving drugs faster and drilling prices down.

The deal will change drug pricing and testing rules — including for expensive new treatments for hepatitis C — amid a global debate on the price of new drugs.

Belgian health minister Maggie De Block said it would make new drugs available to patients “at least two months earlier,” and save them up to €60 million a year in the charges they have to pay for prescribed medicines.

Unprecedented prices, with Gilead’s $1,000-per-pill Sovaldi for hepatitis C as the poster child, is fueling a pushback from payers, and a public debate. It’s the second time this year that De Block has tried a novel way to tackle the access and cost challenges facing national health systems across Europe.

She is also teaming up with her Dutch counterpart to jointly negotiate the prices of some medicines, something that has until now been conducted between drug firms and individual member countries.

The deal with industry signed Monday envisages speeding access to new drugs by cutting down on the time taken in Belgian drug evaluations: trials in other countries will be more readily accepted, and wider access to registries of patient data will be allowed.

The changes attempt to squeeze savings on copy-products to provide headroom for rewarding novel medicines, including by cutting the tax on drug firms' revenue by 13 percent. New possibilities of launching innovative medicines, such as pay-for-performance, will be explored, along with new demands for the industry to provide details of research costs.

Drugmakers often cite the high cost of research and development to justify their prices, an explanation rejected by some patient groups and payers.

Officials with the branded industry said they see advantages in a more predictable environment, after years of crisis-induced, short-term Belgian pricing measures.

The deal will be good “in economic and political terms,” according to Catherine Rutten, CEO of pharma.be, which represents 140 manufacturers.

The savings will come from steep price cuts — of more than 50 percent — on medicines as soon as their patent expires, stimulating tougher competition in the generic market. Pressure on doctors to prescribe the cheapest available version of a medicine will also be increased.

Although generic medicines are slated to lose some €46 million over the next three years, the generic industry association, Febelgen, also sees advantages in higher volume.

Joris Van Assche, its CEO, told POLITICO that a more stable framework will benefit his members.

Until now, price reductions after patent expiry have been gradual, and branded products have consequently been able to retain much of their market share as a result. The immediate price cut will, he predicts, lead to many branded products simply disappearing from the market on patent expiry: their manufacturers will not choose to keep them on a market where the price is so low that it would threaten their price on other markets. As a result, generic manufacturers will have the chance to fill the gap.

Generic manufacturers are also heartened at new support promised for biosimilars — copies of highly-sophisticated medicines manufactured within living organisms.

Van Assche says that Belgium is lagging other parts of Europe in penetration of biosimilars, and the pact opens up the prospect of catching up in this lucrative and growing niche, with possibilities including new tax-shelter arrangements for companies.

The head of the European generic medicines association, Adrian Van Den Hoven, also POLITICO that the deal was an improvement for generic companies.

“It’s true that the generic sector as well as the originator industry will feel some pain in the Belgian market through important price cuts in the off-patent sector immediately after patent expiry.”

But compared to the present system where pricing decline slowly, “the new system  will create an opportunity for volume uptake for lower priced generic medicines.”

The concessions made by the generics sector may be compensated for, at least in part, by measures to increase uptake, such as more effective prescribing measures, and greater openness to biosimilars, he said.

The deal seeks to ease the cost-burden on patients: a combination of measures will save them €24 million in 2015, rising to savings of €60 million by 2018.

Sonja Willems of Janssen, who is president of pharma.be, said the deal is something the research-based industry has been seeking for a long time in Belgium.

Both sides of the Belgian industry have welcomed the shift towards what they call a better level of trust in talks with the authorities.

This mirrors a frequent call from the industry for more strategic thinking on how to square the circle of providing expensive innovative medicines to a larger population, within the capacities of healthcare system finances.