Medicines shortages: an European overview?

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pharmacist using computer and telephoneA clear definition of the terms shortages and a measurable scope of the problem are required to prevent patient’s discomforts

Caterina Lucchini

Medicine shortages have consistently been in the media over the past few years and have seemingly, with the economic crisis and austerity programme, become a crisis in their own right. Independent researchers Birgli recently published a study on the causes of medicines shortages, commissioned by the EAEPC (European Association of Euro-Pharmaceutical Companies). The key finding of the report is that the pharmaceutical supply chain is highly complex and vulnerable, meaning that possible causes for shortages are multifaceted and manifold. The process of delivering medicines to patients is more complex than is generally perceived and even a small failure in one part of the system can have lasting consequences for the entire supply chain. Based on their survey, a list of possible causes can be filled (box 1). Parallel distribution is often accused of being possibly the primary source for shortages, however Birgli report shows that there are other significant factors that weigh heavily on shortages and access to pharmaceutical products. Parallel trade consists in the importation of legitimately produced goods into a country without the authorization of the trademark, copyright, or patent holder. From a dossier published by Claudia Desogus, an economist, we learn that “parallel trade of pharmaceuticals started in the ‘70s but it increased significantly with the maturing of the internal market. From the half of the ‘90s the share of parallel trade grew up to 7-17%, especially in countries like Denmark, Sweden, United Kingdom, Germany and the Netherlands (Box 2). While parallel trade traditionally enjoys a significant protection from European Institutions, in the belief that it fosters competition and encourages trade, pharmaceutical companies claim that this form of competition undermines their incentive to innovate and threatens the competitiveness of the European pharmaceutical sector. Pharmaceutical companies strongly try to prevent the growth of such business. Being forced to compete in importing markets with their own products sold by parallel traders at a lower price, they claim that this form of competition is capable of eroding their profits and undermining their incentive to innovate. Therefore, in order to safeguard their revenue, manufacturers implement different strategies based either on pricing or on supply management. On the contrary, European Institutions have traditionally given a certain degree of protection to parallel trade, in the belief that it fosters intrabrand competition and promotes integration through intrastate trade”. Based on EAEPC declarations, parallel trade is not the main cause of shortages; this is further supported by the findings that shortages affect generics, as well as patented brands, although there is very little parallel trade with the former, and shortages also appear in countries, which are totally unaffected by parallel distribution, such as the US and Switzerland. Birgli report point out a survey to explain what are counties doing against shortages.

United Kingdom

Shortages have been in the press with a number of studies and reports being issued with alarming frequency on the topic; two lists are used as a basis from which the Department of Health (DOH) tracks market shortages (generic products and branded products). Regardless of the definition, there is very limited published quantitative data on shortages in the UK. The UK has a number of regulations in place beyond those from the EMA. The Department of Health has issued “Shortages and Supply Chain Obligations” in January 2013 updating those issued in 2009. This document refers to the Human Medicines Regulations 2012 (SI 2012/1916). It covers the key stakeholders in the supply chain namely Manufacturers, Wholesalers (from a sourcing and supplying perspective), NHS Trusts (hospitals), Registered Pharmacies, and dispensing doctors. In its conclusions, it asks all parties to consider the consequences on the patient as well as being “aware of the consequences of exporting medicines for the supply of medicines to UK patients”. The ABPI (The Association of the British Pharmaceutical Industry) and the DOH in 2007 also issued joint best practice guidelines on “Notification and management of medicines and shortages”. Though these are voluntary, they do refer to the statutory requirements under EC Directive 2001/83/EC mentioned earlier. Though there are general regulations in place, there are quite a few voluntary components that perhaps need to be reviewed should the issue of shortages continue to worsen.

France

A current list of shortages is available on the website managed by the ANSM (Agence Nationale de Sécurité du Medicament et des produits de santé. The Article R 5115-13 (Code de la Santé Publique) requires every wholesaler to send the ANSM details of the territory the company covers. They have to hold in stock at least 90% of all medicines used in France whether reimbursed or not and have a 2 week supply capacity for their usual customers. Moreover wholesaler must supply the orders of any pharmacy within its territory and have to inform the authorities as soon as there is a reduction in stockholding. A regulation was put into place at the end of 2012 to specifically address shortages (Decret 2012-1096 2012/09/28). In short it requires that each product considered having being of “major therapeutic importance” is covered by the alert procedure of the regulation.

Greece

Greece presents one of the more complex cases in Europe today. It is a market that has been most significantly hit by the financial crisis and austerity programmes. Current shortages are available on the site of the National Organization for Medicines (EOF). Parallel distribution, in the case of Greece parallel exports, are often named as the main cause for shortages in medicines for which there is no possibility for substitution. The cuts in prices (for innovative or generic products) have made Greece a prime location for wholesalers to buy cheap products for re-export. If shortages are judged to become a risk for the public health, the EOF will apply the following measures;

a temporarily limited ban of parallel exports for medicines with short supply.

Fines on the Marketing authorization holders (MAHs) for not covering the domestic market with a 3-months’ stock, as required by law.

Poland

The Birgli survey proposes a list of five primary causes of shortages, based on discussions a with various stakeholders and market research:

the reimbursement act;

quota systems at wholesale and pharmacy level;

parallel exports;

lack of financial capacity of pharmacies & wholesalers;

reduced market access / reduction of product lines available.

MAHs are required by law to notify the GIF of any prospective shortages. There are, by Birgli opinion, no  equirements for pharmacies and wholesalers to do so and the government only now seems to become aware of shortages on the market. Their primary concern has been to impose savings and having been successful at this, their attention is now being drawn to general shortages in the market.

Spain

Shortages or irregular supply should be reported to the Spanish Agency of Medicines and Health Products (AEMPS). In order to achieve a high level of traceability, all MAHs, wholesalers, and pharmacies are obliged to inform the MOH and their respective regional authorities of the legal entity to whom medicines have been sold within the territory. Spain has experimented with certain measures in an attempt to introduce transparency over what is distributed in the country and what is exported. In May 2003, the Spanish government proposed a decree allowing dual pricing for products that were parallel-exported, but this was withdrawn a few weeks after its initial introduction. Concerning dual price EAEPC let us know that ” Dual-pricing contracts between manufacturers and wholesalers are an infringement of competition by object (Commission Decision 2001/791/EC of 8 May 2001 and Judgment of ECJ of 6 October 2009 in Joined Cases C-501/06P GlaxoSmithkline v Commission). Member States, when laying a foundation for double pricing with the purpose of restricting parallel exports, are infringing the rules on free movement of goods and favoring the effects of anticompetitive practices in violation of articles 3 and 101 of the TFUE (see Judgment of ECJ of 21 October 1986 ,Van Eycke c Aspa C-267/86)”.

Italy

Recently drug shortages is a topic argument. In many cases it has been addressed to parallel export and AIFA (Italian drug Agency) with the Ministry of Health are working to point out a survey and a full list of shortages is weekly reported by AIFA; a recent law decree (17/2014) establishes that the essential drugs must always be present in our territory. Is EAEPC opinion that there are two major problems with the claim that medicines exports have been singled out as the principal cause for shortages. First of all here is no clear definition of shortage in Italy, making it impossible to establish that shortages are, in fact, occurring. For example, Assogenerici has claimed that there is a shortage when there is no therapeutic alternative. However, most of the medicines currently ‘missing’ in Italian pharmacies are available in generic form and could be substituted. Second, putting the blame for medicine shortages squarely on parallel exporters mistakenly simplifies the issue and will not help alleviate the serious problem shortages can cause for patients”.

EAEPC declares that against shortages there will be a list of possible solutions:

The criteria for determining a shortage must be objective and transparent.

A notification from the originator on low availability of a product should be made available through the AIFA website in time.

Enforcing the public service obligation: MoH/NAS should inspect pharmacies with a newly applied Wholesaler Licence, to check adequacy of GDP rules, including the feasibility of shared warehouses.

Combining the Italian government’s current sophisticated tool to track and trace pharmaceutical products throughout the entire distribution chain and AIFA’s regional pay-back system would provide all necessary information on the availability of medicines.

If a restriction on exports is established, there must be proof that certain products are short in supply and exports are a primary cause and not only aggravate the situation. This must in addition be a temporary measure that should be limited to medicines for which there is no alternative therapeutic option available. Generics are in fact an alternative.

Establishing a list of ‘all non-exportable products’ constitutes a de facto restriction to trade and is prohibited by European law. Such a list should be accompanied by a requirement for manufacturers to eliminate any supply quotas on wholesalers for the listed items. This should be enforced by AIFA.

 

Box 1

SHORTAGES CAUSES

Birgli report analyses the principal causes of shortages in Europe and published a list which has been summarized by EAEPC:

Product withdrawal: as part of austerity measures in recent years across European countries, dramatic price cuts and reduced state-spending on medicines have impacted the business decisions of pharmaceutical companies to reduce costs and streamline manufacturing. This has lead to companies withdrawing certain products from the market, which in the current conditions are no longer sufficiently profitable – thus creating shortages.

Production problems: in recent years many producers have streamlined their production facilities and processes, and have gone through mergers and acquisitions. The result has been that currently only very few facilities supply a substantial share of the world’s demand. The negative impact of this trend on medicine supply is twofold:

The global supply chain has become more vulnerable, as any incident that limits production in one of the facilities automatically impacts supply in a negative way, leading to shortages due to manufacturing issues;

Economies of scale and dependence on a limited number of players have not been beneficial to the overall quality of medicines: a substantial amount of quality-related recalls of medicines have led to shortages of supply.

Quota systems: originally introduced to limit parallel distribution, quota systems have now become a cause for shortages. This is supported by findings of the French Competition Authority in July 2012. Manufacturer’s supply quotas are often not flexible enough to respond quickly to demand fluctuations.

Reimbursement problems: the lack of prompt reimbursement for pharmacies by national healthcare systems, due to the overall economic situation in some debt-ridden countries, has lead to pharmacies being unable to settle their accounts with wholesalers and to wholesalers being unable to pay the producers. These liquidity problems can have a negative impact on the supply chain, resulting in interrupted or delayed deliveries. Moreover, in an attempt to reduce costs further, wholesalers and pharmacies have decided to eliminate buffer stocks.

Parallel trade: occurs when product which are purchased at lower price in one coutry are transported for resale in another country. It is 100% legal.

 

Box 2

PARALLEL TRADE IN EUROPE

The UK market has one of the highest level of penetration. Based on sourced from IMS Health, EFPIA (European Federation of Pharmaceutical Industries Associations), and EAEPC Claudia Desogus summarized that “in the years 2000–2002, the UK market for parallel imports was one of the largest in Europe and was worth around $1, 700 million, that is, about 15% market share and 14% of the National Health Service expenditure. In 2003 parallel imports were estimated to account for 17% of the pharmacy market sales. After a period of stagnation in 2004, the business is now expanding again. Likewise, the German market for parallel trade experienced a rapid growth. Over the period 1998-2003 the market shares of total pharmacy market sales increased from less than 2% to around 7%. In 2002, parallel imports penetration increased significantly, as legislation required pharmacists to source at least 5% of the sales from parallel imported products. In 2003 such percentage was set to 7%. In 2004 the reversion of the mandatory quota to 5% reduced parallel import market share correspondingly. However, thanks to favorable market conditions such share increased again to around 8.5% at the end of 2006. The average market share for the 20 drugs with largest turnover is around one third. In the Netherlands, parallel imports reached about 13% of the market in 2006. In Denmark, the first approval for parallel import of a drug was given in 1990 and since then marketing authorization has been granted for 6-8, 000 products. Over the period 1998-2004 the share of total drug expenditures spent on parallel imported products has remained more or less constant at slightly above 12% of total sales of prescription and non-prescription drugs in the primary health care sector. The expenditures on parallel imported medicine in the hospital sector amounts to 2% of total expenditures on drugs in the hospital sector. The first parallel imported drug was available on the Swedish market in 1997. The parallel distribution sector increased rapidly also in Sweden. The market share of 1.9% in 1997 increased to 6.1% in 1998. By 2000 the market share was 8.6% and reached 12,1% in 2006”. The last data published by EAEPC, referred to 2013 shows that parallel import penetration is about 20% in Nederland and Sweden, 16-19% in Denmark, 8% in Ireland, 6% in United Kingdom and 1% or less in Italy and Poland.  The level of parallel trade in Europe is stable over 5 years and touch less than 3% of total pharmaceutical market (ca. €4.5bn import sales). The number of parallel distributed medicines packages in Europe is estimated around 120-140 million packs per year.

 

Picture 1

An overview of the causes of shortages – Source: Birgli report 2013

 

BIBLIOGRAPHY

Claudia Desogus. Antitrust issues in the European pharmaceutical market: an economic analysis of recent cases on parallel trade.

Heinz Kobelt, Barbara Scognamiglio. Are export restrictions the right medicine against medicines shortages? 2014

Birgli Report. An Evaluation of Medicines Shortages In Europe with a more in-depth review of these in France, Greece, Poland, Spain, and the United Kingdom. 2013

EAEPC and AIP. Q&A on parallel distribution in Italy. 2014

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