At a time when governments are cutting public spending but face rising healthcare costs from an ageing population, new models need to be found to ensure a flow of innovative products, accessible to all.
Proposals at the hearing ranged from pooling patents to a prize fund model.
The status quo ''not only fails to promote innovation, but has also become far too expensive for both developed and developing countries,'' noted French Green MEP Eva Joly. ''Health is not a luxury – it is a basic right.''
The price of medicines is a key factor: EU governments have moved to curb prices of patented medicines, but pharmaceutical firms complain they cannot spend on research and development (R&D) without the incentive of making a profit on new products.
In May, health ministers from the 27 EU member states called for new models to break the link between R&D costs and medicine prices. The World Health Assembly has also adopted a resolution encouraging new models of biomedical innovation that ensure global access.
An unsustainable model
The recent medicine price cuts by EU countries – notably Germany and Spain – are proof that governments cannot afford the current model, observed David Hammerstein from the Transatlantic Consumer Dialogue, a consumer group.
Patenting medicines took centre stage at the hearing. In July 2009, the EU completed an investigation into alleged anti-competitive tactics in the pharmaceutical sector amid allegations that generic drugs were being delayed from reaching consumers.
The EU found that large pharmaceutical companies were applying for multiple patents for the same medicine to prevent competitors from developing rival drugs.
The report stressed the need for patent reform and a single judicial system, which the European Federation of Pharmaceutical Industry Associations agreed would cut costs and reduce legal uncertainties. But the industry group said the report "failed to substantiate" allegations that patenting strategies dampen innovation and illegitimately delay generic entry.
Yet for Sophia Bloemen of the NGO Health Action International, the business models of large pharmaceutical firms are not conducive to innovation because they focus too much on marketing, ''defensive'' patents and litigation. They do not have the incentives to innovate, she argued.
Raminta Stuikyte of the European Aids Treatment Group painted a worrying picture of access to medicines in Eastern Europe. Bulgaria, Romania, Poland and the Baltic states have the lowest health budgets in the EU and the highest death rates, with patients forced to pay half or more of the costs of vital treatments.
On joining the EU, prices of essential drugs in these countries rose sharply because of an EU-wide system that aims to equalise prices between member states. This means that HIV patients in these countries must pay up to 19 times more than in the Ukraine, outside the bloc, to get first-line treatment. In Latvia, only 15% of AIDS sufferers can afford the treatment they need, she added.
Towards a demand-driven system
New models are clearly needed to foster an ''innovation ecosystem'' that begins with at the research stage and continues through to market launch, stated Ruxandra Draghia-Akli from the European Commission's research arm.
The challenge is how to establish a demand-driven system that puts consumers and patients first while providing pharma companies with the incentive and money to conduct new research into future products, she said.
One initiative is the Medicines Patent Pool Initiative, a UNITAID programme aimed at lowering the cost of drugs for HIV/AIDS, malaria and tuberculosis by persuading companies to allow generic production of their patented drugs in poorer countries. A system of shared royalties could help persuade firms to sign up to the scheme, suggested programme head Ellen t'Hoen.
She called on governments and the European Commission to back the initiative and help provide incentive for patent holders.
James Love, director of Knowledge Ecology International, presented the 'prize fund' model. The idea is to bring innovation in drug development without making the customer pay higher prices.
Prizes could be designed in novel ways to reward products that improve treatment options and reduce marketing costs. The system could involve proportional rewards, for example. Companies could receive more money back than others based on the impact of their innovations, he explained.
Michelle Childs from Doctors without Borders said policymakers must come up with ways to break today's ''vicious circle'', whereby industry charges high prices to recover the costs of their research and production. The most effective approach is through generic competition from third parties. Generic competition, however, could be limited by current EU free-trade agreements, she said.