Netherlands should raise generics prices to combat drug shortages, says Dutch bank

The Netherlands should increase the maximum price of generic medicines sold to Dutch patients to help combat drug shortages, Dutch bank ABN AMRO said in a recent report.

Drug shortages in the Netherlands increased by 51% in 2023 compared to 2022. In 2023, there were 2,292 instances where patients could not get the required medicine, up from 1,514 in 2022.

The country’s Medicine Evaluation Board (CGB) attributes 68% of the shortages to generics, and cheaper versions of brand-name medicines while sharing the same active ingredient.

ABN AMRO, the third largest bank in the Netherlands, believes that making generics more expensive rather than cheaper may boost the availability of these relatively affordable drugs in the country. “The large shortage of generic medicines is mainly caused by the fact that neighbouring countries pay 25% more for medicines,” Anja van Balen, ABN AMRO healthcare sector banker, wrote in a report on drug shortages.

The lower pricing factor

Van Balen argued that countries such as Belgium and Germany are then given priority by suppliers due to the stricter Dutch price ceilings, suggesting that the Netherlands should increase the maximum prices of generic drugs to match those of other countries.

ABN healthcare sector economist David Bolscher told Euractiv that such a measure would help alleviate shortages in the Netherlands as suppliers would be more willing to sell their medicines there.

“We have experienced that with supply chain disruptions, suppliers will prefer other countries over the Netherlands due to low prices here,” Bolscher said. He noted that during these disruptions, Dutch patients were able to drive to Germany and Belgium, where they found the medicine they needed was still available.

However, a spokesperson for the Pharmaceutical Group of the European Union (PGEU), an organisation that represents EU community pharmacists, told Euractiv they had no evidence that shows that increasing price ceilings for generics would help alleviate drug shortages.

From his end, Bolscher acknowledged that the Netherlands’ lower pricing wasn’t the only factor at play.

“Health insurers should also stop or adjust the preference policy where they only grant tenders to one supplier. It is important to maintain multiple suppliers in case one experiences shortages,” Bolscher said. “(...) some shortages are global. So it might be wise to set a European-wide policy,” he added.

Raising the ceiling costs €170 million

Van Balen estimates the proposed measure to increase the price ceiling would cost €170 million. The Netherlands spent €54.8 billion on reimbursements in 2023 as part of the basic health insurance packages.

“An increase in expenditure of €170 million is only 0.3% of the costs. As a result, the increase hardly has any effect on the premium that policyholders pay,” van Balen remarked.

However, van Balen warned that paying higher prices for medicines does not solve the whole issue as “temporary or structural shortages will always exist worldwide”.

The CBG reports that 849 products were withdrawn from the market last year, mostly for financial reasons. ABN AMRO interprets this to mean low prices coupled with high financial risks for the producers of the drugs.

The new Dutch cabinet headed by Dutch Prime Minister Dick Schoof has pledged to increase its spending on healthcare. However, Bolscher says this will mainly go towards reducing health insurance premiums and reversing previous cuts from elderly care.

“I do not see any increase in the budget for the health insurers or the medicine budget in general. However, the government is implementing additional measures to stop the medicine shortages,” Bolscher said. These measures include increasing drug stocks from six weeks to two months from January onwards and then again to two and a half months from July onwards.

Asked whether Europe would benefit more from increasing the production of the drugs it needs closer to home, Bolscher said this would not be a cost-effective option. This is because of the low cost at which Asian companies can produce the needed drugs.

“Prices of generic medicines have become very low, and production in Europe can’t beat that. However, it might be valuable to subsidise some production in Europe to avoid shortages. This is necessary to prevent total shortage when bigger supply chain disruptions happen,” said Bolscher.

EU needs common definitions

According to the PGEU, medicine shortages can result from different economic, manufacturing, or regulatory causes, including the globalised nature of pharmaceutical manufacturing, shifts in demand, but also pricing strategies.

The organisation also highlighted a 2021 study by the European Commission that showed that most reported causes of medicine shortages appear to be related to quality and manufacturing issues.

The PGEU is calling for effective policy measures to strengthen supply resilience and to allow for shortages mitigation, the spokesperson told Euractiv. These include creating a common definition of medicine shortages across the EU, allowing community pharmacists to find alternative treatments for their patients, and optimising European and national stockpile management by progressively building rolling stocks.

[By Christoph Schwaiger, Edited by Vasiliki Angouridi, Brian Maguire | Euractiv’s Advocacy Lab]