New drugs: how much are governments paying for innovation?

The medical innovation debate is also heated up due to the ongoing discussion on Health Technology Assessments (HTA). [Shutterstock]

The European healthcare sector is divided over the “actual value” EU governments pay for the authorised and partly public-funded novel drugs, compared to medicines already on the market.

The linkage between the regulatory approval framework and the evidential requirements for innovative medicine is high on the health political agenda. The fine line between the need for pharma innovation, affordability and patients’ safety in practice proves hard to identify.

“The assessment [of innovation] is a central topic for modern healthcare systems, not only for medicines but also for new therapies and therapies in general,” the president of European Health Forum Gastein, Clemens Martin Auer, told

The assessment of new drugs’ added therapeutic value or innovation is becoming the thorniest problem. The debate implies a matter of better spending of public resources in the health sector as well.

“It is becoming increasingly clear that governments in Europe and across the globe are paying too much money for little innovation,” stressed Yannis Natsis, policy manager at European Public Health Alliance (EPHA).

The German representative at the European Medicines Agency (EMA) Board, Wolf-Dieter Ludwig, shared a similar view: “Of course, we pay too much money for new drugs that have not a meaningful clinical benefit for patients, based on the data available at the time point of approval.”

Assessing innovation is an integral part of the broader topic of access and affordability of medicines, and it could be tackled from a public health perspective.

“A lot of the medicines that have been approved, particularly the complex medicines, are paid through publicly funded mechanisms,” said European Public Health Association (EUPHA) president Natasha Azzopardi-Muscat.

“When we are approving medicines that are being funded by the public health system, we can’t afford to ignore that public,” she added.

EPHA’s Yannis Natsis added it is “not credible for the regulators to pretend that the issues of affordability and access are not on the radar”.

The industry

Contacted by EURACTIV, the European Federation of Pharmaceutical Industries and Associations (EFPIA) stressed that with more than 7,000 medicines in development, the exciting new wave of medical innovation will play a key role in addressing the challenges faced by patients and healthcare systems.

“Breakthroughs are happening. Some are incremental. Some are transformative. All are based on the collective learning from rapidly advancing science. Even the setbacks and false horizons in the research journey are part of the process,” EFPIA said in an emailed response.

It added that the way the society values a medicine should be based on a range of factors, including its impact on patients and their disease relative to other available treatments, its potential to reduce other health care costs, such as hospital stays and the individual country’s health and economic needs.

“We are working with governments and healthcare systems to find solutions to make medicines accessible and healthcare more sustainable, including value-based, outcomes-focused pricing models,” EFPIA emphasised.

Things get even more complicated when it comes to patients, especially those who suffer from rare diseases and are in need of so-called orphan drugs. Considering the low demand on the market, the pharma industry is not interested in investing while patient organisations say the pharma industry should not be discouraged to innovate.

Patients: ‘Think carefully’ before questioning orphan drugs’ incentives

Organisations of patients with rare diseases have warned EU policymakers to “think carefully” before reviewing the incentives in the orphan drugs regulation, claiming that the pharma industry should not be discouraged from investing in new therapies.

Post-marketing studies

For Gastein President Auer, there is a structural problem, which is “an asymmetry of information” on the added value of the products between patients, doctors and healthcare reimbursers.

“It’s not black and white and it can be looked at from different angles, but all the countries come to this same conclusion, namely that there is this kind of asymmetry,” he told EURACTIV.

The market authorisation process, according to him, has some loopholes which the sector should start talking about.

To fix these loopholes, a solution could be to add more information during the procedure for market authorisation as well as ensure post-market authorisation, Auer explained.

“It is extremely important that after the approval we perform additional post-marketing studies,” Wolf-Dieter Ludwig added.

He noted that scientific literature clearly shows that these post-marketing studies are not performed within the first 2/3 years, which is basically the time point where the results should be available, but after four or even six years.

In Germany, regulatory authorities are experiencing an extended period for getting additional data from clinical studies. This new data tries to show if a certain drug is truly better than the ones already present on the market, particularly when drug developers do not prove any added therapeutic value at the time of the approval.

“If license holders do not provide this additional data after two or three years, we will change our assessment and the price will go down,” Ludwig said.

“It’s the only way. We cannot approve drugs with no added therapeutic value, afterward we pay a lot of money for drugs that they do not need,” he concluded.

Health technology assessments

The medical innovation debate is also heating up due to the ongoing discussion on Health Technology Assessments (HTA). They aim to identify and evaluate a medicine’s added value and help EU countries decide on pricing.

The European Parliament voted on the mandate to negotiate with EU ministers over HTA on 3 September.

MEPs stressed that, even though HTAs are under national competence, it would be better to carry out parallel assessments at the EU level to avoid duplications and decrease the financial and administrative burden on health technology developers.

According to Clemens Martins Auer, HTA is a good attempt at having a common understanding of joint assessments at the European level.

“HTA can be a gatekeeper for the system and we need to get this golden opportunity right,” EPHA’s Yannis Natsis told EURACTIV.

The public health expert noted there should be a convergence between the European regulator, the  EMA, and the HTA. For instance, the EMA should follow the example of HTA agencies and ask for more comparative trials.

“We need to know that new medicines we authorise are actually better than the existing alternatives. We need to move towards an approval system that gives us innovative drugs, where innovative means novel, but it should also mean better,” he said.

Nathalie Moll, EFPIA’s director general, said it “makes sense to join forces to provide one, high-quality clinical assessment for use across Europe. This will support better decision-making and ultimately benefit all patients across the EU.”

The EMA, for its part, declined to comment on ongoing legislative debates but said it welcomes the proposed establishment of a legal framework which aims to foster cooperation among EU member states in the assessment of health technology.

“EMA has good experience in working with health technology assessment (HTA) bodies and has collaborated with an increasing number of HTA bodies since 2010 through the European Network for Health Technology Assessment (EUnetHTA),” an EMA spokesperson said.

“We are currently continuing this technical work together with our HTA partners, as defined in our joined work plan, for the benefit of patients,” the spokesperson added.

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