Drug firms call for EU measures to keep supplies flowing

The head of Europe’s drug industry has written to EU leaders ahead of their summit this week, seeking major concessions to help keep supplies of medicines flowing to crisis-hit states.

Faced with price cuts and billions in unpaid bills, firms want two measures to prevent discounts offered in Southern Europe from being exported to rich states in the north.

In a forthright letter, GlaxoSmithKline CEO Andrew Witty, who heads Europe’s pharmaceuticals association, says failure to ring-fence austerity cuts will undermine a sector that employs 660,000.

“In these extraordinary times for Europe, its economies and its citizens, business as usual — cost- containment policies that create market distortions — will drive investment elsewhere,” he said.

His letter was sent to EU commission president José Manuel Barroso and to council president Herman Van Rompuy.

In Greece, Ireland, Italy, Portugal, and Spain, drug companies have contributed over €7bn to balancing health budgets through price cuts and discounts in 2010 and 2011.

The overall impact is greater still because governments refer to prices in Southern Europe when setting their own medicine prices.

Low prices in Southern Europe have also helped suck medicines out of the region as wholesalers re- export drugs to countries where prices are higher.

To counter the problem, EU states should exclude from their reference pricing baskets countries undergoing fiscal restructuring schemes, according to the European Federation of Pharmaceutical Industries and Associations.

The group also wants the EU to accept a temporary ban on the re-export of drugs from states that are fighting to re-balance public finances.

This could help prevent shortages but is a big ask, since the commission closely guards the right to such free movement of goods under EU laws.