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REVIEW ARTICLE

How Can Pricing and Reimbursement Policies Improve Affordable Access to Medicines? Lessons Learned from European Countries

Sabine Vogler1 • Valérie Paris2 • Alessandra Ferrario3 • Veronika J. Wirtz4 •

Kees de Joncheere5 • Peter Schneider1 • Hanne Bak Pedersen6 • Guillaume Dedet6 •

Zaheer-Ud-Din Babar7

Published online: 6 January 2017

� Springer International Publishing Switzerland 2017

Abstract This article discusses pharmaceutical pricing

and reimbursement policies in European countries with

regard to their ability to ensure affordable access to

medicines. A frequently applied pricing policy is exter-

nal price referencing. While it provides some benchmark

for policy-makers and has been shown to be able to

generate savings, it may also contribute to delay in

product launch in countries where medicine prices are

low. Value-based pricing has been proposed as a policy

that promotes access while rewarding useful innovation;

however, implementing it has proven quite challenging.

For high-priced medicines, managed-entry agreements

are increasingly used. These agreements allow policy-

makers to manage uncertainty and obtain lower prices.

They can also facilitate earlier market access in case of

limited evidence about added therapeutic value of the

medicine. However, these agreements raise transparency

concerns due to the confidentiality clause. Tendering as

used in the hospital and offpatent outpatient sectors has

been proven to reduce medicine prices but it requires a

robust framework and appropriate design with clear

strategic goals in order to prevent shortages. These

pricing and reimbursement policies are supplemented by

the widespread use of Health Technology Assessment to

inform decision-making, and by strategies to improve the

uptake of generics, and also biosimilars. While European

countries have been implementing a set of policy

options, there is a lack of thorough impact assessments

of several pricing and reimbursement policies on

affordable access. Increased cooperation between

authorities, experience sharing and improving trans-

parency on price information, including the disclosure of

confidential discounts, are opportunities to address cur-

rent challenges.

Kees de Joncheere–Retired.

Electronic supplementary material The online version of this article (doi:10.1007/s40258-016-0300-z) contains supplementary material, which is available to authorized users.

& Sabine Vogler [email protected]

1 WHO Collaborating Centre for Pharmaceutical Pricing and

Reimbursement Policies, Pharmacoeconomics Department,

Gesundheit Österreich GmbH (Austrian Public Health

Institute), 1010 Vienna, Austria

2 Health Division, Organisation for Economic Co-operation

and Development (OECD), 75116 Paris, France

3 LSE Health and Department of Social Policy, London School

of Economics and Political Science, LondonWC2A 2AE, UK

4 Department of Global Health, Boston University School of

Public Health, Boston, MA 02118, USA

5 Essential Medicines and Health Products Department (EMP),

World Health Organization (WHO), 1211 Geneva 27,

Switzerland

6 World Health Organization (WHO) Regional Office for

Europe, Copenhagen 2100, Denmark

7 School of Pharmacy, Faculty of Medical and Health Sciences,

University of Auckland, Private Mail Bag, 92019 Auckland,

New Zealand

Appl Health Econ Health Policy (2017) 15:307–321

DOI 10.1007/s40258-016-0300-z

Key Points for Decision Makers

European countries apply different pharmaceutical

pricing and reimbursement policies.

These policies are frequently assessed against their

financial consequences and their ability to contain

costs but less so in terms of access to medicines.

Policies should be accompanied by regular

evaluations, facilitated by the use of the appropriate

methodology and access to the relevant data.

There appears to be a need for additional changes

beyond traditional pharmaceutical pricing and

reimbursement policies. Collaborative approaches

(e.g. between countries or between regulatory

authorities, pricing and reimbursement agencies) and

more transparency in terms of real medicine prices,

R ? D costs and medicines in the pipeline are

considered as possible pathways for the future.

1 Introduction

In recent years, access to essential medicines has become an

issue even in the wealthiest parts of Europe. In particular,

the proliferation of high-priced medicines has pushed the

issue of access to new medicines high on the policy agenda

of all European countries, including in high-income econo-

mies [1–4]. At the same time, pharmaceutical spending is

rising again, boosted in 2014 by the entry of new hepatitis C

treatments [5]. Apart from prices, payers are increasingly

concerned that some of these high-priced medicines only

deliver limited therapeutic-added benefits to patients [6–8].

While in most European countries all residents benefit

from comprehensive coverage of healthcare costs, includ-

ing costs related to medicines [9], and a major part of

spending on medicines comes from public progammes,

there is considerable variation in public funding on

medicines between countries [10]. In addition, important

variation in access to medicines exists between European

countries, in particular between Western and Eastern

countries. This is due to differences in marketing of

medicines and their inclusion in national reimbursement

lists, the country’s gross domestic product, government

expenditure on health, and also due to medicine prices and

utilisation (for further information on differences between

countries related to availability [11–14], prices [5, 15–22]

and utilisation [23–30] of medicines see Appendix A1 in

the Supplementary Materials).

This article provides a critical discussion of selected

pharmaceutical reimbursement and pricing policies used in

European countries and their ability to ensure affordable

access to medicines. In line with existing frameworks

[31–34], availability (marketing of a medicine in national

markets) and indicators such as inclusion of medicines in

reimbursement, public spending and medicine prices are

considered as key determinants for affordable access to

medicines. This understanding of affordable access to

medicines also fits within the Universal Health Coverage

and access to medicines target under Sustainable Devel-

opment Goal 3 on Good Health [35].

Over the last three decades a number of initiatives have

been developed to better characterise and measure the situa-

tion in countries and globally on the access to and regulation

and use of medicines. These initiatives were developed in

collaboration with numerous international and national

organisations, academia and experts, and fed with country

experiences and often consolidated in WHO documents and

guidelines [36]. They normally contain a set of structure,

process, output and outcome indicators. In parallel many

countries developed and used their own set of indicators to

more specifically measure their national situation. The latest

effort has been the development of a set of 100 indicators,

jointly by WHO and the World Bank, to monitor progress on

UHC, and this also contains some indicators across disease

programmes as well as health system development [37].

The presented findings are based on an iterative search

of the published and grey literature, using the bibliographic

database PubMed, alongside Google Scholar and reviewing

reference lists of flagship reports (e.g. a WHO Euro report

on access to new medicines [3] and the WHO Priority

Medicines for Europe and the World Report, with the

background chapter on pricing and reimbursement [11]).

The literature search was complemented by input from co-

authors, all expert on the topic. Key search terms were the

names of the pricing and reimbursement policies, as listed

in the WHO report on access to new medicines [3]; sear-

ches were run between 25 May and 26 June 2016. When

co-authors learned about relevant updated literature that

was published later, this was also included in the first draft

and revised paper. In order to have access to up-to-date

information about policies in Europe that might not have

been covered in the literature, we included descriptive

information about the existence of the discussed policies in

Europe as of 2016 based on information obtained from

policy surveys done with representatives of compentent

authorities involved the Pharmaceutical Pricing and

Reimbursement Information (PPRI) network.

To keep the review focused, this paper focuses on key

policies out of the larger menu of pharmaceutical pricing

and reimbursement policies, as described in the literature

[3, 18, 38]. Policies included were those that have com-

monly been applied in European countries for several

years, some of which (e.g. health technology assessment

308 S. Vogler et al.

and external price referencing) have also been intensively

discussed in literature. In addition, recently introduced

policies (e.g. managed-entry agreements and horizon

scanning) that have been seen as major policy options in

the menu of policies for high-priced medicines are included

[3]. For definitions of key policies used see Table 1.

2 Health Technology Assessments to Inform Pricing and Reimbursement Policies

In Europe, decisions about reimbursement of medicines are

taken at the national level. These are often implemented

through positive or negative lists, even in health systems

with competing health insurers such as The Netherlands or

Switzerland. Patients usually have to contribute to the costs

of outpatient medicines; however, various mechanisms exist

to protect patients from excessive out-of-pocket payments

[9]. Typically, marketing authorisation holders have to file

an application if they want their medicine to be included in

the positive list of reimbursed medicines. European

countries use one of the following processes to make

reimbursement and pricing decisions: In some countries,

health technology assessment (HTA) is used to inform

reimbursement and/or pricing decisions (e.g. France, Italy,

the Czech Republic, Switzerland). In other countries, HTA

(and appraisal) results in a decision to reimburse a new

product (with or without restrictions) or to reject funding

(e.g. England, Sweden and Norway; see Appendix A2 in the

Supplementary Materials on different models).

In many European countries, HTA is used either sys-

tematically for all new medicines or only for those raising

specific problems such as high prices, uncertain clinical

benefits or high budget impact. There are usually more than

one or two HTA institutions per country (for an overview

see WHO report [3]). HTA is focused on the assessment of

clinical benefits but may also include economic aspects. It

determines the therapeutic value of a medicine, the added

therapeutic value in comparison to existing treatments, and

frequently its cost-effectiveness. Medicines which are more

effective than existing comparators can get a higher price,

while others tend to be priced at a similar or lower level.

Table 1 Policy Definitions

Policy Definition

Health technology assessment (HTA) A multidisciplinary process that summarises information about the medical, social, economic and

ethical issues related to the use of health technology in a systematic, transparent, unbiased, robust

manner. Its aim is to inform the formulation of safe, effective health policies that are patient-focused

and seek to achieve best value

External price referencing Practice of using the price(s) of a medicine in one or several countries in order to derive a benchmark or

reference price for the purposes of setting or negotiating the price of a medicine in a given country

Synonyms: external reference pricing, international price referencing, international price

benchmarking, international price comparisons

Parallel trade The act of importing pharmaceuticals into one country (the ‘import’ country) from another (the ‘export’

country) and placing them on the market outside the formal channels authorised by the product’s

manufacturer or licensed distributors

Value-based pricing (VBP) Setting a price according the added therapeutic value of a new product by comparison with existing

treatments

In a broad sense, VBP means that activities should be oriented, organized or funded to maximize health

benefits for patients and societies. Thus, it proposes to link payments for health services, including

medicines, to evidence-based assessments of value for patients, their relatives and society as a whole

Managed-entry agreement (MEA) An arrangement between a manufacturer and payer/provider that enables access to (coverage/

reimbursement of) a health technology subject to specified conditions. These arrangements can use a

variety of mechanisms to address uncertainty about the performance of technologies or to manage the

adoption of technologies in order to maximize their effective use, or limit their budget impact

Tendering Any formal and competitive procurement procedure through which tenders (offers) are requested,

received and evaluated for the procurement of goods, works or services, and as a consequence of

which an award is made to the tenderer whose tender/offer is the most advantageous

Reference price system Identical or similar medicines are clustered and are reimbursed up to a certain limit

Generic substitution Practice of substituting a medicine, whether marketed under a trade name or generic name (branded or

unbranded generic), with a less expensive medicine (e.g. branded or unbranded generic), often

containing the same active ingredient(s)

International non-proprietary name

(INN) prescribing

Requirements for prescribers (e.g. physicians) to prescribe medicines by its INN, i.e. the active

ingredient name instead of the brand name

Definitions are based on the glossaries of the WHO Collaborating Centre for Pharmaceutical Pricing and Reimbursement Policies and of the

OECD

Lessons from Pricing and Reimbursement Policies in Europe 309

Medicines used in the treatment of very severe diseases

and/or orphan diseases without treatment alternatives are

very often accepted for reimbursement even though they do

not meet the cost-effectiveness threshold [39]. This sug-

gests that cost-effectiveness is not the only criteria taken

into account by decision makers and also that the negoti-

ation power of payers is very limited in such cases.

HTA is a tool to support prioritisation, with the aim of

helping policy-makers obtain better value for money. This

would arguably ensure a more rational and targeted

investment of funds, thus contributing to access to cost-

effective medicines. A study that compared HTA and

internal price referencing suggested that HTA appears to be

the superior strategy for obtaining value for money because

it addresses both price and appropriate indications for the

use of the medicine and the relation between additional

value and additional costs [40]. Overall, no clear pattern of

the impact of HTA on prices could be determined [41].

Still, policy-makers consider HTA as one of the two key

tools (the other one being managed-entry agreements) to

deal with new high-priced medicines [42].

3 Selected Pricing and Reimbursement Policies

Most European countries regulate the prices of medicines

via a mix of instruments, applied to different market seg-

ments (outpatient/inpatient medicines, onpatent/offpatent,

innovative/medicines with no added therapeutic value,

etc.). Even though all these instruments have advantages

and drawbacks that are described below, it is difficult to

isolate the impact of any single policy on availability and

affordability of medicines since countries typically use

several of these policies simultaneously.

3.1 External Price Referencing

All but two (Sweden, UK) EU member states refer to the

price in other countries to set the price of medicines in their

own country, a practice known as external price referencing

(EPR). EPR is also used in other European countries (e.g.

Norway, Iceland, Switzerland and Turkey) [43]. However,

the scope, relevance and methodological design vary across

countries. In Denmark, for instance, EPR only applies in the

hospital sector. In Germany, EPR exists in the legislation but

is not used in practice [43]. EPR is typically applied to

regulate the price of new products, less often in offpatent

markets. This international price comparison offers a refer-

ence, or benchmark, for policy-makers, to understand where

the prices proposed by the pharmaceutical industry for their

country are relatively ranked. The price information

achieved through EPR is frequently seen as a starting point

for public payers to further negotiate and conclude

agreements to reach a more acceptable and somewhat

affordable price that will be funded.

The Organisation for Economic Co-operation and

Development (OECD) described EPR as a policy that is

‘‘readily gameable by the pharmaceutical industry and—

by reducing firms’ willingness to price to market—

contributes to access and affordability problems’’ [44].

EPR incentivises marketing authorisation holders to

launch medicines first in countries with higher prices,

and delay, or not to launch, in lower-priced countries.

This is in order to not reduce the medicine’s interna-

tional reference price [38, 45–53]. Countries with lower

prices or lower market volume were found to have fewer

medicines available and longer delays in medicine

launches [48, 54, 55]. Pharmaceutical companies have

systematically delayed dossier submissions in Belgium

in order to avoid the lower Belgian prices affecting other

European countries [56]. While studies highlighted the

ability of EPR to negatively impact the availability of

medicines on the market, it remains difficult to isolate

the impact of EPR from other factors, such as ‘parallel

trade’ (see Table 1), which is a legal practice within the

EU [49, 57] or pricing regulation in Germany and Italy

that allow free pricing for some medicines in the first

year to improve earlier market access in their country,

but thus signal a high price to other EPR-applying

countries. Overall, available literature on the impact of

EPR is limited [41, 48]. Evaluations focused on cost-

containment, showing how EPR was able to contribute

to savings under specific conditions [21, 58–61], whereas

aspects such as availability and uptake have not been

sufficiently addressed. One study showed that, using a

limited sample of new patented medicines, EPR-apply-

ing countries had, in general, lower list prices than

countries not using EPR [60].

To mitigate the negative impact of EPR (and parallel

trade) on availability in lower-income countries in Europe,

it has been argued that public payers could keep a high ‘list

price’ and get confidential discounts through product-

specific agreements [46, 62]. This would allow the phar-

maceutical industry to provide medicines at lower prices to

low-income countries without negatively impacting the

average reference price. While confidential arrangements

(frequently subsumed under the umbrella term of managed-

entry agreements (MEA), see below) have increasingly

been used, also by higher-income countries as an instru-

ment to ensure affordable access to medicines [3, 63], there

is no evidence that access has improved in lower-income

countries since they continue to experience delayed and

limited availability. On the negative side, confidential

discounts and rebates are blurring the price transparency of

the market, and they limit the ability of payers to determine

what a ‘reasonable and fair’ price would be.

310 S. Vogler et al.

3.2 Value-Based Pricing

Value-based pricing (VBP) consists of setting a price

according the added therapeutic value of a new product

through comparison with existing treatments. Seeking to

pay for medicines in relation to the ‘value’ they bring to

their own health system and society has been considered

one approach to ensure value in pharmaceutical spending

(static efficiency) and to send appropriate signals to com-

panies for further investments in research and development

(R&D; dynamic efficiency) [44].

In a narrow approach, VBP (in the context of the Eng-

lish National Health Service (NHS)) is defined as ‘[the

price] that ensures that the expected health benefits [of a

new technology] exceed the health predicted to be dis-

placed elsewhere in the NHS, due to their additional cost’

[64]. It thus relies on cost-effectiveness analysis and the

setting of an ICER threshold beyond which a new medicine

is not funded. Sweden has such a ‘real’ VBP system.

Introduced in 2002, pricing and reimbursement processes

are completely integrated, and eligibility for reimburse-

ment is assessed against three criteria: the human value

principle to guard against discrimination of individuals, the

need and solidarity principle that gives priority to those in

greatest need, and the cost-effectiveness principle [11, 65].

Applying a broader approach, any policy linking the price

of a medicine to its added therapeutic value can be considered

within the category of value-based pricing. With such a defi-

nition, many European countries use such policies [3, 39].

However, value-based pricing has proven difficult to

implement, especially in therapeutic areas where no alter-

native treatment is available and patients suffer from severe

life-threatening or debilating disease, such as oncology or

rare diseases. In such cases, payers face a strong public

pressure and often accept paying high prices for limited

clinical benefits. To some extent, it can be argued that the

value of such products cannot be reduced to clinical ben-

efits and some analysts have developed frameworks to take

other criteria into account, such as the absence of alterna-

tive treatments for orphan diseases for instance [66].

However, such frameworks do not provide any simple rule

to set the price of a new medicine.

A major argument for using a value-based pricing policy

is that it might create an incentive for the development of

products that generate more added value [11, 65]. It could

also support a new approach of policy-makers to signal more

explicitly their priorities regarding which medicines would

be reimbursed if they are developed as proposed in the

WHO Priority Medicines for Europe and the World Study in

2004 [67]. Currently, the pharmaceutical policy framework

appears to be supply-driven, and a more pro-active approach

has been suggested [68, 69]. In principle, medicines with

perceived high value are likely to obtain higher prices,

providing a reward for innovation, which might explain the

preference of the pharmaceutical industry for this policy

[70]. However, VBP also presents opportunities to the

pharmaceutical industry for ‘gaming’, in particular related to

the choice of the comparator and the threshold [53]. For

instance, a manufacturer will try to avoid a genericised

molecule as a comparator, even if this means positioning

their product as a second- or third-line therapy. In such a

case, the population target will be smaller but the price

premium will be set in relation to the price of an on-patent

medicine. In addition, where an explicit cost-effectiveness

threshold is published, marketing authorisation holders tend

to price up to the threshold [71].

It has been argued that VBP would encourage access to

needed medicines, in line with the prioritisation of policy-

makers. Still, it can also result in limited, or delayed,

access due to the resource-intensive and time-intensive

character of underlying value assessments, and discussions

between the authority and the manufacturer on different

perceptions of value [53]. Until now, VBP has been pro-

posed as a logical and fair policy to promote access as well

as reward useful innovation; however, implementing this

policy has proven very challenging.

3.3 Managed-Entry Agreement

European countries have increasingly been using MEAs

to deal with high-priced medicines and uncertainty around

the medicine’s value [3]. These agreements take many

forms such as simple confidential discounts and price–

volume agreements in financial-based schemes (non-

health-outcome-based schemes). These also include more

sophisticated performance-based (or health-outcome-

based) schemes, where the final price of a product is

linked to health outcomes observed in real life. Perfor-

mance-based schemes include outcome guarantees (i.e. an

agreement where the manufacturer provides rebates,

refunds or price adjustments if the product fails to meet

the agreed outcome target), coverage with evidence

development (i.e. reimbursement where additional data

gathered in the context of clinical care would further

clarify the impact of the medicines, and patient eligibility

linked to patient registries to measure post-marketing

clinical outcomes).

In some countries, the existence of such agreements is

not disclosed to the public (e.g. in France), while in others

the existence and the content of the agreements is public

(e.g. Scotland, England and Belgium). In all cases, the final

discount to payers is unknown. The EMINet survey of

2013 [72] confirmed other research [73–75] that MEAs

were particularly used for specific (high-priced) indications

such as cancer, and that some European countries (e.g.

Italy and the UK) used them at a much higher scale than

Lessons from Pricing and Reimbursement Policies in Europe 311

others. It also showed that most countries opted for finan-

cial MEAs, which are easier to handle than performance-

based MEAs [76]. Since that study, more MEAs have been

implemented for new products, and even European coun-

tries (e.g. Bulgaria and Romania) that had not applied them

before started to use them [3, 77].

For patients and the pharmaceutical industry, MEAs are

an opportunity to facilitate early market access to medici-

nes, even if added therapeutic value has not yet been fully

proven. They also allow for price discrimination without

changing list prices. For policy-makers, MEAs are a tool to

manage uncertainty [78] and obtain lower prices than the

list prices; how much lower is unknown as the prices are

confidential. When performance-based MEAs have been

set up, together with patients registries, for instance, this

allows collecting real-life clinical data that are needed to

assess the treatment effect and take a more sound decision

based on more robust evidence. Still, even if updated data

may urge for a discontinuation of funding (at high prices)

of a medicine under a MEA, it might be difficult in reality

to implement it if expectations of patients have been cre-

ated [79]. Due to public pressure, funding may be contin-

ued, as observed in the cases of agalsidase alfa and

agalsidase beta for Fabry disease and alglucosidase alfa for

Pompe disease in The Netherlands [80].

The confidentiality of MEAs is a major drawback, par-

ticularly given the widespread use of EPR. As a result,

European countries refer to the official list price of a high-

priced medicine that is under MEA in several countries. It

was argued that by opting for MEA payers implicitly

accepting high (list) prices [81].

Despite continuously wide-spread use of MEAs, there is

some [82], but comparably little, knowledge about their

functioning and results in terms of improving affordability

and access.

3.4 Tendering

In Europe, tendering has traditionally been applied in the

hospital sector, at the level of individual hospitals and

hospital groups, or through voluntary pooling of regional

procurement at national level by procurement agencies (in

Denmark and Norway) acting on behalf of all public

hospitals [83–85]. In the outpatient offpatent sector, some

European countries (e.g. Germany, The Netherlands,

Slovenia and Romania) have implemented tender systems

and auction elements to enhance competition (cluster-

tendering) and thus achieve lower medicine prices

[86–88].

National procurement agencies in Denmark (AMGROS)

and Norway (LIS) have been reporting efficiency gains and

lower prices through their centralised hospital tendering

compared to other countries [83–85]. This is in part

attributed to the shift of the balance of power in favour of

the national procurement agency that procures for a much

larger market as well as use of new types of tendering

procedures.

Tendering in the outpatient sector has also proven its

ability to considerably reduce prices through competition

[88–90]. Concerns have been raised that, if tender

pushed prices too low, the sustainability of the generic

industry would suffer, and some companies could with-

draw from the market, thus reducing competition in the

longer term [91]. However, a recent study did not find

any evidence Dutch offpatent market that tendered

medicines would be more affected by shortages than

non-tendered medicines [88]. Still, in case of shortages

of tendered medicines, alternative medicines might also

not be available or only at substantially higher prices.

Tendering requires a clear and robust framework, as

apparently observed for the tender-like system in the

Danish outpatient system [88], particularly aiming at

keeping several suppliers in the market, including

backup strategies to deal with possible supply problems.

If tendering is not well designed and based on a sound

framework, there are risks of neutralisation of savings

(lower prices for one medicine are met with higher

prices for similar medicines), of stakeholders going to

court to challenge the legal provisions, and the non-

availability of medicines. These developments were

observed in Belgium, which, as a result, withdrew its

tendering policy for offpatent medicines [88, 92].

3.5 Generic Policies

European countries have increasingly been implementing

generic policies [93, 94] (see Table 1 for definitions of

generic policies listed below). They are particularly aimed

at ensuring swift market entry of high-quality generics,

bringing down the prices of multi-source products (off-

patent originator medicines and generic medicines) and

improving acceptance of generics and uptake of lower-

priced medicines. As a result, generic policies are consid-

ered as a valuable instrument to generate savings for public

payers that can be used to afford more expensive medicines

and treat more patients. European countries use a mix of

policies related to pricing, reimbursement and enhance-

ment of uptake of generics.

Twenty-two EU member states (as of 2016) use ‘internal

reference pricing’, i.e. maximum reimbursement amounts

for clusters of medicines. In nine of these countries, clus-

ters of medicines with the same active ingredient have been

established, while in 13 countries a reference price is

applied to therapeutic substitutes (e.g. Germany and The

Netherlands) [95]. Most EU member states set the price of

generics in relation to originator prices, whereas fewer

312 S. Vogler et al.

countries (e.g. Finland, Germany, Norway, Sweden and the

UK) exclusively rely on competition [96]. As explained

above, tendering, or an auction-like system for generics, is

used by some European countries for the procurement of

generics in the inpatient and, to a lesser extent, the out-

patient sectors. Generic substitution by the pharmacist is

allowed in 24 EU member states and is even mandatory in

ten (2016 data [95]). Doctors are encouraged to prescribe

using the International Non-Proprietary Name (INN) in 25

EU member states, and mandated to do so in ten of them

[95]. These demand-side measures are supplemented by

education and information activities targeted at patients

and health professionals. Financial incentives are also

applied, but to a far lesser extent. For instance, different co-

payment rates for originator and generic medicines had

been in place in Portugal and were abolished [97], and

Austria ran a pilot of lower co-payment in one health

insurance fund [98]. In recent times, more countries are

moving towards mandatory generic substitution and

mandatory INN prescribing instead of the voluntary form

they had introduced earlier [99]. This may in fact be an

approach to ensure better enforcement of the measures.

As a result, several European countries have been suc-

cessful in bringing down generic prices and increasing their

generic market share even if, apart from a few countries

(Germany, the UK, Slovak Republic and The Netherlands)

generic uptake is lower in Europe than in the USA and

generic prices in European countries tend to be higher than

in the USA [100]. Overall, competitive pricing policies,

including tendering, as used in some Nordic European

countries, appear to be more successful than other, more

regulated generic policies in reducing the price levels of

generics as well as of competitor originators and increasing

the uptake of generics, in particular if coupled with

demand-side measures [96, 101]. The quality of generics is

ensured in the EU member states and neighbouring Euro-

pean countries, but lack of trust in the quality of generics

by patients and even health professionals is still an issue

[94, 102, 103]. It has been noted, for example by the

Pharmaceutical Sector Inquiry of the European Commis-

sion [104], that benefits of generics were not always fully

realised because of delays in market entry. Industry

strategies of ‘evergreening’ have been observed, trying to

link intellectual property issues to marketing authorisation,

pricing and reimbursement of medicines [105, 106].

There is a large body of literature, including on Euro-

pean countries, that has confirmed the savings potential

through lower prices by implementing generics policies

[101, 107–109]. Evidence shows that generics have con-

tributed to increased utilisation of medicines [101, 110]. In

contrast to other policies described above, generic policies

describe an area for which evidence on their effectiveness

to ensure affordable access is available.

3.6 Policies on Biosimilar Medicines

Given the high prices of new biological medicines,

authorities and payers have high expectations regarding

offpatent successors [3]. At the time of writing, 20

biosimilar medicines have been approved in Europe [111],

with substantial cost savings [112], compared to two

biosimilar medicines in the USA [113]. Studies about the

clinical impact of switches from originators to biosimilars

are being performed in European countries [114]. The

recently published first results of the Norwegian NOR

SWITCH study suggested that a switch from the originator

infliximab to biosimilar infliximab is safe [115].

Policies to encourage the uptake of biosimilars differ

from policies to encourage the uptake of generic medicines

because of the perception that biosimilar medicines should

not be treated as ‘generics’ [116]. For instance, the prices

of biosimilars are linked to originator prices, the required

difference between the biosimilar and the originator price

is lower compared to generics (e.g. 30% for generics and

15% for biosimilars in Croatia; and 50% for generics and

30% for biosimilars in Lithuania) [117]. While generic

substitution has been widely implemented in European

countries, this is not the case for biosimilar substitution at

pharmacy level [118, 119]. Though European countries

seem to be advanced with regard to biosimilar medicines

compared to the rest of the world, overall governments in

European countries appear to be still struggling to develop

the best policy option mix for achieveing most benefit from

biosimilar medicines. At the same time, there is the best-

practice example of Norway that combines several policies

(pricing, uptake enhancement and education): In the areas

of biological and biosimilar medicines, Norway has been

following up on its successful policy of tendering through a

public procurement agency for medicines used in public

hospitals [120], and closely works with the clinicians to

educate and encourage them to prescribe the tendered,

lower-priced medicines. Figures regarding price reductions

that Norway has achieved in tenders are impressive (e.g.

discounts of up to 80% between originator and biosimilar

medicines) [121], and this is used to ensure that in total

more patients can be treated.

4 Suggestions for Improvement

European countries developed a range of pricing and

reimbursement policies, with the aim of ensuring afford-

able access to medicines, protecting citizens against

financial hardship and generating public savings and/or to

contain costs. Despite several achievements, countries

continue to struggle to meet policy objectives. This is in

particular the case in the context of market entry of new

Lessons from Pricing and Reimbursement Policies in Europe 313

high-priced medicines. Policy-makers in Europe identified

an imbalance of (negotiation) power in the pharmaceutical

sector, as stated in the ‘Council conclusions on strength-

ening the balance in the pharmaceutical systems in the EU

and its member states’ published under the Dutch EU

Presidency in June 2016 [122]. In order to address this

perceived imbalance, some new approaches, including

cooperation between countries and between different

agencies (e.g. responsible for marketing authorisation,

HTA body, pricing and reimubursement authorities),

improved information sharing and data generation as well

as revised incentives and frameworks, have been discussed

and also partially been implemented in European countries.

They aim to improve the capacity, knowledge and nego-

tiation power of governments. They are thus intended to

enable payers to take more informed decisions and to

achieve negotiation results with the pharmaceutical

industry that lead to a more affordable access to medicines

for patients while keeping a ‘healthy market’. These

approaches are not policies per se, but rather processes and

tools to support and further develop pharmaceutical policy.

4.1 Cooperation and Stakeholder Involvement

During the last decade, European countries have seen

increased cross-national cooperation activities between

public authorities at technical levels, using platforms such

as the Network of Competent Authorities on Pricing and

Reimbursement (CAPR) and the Phamaceutical Pricing

and Reimbursement Information (PPRI) network (for

information on these and further networks see Appendix

A3 in the Supplementary Materials).

These networks mainly serve for building capacity and

improving the exchange of experiences between authori-

ties. Any further-reaching collaboration beyond informa-

tion sharing, such as joint negotiations or joint

procurement, were for some time not considered to be

feasible policy options for EU member states that make

the decisions about medicine prices and funding at their

national levels. The sofosbuvir case, however, appeared to

have been a trigger for a change. A French initiative in

2014 sought collaborative approaches with other Euro-

pean countries to get a lower price for sofosbuvir, but it

was not successful. Some EU member states hoped that

the specific ‘Joint Procurement Agreement (JPA) of

medical countermeasures’ as of 2014 [123] (i.e. pro-

curement of vaccines, for instance, to be prepared for an

outbreak of a serious cross-border threat to health such as

a pandemic) could be extended to a joint procurement of

high-priced medicines against cancer, multiple sclerosis

and orphan medicines. But the European Commission

clarified that this would be beyond of the scope of this

agreement [43]. Collaborative approaches such as joint

negotiations and procurements were sought since member

states wanted to increase their negotiation power in order

to achieve lower prices, in return for—the predictability

of—larger volumes for the pharmaceutical industry, and

also to achieve earlier and improved access to medicines

for lower-priced countries and small markets that were

not supplied with some high-priced medicines. In this

respect, the issue of ‘fair prices’ was also discussed since

prices in lower-priced European countries were found to

be as high as in higher-priced countries and thus unaf-

fordable ([5]; see also Appendix A1 in the Supplementary

Materials). Discussions also included considerations

about a differential pricing policy within the EU in order

to ensure that medicine prices were better linked to the

economic situation of a country. A study [43] commis-

sioned by the European Commission to explore the fea-

sibility of differential pricing in Europe concluded that a

fully-fledged differential pricing system would require

addressing major obstacles, including measures to prevent

leakage due to parallel trade and the wide-spread use of

EPR, and political commitment of the EU member states

to agreeing on principles and mechanisms.

While this far-reaching EU-wide cooperation appeared

not to be implementable in the short term, a number of the

countries started to cooperate in this area. For instance, in

2015, Belgium, The Netherlands and Luxembourg

announced a cooperation initiative aiming to jointly

negotiate with pharmaceutical companies [124], and

another country (Austria) joined this cooperation platform

(Beneluxa) in 2016 [125]. These collaborations appear to

be at early stages and thus cannot be assessed. Joint

negotiations are expected to strengthen the purchasing

power of the collaborating countries, and technical coop-

eration in areas of HTA or horizon scanning is planned that

helps governments get an improved evidence base for more

informed decisions in a more resource-efficient way com-

pared to doing this individually and separately.

In addition, joining forces in the fragmented pharma-

ceutical systems in European countries also requires ver-

tical (cross-agency) cooperation in countries and at the

European level. In order to overcome working in ‘silos’ at

different stages of a the life-cycle of a medicine, awareness

has been raised for enhancing national and international

cooperation between different authorities along the man-

agement of market entry of new medicines (i.e. regulatory

authorities, HTA organisations, pricing authorities and

reimbursement agencies), possibly with the involvement of

other stakeholders like the pharmaceutical industry,

patients and academia [3]. Supported by a legal framework

and EU funding, EUNetHTA, which is a large network of

HTA organisations and public authorities, with the

involvement of external stakeholders such as the pharma-

ceutical industry, has already been active for nearly a

314 S. Vogler et al.

decade [126]. Since 2010, the European Medicines Agency

(EMA) has been offering parallel scientific advice to that of

HTA bodies that allows pharmaceutical companies to

receive simultaneous feedback from both regulators (EMA)

and HTA bodies on their development plans for new

medicines [127] and to be better able to respond to

expectations of regulators and payers. Furthermore, the

project of the Adaptive Pathways (adaptive licensing) of

EMA foresees a staged approach to the collection of evi-

dence and consequent licence adaptations [128]. However,

it is still in the pilot phase, and the impact on pricing and

reimbursement is not clear.

The involvement of patients, and, even more broadly, of

citizens in priority-setting for health and social care,

including aspects of pricing and reimbursement policies,

has been urged for several years [67]. Patients are the

‘experts’ for their diseases, and they can bring in aspects of

quality of life and different perspectives about medicines,

for example on their observed and expected impracticali-

ties [129]. Despite the acknowledged importance of patient

involvement, this has been hardly implemented in the area

of pricing and reimbursement in European countries [130].

This might also be linked to authorities’ lack of knowledge

and experience on how to address patients and integrate

them in committees, for instance. Some examples in this

field include the activities of the National Institute for

Health and Care Excellence (NICE) in England [129] and

the Scottish Medicines Agency [131], which have been

involving the public in their processes.

4.2 Transparency

While pricing and reimbursement decisions are, as

described, the responsibility of the national competent

authorities in the EU member states, the EU Transparency

Directive [132] obliges member states to comply with

defined specifications of the processes, including time-lines

and a clear definition of criteria taken into account to make

reimbursement and pricing decisions of processes (e.g.

justifications of the decisions and the possibility for mar-

keting authorisation holders to appeal). This directive

imposes obligations on competent authorities, not compa-

nies, and confidential arrangements between payers and

companies do not fall under the scope of this regulation.

As shown, confidential discounts and further MEAs

have been increasingly used, particularly for high-priced

medicines. Industry has been arguing that, given the

widespread use of external price referencing, price dis-

crimination through confidential discounts was the only

way to ensure affordable access to medicines (see also

EFPIA [133]). Policy-makers have increasingly become

aware of the impact of their confidentiality agreements on

other countries, but they are in a type of prisoner’s

dilemma [43]. In recent years, authorities [134] increas-

ingly joined the call of researchers and international

institutions [3, 16, 48] for more price transparency. A

disclosure of discounts would allow EPR-applying coun-

tries to refer to actual prices, thus lower prices and contain

costs by not overpaying. But even payers that do not apply

EPR, or only as a supplementary policy, reported that

knowledge about real prices would be helpful to have some

kind of benchmark for decision-making (information pro-

vided by PPRI network members). However, no European

country has been pioneering in disclosing discounted prices

[43]; in addition there is concern that lower or no discounts

would be offered by the pharmaceutical industry. As a first

step, since 2016 Austria has been labelling the medicines in

its reimbursement list for which a discount agreement has

been arranged, without disclosing the extent of the dis-

count. Such practice is also common in Australia [135].

While a routine disclosure of discounts does not appear

feasible for European countries at this time, a possible

solution could lie in cooperative approaches of public

authorities, as discussed in the previous section and also

encouraged by the Council Conclusions in June 2016 [122]

(‘enhancing voluntary cooperation between member states

aimed at greater transparency’). Even the cooperation of a

few countries can be expected to have an impact: Given the

improved knowledge and capacity of the cooperating

countries, prices will likely reduce, and due to stronger

purchasing power and larger markets in case of joint

negotiations or even joint procurement, access can argu-

ably be improved. Another option for countries could be to

assume a certain extent of discount and thus insist on

lowering the ‘list price’ that would be used everywhere as a

starting point for negotiation.

Discussions about transparency are not only about price

transparency and disclosure of discounts. To be prepared

for new medicines and to develop appropriate strategies to

manage their market entry (including taking priorisation in

resource-restrainted settings), public authories need to

know which medicines are in the pipeline. Horizon scan-

ning and forecasting tended to be implemented rather as an

academic exercise disconnected to the policy practice [3].

The horizon scanning project in Veneto, Italy [136], the

English National Horizon Scanning Centre [137] and

activities at the regional level with the Stockholm County

Council in Sweden [138] were among the rare exeptions in

Europe where horizon scanning was used to support deci-

sion-making of public authorities. While horizon scanning

is not a tool to immediately ensure access to medicines or

bring down prices, it surely supports the prioritisation

process. The sofosbuvir case, for which policy-makers and

payers of several countries were not prepared [81], could

be seen as a trigger, and some countries (e.g. Norway and

France) started building horizon-scanning systems [3].

Lessons from Pricing and Reimbursement Policies in Europe 315

Also, the above-mentioned cooperation platforms such as

Beneluxa or the Nordic Pharmaceutical Forum aim to work

together on horizon scanning [125, 139].

Furthermore, long-lasting discussions about knowledge

of production costs, including R&D costs [69, 140], have

also reached Europe. In some US states ‘pharmaceutical

cost transparency acts’ were passed in the spring of 2016.

Under these acts, it is mandatory for manufacturers to

disclose their production costs for some high-priced

medicines [141]. However, no concrete steps regarding a

disclosure of R&D costs have yet been implemented either

in Europe or in the USA.

4.3 New Funding Models

As access to new high-priced medicines has become a

challenge for high-income countries in Europe as well, the

ability of current pricing and reimbursement policies to

ensure affordable access to medicines has been questioned.

Incremental changes that are envisaged may not be enough

to respond to all policy objectives, i.e. provide access,

encourage innovation and ensure sustainability. There has

been a call for new rules and frameworks, in particular new

methods to develop and market medicines (by de-linking

the price from the return on investment into R&D): While

at global levels the WHO, policy-advisers and academics

have been discussing new models of funding R&D for

many years [142–148], this debate has only started in

Europe recently, fuelled by the Dutch Presidency of the EU

[4], the Review on Antimicrobial Resistance [149] and

interventions at conferences (e.g. European Health Forum

Gastein 2015—statement by Josef Probst, Austrian Main

Association of Social Security Institution, or the PPRI

Conference 2015 [81]). In September 2016, the UN High

Level Panel on Access to Medicines report was published

and also called for de-linking the R&D cost from the price

of a medicine [150]. The Lancet Commission on Essential

Medicines for UHC goes one step further in calling for an

Essential Medicines Patent Pool (EMPP) by which a patent

owner’s refusal to license an essential medicine to the

EMPP would satisfy the condition for granting a compul-

sory licence [151]. A medicines patent pool provides a

legal mechanism through which the availability of a gen-

eric medicine can be increased and negative effects of

market monopolicies be reduced.

Still within the scope of the current pricing and reim-

bursement framework, some European countries introduced

funding models that aim at bridging the hospital and

ambulatory sectors. This was done in response to the frag-

mentation in healthcare systems (different payers responsi-

ble for funding medicines, e.g. outpatient medicines

reimbursed by social health insurance and medicines in

hospitals covered by hospitals or regional authorities). This

set-up incentivised payers to shift patients, treatments and

thus costs between sectors. The transfer could have negative

clinical outcomes, and in turn may even increase overall

healthcare costs [152]. In The Netherlands, defined high-

priced medicines used in hospitals are funded by the health

insurers (instead of out of the hospital budget). Since 2006,

Norway has been increasingly transfering the funding

responsibility for a selected number of medicines (TNF-

alpha inhibitors, medicines for the treatment of multiple

sclerosis and anti-cancer medicines) to hospitals even if

these medicines were used in the outpatient sector [3, 83].

However, to the knowledge of the authors, impact assess-

ments as to whether these new funding approaches were able

to address the observed limitations have not been made.

5 Conclusions

This article discusses selected pharmaceutical policies that

aim to contribute to improving affordable access to medi-

cines. The analysis concluded that there is an overall lack

of evidence on the impact of pricing and reimbursement

policies on affordable access in many settings. This is

partially due to the lack of a well-established method-

ological evaluation framework, and the challenges in

attribution, demonstrating the causual relation between the

implementation of a single policy and the observed results

in the availability and affordability of medicines

[153, 154]. Furthermore, access to relevant data is a

common limitation [151, 155].

However, an exception are policies to promote generics

where there is strong evidence on price reduction resulting

in substantial savings that allow investing in treating

overall more patients. As other work has shown [156], an

important precondition is that generic medicines in fact are

lower priced than originators, quality assured and accepted

by patients and health professionals. The entry of a number

of biosimilars offers the opportunity to increase access to

biological medicines and to contain expenditure. To take

advantage of the benefits offered by biosimilars, studies

such as the NOR SWITCH study [115] are essential to

build trust among the medical and patient communities on

the safety of switching.

In addition, the analysis showed the relevance of tools

that allow prioritisation on which medicines (and patient

groups) money should be spent, not only in making them

more affordable through pricing policies. There is a need

for improved prioritisation techniques in HTA and evalu-

ations, and for capacity-building of technical staff. Coun-

tries pioneering in this area could support other countries

through sharing of methods and techniques.

This analysis found that sharing information and

exchanging experiences about policy implementation and

316 S. Vogler et al.

procurement, including failures, between policy-makers is

very beneficial for countries. This allows better-informed

decisions to be taken and negotiations to be more strate-

gical. Eventually, this could increase transparency around

negotiated prices if cross-border collaborations agreed to

jointly negotiate and procure.

Our analysis, though limited to selected policies, cov-

ered both existing policies as well as discussions and ini-

tiatives for new models, including proposals for funding

and incentivising R&D and patent pooling. While we

identified a strong interest of some policy-makers and Non-

Governmental Organisations in more far-reaching changes,

the analysis also showed that there is still space for

improvement in the development and implementation of

traditional pricing and reimbursement policies, such as

better enforcement of demand-side measures to promote

generic uptake (e.g. generic substitution) and method-

ological adaptions in external price referencing (e.g. related

to country baskets).

Regular reviews and evaluations of the impact of pricing

and reimbursement policies, with subsequent adaption

based on the findings, if necessary are critical to inform

whether, or not, the policies were effective in achieving the

intended aims (e.g. more affordable access to medicines).

In addition, evaluations are necessary to determine areas

for improvement including increased efficiencies. In par-

ticular, there is a need for impact assessments of managed-

entry agreements, value-based pricing and HTA.

While this paper was limited to European policies, the

conclusions about the impacts of some of the discussed

policies, and possible avenues for the future are also of

relevance in the global context.

Compliance with Ethical Standards

Funding No funding was received for the writing of the manuscript.

Conflict of interest SV, VP, AF, VW, KdJ, PS, HBP, GD and ZUB have no conflicts of interest to declare. All authors submitted a signed

Conflict of Interest disclosure form.

Author contributions All authors fulfilled the authorship criteria. All authors are aware of the submission and are in agreement with the

manuscript. SV had the lead in drafting and revising the manuscript.

VP drafted the chapter on health technology assessments, KdJ drafted

the section about measurement of policies, and PS drafted the

Appendix on networks. AF had the lead in providing literature. VP,

AF, VW, KdJ, PS, HBP, GD and ZUB critically reviewed several

versions of the manuscript.

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Lessons from Pricing and Reimbursement Policies in Europe 321

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  • How Can Pricing and Reimbursement Policies Improve Affordable Access to Medicines? Lessons Learned from European Countries
    • Abstract
    • Introduction
    • Health Technology Assessments to Inform Pricing and Reimbursement Policies
    • Selected Pricing and Reimbursement Policies
      • External Price Referencing
      • Value-Based Pricing
      • Managed-Entry Agreement
      • Tendering
      • Generic Policies
      • Policies on Biosimilar Medicines
    • Suggestions for Improvement
      • Cooperation and Stakeholder Involvement
      • Transparency
      • New Funding Models
    • Conclusions
    • References