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Medicines and vaccines are some of the most powerful tools in helping people all over Europe are living longer, healthier and more productive lives. Since the 1980’s we have seen death rates from HIV fall by over 80%, since the 1990’s death from cancer have fallen by 20% and recent pharmaceutical innovation means 90% of people living with Hepatitis C can be cured through a 12 week course of medicines.


Source: Health Advances analysis; [1] PhRMA 2016 Prescription Medicines: Costs in Context; [2] WHO Mortality Database (accessed February 2016). [2] EFPIA 2015 Health & Growth Evidence Compendia analysis of PhRMA 2014 25 Years of Progress Against Hepatitis C and PhRMA 2015 Pharma Profile

With over 7000 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.

 You can find out more on the impact of medicines on patients, healthcare systems and on European society here.

We acknowledge the affordability challenges faced by healthcare systems, under pressure from rising healthcare demand and recognise the concerns expressed on the affordability of innovative medicines. Our industry wants to be part of the solution in making medicines more accessible and healthcare more sustainable.

We share a common goal with all partners in healthcare: to ensure that patients across Europe get rapid access to the latest, effective and life saving medicines. That is why we are working with governments and healthcare systems to find solutions to make medicines accessible and healthcare more sustainable, whilst securing future medical innovation.

In the future we believe we can build sustainable healthcare systems by developing new pricing models, such as outcomes based, or value based contracts. This is in its infancy and will require partnering with patients, healthcare providers, payers and industry to create real breakthrough. You can find out more about this important dialogue and our commitment to the long-term sustainability of healthcare in Europe here.

Answering your questions on the cost of medicines

1. Are medicines' prices the principle driver of rising healthcare costs?
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No. Increasing healthcare costs have primarily been caused by rising demand on healthcare services driven by an ageing population and increased prevalence of chronic disease. Growth on medicines spending in Europe has not been the main driver of rising healthcare costs in recent years. Since 2010, spending on medicines in OECD countries has fallen by an average of 2% per year. Medicines account for one fifth of total healthcare spends in Europe. Despite this, medicines are often the principle focus of cost containment policies, rather than analysis of the entire healthcare spend, understanding total disease costs and identifying and reducing waste in the system. Today’s innovative medicines are tomorrow’s generics and bio-similars that is why we have lower cost options for treating conditions like heart disease and depression today. This will extend to conditions like cancer, rheumatoid arthritis, and other diseases in the future.
2. Why are new medicines expensive?
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Some new medicines are expensive, based on the value they deliver to patients, to healthcare systems and society. Industry continues to seek to price medicines and vaccines responsibly and sustainably to reflect both the value they deliver - to patients and their families, healthcare systems and wider society. Industry works with governments to determine the price of a medicine based on a range of factors, including: Impact on patients and their disease relative to other available treatments; potential to reduce other health care costs, such as hospital stays; individual country’s health and economic needs. In addition to their local assessment of value, governments often use prices of other countries as a benchmark. Today’s innovative medicines are tomorrow’s generics and bio-similars that is why we have lower cost options for treating conditions like heart disease and depression today. This will extend to conditions like cancer, rheumatoid arthritis, and other diseases in the future.
3. What determines the price of a medicine?
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Industry works with governments in each Member State to establish a medicine’s price that reflects the value it provides to patients and the healthcare system. Each government determines the value of a medicine based on a range of factors, including: Impact on patients and their disease relative to other available treatments; potential to reduce other health care costs, such as hospital stays; individual country’s health and economic needs. In addition to their local assessment of value, governments often use prices of other countries as a benchmark. Duplicative assessment of clinical evidence in different European countries creates unnecessary barriers to access. The industry in Europe is calling on HTA bodies to join up when assessing the therapeutic value or benefit of innovative medicines through a scientific Relative Efficacy Assessment (REA) when a medicine is launched.
4. Why are the net prices of medicines not more transparent?
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As with most health and other services, specific agreements between governments and medicine companies are often confidential, allowing for competition among suppliers and differentiated pricing to meet the needs of each country. Increasing transparency of net prices puts the shared objective of ensuring that patients across Europe get rapid access to the latest, effective and life saving medicines at risk. Disclosing net prices, in the context of external reference pricing and parallel trade, removes the flexibility for companies to adapt the price of a medicine to a country’s economic and healthcare environment.
5. Do pharmaceutical companies make excessive profits?
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Pharmaceutical companies invest more of their revenue in research and development than any other sector. As an industry, we need to continue to maintain a balance between value to patients and society and investment in medicines, while providing a return to our shareholders. Multiple studies have demonstrated that innovative medicines produce great value for patients and society. That value accrues disproportionately to society: Of the total social value generated by statins through avoided hospitalizations and deaths, 70% has been passed to society and 30% to industry. Similarly, society netted 81% of the economic value of cancer survival gains. While we are an industry that takes on enormous financial risk to develop new medicines, our profits are in line with comparable high risk knowledge-intensive sectors. Profit made by pharmaceutical companies enable future investment in researching and developing new medicines. Any reference to profitability needs to be balanced with an understanding of the substantial contribution of the pharmaceutical industry to the European economy.