With governments scrambling to enforce measures to address the COVID-19 crisis, EU member states are again confronted with the fact that an EU common policy in the healthcare sector is virtually non-existent. This is equally true in respect of medicinal product pricing and reimbursement.
While the EU Transparency Directive (89/105/EEC) provides for a limited harmonisation of pricing and reimbursement procedures, there is a growing tendency for national governments to look beyond their national borders and even to collaborate in this field (eg, the Beneluxa initiative).
One of the more striking developments is the instauration in various countries of price reference systems, whereby reimbursement and pricing levels are made dependent on prices applied in selected third countries.
This article illustrates that the reverse side of such developments is the need for national pricing authorities to consider that their policies could have unintended consequences and cross-border effects. Otherwise, national measures risk backfiring, as seems to have happened with the Belgian authorities' most recent attempt at further reducing medicinal product prices.
Medicinal product reimbursement in Belgium is never a question of straightforward mathematics. Over the years, the legislature has introduced various measures allowing for reductions of and clawbacks on the amounts spent by the Social Security Institute to provide medicinal products to Belgian patients. In this context, any attempt to realise budgetary economies entails further additions to an expanding list of provisions and arrangements incorporated in the numerous and increasingly complex legislative instruments.
In recent advice (66.872/2) the Council of State qualified a recent legislative proposal to this end as 'illegible'. This draft act was tabled by the government on 11 February 2020 and purported to introduce further economies in the reimbursement of medicinal products in the framework of the 2020 healthcare budget, already with effect from 1 April 2020. Quite unexpectedly, the legislative approval process has been temporarily stopped, allegedly in view of the more urgent matters imposed on the federal parliament by the COVID-19 pandemic.
According to the explanatory memorandum of the draft act, its purpose is to realise multiple economies, in particular by a further deepening of the so-called 'old drugs cliff' (ie, the mandatory price decrease imposed on reimbursed medicines after 12 and 15 years of being granted reimbursement status) and the so-called 'bio cliff' (ie, a similar measure for biological medicines imposed after 18 years of being granted reimbursement status or once competing biosimilars are accepted for reimbursement).
In addition, the draft act provides for the disappearance of the so-called 'safety margin'. This margin can be added to the reimbursed price of 'off-patent' originator medicines that are 'clustered' with their competing generic versions. Under the present rule, when an originator is confronted with the market launch of a reimbursed generic version, the so-called 'reimbursement basis' of its product will be reduced to that of the generic version. However, the choice is left to the originator to either:
- withdraw the reimbursement of its product;
- accept the same reimbursement level as the generic; or
- apply a 25% safety margin up to a maximum of €5.
Over time, many originator products have opted for the application of this safety margin. As the safety margin is paid by the patient, its disappearance was viewed as a significant measure in favour of patients. According to the draft act, the latter option would be abolished with effect on 1 April 2020 and there would be a 'regularisation' (ie, an equalisation) of the price at the level of the reimbursement basis.
Impact on reference pricing in other countries
The disappearance of the safety margin in conjunction with the other price reductions imposed by the draft act would lead to a substantial mandatory price decrease for many branded medicines. However, as it is a reference country for several other European countries, a price decrease in Belgium would have a domino effect on prices in those countries and thus lead to potential indirect losses which are far greater than the direct losses resulting from price reductions imposed in Belgium. Therefore, a first unintended consequence would be originator companies being forced to remove the product from the Belgian market.
However, the only option for companies to do so would be to request the withdrawal of the reimbursement status, which under normal circumstances takes effect only after one year. It is possible to request such withdrawal on an urgent basis for social, economic or therapeutic reasons, but even if the minister of social affairs accepts such a request, this procedure still takes several months. Thus, with the mandatory price decrease applying in Belgium with effect as of 1 April 2020, a second unintended consequence would be the unavoidable negative transnational effect of this price decrease.
Need for appropriate transitional measures
The above situation highlights the need for draft legislation to set out appropriate transitional measures. Legal arguments support the need to provide for transitional measures, such as a renewed option to withdraw a product from reimbursement, otherwise firms will be subjected to a pricing and reimbursement level which they never accepted. For example, under the draft act, originator firms that had initially been given the choice to withdraw their product's reimbursement status, align its price with generic competitors or apply a safety margin could be deprived of this choice on short notice and become subjected to a regime which they elected not to be.
While a public authority is obviously entitled to opt for a change of policy, a precipitous change without objective or reasonable justification for the lack of transitional measures will be questionable in view of the principles of legal security and confidence on which addressees of legal provisions should be entitled to rely. The Constitutional Court has already ruled that the prohibition on discrimination enshrined in Articles 10 and 11 of the Constitution is violated "if the lack of a [transitional] provision leads to a difference in treatment for which there is no reasonable justification or if the principle of confidence is violated excessively" (Judgment 170/2014).
The absence of transitional measures or (renewed) option for the addressees of the price reductions somehow puts the latter in a less favourable position than those which effectively retain this choice because their products have not (yet) been clustered.
As the ongoing COVID-19 crisis shows, the world – or at least Europe – is a proverbial village, where acts have consequences not only at home, but also for parties' neighbours. The draft act will not just force many originators to choose between withdrawing their product from reimbursement in Belgium or potentially subjecting their affiliates in other European countries to further price decreases, beyond the benefit of maintaining reimbursement in Belgium, it will also leave these companies stranded between both options. By doing so, had it not been for the draft act's postponement, this aim risks backfiring on the government.
