CRA Insights

Busting a myth: Is achieving US drug prices in Europe impossible?

January 22, 2021
Capsule Production Line

Few myths within the global drug pricing community seem as factual as the inability to achieve a US-like price for an innovative New Molecular Entity (NME) in Europe. Willingness and ability to pay are just too different in the different systems. Or are they?

To answer this question, the authors searched for evidence in the individual countries. Germany and the UK, for example, are the two European countries where manufacturers can still set their list price for NMEs and – after EMA marketing authorization – the price is automatically reimbursed. While free pricing is the theory, in practice it is not that straightforward.

In the UK, NICE acts as a gatekeeper to access to NMEs via heath technology assessment (HTA), with price the main driver for cost-effectiveness and patient access. In Germany, a reimbursement price negotiation process was introduced in 2011 (AMNOG), which results in a publicly disclosed rebate a year after launch that reduces the reimbursed price for the public health system.

Our methodology looked at publicly available prices and wholesaler acquisition cost (WAC) from the IBM Micromedex RED BOOK in the US and public, ex-manufacturer (ex-Man), reimbursed list prices in Europe, as found in MIMS (UK), Lauer Taxe (Germany), BOT Plus web (Spain), Gazzetta Ufficiale (Italy) and Ameli BdM IT (France). We excluded undisclosed discounts – on both sides of the Atlantic – due to lack of transparency and confidentiality.

We then compared prices of NMEs of similar pack sizes from the date of first publication and used the exchange rate USD to EUR/GBP on that date. To account for time gaps and exchange rate changes between US strategy decision / launch (which must pre-date Europe to set the base price) and EU approval / implementation time, we defined ‘similar’ prices as EU prices above US prices or up to 20% lower.

We reviewed WAC and ex-Man prices for all EMA approved NMEs that underwent the AMNOG process in Germany looking for similar US/EU list prices before AMNOG rebate negotiation between 2011-2018. For the same EMA approved NMEs, we looked through MIMS to identify relevant products in the UK (after deducting distribution margins). We then looked at the NMEs identified in Germany and the UK in France, Italy and Spain on the basis that it would be more challenging to achieve negotiated, reimbursed US prices in these countries – or for other NMEs than those with freely set list prices in Germany and/or the UK.

Based on this approach, we identified 16 different NMEs that in at least 1 of the 5 big EU markets had a similar price to the US (12 were EMA approved between 2011 and 2018, and 4 before 2007). 13 of these products had at least one big EU market price that was within 10% of the US WAC. Several of these products had a higher ex-Man price in Europe than WAC in the US.

To learn more and see our analysis, please download the Insights.

Additional Authors