COSTEFF: Parallel trade, generics, biosimilars and home care can reduce European healthcare costs

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We are all familiar with the pressures piling up on healthcare systems around the world. People are living longer and diseases of ageing, such as dementia, are becoming more prevalent. Some illnesses linked to lifestyle, such as diabetes, are also on the rise.


Drug research is increasingly based on biotechnology, and the resulting products will be more expensive. The economic crisis, with its accompanying rise in unemployment, will result in both more illness and lower tax revenues.

In this gloomy scenario, it is important that governments do not cut back on healthcare provision in an attempt to cut costs, as doing so will merely increase the pressures in the longer term.

Among those calling for sustained healthcare spending is the European Commission. In a recent speech to the European Public Health Alliance annual assembly, Health Commissioner Androulla Vassiliou said that the combination of the greying of the population and a low birth rate means that, by the middle of this century, Europe's population will be significantly older.

“This will have a major impact on the financing of health systems. At the same time, demand for health services and health professionals is likely to grow and expenditure on health care is expected to increase by 1–2% of our GDP by 2060,” she declared.

Health outcomes are greatly affected by changes in the resources available for health systems, so governments will need to find ways to use their limited resources more efficiently if they are to succeed in improving health for all EU citizens, according to the Commissioner.

“It is therefore crucial,” Mrs Vassiliou said, “that there is sufficient investment in public health now as part of a broader economic stimulus agenda. Indeed, and especially in the context of ageing, health and care jobs will be one of the most important sources of employment in the future”.

That is all very well, but how are governments meant to keep up their healthcare spending if their outgoings continue to grow because of rising demand and the increasing cost of healthcare goods such as new medicines for cancer, Alzheimer's disease and the like?

German initiative
Some countries are using health technology assessments (HTAs) to decide whether or not new and expensive drugs should be funded, and for whom. But this is a political minefield, and any governments that use this route face charges that financial considerations are being put before people's health. Moreover, HTAs tend to focus on the cost of new innovative drugs, while the potential of older off-patent drugs and other cost-saving tools tends to be sidelined.

Generics companies have long touted the benefits of their products in reducing spending, and now moves are afoot around the world to promote the development and use of cheaper biosimilar versions of off-patent biological products. Parallel traders too have promoted the cost savings of their activities, although the debate over how much benefit the end user (i.e. the payer) actually derives from this activity remains a moot point.

Now, to take things a step further, a number of German companies active in parallel trade, generics and home care have clubbed together to form an association called COSTEFF. Its aim is to lobby policymakers, health professionals and the public in order to raise awareness of the role the group's members could play in reducing healthcare costs.

COSTEFF's initial focus is on three main sectors. The first is what it calls ‘affordable patented medicines’ (an interesting new name for parallel traded drugs). The second is ‘generics and biosimilar medicines’, while the third is what COSTEFF terms ‘ambient assisted living’ – caring for people at home rather than in hospital.

It claims parallel trade allows healthcare systems to save ‘billions’ a year, noting that greater use of generics, biosimilars and home care will also help to reduce costs.

Whole cost-saving package
On the face of it, there does not seem to be much new in this initiative. After all, generics and – to a lesser extent – parallel imports have for years played a significant part in healthcare budget planning in most EU countries, while payers will be looking to biosimilars for further savings.

But for Mr Thilo Bauroth, Head of Legal Affairs at COSTEFF, founding member Kohlpharma (a parallel trader), the novelty of the move lies in the fact that the group's members can offer a whole suite of cost-saving products and services.

Its member firms specialise not only in parallel traded medicines and generics (and presumably biosimilars at some future point), but also in homecare services and methods for reducing waste such as tailored medicine packs. The group can therefore produce, repackage and distribute cheaper medicines, while offering home deliveries, homecare services and patient-specific packaging to improve compliance and reduce waste.

Mr Bauroth believes this is a good time to take such a step, given the growing influence of the EU over health matters. “We have been thinking about this for a long time,” he said. “Now we have finalised our thinking. We believe this is good timing because of the problems in healthcare systems. It is a good time to begin discussions”.

COSTEFF feels its efforts could also feed into the HTAs that are performed by member states to evaluate the relative costs and benefits of drugs. HTAs, it says, should take account of factors such as improved compliance and preventive use of medicine.

More generally, COSTEFF says it wants to ensure that EU policymaking takes account of cost efficiency factors and the “innovative potential of the healthcare industry”, to which end it plans to undertake advocacy work with EU institutions and the wider public.

It is too early to predict the likely outcome because COSTEFF has only been up and running for a couple of months. But at a meeting it held in Brussels mid October 2009 (Mr Bauroth would not say who with), there were “positive reactions”, and the group has had enquiries from other companies interested in becoming members.

Its next step is to appoint a secretary general to promote the group among EU institutions, hospitals, patient, doctor and pharmacist associations and the general public. This will probably happen in the first half of November 2009. The group is also planning some workshops to raise awareness of the issues.

Whether the initiative will have any concrete effect in terms of discouraging governments from cutting health services remains to be seen. After all, how much more publicity do generics and parallel imports need? But maybe integrating the provision of cheaper medicines with a greater emphasis on home care and drug compliance will have some sort of wider synergistic effect. In any case, at a time of financial crisis and with healthcare systems bursting at the seams, any ideas for keeping down costs while preserving the quality of care are worth a try.

Can cost efficiencies and homecare solve European healthcare problems? Scrip News. 2009 Oct 28.
COSTEFF - alliance for cost-efficiency in healthcare.

Source: Scrip News; COSTEFF

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