Netherlands should raise generic prices to counter drug shortages, Dutch bank demands – Euractiv

The Netherlands should increase the maximum price for generic drugs it sells to Dutch patients to counteract the drug shortage, Dutch bank ABN AMRO demanded in a recent report.

The shortage of medicines in the Netherlands increased by 51% in 2023 compared to 2022. In 2023, there were 2,292 cases where patients could not get the medicines they needed, compared to 1,514 in 2022.

The country's Medicine Evaluation Board (CGB) attributes 68 percent of the shortages to generics, i.e. cheaper versions of brand-name drugs with the same active ingredient.

ABN AMRO, the Netherlands' third-largest bank, believes that making generics more expensive, rather than cheaper, could increase the availability of these relatively cheap drugs in the country. “The large shortage of generics is mainly due to the fact that neighboring countries pay 25 percent more for medicines,” wrote Anja van Balen, a banker in the healthcare sector at ABN AMRO, in a report on drug shortages.

The lower price factor

Van Balen argued that countries such as Belgium and Germany were favoured by suppliers due to the stricter Dutch price caps and suggested that the Netherlands should raise maximum prices for generics to bring them in line with those of other countries.

David Bolscher, healthcare economist at ABN, told Euractiv that such a measure would help ease the shortage in the Netherlands as suppliers would be more willing to sell their medicines there.

“Our experience is that when there are disruptions in the supply chain, suppliers give priority to other countries because of the low prices in the Netherlands,” said Bolscher. He noted that during these disruptions, Dutch patients were able to travel to Germany and Belgium, where they still found the medicines they needed.

However, a spokesperson for the Pharmaceutical Group of the European Union (PGEU), an organisation representing pharmacists in the EU, told Euractiv that there was no evidence that higher price caps for generic medicines would help alleviate medicine shortages.

Bolscher, for his part, admitted that lower prices in the Netherlands were not the only factor at play.

“Health insurers should also end or adapt the preferential policy of awarding contracts to only one supplier. It is important to have multiple suppliers in case shortages occur,” said Bolscher. “(…) Some shortages are global. So it might be wise to introduce a Europe-wide policy,” he added.

Raising the maximum costs 170 million euros

Van Balen estimates that the proposed measure to increase the price cap would cost 170 million euros. The Netherlands spent 54.8 billion euros on reimbursements under the basic insurance packages in 2023.

“An increase in expenditure of 170 million euros represents only 0.3 percent of costs. Therefore, the increase has little impact on the premiums paid by policyholders,” noted van Balen.

However, Van Balen warned that higher drug prices would not solve the whole problem, as “there will always be temporary or structural shortages around the world.”

According to CBG, 849 products were taken off the market last year, mostly for financial reasons. ABN AMRO interprets this as low prices coupled with high financial risks for the drug manufacturers.

The new Dutch cabinet under Dutch Prime Minister Dick Schoof has promised to increase spending on healthcare, but Bolscher says this will mainly come from reducing health insurance contributions and reversing previous cuts in elderly care.

“I do not see any increase in the budget for health insurance companies or the drug budget in general. However, the government is taking additional measures to end the drug shortage,” said Bolscher. These measures include increasing drug stocks from six weeks to two months from January and then again to two and a half months from July.

Asked whether Europe would benefit more from ramping up production of the medicines it needs closer to its home market, Bolscher said this would not be a cost-effective option, citing the low cost at which Asian companies can produce the medicines it needs.

“Prices for generics have become very low and production in Europe cannot undercut that. However, it might make sense to subsidise part of the production in Europe to avoid shortages. This is necessary to prevent a total shortage if there are major disruptions in the supply chain,” said Bolscher.

EU needs common definitions

According to PGEU, drug shortages can have various economic, production-related or regulatory causes, including the globalization of drug production, changes in demand, but also pricing strategies.

The organization also pointed to a 2021 European Commission study showing that most reported causes of drug shortages appear to be related to quality and manufacturing issues.

The PGEU is calling for effective policy measures to strengthen security of supply and mitigate shortages, the spokesperson told Euractiv. This includes creating a common definition of medicine shortages across the EU, allowing local pharmacists to find alternative treatments for their patients, and optimising European and national stockpile management by gradually building up rolling stocks.

[By Christoph Schwaiger, Edited by Vasiliki Angouridi, Brian Maguire | Euractiv’s Advocacy Lab]

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