Austria’s Director General For Health Clemens Auer Discusses Goals For EU, Drug Pricing

Clemens Martin Auer, director general of Austria’s Ministry of Health, could be said to take a pragmatic and original perspective when it comes to European and national policy. In an interview with Health Policy Watch during the recent European Health Forum in Bad Gastein, Austria, he discussed health priorities for the current Austrian presidency of the European Union and beyond. He also discussed ongoing efforts by a number of European countries to address high prices of medicines and public funding for R&D. This is the second of two parts. The first is here.

Clemens Auer speaks to the European Health Forum, Gastein

Priorities of the EU Presidency

Asked about goals for the current presidency, he said it is his third presidency, so he “should learn something.” But he noted that in the six month term of a presidency, it is difficult to achieve much. As well, some 50 percent of the EU agenda is already set so there is no choice, he said, “there are the legal dossiers you have to coordinate and finish.”

An important one that has to be finished is the health technology assessment, he said, to put in a legal framework for EU collaboration for medicines and medical devices. “That’s a very important piece of legislation,” said Auer, noting that the presidency coordinates the legal discussions, the regulatory debates.

He also cited digital health, as digitalisation is high on the Austrian agenda, a single approach. “There is political agreement on that, there is consensus,” he said. “I don’t even think there is a political movement anywhere, not in this country or elsewhere, against digitalisation in the health care sector.”

I don’t think there is a political movement anywhere, not in this country or elsewhere, against digitalisation in the health care sector – Clemens Auer

But what they have noticed – “and that’s true for many, many issues in the health sector,” he said – is that the sheer amount of fragmentation is blocking fast development of the health care sector. He gave the example of fragmentation compared to the banking industry, where he said interoperability is almost achieved. But the complexity of creating this in the banking industry is “benign” if you compare it with the health care sector, he said. There are likely not more than 1,000 banking conglomerates in Europe, he said, making it relatively easy to find solutions for an interoperable ecosystem in banking.

“But when it comes to health,” said Auer, “how many hospitals do you have, how many outpatient organisations do you have, general practitioners, single doctor offices, pharmacies, this goes into the hundreds of thousands, and each and every of these entities is more or less an ‘independent business unit.’”

Meanwhile, the public sector wants them to exchange health data, he noted, arguing, “There is consensus that the process and outcomes in the healthcare sector will improve if they can share.”

But there will have to be a “boost of investment” in digital infrastructure if they want health care providers to share health data “to organise the continuity of care,” he said. And anyone can test this, just by looking over the shoulder of their health care practitioner to see if they have the capability to exchange health data with a third party. “You will probably find out it is in a very, very limited way,” he said. “He or she may be capable of receiving from a lab a digital exam, but to have a [more elaborate] exchange of health data, anonymized, not anonymized, doesn’t matter, it’s not possible.”

So with the presidency, they have sought to clearly define a point which was a subject of discussion among the health ministers, that they have to have a boost of investment in the digital infrastructure of health care providers.

“If we, the public sector, want them, the healthcare sector, to share data for continuity of care to get a better understanding of how the health system works or for research purposes, then the public sector has to invest on the level of healthcare providers because the healthcare provider as a private entity, they don’t have that as a business case,” said Auer.

Market Authorisation for Medicines

A second priority of the Austrian presidency related to the healthcare sector is to look closer at certain regulatory aspects of the market authorisation process for medicines, he said. For example, he said, they can look at if they have set up the regulatory framework for market authorisation efficiently enough that they get the needed information of the value added of a new product.

Another issue is information asymmetry. “If we are talking about public reimbursement systems, social health insurances, they don’t know what they are buying on behalf of their patients when it comes to certain aspects of innovation,” he said. “So the added value is not transparent. But it’s easy, there are certain questions you can ask.”

In a session during the Gastein conference, one of the medical doctors who sits on the board of the European Medicines Agency (EMA) asked, when it comes to cancer treatments, do we have the right “endpoints” to understand how a new drug really works, Auer noted. Another aspect, which he said “is a pain for many, many member states, half of the EU members,” is the market availability of innovative products.

“Centrally authorised products by the EMA – these are the innovative products – are only available in roughly 30-40 percent of member states,” he said. “In the rest, the takeup of these innovative products is late and slow.”

It’s very simple question, he argued: “We, the European Union, grant the rights to the molecule, the market exclusivity in 28 member states, and then the product is not available in half of the markets. So something is wrong. We call it the sunset clause.”

We, the European Union, grant the rights to the molecule, the market exclusivity in 28 member states, and then the product is not available in half of the markets. So something is wrong.

Ministers agreed together that the member states with the Commission have to look into that, he said.

This is not an issue for Austria, Auer said, because they have “very early takeup of innovative products because we’re willing to pay the price.”

“But some are not capable of paying the price industry wants them to pay,” he said. “This is a political discussion, this is an ethical discussion.” He clarified that “there is no private consumer” when it comes to innovative drugs.

“Patients don’t pay the treatment, because the treatment is paid on behalf of them by whoever, the social health insurance, or the public funding of the public hospital. There is no consumer,” Auer said. “At least in good old Europe, healthcare is predominantly organised in a public setting. Taxpayers or contributors into sick funds under the solidarity system are paying the bills on behalf of each and every individual. The solidarity system is what we have, I think it is a deeply ingrained aspect of the social fabric of almost all the European countries.”

“We have a public system, and if certain products are not available in the public system, then we have an issue, because why didn’t the health authority in a country – why should they learn that there is a super innovative product out there and it is not available for my own citizens,” Auer said. “If the company doesn’t even bother to come to the market.”

Asked how that can be addressed at the EU level, he answered in the regulatory context. “If the law said you have to be present in 28 countries, that would be simple, wouldn’t it,” he noted. “The regulation now says you only have to be present in one country, because we have an issue of how to interpret a ‘single market’ in that way.”

In effect, he said, when it comes to pharmaceuticals there are 28 markets, not a single market. It’s a little bit more complex than that, he said, but in essence, “this is a problem here. It is not true that if you are present in one member state, you are present in the single market.”

Drug Pricing

The director general was asked about efforts Austria has participated in with other EU countries in recent years to bring drug prices down for governments.

“Once again, where do these initiatives come from?” he responded. “They come from a level of irritation in the national governments when it comes to certain issues. There’s an irritation, an anger or anxiety.”

In the pharma sector several years ago, he noted, there was an American company (referencing Gilead, though he did not name them) coming to the market with “a really innovative product” in the field of hepatitis C. “It was a good product, an innovative product, but it was obscenely high priced,” he said.

“I do remember that back then, it’s 4 or 5 years ago already, there was not a single political meeting on the European level where ministers were not loud, angry, saying ‘we have to do something’ – once again we cannot do that alone,” he recounted. “And out of these discussions – and these were on the side of European Commission, which was not very willing to help there or do something, also because of their constitutional constraints of course – like-minded ministers and countries said, ‘ok let’s do it together’.”

For this reason, the three Benelux (Belgium, Netherlands, Luxembourg) countries started, then they invited Austria, and in the meantime Ireland got on board too, he said.

These are countries with a similar GDP and similarities in healthcare when it comes to reimbursement, price-setting mechanisms, and other related issues, he said.

“We said, ‘Let’s work together and share information about pricing and many aspects of how to use innovative medicines in our markets and health systems, let’s work on shared efforts on horizon-scanning, look into what is in the pipeline, what will come to the market in the next few years, is that efficient, do we need this product, can we start very, very early dialogues with the producers of these products, can we talk about the added value of this product and price expectations the producer might have, and our willingness as the public sector to pay these prices, are these products closing efficiently enough medical needs, gaps.’ So this is a joint effort.”

Meanwhile, southern Europe countries also joined forces in the Valetta Declaration which was signed under the Maltese presidency last year.

But it is unclear where these efforts will go, Auer said. Theoretically, in their memorandum of understanding, that might even end up in joint procurement, he said.

The “BeNeLuxA” (Belgium, Netherlands, Luxembourg, Austria) countries could come together and say, ‘We put out a tender for a certain product and instead of buying it four times, five times, we are negotiating it one time’,” he said. “So instead of negotiating for a market of say, 8 million Belgians or Austrians, it becomes market of over 40 million. That puts us in a totally different market position vis a vis the licence holder and we might be able to bring the prices down, with simple market mechanisms.”

Asked if it has started yet, he said no, “because we learned that there are certain constraints [on whether] we are even capable of putting up joint procurements, because there are legal barriers and industry is using these legal barriers of course to their advantage. Fragmentation is a problem also here, because there is not a single market.”

“Think about the paradox here,” he commented. “We grant market exclusivity for the whole European market, but if comes to placing a product on the European market, they can place it 28 times.”

“It’s very early, we are in a steep learning curve, I don’t think we have really solved any major problems, but what these initiatives also do, and why I’m so behind multilateralism, is it creates an ecosystem,” Auer said. “All of sudden the people who work on these issues, different competent authorities, work together, come together, know each other, have a telephone number, have maybe even a cell phone number, and can clandestinely talk to each other and say, ’Do you have any information on that, can you share that?’ And if it’s a trustworthy relationship then you can say yes, yes.”

“My experience on the international level is that people can build this circle of trust if they can learn how to work together and solve problems,” he said. But there is no timeframe for this effort, he added. “It will happen or it won’t happen.”

He sought to settle industry concerns but also to encourage them to change. “Industry should not be afraid that we are that quick to get our act together, but they should be aware that we are organising ourselves,” he said.

“I always say, think about it, a large pharmaceutical company has a boardroom and they make strategic decisions in a boardroom. Where is our boardroom? Where do we sit together and make strategic decisions?” said Auer. Industry comes together in Basel and “very, very cleverly,” decide when they approach which market what the expectations and price-setting will be.

Think about it, a large pharmaceutical company has a boardroom and they make strategic decisions in a boardroom. Where is our boardroom? Where do we [governments] sit together and make strategic decisions?

“These are very simple, very important strategic decisions they make together in a boardroom. Where do the national governments come together and have their boardroom?” he said. “This is what we do with BeNeLuxA and other initiatives to organise ourselves.”

Of course it is not comparable with a boardroom of an industrial complex, he noted. “Where do we create a common understanding of shared strategic needs? This is what we are doing now,” he said. “Once again it is a question of leadership, do you have people who understand those issues, and have the capacity to bring people together.”

Asked if the organising and awareness has already had some impact on drug prices, he said, “Even if we don’t see it already, I’m always an optimist that the mindset on the other side of the bargaining table might change.”

Beyond Pricing: R&D Public Funding

While they have started talking about different pricing models, he said, “I don’t want to only talk about pricing, because it’s not the only issue. Another issue is where do we put our R&D funding into? Is there enough research funding in closing medical gaps, or working on disease burdens?”

That’s what officials in the public sector are already analysing, he said, and he thinks they have “a pretty good understanding” where the disease burdens are, and where the medical gaps are. “There’s not enough research, not only when it comes to medicines,” he said.

“Here again, we have to break through the siloes, we the health people have to talk to our colleagues, whoever is in charge of research, to prioritise, and to set up different strategies,” Auer said.

Don’t forget – and the pharma sector doesn’t like when we say that – there is enormously much money coming from the public side when it comes to research, even in the medicines sector

“Don’t forget – and the pharma sector doesn’t like when we say that – there is enormously much money coming from the public side when it comes to research, even in the medicines sector,” he said. “It’s hard to quantify because if there’s breakthrough research done at a public university somewhere how do you figure that into the cost structures so to say, and cost in the development of a product.”

“But there are so many examples, and even this hepatitis C product, initial research came from a publicly financed university in the United States,” he said. “Even here you see the link with the public role, but it is financialized and capitalized solely by the private sector.”

He added: “These are the things we have to learn. We are living in exciting times because we are in the process of learning that, and that we are not doing our job in the public sector. It’s very simplistic to say that, but it shows the problem: we are paying it twice. Or it is a feeling that we are paying it twice, though it is more differentiated of course. But just to raise awareness … it is exactly about that. What is the public function of R&D, and how can we safeguard the public interest in R&D with regard to medicines? It’s a really good topic.”

Concluding, Auer said: “I’m not sure where it leads us. If it only leads us in the capitals to work together, as the public funders, and at the European level the public funds available for research, Horizon 2020 – name them, there are so many billions in public research money – that we align with each other and define priorities and strategies, reduce the amount of cancer research, shift funds to areas of disease burden.”


Image Credits: EHFG.

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