BioWorld International Correspondent

BRUSSELS, Belgium - A new strategy paper from the European Union places "great emphasis on the fostering of biotechnology."

The document, the latest attempt by the EU to promote pharmaceutical innovation without sending health insurance bills through the roof, squarely acknowledges that "more and more medicines are currently being developed either partly or entirely through biotech-derived processes," and that "in many ways biotechnology represents a large part of the future of the pharmaceutical sector."

The paper, "A stronger European-based pharmaceutical industry for the benefit of the patient," concludes that "a strong and steady commitment to innovation and research and development in both the public and private sectors is required." Europe's biotechnology companies "are still at a rather early stage of development," and "it is now of high importance that the industry consolidates and develops success stories of more mature and profitable companies and clusters of a meaningful size."

The paper, which will be discussed by the European Parliament and EU ministers later this year, timidly suggests some easing up of the tight national controls on drug pricing and reimbursement that, it acknowledges, have held back the development of genuinely competitive markets. Greater freedom of pricing is a legitimate goal, the paper says, and some steps toward liberalization are recommended - including full competition for medicines that the state or national health insurance systems do not purchase or reimburse. The paper even advances one possible option for freeing up pricing decisions: It says companies could be given the right to set the prices of products if they negotiate safeguard mechanisms with member states to limit total pharmaceutical expenditure by, for example, yearly paybacks or rebates calculated on the revenues generated by those products on the national markets.

"Such a system is meant to open the way to the free fixing of prices in the market, as with any other product," it says.

Other improvements the paper urges to operating conditions for European biotechnology companies include "rapid implementation of the directive on the legal protection of biotechnology inventions by all member states." Eight of the 15 EU member states have still not put this fully into effect, after repeated reminders, and EU legal action has been started against them.

National pricing and reimbursement decisions also should be speeded up, says the new EU position. Current national systems can slow down the introduction of valuable new medicines, it argues. Other pro-research elements in the paper reflect recent EU legislative proposals. A fast-track assessment procedure (150 days instead of 210 days) is urged for medicines of major public health interest. And the importance of improved data exclusivity - one of the elements in the major review of EU pharmaceutical rules currently under way - is emphasized again.

Nevertheless, the new strategy paper suffers from the same weakness that has over recent years left other similar exhortations as little more than expressions of good intentions. Whatever the EU thinks, the member states still retain total autonomy over drug pricing decisions - and they have no intention of giving that up, because they fear a health-cost explosion if they do. The new paper has emerged from two years of reflection in the G10 group of EU experts, which brought together 10 key figures from government, industry and social security agencies in a bid to resolve the dilemma. But it faces the same problem: Establishing European Union policy is virtually impossible in an area where the member states continue to retain virtually total autonomy.

So, despite the paper's conclusion that "in order to stop the process of erosion, Europe must act now if it is to retain its attractiveness as a location for industry in the years to come," the EU can do nothing to force member states to act.