Parallel trade: Which factors determine the flow of goods in Europe?

Transcription

WHITEPAPER | PARALLEL TRADE
Parallel trade: Which factors determine
the flow of goods in Europe?
MyrPro SB 32pt
IMS HEALTH |PARALLEL TRADE: WHICH FACTORS DETERMINE THE FLOW OF GOODS IN EUROPE?
2
Parallel trade: Which factors determine the flow
of goods in Europe?
INSIGHTS INTO THE MARKET SEGMENT OF PARALLEL IMPORTS AND EXPORTS AS WELL AS AN OUTLOOK ON THE DEVELOPMENT OF PARALLEL
TRADE WITH PHARMACEUTICALS
Despite the ongoing harmonization in Europe, the European pharmaceutical market is
divided into individual national markets. One of the consequences of this division are
different price levels. Parallel traders use these price differences: They buy up originals in
member states of the European Economic Area (EEA = European Union, Norway, Iceland,
and Liechtenstein) with low prices and resell them in other EEA countries. Although logistics and repackaging cause considerable costs to the parallel traders, arbitrage trading
with pharmaceuticals is an appealing commercial activity. The market volume of this segment of the European economy has increased noticeably in recent years.
Parallel exports and parallel imports – defining the terms
Parallel export is the exportation of pharmaceuticals which have been produced by international or multinational companies and are taken to a different national market by the
manufacturer as well as export traders. The traders therefore export a parallel export.
Accordingly, parallel import is defined as the importation of drugs which have been produced by internationally operating manufacturers and which are brought into the German
market by the manufacturer as well as import traders. The traders bring parallel imports
into Germany.
Among physicians and pharmacists, the term parallel import is considerably more commonly used than parallel exports. This is due to the fact that historically Germany has
served almost exclusively as a target market for parallel imports. However, as a consequence of the Act on the Reorganization of the Pharmaceutical Market (German: Gesetz
zur Neuordnung des Arzneimittelmarktes (AMNOG)) and price comparisons on an international level, a new dynamic has developed in recent months. For many patented pharmaceuticals with “AMNOG reimbursement amounts”, Germany has already become an
export country.
In this context the authors would like to point out that currently about 90% of all imported pharmaceuticals are parallel imports. There was no quantification relating to exports
and parallel exports available to the authors of this white paper.
IMS HEALTH | PARALLEL TRADE: WHICH FACTORS DETERMINE THE FLOW OF GOODS IN EUROPE?
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DRIVERS OF PARALLEL TRADE WITH PHARMACEUTICALS IN EUROPE
The parallel trade with drugs in the EEA is very dynamic and driven by four major factors:
1) THE DIFFERENT PRICE OF PHARMACEUTICAL PRODUCTS IN VARIOUS COUNTRIES
The prices of pharmaceuticals are the crucial driver of parallel trade. In the individual countries factors
such as purchasing power, and increasingly also reference pricing with regard to other European countries, determine the price formation of pharmaceutical products.
A price corridor is thus established which enables parallel traders to use the divergent prices in different
countries for their business.
2) LEGAL GUIDELINES
The legal framework also plays an important role for parallel trading within the EEA.
Example: SHI-Modernization Act (2004) in Germany
One of the best examples for this is the adjustment relating to the SHI-Modernization Act in Germany,
which came into force in January 2004. It has led to changes in the regulation of price intervals for imported
pharmaceuticals and modified minimum import quotas.
It is important to note in this context that
•• the pharmacists are required to dispense imported pharmaceuticals if these are 15% or 15 euros
cheaper – measured against the pharmacy retail price – than the respective original. Only parallel
imports meeting these requirements contribute to fulfilling the import quota of 5%. (Note: Since
January 1, 2011 manufacturer rebates need to be taken into consideration when calculating the
15/15 price gap.)
•• the actual price gap between parallel import and corresponding original used to be at around 10%
before 2004.
In the immediate aftermath of the SHI-Modernization Act the share of parallel imports collapsed. Many
did not meet the new “15% or 15 euros requirement” the substitution rule demanded.
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Proportion of parallel imports (value) in the pharmacy market (in %)
§ 129 Section 1 No. 2 of Germany’s Social Security Code’s
fifth volume (SGB V) places pharmacists under the
obligation of dispensing imported pharmaceuticals (…) if
their selling price is at least 15% or 15 euros lower than
the price of the reference drug (…). If the price gap is
smaller, there is no obligation to dispense re-imports.
7.0
12.7
11.5
9.1
10.9
9.5
10.2
7.8
6.7
5.7
4.7
10.9
4.8
3.2
At the same time minimum
import quotas for
pharmacists have been
reduced from 7% of sales to
5%.
2.2
Source: IMS DPM®, 1993-2013
FIGURE 1: THE CURRENT RE-IMPORT PROMOTION CLAUSE COMES INTO FORCE IN 2004 – THE SHARE OF PARALLEL IMPORTS HAS INCREASED SIGNIFICANTLY BY 2010
However, in the following years the share of parallel imports increased continually due to a growing focus
on specialty drugs (including oncology products, HIV- and CNS-therapeutics) and the capping of price
differences at 15 euros per package worth 100 euros or more. This price cap is a consequence of the substitution regulation which demands that parallel imports must be 15% or 15 euros cheaper.
In 1999 the share of parallel import in the German pharmacy market (purchases of retail pharmacies by
value) was 2.2%. By 2010 it had risen to 12.7% (MAT December 2010). During this period, importers of
pharmaceutical products firmly established themselves in the market – some of them have become highly specialized.
Changes in health insurance regulations and other rules (2011)
Another example for the influence of legal guidelines is the raise of manufacturer rebates for drugs not
regulated by reference pricing. It changed from 6% to 16% between August 1, 2010 and December 31,
2013.
The increase of manufacturer rebates brought the strong growth of parallel imports to a standstill and
resulted in a stagnation of the parallel import market between 2011 and 2013.
For the first quarter of 2014 manufacturer rebates were reduced down to 6%. The fourteenth amending
law to SGB V settled the manufacturer rebate at 7% – starting from April 1, 2014. Particularly due to the
reduction of the manufacturer rebate, the share of oncology products and CNS-therapeutics imported
into Germany has risen since then again.
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Example: Regulations in other countries
Following the economic and financial crisis in Greece, the Greek National Organization for Medicines has
prohibited the export of 34 medicines in February 2013. This decision was justified with a need to secure
the supply of drugs within the country. Presumably the payments to pharmacies had increasingly failed
and thereby encouraged export trade.
Following this decision, fewer goods could be provided by parallel traders. As a reaction they adjusted
exports from other markets.
3)
EXCHANGE RATE FLUCTUATIONS
The extremely volatile nature of parallel trade with pharmaceuticals within the EEA is illustrated in particular by the example of parallel imports to and parallel exports from the UK. Driven by a weak exchange
rate of the British pound vs. the euro, parallel imports to the UK decreased noticeably in 2008 and particularly in 2009.
During these years, British traders “discovered” Germany as a target market for their pharmaceutical
products, eventually contributing to a shortage of some medicines in the domestic market.
Development of parallel imports (PI) to the UK – Share (value) of PI in the total market
GBR
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
11 %
-20 %
-6 %
7%
-17 %
-45 %
6%
12 %
6%
0%
Exchange rate development £ vs. € and sales
development of parallel imports
The British parallel import market …
9/2009: 1 £ = 1.10 €
9/2010: 1 £ = 1.20 €
9/2011: 1 £ = 1.14 €
1/2013: 1 £ = 1.19 €
7/2013: 1 £ = 1.14 €
12/2013: 1 £ = 1.18 €
3/2014: 1 £ = 1.21 €
7/2014: 1 £ = 1.26 €
Fx rate (Index)
784
Mio. €
1.800
140%
1.600
1.400
120%
1.200
100%
1.000
80%
800
60%
600
40%
400
20%
!
Source: IMS MIDAS®, Sales, Price, manufacturer’s price, Oanda Fx rates
FIGURE 2:
160%
200
0%
2003
2005
2007
GBR PI
2009
2011
2013
GBP/EUR
FOLLOWING WEAK EXCHANGE RATES THE VALUE OF THE BRITISH POUND IS CURRENTLY INCREASING AGAIN
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Supported by a strong British pound, parallel imports rose again between 2010 and 2012.
The exchange rate fluctuation generally leads to shifts in the flow of parallel traded pharmaceuiticals
within the European Single market. In 2012 the relative weakness of the euro in relation to the British
pound resulted in a decreasing appeal of Germany as a market for parallel imports.
In 2013 the tables turned: The euro’s exchange rate turned out stronger than expected. The development
of the British economy was disappointing and consequently the growth of parallel imports of pharmaceuticals into England, Wales, Scotland, and Northern Ireland stagnated. This was accompanied by a “struggling” external value of the British pound.
Since the beginning of 2014 the value of the British pound has increased considerably in relation to the
euro. Following stagnating parallel imports into the United Kingdom, the coming months should see
imports rise again.
Important export markets are supplemented with new export sources
−
−
−
−
GB
Greece
CZ, SK, the Baltic states, and
other Eastern European countries
Focus: Specialty
drugs
Further export markets:
−
−
−
−
−
−
Spain
Italy
Portugal
France
Austria
Belgium and the Netherlands
Significantly more parallel exports
− Greece
− Eastern Europe
Significant target markets (size and growth)
PI
PI/PE
PE/PI
PE
No PE/PI
− Germany (size)
− Sweden (growth)
“These trends will continue to
change as price corridors adjust.”
Source: IMS Senior Management Review
FIGURE 3: EXCHANGE RATES AND PRICING INTERVENTIONS INCREASINGLY DETERMINE THE RATE OF PARALLEL IMPORTS OF PHARMACEUTICALS
4) SOCIO-CULTURAL FACTORS
The great significance of the UK – and other European countries such as Germany and the Netherlands
– for European parallel trade is not only based on economic and legal parameters. In fact, these countries show a certain affinity to arbitrage activities. In consequence of this “love for trade” companies have
established themselves in the European market, forming a European network – at least partially – and
continuously developing parallel trade further and further.
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CURRENT TRENDS IN PARALLEL TRADE WITH PHARMACEUTICALS IN EUROPE
The German parallel import market – with a share of 54% by value (total2014) – still dominates within
the EEA.
As previously outlined, the importance of Germany as parallel import market is driven by price differences
between the German pharmaceutical market and other national markets – with, in some instances, significantly lower purchasing power – as well as the legal guidelines in place.
Parallel imports into Germany increased after manufacturer rebates for drugs not regulated by reference
pricing had been reduced from 16 percent to 6 percent (Jan-Mar 2014), respecitvely 7percent (Apr 2014
onwards). Furthermore, the Oberlandesgericht (Higher Regional Court) Düsseldorf ruled that parallel
imports must generally be considered in Europe-wide tenders for discount agreements. Grist to the mill
of parallel importers!
Net-import countries in Europe*
Shares of parallel imports by value
GB
15%
5,5 Bn €
EU 8 Import markets measured:
(DEU, GBR, IRL, NLD and Nordics)
Size
Growth
Share
+3% parallel imports
+3% total market growth
SE
10%
D
54%
3.1 Bn €
NL
8%
DNK
5%
10% parallel imports
(8 main import markets only)
About 3-4% across EU28
Other
countries FIN
4%** 0,6%
NL
1%
IRL
2%
* Germany, GB, the Netherlands, Ireland, and Scandinavia, 96% of the European parallel import market
** other net-import countries: France, Spain, Italy, Belgium, Austria, Poland, and CZ
Source:
FIGURE 4:
IMS MIDAS® and internal database, import markets: DEU, GBR, NLD, Nordics and IRL, All sales at ex-MNF level.
GERMANY IS THE NO.1 TARGET MARKET FOR PARALLEL IMPORTS
The UK remains an important hub for parallel trade in Europe – as a parallel export market but also as the
second biggest net-import country with a share of 15% by value. Due to the rising value of the British
pound, it is likely that parallel imports into the UK will increase.
Sweden has experienced a tremendous growth in parallel trade in the past years, recently getting to hard
stop driven by a new reference pricing in 2014 on mature products. Still, Sweden remains the third largest
import market in the EEA with a share of 10%.
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Sales of parallel imports in €
Net-import markets in Europe*
Net-import markets with euros
3,5
Net-import market with its own
currency
2012
+7%
2013
2014
3,0
FIN
2,5
SWE
DNK
GBR
IRL
NLD
DEU
PI / € (bn)
NOR
2,0
1,5
+5%
1,0
-7%
-11%
-2%
0,5
-2%
FIN
NOR
IRL
DNK
NLD
SWE
GBR
GER
0,0
Source: IMS MIDAS® Parallel trade database. *Net-import markets: D, GB, NL, Scandinavia, and Ireland, price base: manufacturer’s prices
FIGURE 5: SWEDEN’S APPEAL FOR PARALLEL IMPORTS IS STILL INCREASING – BUT LESS RAPIDLY
Despite a relatively strong euro, several patent expiries (Lipitor among others) curbed the parallel import
of pharmaceuticals into the Netherlands.
In Denmark parallel imports have recently slightly declined. Denmark is very much driven by tender business with suppliers (original manufacturers and parallel traders) competing as often as every two weeks
for supplying pharmaceuticals.
Republic of Ireland: A relatively strong euro in comparison with the British pound should have led to a
rise in parallel imports. Yet price reductions in the Irish healthcare system more than offset exchange rate
dynamics.
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Parallel imports: countries of origin
A few years ago the UK used to play a major role in supplying Germany with parallel imports. Currently,
however, these imports increasingly come from South Eastern Europe.
Massive cost reductions in some healthcare systems (i.e. in Greece, Ireland, and Spain) are the driving
forces behind this development. Furthermore, some Eastern European currencies (i.e. the Hungarian
forint) have diminished in value compared to the euro.
Survey of defined parallel imports via specialized pharmacies
June 2014: 508 packages – Distribution
according to indication groups
June 2014: 415 packages** – Distribution
according to country of origin
13.4%
34.7%
48.8%
14.5%
8.0%
13.5%
11.8%
13.2%
12.8%
16.5%
12.8%
HIV
Greece
CZ, SK, & Poland
Austria
Onkology *
Hungary, Romania,
& Bulgaria
France
other countries
GB & Ireland
Italy, Spain, & Portugal
CNS
* incl. medicines used in treatment of rheumatoid arthritis (RA), e.g. when suffering from cancer
** Note: For 87 packages the country of origin was determined using the batch number. For 6 packages the country of origin could not be identified.
N = 322 specialized pharmacies
Source: IMS Senior Management Review, parallel imports of 15 brands were surveyed in June 2014
FIGURE 6:
MANY PACKAGES ORIGINATE FROM EASTERN AND SOUTH EASTERN EUROPE
11
€ PI Sales (mil)/ MNF
800
600
400
200
0
Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14
Immun. & Oncology
CNS
Anti-Infect.
Hematology
CV
Source: MIDAS® Parallel trade database, IMS DPM®, Rx only, price: manufacturer’s price
Respiratory tract
G.I.*
Other indications
*G.I. = Gastrointestinal
FIGURE 7: AFTER THE REDUCTION OF MANUFACTURER REBATES FROM 16 TO 6 % AND 7%,
RESPECTIVELY, PARALLEL IMPORTS TO GERMANY ROSE AGAIN SIGNIFANCTLY
Particularly oncology products and anti-psychotic drugs are selectively imported into Germany. These
two therapy areas account for more than 40% of all parallel imports.
Particularly the reduction of manufacturer rebates led to rising imports of oncological products and CNStherapeutics into Germany.
IMPORT MARKET GERMANY AND COUNTRIES OF ORIGINS – HOW DO THE PIECES OF THE JIGSAW FIT TOGETHER?
German subsidiaries of globally operating pharmaceutical companies lose substantial market shares and
domestic sales. The origin of the pharmaceuticals is very diverse and changes over time. The IMS® Country
of origin study puts the jigsaw back together.
Since March 2003 IMS Health has offered to survey and identify countries of origin for selected medications. During these years we have learned that the process of surveying and analyzing depends on the
customers’ individual needs and the type of medication. Therefore it needs to be adjusted accordingly.
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high
1
Storage in pharmacies
survey via a special panel of around
1,000 pharmacies
2
3
survey via specialized
pharmacies
survey via fully
stocked wholesalers
Direct business
Wholesale
IMS recommends the most
useful approach based on
the dynamics of the
market and the
distribution of the
products
low
FIGURE 8: IMS HAS DEVELOPED THREE METHODOLOGICAL APPROACHES
Objective of the IMS® survey on countries of origin: Identification of source countries of parallel traded
product and quantification of the respective export volumes for a defined period. IMS uses various approaches which offer different advantages depending on the kind of drug and the favored method of
distribution:
•• The survey via a special panel of around 1,000 pharmacies,
•• alternatively the survey via fully stocked wholesalers,
•• or via individual highly specialized pharmacies
Panel of pharmacies: Using a questionnaire IMS collects information on the stock of selected
community pharmacies and defined products on a specific day. For this survey IMS established
a separate panel of pharmacies. The panel size of around 1,000 pharmacies guarantees a solid
sample size, which ensure highly valid results. For the observation period IMS provides the
following information: number of packages of the chosen parallel imports, distribution of parallel imports among the traders, graphic representation of the results, raw data of the survey
(product, commercial form, central pharmaceutical number, importer, batch number, country
of origin).
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In cases where the panel pharmacies stock only a few packages (Note: This applies to specialty
drugs with very low distribution rates.), the panel does not allow us to draw valid conclusions
about the countries of origins. Therefore we offer alternative surveys via
wholesale or via specialized pharmacies.
Specialized pharmacies: Customer-tailored specialty pharmacy panels are often the first choice
to maximize coverage of specialty care products with a compareably low number of distributing pharmacies: It provides information on the purchasing patterns of the major players in the
market. Therefore, this highly specialized approach is superior to classical methods of qualitative market research.
Survey via wholesale: If the survey via pharmacies does not provide sufficient information, data
can be collected as well in wholesaler storage sites. Data is collected about the stocks of parallel import goods in various wholesale storage sites. This method collects the data of defined
pharmaceuticals on specific dates. Due to the expected amounts of stock, the survey via wholesale allows us to draw general conclusions about the distribution among various countries.
However, the market information is not representative in the statistical sense.
The IMS® country of origin study offers various benefits
The results of the country of origin study can be utilized by various business sections and in a number of
different ways. Based on the identification of source countries and the subsequent quantifcation of export
volumes, financial performance of the affiliates can be reviewed.
Furthermore, prognoses for the company’s pan-European logistics can be optimized. Indirectly, the
findings of the country of origin study may also contribute to securing sufficient supplies for the national
markets within Europe. Furthermore, it is possible to identify unexpected or even illegal flows of commodities and implement appropriate counter-measures.
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Benefit
Illustration
Performance Management: fair
compensation among adversely affected
importing countries and the privileged
exporting countries or rather subsidiaries.
Supply Management: The quantification of
imports relating to countries of origin also
enables an estimate of exports
Country Mix: Identifying “balloon effects”,
such as changes in the flow of goods due to a
change in company policy
New Route Assessment: Identification of
unexpected or even illegal flow of goods
Exporting country:
…
€
£
Method …
1
The survey via a special panel of
more than 1,000 pharmacies
allows for a precise statistical
projection on a national level.
PL ZLT
2
This shows the purchases of
major players in the market for a
certain period.
3
Identification of lead time till PI
(e.g. time gap between orginiator
supplies the product to the market
until it is sold as parallel traded
product in Germany)
Importing country:
FIGURE 9: IMS COUNTRIES OF ORIGIN SURVEY: THE SUBSIDIARY AND THE “PARENT” BENEFIT FROM THE HIGH QUALITY AND SIGNIFICANT FINDINGS PROVIDED BY THESE THREE
APPROACHES
PARALLEL TRADE, PRICE REFERENCING, AND INTERNATIONAL REPERCUSSIONS OF
THE AMNOG
Most European countries have an increasingly ageing population. This development is particularly dramatic in South Eastern Europe (Romania, Bulgaria, and Greece) and in the Baltic countries. When looking
at the larger European countries, particular attention is drawn to the demographic change in Germany
and Italy. According to a UN survey by 2045/50 only Luxemburg and the Republic of Ireland will see the
number new born babies exceeding the number of deaths.
European healthcare systems tend to be publicly funded. In Germany, France, the UK, Italy, and Spain 60
to 70+% of the respective healthcare system is publically funded. Although for some years the Statutory
Health Insurance in Germany was able to create a surplus – due to high employment rates – the European
healthcare systems will eventually need to reduce costs. In some countries in the south of Europe, such as
Greece and Spain, the economic crises will bring about these cuts sooner. In other countries ageing populations will lead to cost reductions medium to long term. The pressure on the prices of pharmaceuticals
will increase!
15
1
2
Income
Publically
funded
healthcare
system
Spending
The importance of payers
in the healthcare system
grows – the pressure on
prices of pharmaceuticals
increases!
Source: IMS SRM
FIGURE 10: EUROPE: PUBLIC HEALTHCARE PAYERS CAUGHT BETWEEN A ROCK AND A HARD
PLACE
The Act on the Reorganization of the Pharmaceutical Market raises the question whether a combination
of early benefit assessment, reimbursement amounts, and price referencing of pharmaceuticals throughout Europe will trigger prices downward spiral. The manufacturer’s prices in 15 EU-countries (F, GB, I, E, S,
A, NL, B, IRL, DNK, FIN, GR, P, CZ, and SK) will be one criterion for the reimbursement amounts.
The lion share of these countries has a lower GDP per capita than Germany. Only Austria, the Netherlands,
and Sweden exceed Germany in economic power – and consequently probably also in purchasing power.
Yet, prices for pharmaceuticals in Germany are compared with prices in countries that are in a very different situation. In many of these countries the economic performance is significantly lower, their social
security systems run high deficits and the purchasing power of their population is generally less than in
Germany. Reciprocal price referencing among these countries leads to falling prices – which further increases the pressure.
One question remains unanswered: Will this downward spiral lead to a convergence of prices for pharmaceuticals in Europe? On the one hand “lower prices” will be “imported” into Germany from economically weaker countries, price levels could equalize, and parallel import into Germany would decrease.
On the other hand prices might change permanently. A price reduction in one European country would
make imports to other countries more appealing.
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Example Germany: 15 countries of the EU as
reference for prices of pharmaceuticals
Sweden
41188
GDP per capita in US; Estimate of the IMF for 2013
Finland
Denmark
35617
37900
the Netherlands
41711
United Kingdom
37307
Czech Republic
27200
Ireland
Belgium
Slovakia
39547
24605
37881
Germany
40007
France
GDP per capita higher than in Germany
23068
42597
35784
GDP per capita lower than in Germany
Portugal
Austria
Greece
Spain
29851
24012
Italy
30289
Source: International Monetary Fund, ÄrzteZeitung, *adjusted to purchasing power
FIGURE 11: WILL THE LEGISLATION IN INDIVIDUAL EU-COUNTRIES LEAD TO A PRICE RACE TO THE
BOTTOM?
Many experts are critical of international price referencing, in particular because of the discrepancy
between the economic situations in the individual EU countries. Here are some opinions:
„Conclusion from the evidence: Launch delay and non-launch are more likely in countries with lower
prices. Referencing from high-price to lower-price EU countries contributes to launch lag in the lower-price
countries. Referencing from high-price EU countries also contributes to higher prices, relative to their income, in lower-price EU countries. Referencing and parallel importation by high-income countries create
a dilemma for lower-income countries: Pay high prices, relative to their income, or forego availability.”
Source: Danzon, P. (2008): Cross-National Effects of Pharmaceutical Pricing Policies,
www.oecd.org/els/ health-systems/41593241.pdf
„External reference pricing will soon reach the end of its useful life cycle (when almost all countries reference each other and prices converge, the differences between countries diminish)”
Source: Seiter, A. (2010): A Practical Approach to Pharmaceutical Policy. The World Bank
„This study comes to the conclusion that EPR is a dynamic and widely used pricing policy in Europe, with
many different national characteristics; (…) However, we still see room for improving by implementing
more detailed legislations (…).”
Source: Leopold, C. et al. (2012): Differences in external price referencing in Europe – A description overview.
In: Health Policy 104 (2012) 50 – 60
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PARALLEL EXPORTS FROM GERMANY – A NEW DYNAMIC
Since the end of last year more and more patients, pharmacists, and physicians have been reporting
shortness of supplies for certain drugs – following the decision on the final reimbursement price after the
AMNOG assessment.
In June 2014 the German Association of Research-Based Pharmaceutical Companies (VFA, Verband
Forschender Arzneimittelhersteller e.V.) analyzed 45 products with a reimbursement amount. The study
showed that 80% of the German prices were already below the European average; almost half of them
even below the smallest reference prices.
Percent (mean reference price = 100)
45 products with
reimbursement price
250
15 reference countries
(in accordance with the
agreed framework)
200
150
Range of European
reference prices
Levels of reimbursement amounts in
Germany (catalogue
price minus rebate
according to § 130a
Section 1 and
§130b)
100
50
Current as of June 2014
Source: ÖBIG, Lauer-Taxe
0
Anonymous representation, sorted by level of reimbursement in Germany
Source: German Association of Research-Based Pharmaceutical Companies, stating the manufacturer’s price (Abgabepreis pharmazeutischer
Unternehmer, ApU) without further discounts
FIGURE 12: SINCE AMNOG*: REIMBURSEMENT LEVEL BELOW EUROPEAN AVERAGE
Parallel trade within the EEA is driven by differences in the legal framework, fluctuating exchange rates,
and price differences in the individual national markets. If a relatively high price level encourages parallel
imports, by implication the opposite – low price levels – can be a decisive factor for low parallel imports
and declining shares of parallel imports, respectively.
A recent analysis shows that the share (in value) of parallel imports “under reimbursement amount”
(= low relative price level) is actually significantly smaller than the share of parallel imports without reimbursement. Furthermore, the share (in terms of value) of parallel imports with reimbursement amounts is
declining, while the share of parallel imports without reimbursement is continuously rising.
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Development of parallel import 2014
Share of parallel imports in the SHI-market (value)
pharmaceuticals with reimbursement amounts /
“AMNOG”
Thesis: The price level in Germany is relatively
low. Consequently, a profitable arbitrage
business with parallel imports is hardly
possible.
2.3%
2.9%
3.0%
January
Januar February
Februar March
März
2.2%
April
April
Share of parallel imports in the SHI-market value
pharmaceuticals without reimbursement /
“NON-AMNOG”
9.9
10.1
10.2
10.4
10.4
10.5
10.6
April
April
May
Mai
June
Juni
July
Juli
2.1%
May
Mai
1.2%
1.1%
June
Juni
July
Juli
January
February März
March
Januar Februar
Source: IMS PharmaScope® National
FIGURE 13: THE SHARE OF PARALLEL IMPORTS IN THE SHI-MARKET IS SIGNIFICANTLY HIGHER FOR
PHARMACEUTICALS WITHOUT REIMBURSEMENT
Apparently medications with reimbursement amounts are subject to “different laws of parallel trade” than
other pharmaceuticals which are not governed by the AMNOG. This insight also explains why Germany
evolves into a parallel export country – at least for medicines with reimbursement amounts.
Case study parallel export: Gilenya
An example of parallel export from Germany is the product Gilenya by Novartis.
Background: After agreeing on a reimbursement amount, the product has been released for wholesale
at a price of 1,300.32 euros (Gilenya 0.5 mg 28) since February 2013. The introductory price was 1,850.00
euros. Consequently Novartis reimburses a rebate of 549.68 euros (rebate according to §130b SGB V).
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Example:
problemsPro
withReg
Gilenya.
Lift-out delivery
text in Myriad
14ptReports
on 18on
inFacebook:
IMS Dark Blue on Ivory or
“Do
youGray
also have
delivery problems
withto
Gilenya?”
Warm
background
indented
28mm. IMS Yellow 6mm square top left.
“I still haven’t got any Gilenya. Today they finally ordered it directly from Novartis. (…)”
“I tried to get it from my pharmacy on friday. They said it was not available at the moment but
would get back to me as soon as they had some. This has never happened before. Luckily, I still
have enough for about a week.”
Source: FACEBOOK, German language group, December 17, 2013
In all 15 EU countries with reference pricing (F, GB, I, E, S, A, NL, B, IRL, DNK, FIN, GR, P, CZ, and SK) the
manufacturer’s price is higher than in Germany – even in Bulgaria (1,548.62 euros) and Romania (1,610.00
euros), two of the countries with the weakest economies in Europe (current as of February 2013).
A consequence of the low reimbursement amount: Parallel traders buy goods intended for the German
market from pharmacies and pass them on to other European countries. Target markets of these parallel
exports are particularly Denmark (manufacturer’s price: 1,753.63 euros), Sweden (1,734.74 euros), and
Austria (1,682.20 euros).
Estimate: by now more than 10 % of the German market volume is exported
Difference: purchases vs. sales
(packages)
3,500
Packages by month
11,000
10,000
9,000
8,000
Parallel export –
example: GILENYA
3,000
2,500
7,000
1,997 1,991
6,000
1,617 1,698
5,000
1,095
3,000
745
2,000
1,000
0
-1,000
465
210
0
911
875
21
-116
96
38
-29 -8
-52
241
237
55
-105
58
34
-35 -48 -48 -94 -50 -88
-148
-209
-101 -232 -257
68
193
-16
01/11
02/11
03/11
04/11
05/11
06/11
07/11
08/11
09/11
10/11
11/11
12/11
01/12
02/12
03/12
04/12
05/12
06/12
07/12
08/12
09/12
10/12
11/12
12/12
01/13
02/13
03/13
04/13
05/13
06/13
07/13
08/13
09/13
10/13
11/13
12/13
01/14
02/14
03/14
04/14
05/14
-2,000
1,500
1,290
4,000
Pharmacy purchases
Pharmacy sales
2,000
Difference between purchases and sales
Source: IMS DPM® and IMS Pharma Scope®, Note: possible rebates in individual countries are not included
FIGURE 14: PHARMACIES BUY MORE GOODS THAN THEY DISPENSE
1,000
500
0
-500
20
Comparing the amount of Gilenya community pharmacies buy to the amount they dispense is another
piece of evidence supporting the assumption that Germany is developing into a parallel export market
for pharmaceuticals with reimbursement amounts. At a peak, up to 12% of the packages intended for the
German market were exported to other European countries. Obviously, these medicines are not available
to patients in Germany.
Patients communicate their problems via well-known social media channels.
QUO VADIS EXCHANGE RATE? QUO VADIS PARALLEL TRADE?
It is difficult – if not impossible – to assess in which way exchange rates will develop, since the value of a
currency depends on a large number of different factors.
Currently the British economy is booming. The economy is expected to grow by 3 % or more. This positive development also means the British pound is increasing in value. Drivers of the boost are the central
banks expansionary monetary policies, a significant rise in household spending, and the recovery of the
real estate market “around London”. However, due to the deficit (Note: Imports are a lot higher in the UK
than exports.) and high debts among the citizens, many economists assume that this trend is not sustainable and that the British pound is overvalued. Although the public deficit decreased slightly, at 6.8% of
GDP (in 2013) it is still very high. Some experts even expect a “sterling crash”.
One cause for a possible “crash of the pound” might be the referendum on Scottish independence.
Furthermore, the referendum on leaving the EU endangers the exchange rate of the currency. Additionally, a new parliament will be elected in 2015. A shift in direction – e.g. away from the economy-friendly
policies of the Conservative government – entails further risks for the currency market.
The weak Swedish economy is also recovering after a disappointing GDP in 2013 (just 1.5% growth). For
2014, however, the GDP is expected to grow a significant 2.6%. Might this lead to an increased value of
the Swedish krona in the coming months?
Private household consumption and increased investments in highly innovative Sweden might see the
Swedish currency soaring high again. In the face of low interest rates and rising real estate prices, however, such a development entails substantial risks – according to the “Neue Zürcher Zeitung” (a Swiss
national newspaper). The months to come will be exciting.
21
It is a fact that a heterogeneous economic development (i.e. in principle positive economic developments in Germany and the UK – no or little economic recovery in Southern Europe and other European
countries) will increase the gap of purchasing power among the European countries.
A major driving force for parallel imports and exports – price differences, or rather exchange rate fluctuations, in the national markets – will remain and might grow even stronger.
Price level
Legal guidelines
Parallel trade
in Europe
Exchange rates
Social-cultural
factors
FIGURE 15: 4 FACTORS WILL CONTINUE TO DETERMINE THE FLOW OF GOODS IN EUROPE
22
Authors:
Florian Scholz, is Engagement Manager in Analytics & Consulting at IMS Health.
Mr Scholz has extensive experience as a consultant working on more than 100 projects
in Eastern and Western Europe. For many years he has been focusing on Commercial
Effectiveness and Marketing & Launch Excellence as well as the topic of parallel import of
pharmaceuticals. Florian Scholz graduated from Johann Wolfgang von Goethe University
in Frankfurt/Main as a biologist (diploma).
Heinz-Werner Schulte, is Key Account Manager at IMS. For 30 years he has been working
in the German pharmaceutical market. In addition to the traditional areas of Market Research, Sales Controlling, and Pharma-Consulting, he focuses on the topic of distribution
channels in the domestic and international pharmaceutical market.
Frank Weißenfeldt, is Senior Manager at IMS Health with 20 years of experience in
Consulting, Project Management and Marketing. Mr Weißenfeldt has a degree in business (diploma) and an MBA from the University of Bradford. When he first joined IMS in
2000 he worked in Product Management. Since April 2010 he has been in charge of the
management of pharmacy panels, among others. Furthermore, Mr Weißenfeldt organizes projects in Management Consulting and Project Development. He also develops and
chairs IMS Customer Events and working groups.
References
Dr. Alexander Frenzel / Armin Maier / Frank Weißenfeldt – „Parallelimporte von Arzneimitteln in Deutschland“, Pharm. Ind. 73, Nr. 1, 44-48 (2011)
Dr. Alexander Frenzel / Armin Maier / Frank Weißenfeldt – „Parallelimporte: ein Ausblick“, Pharma Relations
03/2011
Dr. Jan Bungenstock – „Internationale Rückwirkungen des AMNOG“, 19. März 2014, vfa. Die forschenden
Pharma-Unternehmen
Dr. Stefan Lieck – „Der Parallelhandel mit Arzneimitteln“, GEW Band 10, Hrsg. Dr. Anja Steinbeck und
Dr. Christoph Ann LL.M., Carl Heymanns Verlag, Köln/München, 2008
Frank Weißenfeldt – „Arzneimittel-Parallelhandel in Europa“, Pharm. Ind. 76, Nr. 2, 180-185 (2014)
Jörg Geller – „Arzneimittel-Importe in Europa“, Pharmabetriebslehre (Zweite Auflage), Hrsg. Oliver
Schöffski, Frank Ulrich Fricke, Werner Guminski, Springer-Verlag, Berlin/Heidelberg, 2008
23
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60598 Frankfurt
Tel.: +49 (0)69 6604 0
www.imshealth.de
about IMS Health
For more than 60 years IMS Health has been the world’s leading provider of information, consulting services, and technology in the healthcare sector.
With more than 100 subsidiaries worldwide, IMS combines relevant healthcare information with great analytical knowhow
and extensive experience in consulting. Our services help customers in the field of Life Science as well as healthcare providers, payers and political decision makers to improve the health of patients and to further their economic success.
Multiple scientific publications, e.g. in health service research, and studies in health economics, are based on IMS analyses.
Our range of international publications supports authorities and institutions in healthcare worldwide.
IMS represents reliability and quality in the collection and analysis of data. We provide all our partners with unbiased information on market developments. Data protection and the anonymity of our data sources are our leading principles.
IMS Health | Intelligence. Applied.
© 2015 IMS Health Incorporated or its affilates. All rights reserved.
WP-PARHAN04/15

Parallel trade: Which factors determine the flow of goods in Europe?

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