Europe’s generic drugmakers might lower output attributable to surging power payments By Reuters

By Ludwig Burger

FRANKFURT (Reuters) – Europe’s drug makers have warned they might cease making some low cost generic medicines due to surging electrical energy prices and are calling for an overhaul of the way in which they’re priced, the most recent business to hunt assist because the power disaster deepens.

The generic drug business foyer group Medicines for Europe, which represents corporations together with Teva, Novartis’s Sandoz unit and Fresenius SE (ETR:)’s Kabi enterprise, on Tuesday despatched an open letter to European Union member states’ power and well being ministers forward of their extraordinary EU Council assembly on Friday, calling for measures to ease the price burden.

The letter was additionally addressed to key European Commissioners. The recipients didn’t reply to requests for remark given the late hour.

Electrical energy costs have risen ten-fold for some drug factories in Europe and uncooked materials prices have risen by between 50% and 160%, in line with the letter.

Generics associations in member states are additionally petitioning nationwide heath authorities for extra flexibility on drug costs, mentioned Medicines for Europe.

“We might discontinue possibly three, possibly 5 merchandise because of the direct and oblique influence of accelerating power prices,” mentioned Elisabeth Stampa, chief government of Medichem SA, a generic medication and pharmaceutical components maker based mostly close to Barcelona, Spain.

Medicines for Europe’s director normal Adrian Van Den Hoven informed Reuters that larger power prices have been hitting a sector that was compelled to consolidate attributable to worth stress, making the market extra susceptible to produce outages and shortages.

“Increased power prices simply eat the entire margins of many manufacturers of important medicines within the mounted worth system that we function beneath in Europe,” he mentioned.

The problem centres on the pricing regime. Off-patent medicines are usually bought by low-cost drugmakers at costs set by nationwide well being companies or insurers’ associations, which incessantly additionally lower costs.

Generics account for about 70% all distributed medicines in Europe, a lot of them to deal with severe situations resembling infections or most cancers, however make up solely 29% of the area’s drug payments, in line with the foyer group.

The surge in power prices dangers undermining a current push to spice up medicines manufacturing in Europe and make the area extra self-sufficient after the COVID-19 pandemic uncovered a dependence on suppliers overseas and led to a breakdown of sure provide routes.

COVID-lockdown measures in China and the struggle in Ukraine have made issues worse for logistic and uncooked materials provides.

Drug provide shortages, which at instances disrupt affected person care when different sources usually are not out there, have a decade-long historical past within the European off-patent generic drug sector, the place stress on costs by cash-strapped well being techniques permits solely probably the most cost-efficient suppliers to outlive.

Whereas makers of patented progressive medication are additionally usually banned from elevating costs after a reimbursement fee has been set, the a lot larger margins preserve most of these merchandise worthwhile.

ENERGY INTENSE

Customary infusions for hospitals are among the many most power intensive medication to supply as a result of they must be heated and cooled for sterility. The identical goes for the fermentation course of behind generally used antibiotics and therapeutic hormones, mentioned van den Hoven.

Medichem’s Stampa mentioned the results of pricey power ranged from larger delivery charges to waste disposal contractors charging 30% extra.

She declined to call medication that is perhaps affected as a part of an annual assessment this yr, however mentioned clients can be given about six to 12 months to discover a new provider if a product is phased out.

The privately held group made 110 million euros ($106 million) in gross sales final yr with off-patent merchandise resembling antibiotic drips, blood thinners and schizophrenia medication, promoting to generic drug corporations together with Teva and Viatris.

Stampa mentioned indexing drug costs to take manufacturing prices into consideration can be an reasonably priced repair for well being our bodies in Europe the place some off-patent prescription eye drops are reimbursed for lower than the value of a pack of gum.

The president of the Italian pharmaceutical business affiliation, Marcello Cattani, mentioned power prices are seven instances larger than final yr, whereas the U.S. greenback, by which worldwide components are usually paid, is up towards the euro.

“The sector can not move on larger prices … The dangers of damaging impacts on the manufacturing and availability of medicines are very excessive,” he mentioned.

($1 = 1.0394 euros)