5.3. COMPARING DIFFERENT PHARMACEUTICAL MODELS WITHIN EUROPE


SUMMARY


1. There is not one, but two different European models.


2. One is a continental, napoleonic model, which can be found in Germany, Belgium, France, Spain, Portugal, etc.

3. The other is an insular, Anglo-Saxon model to be found in countries such as the UK and Ireland.

4. The difference between these two models respect three aspects:

4.1 Stability versus legislation / regulation intensity;
4.2 Equilibrium (balance) versus price/cost focus;
4.3. Economic freedom versus regulation.

5. The choice between stability and instability; between balance and unbalance; and economic freedom and regulation; is translated into very different levels of benefits for four types stakeholders:
5.1 Patients (in cost and access to innovation);
5.2 Industry and economy;
5.3 Public pharmaceutical costs (ambulatory plus hospital); and
5.4 Tax payers effort (in administrative and non pharmaceutical health costs).

6. The bottom line is: it pays off to abstain from 1) intensive regulation (but rather to achieve stability and economic freedom); and 2) from focusing predominantly on price/cost (but rather to achieve equilibrium).


7. So, the best road to society well-being in general, including protecting patients interests in the average and long run, is through 1) economic freedom, 2) stability and 3) balance.


I.

The first difference between the continental / napoleonic / complex model, and the insular model is in terms of stability.

Indeed, Germany, Spain, Portugal, etc, experience a regulation intensiveness which is incompatible with stability (figure one).

On the contrary both the UK and Ireland have a simpler and thus a stabler model.


II.


The second difference respects the degree of balance achieved by government policies, which must be compatible and obtain an equilibrium among (in figure two):

First): Control of public pharmaceutical expenditure in both the
1.1 ambulatory; and
1.2 hospital.

Second): Patients protection:

2.1 Cost; and
2.2 Access to innovation.

Third):
Competitiveness of the

3.1 Industry; and thus of
3.2 The economy (balance of payments, etc); and

Fourth): Tax payers:

4.1 Administrative costs to control the pharmaceutical industry; and
4.2 Non pharmaceutical health costs (nursing, doctors, length of hospital internment, etc.) which compensate pharmaceutical consumption: below a certain level of the latter, the former increase; indeed there is a negative empirical, statistical relation between them.


III.

The insular model achieves an equilibrium, a balance, among these four types of variables.

The continental model focuses predominantly on price/cost measures to control public pharmaceutical expenditure (variable 1 in figure two), disregarding the other variables. Thus, it is an unbalanced model.

Indeed (figure three), Germany, Spain and Portugal took from 1993 henceforth more price/cost measures than the EU average, and much more than UK and Ireland.


IV.

So we have basically two models, which are different in terms of two characteristics:
- The degree of stability; and the
- balance they achieve (figure four).

V.

The result is that society (and thus patients interests in the average and long term), are worse off in the continental than in the insular model.

Indeed, countries which adopted the insular model (UK and Ireland) are better off than Germany, Spain and Portugal (adopters of the continental model): as demonstrated by figure five.


VI.

In conclusion, we have two different models with two very different results. The choice is clear.