Albedo

Europe is under siege - and will have to struggle to defend itself against death, disease and destitution. This alarmist conclusion may come as a surprise to the 400 million citizens of the European Union (EU), who, by and large, live rather comfortable and healthy lives. But those who know better tell us we should be scared - and should be reaching for panic buttons to find a solution.	

The latest initiative from the EU - the creation of a European centre for disease control to protect us from the imaginable and the unimaginable - is moving towards realization. And, the European Parliament gave the proposal a wholehearted welcome in February.	

Its report on the plan highlighted the dangers Europe faces. One in 10 of new HIV/AIDS cases diagnosed in Europe are now drug-resistant strains - twice the level in the US and "just one menace for millions of our citizens," said the Parliament. And, it went on, multidrug-resistant tuberculosis (TB) and methicillin-resistant staphylococcus aureus are also on the increase. There is a growing threat of major disease epidemics throughout the world - the voluntary and forced movements of people, globalization, wars, famines, and environmental and social changes, all contribute to greater opportunities for the spread of disease. The experience of the SARS (severe acute respiratory syndrome) virus has highlighted the danger of complacency. Such dangers "demand effective surveillance and rapid co-ordinated response," the Parliament said.	

But it is not just naturally-occurring dangers that are causing apprehension in the EU. The Parliament's report on the centre for disease control cited another justification - in almost apocalyptic terms: "Over us is the dark shadow of the threat of bioterrorism," it said. As the Parliament's powerful budget committee observed in the run up to the vote: "The recent spread of SARS and the anthrax alerts of late 2001, which were thought to be because of bioterrorism, reinforced the need to provide European citizens with adequate prevention and control structures." So the Parliament concluded that "public health authorities throughout our Union know they must be prepared to respond to very real health threats, crises and emergencies."	

The EU already has in place some co-ordinating mechanisms for disease surveillance among its member states, but they might be described as fences rather than the wall-like structures that are now under consideration. A communicable diseases network has been operating for 5 years, and a number of dedicated surveillance networks have been conducting epidemiological surveillance and an early warning and response system for specific diseases or groups of diseases (including HIV/AIDS, legionellosis and TB).				

But this can be seen only as "an effective first step," said the European Parliament. "Its limitations are acknowledged by the Commission and participants," and it "needs substantial reinforcement to offer a structured, swift, flexible and efficient co-ordinating role in the EU during the longer term."	

The tasks of the planned new centre (to be located in Sweden) will include rapid action in emergencies; harmonization of surveillance methodologies (including better comparability and compatibility of the surveillance data collected in the member states); epidemiological training; and independent scientific advice to relevant EU agencies. The total annual costs in its first year of operation - scheduled to be 2005 - would be approximately €12 million, rising to around €48 million by 2010. This budget is seen by the European Parliament, however, as "tiny and, probably, inadequate."	

In the legal text voted by the Parliament, the new centre is described as a response to a widening EU responsibility. The EU, it says, "is committed as a priority to protect and improve human health by prevention of human disease, in particular communicable diseases, and to counter potential threats to health with a view to ensuring a high level of protection of health of European citizens."				

The EU "should address European citizens' concerns about public health threats" - not just through "preparedness and control measures," but by "prevention of human diseases." And, it stresses, "the danger of deliberate release of agents also requires a coherent EU response." The centre's mission should be to identify, assess and communicate current and emerging threats to human health from communicable diseases. For outbreaks of illness of unknown origin, it should be empowered to act on its own initiative until the source of the outbreak is known. And, "as emerging health threats may have mental as well as physical health consequences, the centre should … gather and analyse data and information on emerging public health threats and developments for the purpose of protecting public health in the European Community by preparedness."	

The centre is intended, according to the legal text, "to maintain scientific excellence at all times through its own expertise and the expertise in the member states, and should foster, develop and steer applied scientific studies." It should also foster the exchange of best practices and experience on vaccination programmes. This, it anticipates, will enhance the visibility and credibility of scientific expertise in the EU. And "where independent scientific expertise is not available from existing dedicated surveillance networks, the centre may set up independent ad hoc scientific panels." It also intends to support EU planning for disease response, strengthening links with clinical and public health sectors, reinforcing the public health laboratory capacity for rapid diagnosis, and co-ordinating training programmes.	

The weaknesses of Fortress Europe - and the perils of holes in its walls - were also the subtext of a health-related meeting of the influential Kangaroo Group in February. Very few associated with this group would be ready to accept the "fortress" terminology: the Kangaroo Group, formed in the 1980s to support the EU attempts to create a single market, is dedicated to facilitating trade by leaping over internal borders and the protectionism they embody - hence its name. But leaping should have its limits, at least as far as pharmaceuticals are concerned, the group concluded at its February meeting. Europe is threatened by products leaping into it from abroad, and by researchers leaping out of it to more attractive countries.				

"During the last decade, Europe's leadership in the pharmaceutical sector has lost ground, with a steady transfer of R&D activities to the US, where conditions are more favourable to pharmaceutical innovation," warned Tom McKillop, president of the European Federation of Pharmaceutical Industries and Associations (EFPIA) and chief executive of AstraZeneca. Pharmaceuticals remain Europe's most regulated products, and - despite their contribution to scientific progress, public health, Europe's society and its knowledge-based economy - "the core problems faced by the R&D-based industry remain," he stressed. McKillop called on Europe to encourage pharmaceutical innovation, attract R&D investment and stimulate industry's competitiveness: "Europeans increasingly depend on pharmaceutical R&D conducted elsewhere. And if current trends continue, Europe will further lose on all fronts: public health, public finances, employment, growth and education." And veteran German Euro-MP Karl von Wogau, a longstanding member of the Kangaroo Group, also expressed his preoccupations that research is moving more and more to the US.	

The enlargement of the EU on 1 May will extend the walls of the fortress still further. Bringing in 10 new countries - Poland, the Czech Republic, Hungary, Slovakia, Estonia, Latvia, Lithuania, Slovenia, Cyprus and Malta - will make the area covered by the fortress larger, but will involve some tricky adaptations in the new terrain, and also require thousands of kilometres of new walls to be created and patrolled on the enlarged EU frontiers to the east and south.				

The prophets of doom have been hard at work on this scenario too. Even hard-headed commercial organizations with no political axe to grind have perceived some risks for the pharmaceutical industry from enlargement. A new study from the UK market analyst Datamonitor suggests that the upside of the pharmaceutical industry's access to relatively untapped markets with long-term revenue potential has to be set against the uncertainty of product success. Changes in regulatory practice, increasingly complicated pricing and reimbursement policies, and economic disparities between the current EU member states and the 10 new members all represent threats, says Datamonitor.	

The industry is under ever-mounting pressure to decipher the growing maze of regulations post-accession - a necessary component of gaining rapid access to prescribers. And in any case, average government health care expenditure per capita in the acceding countries is about 2.5 times lower than that in the current EU states, explained Datamonitor. The choice and availability of new drugs entering the accession markets is bound to be influenced by their national governments' ability to pay for them, it adds.	

Worse, several of the acceding states are moving towards a regulated pricing system, with the aim of cost-containment in their health care budgets. Datamonitor cites the example of Slovenia, "currently reforming its pricing policy into a formal reference pricing system, weighted towards 'cheaper' imported generics." Post-accession, it is anticipated that key accession markets will also remodel their pricing systems following Slovenia's example, it adds.	

That isn't the worst scenario, either, suggests Datamonitor. "EU expansion may also encourage some current EU states to take into account accession countries' drug prices when assigning health care budgets. If these countries continue to use the average lowest prices set in the EU, this parameter will be influenced by drug prices set in accession countries. Importantly, if downward pressure on drug pricing continues post-accession, its impact on pan-European pricing will affect companies' decisions to launch innovative drugs, since there is no incentive to maximize drug revenues."	

The only bright spots Datamonitor perceives in this gloomy outlook are the enhanced prospects for generics and for parallel imports - two developments that are guaranteed to depress executives in the innovative pharmaceutical industry even further, and to fuel their sense of impending disaster.	

The inclusion of the Central and Eastern European pharmaceutical industry will boost the growth of the European generics market, as generics traditionally forms a major part of their business models. These companies are currently undergoing re-organization and repositioning strategies to ensure their competitive advantage is increased to capitalize fully on post-accession revenue opportunities. It is anticipated that importing 'cheaper' generic drugs from accession countries, because of lower operating costs, would provide increased incentives for western European governments to implement measures promoting generic substitution even further. The lowering of generic drug prices by EU governments (such as in Germany and Italy) will also place more pressure to lower the price of branded products because of the existence of reference pricing systems.	

And, continues Datamonitor, parallel trade is expected to escalate post-EU accession. Lower operating costs in the accession countries will escalate drug price differentials between the EU's new and current members. The impact on the pharmaceutical industry after accession will be a shift of parallel trade from the central and eastern European region to the higher priced 15 EU markets. Furthermore, the growth of parallel imports for branded and even generic products will be encouraged by the recent EU government-endorsed initiatives to reduce overall drug costs. Germany, for example, introduced a parallel import quota requiring pharmacists to dispense at least 5.5% of drugs as parallel imports after April 2002. This quota was further increased to 7% from January 2003, indicating that parallel imports remain a strong focus of cost containment.	

The protection that the western European industry was supposed to be provided by the toughly-negotiated Accession Treaty is unlikely to function well, warns Datamonitor. "From a legislative perspective, the EU has done little to address the issue of parallel importing with regards to accession," and the pharmaceutical industry is "expected to have great difficulties in securing the protection it requires." Successful integration of the 10 new member states with current EU health care provision policies is dependent upon each accession country's timely implementation of regulatory and intellectual property laws relating to prescription drugs - and the current picture, just weeks before enlargement takes place, is far from complete.	

Against this sombre background, students of siege history may recall that one of the stratagems used by attackers was to catapult dead and diseased bodies into the fortress, to spread alarm, despondency and germs. And if Europe is really in as parlous a condition as some forecasters suggest, it may be that Europe's only remaining defence would be to reverse the process and start catapulting victims of its own decay outwards towards the attackers. Albedo does not subscribe to this pessimistic scenario and is not volunteering for catapult duty.  	

Articles

Perils are perceived as pressing ever more intensely on the health of the evolving Europe. The reports of Europe's death may, however, be somewhat exaggerated.

Strengthening the Walls of Fortress Europe?

Many years ago, an Albedo column in Pharmaceutical Technology Europe (or Pharmaceutical Technology International as it was then) included a "cut-out-and-keep" guide to parallel importing, to accompany an exposition of the complexities of this peculiar European Union ([EU] or European Communities, as it was then) phenomenon. It's unlikely that anyone still has their guide, even if they did cut it out and keep it at the time. So, because this year started in Brussels with renewed fever regarding the same subject, Albedo is offering an update on what's been happening inside this particular EU pharmaceutical maze.	

The most astonishing aspect of it all is the easiest to grasp - parallel importing is still going on, and it's still a huge bone of contention between major manufacturers and agile wholesalers. Equally astonishing, but harder to understand, is the likelihood that it is likely to go on, and on, and on - until a new generation of pharmaceutical technologists is reading Albedo, or until hell freezes over, or (even less probable) until the EU can resolve the central conflict that gives rise to parallel importing.	

The conflict arises from a simple rule, familiar to all scientists and to all children making sandcastles on the beach; water will always find its own level. In this situation, the water is represented by successful pharmaceutical products that are sold right across the 15 member states of the EU. And the oddly shaped vessel within which this fluid is contained is - yes, you guessed it - the 15 member states of the EU. 				

When a company sells its successful product to wholesalers in Germany, the UK or The Netherlands, for instance, it is going to charge a higher price for it than when it sells the same product to wholesalers in Spain, Greece or Portugal. This isn't perversity on the part of the company; it's a consequence of the oddness of the EU. Every member state is entitled to fix its own prices for pharmaceuticals - and typically, southern member states impose much lower prices than northern member states.	

If that was the only oddness of the EU, there wouldn't be any parallel importing. Each member state would be, as it were, a hermetic vessel. Pharmaceuticals would be introduced into each market, and would stay there, maintaining a constant level at whatever had been set by the government - lower in the south, higher in the north.	

But there is another oddness to the EU. A product available in one member state market can be legally distributed in any other member state market. There are no hermetic national markets. As a consequence, the natural processes of leakage and seepage occur across the EU market. A wholesaler in the north doesn't need to buy directly from the manufacturer in the north - he/she can go south and buy the same product at a lower price there. Then he/she can pump (to strain the metaphor to breaking point - particularly for anyone who is trying to build a model as they read this column) the cheaper version up into a more generously-priced member state in the north, and sell it to retailers there at less than they would normally have to pay, but still retain a profit for him/herself.	

The effect is to reduce the volume of manufacturers' sales in the northern markets and to increase them in the southern markets. And because north equals more expensive and south equals cheaper, the total value of the manufacturer's sales across the EU falls.	

Naturally, the enterprising wholesalers and everyone paying for drugs in the more expensive northern markets think parallel importing is a good thing. So too does the European Commission (EC). Not because it pays for drugs (it doesn't), and not because it makes any money out of it (it doesn't), but out of dogma. The dogma in question is the free circulation of goods around the single EU market. Free circulation is quite a good idea in itself - and an even better idea for anyone who exercised their rights and bought a Volkswagen Golf (or even more so a Mercedes Benz SL350) in a cheaper EU country than their own.	

But free circulation makes an uncomfortable bedfellow with imposed prices. Volkswagen, Mercedes and every other manufacturer of virtually every class of goods available anywhere in Europe can choose to charge differing prices from member state to member state, and take the risk of parallel importing. And they do. But the key difference between cars (or cakes) and medicines is that there is no price control on cars (or cakes), and in most member states there is price control on medicines.	

The impending accession of ten more member states on 1 May is going to exacerbate the situation. These are largely former-communist countries of central and eastern Europe, and they are much poorer than the current member states. They all impose price controls on medicines, and the prices they permit are in general very low by EU standards. 	

So the EU is about to become an even odder shape. But there is absolutely no prospect in the foreseeable future of member states giving up their sovereign right to set what prices they want for pharmaceuticals (or to relinquish any other autonomy they retain in areas of social security and health). And there is absolutely no prospect in the foreseeable future of the EU dropping the dogma of free circulation.	

Result? A continuation of parallel importing. And a continuation of the efforts that manufacturers make to limit the scale of this trade.	

And now (as any French newspaper might remark at this point in an article) for the news. Two pieces of news, in fact.				

The European Court of Justice (ECJ) ruled on 6 January that German drug maker Bayer had not been proved to be breaching EU competition law in the way it behaved when parallel importers were eating into its direct sales during the early 1990s. The ruling was a defeat for the EC and a small, partial victory for major drug firms because it is likely to exert some minor constraints on parallel importing.	

The case arose from complaints from parallel importers about the way that Bayer was allegedly trying to limit their operations on its major heart drug, Adalat. From 1989–1993, the prices of Adalat in France and Spain were much lower than those charged in the UK. Those price differences of approximately 40% led Spanish wholesalers (from 1989) and French wholesalers (from 1991) to export a large quantity of Adalat to the UK, selling it on to UK pharmacists at prices lower than Bayer was charging there.	

This caused a DM 230 million loss of turnover for the British subsidiary of Bayer, so Bayer at group level then changed its supply policy and began to no longer meet all orders placed by Spanish and French wholesalers. On 	

10 January 1996, following complaints by the wholesalers, the EC adopted a decision requiring Bayer to change its policy, which it deemed contrary to the EU Treaty, and it fined the company 3 million ecus.	

Bayer appealed, and on 26 October 2000, the Court of First Instance (CFI) annulled the Commission's decision. It found that the EC had not proven that there was an agreement within the meaning of EU law between Bayer and its Spanish and French wholesalers to limit parallel exports of Adalat to the UK. None of the documents submitted by the Commission contained evidence proving either that Bayer intended to impose an export ban on its wholesalers or that supplies were made conditional on compliance with that alleged ban.	

In turn, the German association of parallel importers appealed against the CFI in January 2001. The recent ruling by the ECJ is the final stage in the process - the Court has dismissed the importers' appeal and has confirmed the judgment of the CFI. The Commission, the ECJ has confirmed, had not proved the existence of an agreement that breached EU rules.	

The EC, which is committed to easing parallel trading in the single market, admitted that it was "disappointed" by the Court's judgement, but insisted on the need for a careful reading of the ruling and for further reflection on the definition of vertical relationships - such as between producers and wholesalers. The Commission said it will continue to monitor the pharmaceutical sector carefully "because of its unparalleled importance to the economy, to consumers and patients, and to governments that pay for medicines."	

The Commission also noted that the manufacturing industry has since moved on to other forms of dealing with parallel imports. Bayer and other firms have set up what they call supply quota systems, under which each company limits supply to its own estimate of local demand. Some of these agreements have been notified by the companies to the Commission for clearance and have also been the subject of complaints by parallel importers. The Commission is studying the matter closely, it said.	

The second item of news is that the EC published a position paper on 19 January attempting to ease parallel importing of medicines, "aiming to help businesses and national administrations take full advantage of the internal market in medicinal products," it said. The Commission provides an update covering the last 20 years, highlighting its conviction that there should be no major administrative barriers to this type of trade. Member state authorities should grant licences to market parallel-imported medicinal products on the basis of a simplified procedure, rather than the full procedure applied to new medicines being marketed in the EU for the first time, it insists.	

And the Commission claims that legal certainty has been increased by a series of ECJ rulings, including some on the repackaging of a product imported in parallel. The Court has clarified, for instance, that the protection of a trademark is not without limits, so it may not be used to artificially partition the internal market - which threw out of the window one of the devices that big pharma had tried to use to limit parallel trade. A parallel importer may repackage a proprietary medicinal product and reaffix the trademark or even replace it with the trademark used in the market of destination, provided that repackaging does not adversely affect the original condition of the product or the reputation of the trademark and its owner, the EC stated primly. 	

Europe's commissioner responsible for the internal market, Frits Bolkestein, said the position paper "makes clear to national administrators the conditions under which parallel imports of medicinal products must be allowed, and to those marketing medicinal products how they must proceed if they wish to undertake such parallel imports. The ultimate aim is to ensure that patients and health care providers can benefit from parallel imports, without taking any risks with patient safety."	

If there was still any doubt regarding how far the parallel importing dispute is from resolution in Europe, no further evidence need be adduced than the reactions to these two recent developments. Big pharma welcomed the Bayer ruling - whereas parallel importers said nothing. And parallel importers extravagantly welcomed the Commission's late-January position on parallel trade - whereas big pharma said nothing.				

The European Federation of Pharmaceutical Industries and Associations (EFPIA), which intervened in support of Bayer in the ECJ case, welcomed the judgement. It drew attention to the Court's finding that the Commission incorrectly assessed the facts of the case and made an error in assessing that there was an agreement between Bayer and its wholesalers. And it flagged up the finding by the CFI that the Commission's conviction that parallel imports will, in the long-term, result in the harmonization of the price of medicinal products was "devoid of all foundation." The final ruling is welcome in so far as it protects the interests of both research-based pharmaceutical companies and patients, said EFPIA.	

Edwin Kohl, president of the European association of pharmaceutical parallel traders, gave an immediate and warm welcome to the Commission's position paper. "It stresses the legality of parallel trade and reminds EU countries that any obstacles to interstate commerce and the proper functioning of the single market should be removed," he pointed out. The association claims that in 2002, trade between EU member states - amounting to an estimated 140 million packs - generated direct savings to patients and social health insurance systems in excess of €630 million. But "to deliver such savings, traders need to be free to act," he insisted. He said the Commission "must act against those member states that have legislation impeding parallel trade," claiming that some measures in Austria, France, Germany, Greece, Italy and Spain "are in clear contravention of EU law."  	

The parallel importing battle continues between wholesalers and manufacturers. The two sides are slugging it out across member states, the courts and even in the streets of Brussels. The EU, meanwhile, has done what it does best - bury its head in the sand and hope that the whole thing blows over.

A New Model of an Old Parallelogram

Of all the battles that the European pharmaceutical industry has been fighting since the European Union (EU) started to regulate medicines, the fight it has done best with is keeping at bay the fourth hurdle, or "the need clause" as the concept of comparative efficacy is quaintly known. When the first EU pharmaceutical rules appeared in 1965, the drug industry, by a combination of good luck and good judgement, managed to limit the criteria for authorization decisions to just the three hurdles of quality, safety and efficacy. The concept of comparative efficacy, the performance of one medicine against others or the need for another medicine, was not included. Since then, despite innumerable attempts to change the rules, the industry has managed to keep the three hurdles set in stone, with no additions - so far. This could be about to change, for two compelling reasons. 	

One reason is that the European Parliament has been keeping up the pressure for such a change. After 2 years of debate, the Parliament's environment committee decided that the ongoing review of EU pharmaceutical rules should come close to breaking the mould. During its discussions regarding the changes to EU drug authorization rules, there were repeated calls from many Euro MPs requiring new medicines to prove they were better than others to win marketing authorization. The reasoning was invariably the same - too many products appear with no real advantage, resulting in higher costs for health services. If, the argument ran, new medicines were allowed into the market place only when they demonstrated added therapeutic value, there would be fewer me-toos, drug firms would have more incentive to conduct breakthrough research and public money for medicines would be better spent.				

This view was hotly contested by the drug industry, which has always argued that it is impossible to prove a new medicine's full merits at the time the marketing authorization application is made - often a product's value only emerges when it is in wide-scale clinical use. A premature judgement regarding "comparative efficacy" would inevitably be ill-founded and could result in potentially useful products being kept off the market forever, the industry argued.	

It was also rejected by the European Commission (which proposes new EU rules) and by the European Council (the member state ministers that take decisions on EU rules). In fact, member states already frequently employ the relative efficacy principle in national pricing and reimbursement policies - in compiling their positive and negative lists or other categorizations. Pricing and reimbursement decisions are, however, separate from authorization decisions. EU law has little to say about pricing and reimbursement, where member states are more or less free to make up their own rules. But on authorization decisions, it is EU law - including respect for the criteria agreed at EU level - that governs how member states must behave.	

The European Commission (EC) said it could accept a reference in the new version of the EU rules to the principle of comparative efficacy, but only as a tool that member states may use in their decisions concerning pricing and reimbursement: "It is important to also emphasize that this evaluation should not be considered as a necessary criterion for the application or for the authorization of medicinal products. In effect, only the criteria of the quality, safety and efficacy of the particular medicinal product should be used in the evaluation of medicinal products," the EC insisted.	

The Council also acknowledged that member states have developed comparative efficacy evaluations of medicinal products aimed at positioning a new medicine in relation to others in the same therapeutic class. In fact the Council itself, in a resolution back in June 2000, emphasized the importance in such circumstances of identifying medicinal products that presented an added therapeutic value. But, like the EC, the Council was adamant: "This evaluation should not be conducted in the context of the marketing authorization, for which it is agreed that the fundamental criteria should be retained." 	

In the face of this rooted opposition, the committee eventually chose not to go quite so far in its demands as some of its more radical members had been urging. In the early stages of discussions, the committee had proposed that "in the interest of public health, it is necessary that authorization decisions under the centralized procedure be taken on the basis of the objective scientific criteria of quality, safety and efficacy, and added therapeutic value." But in its final formal view, delivered in November (2003), the committee limited itself to a more prudent course. Instead of seeking directly to bring the fourth hurdle into the authorization decisions, it enthusiastically embraced the work being done in the field at member state level.	

The committee urged that the European Agency for the Evaluation of Medicinal Products (EMEA) should collect any available information on methods used by member state authorities "to determine the added therapeutic value that any new medicinal product provides …" and "to promote scientific exchange and avert potential conflict, the agency shall draw up discussion papers that compare these approaches and formulate open questions."	

"The scientific discussion regarding the concept of 'therapeutic added value' is complex but very important for long-term developments of national budgets for medicinal expenses," it said. "The agency should, therefore, not only collect data but rather play an active role in facilitating the debate."	

And it pumped up to giant-size a provision on creating a medicines database. The EC and Council had merely foreseen a database accessible to the general public and provided information in an appropriate and comprehensible manner. But the committee said the database should be maintained independently from pharmaceutical companies and "should enable a comparison to be made between various medicinal products in terms of efficacy, adverse reactions and contra-indications on the basis of the information already authorized for the package leaflet."	

The other reason is probably even more disturbing for the pharmaceutical industry because it comes from member state level (and if anyone has any doubts about the relative power of the EU and its member states, they need only reflect on how the UK and Spain acted on Iraq, despite EU rules on consultation on foreign affairs; or on how France and Germany have flatly refused to observe the EU rules on keeping public deficits in check; or on how - despite the supposed consensus on the need to update the EU treaty - the summit for sealing the deal in early December [2003] collapsed in acrimonious disarray, with Spain and Poland moving firmly in the opposite direction to France and Germany).						

Pressure for a fourth hurdle has come from member states in the past, of course. Countries with little in the way of a domestic innovative drug industry tend to be dismissive of arguments regarding industrial imperatives or the nature of research. They want the cheapest drugs possible, because it keeps down their drug bill. And if they could limit the number of drugs on the market by demanding demonstrations of added therapeutic value at the time a marketing application is sought, they would be all the happier.	

But from member states with a more business-friendly attitude (and a more powerful or effective national drug industry activity to be more friendly to), the attitude to the fourth hurdle has been, until now, very similar to the line taken by industry. And among these pro-industry countries, the UK has probably been the most conspicuous and consistent defender of the three initial criteria - and the most adamant in rejecting any fourth hurdle or need clause.	

But right at the end of 2003, from the very heart of the UK, up popped a public argument that came close to demanding a need clause. Not just from one of the "usual suspects" among the health activists or environmental lobbies. It came from the eminent and highly influential King's Fund - a think tank which is a sharp observer of the UK health care scene with a big reputation for common sense.	

"Getting the Right Medicines?" as the report is entitled, claims to be "putting public interests at the heart of health-related research." It professes that in the UK, the pharmaceutical industry has been the active driver in its relationship with government and has remained "largely free to provide products that it considers likely to be profitable." The government has tended to be a passive purchaser, "rarely proactive and only in limited instances making clear requirements for specific outputs," states the report.	

This has made the relationship an economic success (with UK pharmaceutical exports at more than Â£9 billion in 2001, generating a record trade surplus of approximately Â£2.9 billion), but "there are two significant problems," the King's Fund warns. Because it is focussed on new medicinal drugs, the relationship neglects some other research areas that may be potentially beneficial for promoting people's health, such as alternative therapies; research designed to protect and promote health currently attracts far fewer resources than research focussed on searching for new pharmaceuticals, claims the report. 	

In addition, the relationship does not fully consider the needs of some major groups, including children and older people, alleges the report. Government reforms designed to empower patients and the public in the governance and delivery of health care have not yet been extended to pharmaceuticals research, it says.	

As a result, the partnership "is not sufficiently focussed on achieving better health for the UK population" and a reshaping of the framework is needed if users of the health care system are to get a better deal. The "independence" of the whole drug development process must be guaranteed, with more public oversight, it says.	

The underlying assumption in all of this is that the drug industry is subverting, with the connivance of government, some democratic exercise of rights of access to health care. The report doesn't call, as such, for a fourth hurdle, but all arguments are focussed on what it depicts as the essentially autocratic and self-serving manner in which the drug industry does more or less what it damned well likes -  including, notably, researching products for which there is not necessarily demonstrable need, and neglecting areas where, in public estimation, there is greater need.	

The trend underlying this chain of argument is that a brake needs to be put on the industry's freedom of action. The report calls for the formation of a UK task force to "include the views of all those who may be poorly served by the existing arrangements … primarily, the general public, who are current and/or future users of health care … (and clinicians and public health experts) who may challenge the focus of research programmes on new treatment as opposed to the effective application of existing interventions, or highlight bias towards commercially viable interventions compared with other approaches." It proclaims as one of its key objectives "promoting greater public and patient involvement in health and health care issues - as a route to greater ownership of health and health issues at individual and community level, and to more responsive and inclusive services." This will be served by "helping to develop an effective health system - with a greater focus on health outcomes, not simply on service delivery."	

There should be systematic evaluation of neglected areas of R&D where there is potential high benefit, whether in the development of new drugs or therapies or in areas such as post-licensing clinical trials. And the public sector should become "a better purchaser" by developing the role of product assessment upstream of reimbursement decisions, "ensuring that the earlier stages in the therapy development process produce the data it needs."	

All good democratic stuff, of course. But its starting point is similar to those who would impose a "comparative efficacy" in authorization decisions: it is tantamount to a claim of superior knowledge - something, in fact, akin to omniscience - by the general public and all experts other than those in the pharmaceutical industry. 	

Once ideas of this sort take root firmly in member states that have until now been ready to accept a degree of serendipity in the way private industry runs its research, it will not be long before new hurdles appear along the path of drug development. Each expert group, or spokesperson for the general interest, will attempt to impose his or her own favourite hurdle on the area he or she feels is insufficiently regulated. And one of the first areas that is likely to find itself fully hurdled will be the criteria on which authorization decisions are made.  	

Europe is debating the process by which drugs receive marketing authorization. As ever, the debating table features the EU, the pharmaceutical industry and the usual suspects among the European lobbies. The crux of the matter? Should comparative efficacy play a role in marketing authorizations?

New Hurdles Ahead?

Every new year offers a moment to look briefly forwards and backwards; and, just before the end of last year, a happy chance wafted a document across this columnist's desk that provided some interesting festive season food for thought. It is a vision of the future of the European pharmaceutical industry - but a vision of the 21st century that comes from the past.	

So, to provide readers of this column with a sense of seasonal fun, you will have the opportunity to decide for yourselves to what extent the predictions were right or wrong. And as an esoteric pharmaceutical quiz, you can also have a guess at when the predictions were made and by whom. It contains plenty of clues and, in the spirit of seasonal goodwill, some of the answers appear at the end of this column. Some of the key passages from the document are presented below.	

"Let's look at what the pharmaceutical industry in Europe may be faced with after patent term restoration; after a European marketing authorization system has been set up; after the single market has 'harmonized' information and advertising; after some experience with transparency regarding pricing systems; and after some reshaping, perhaps, of the European political map and the political economy. Will the principal preoccupations have changed by 2000? Not profoundly, I think. The current wave of European legislative measures will have subsided, but in themselves these changes will have had a marginal rather than a fundamental influence."				

"Patent term restoration will certainly bring some relief for some products (but not many - and in most cases will only be effective from the beginning of the next century, when patents start to expire on the first products to benefit fully). It will, perhaps, have given some upward lift to research and development (R&D) investment confidence among the companies that depend most heavily on European sales."	

"But the perceived advantages for industry are likely to bring increasing calls from industry opponents (they have already begun) for tighter controls on industry, including controls on prices or on the allowable cost elements such as marketing or information; generic or therapeutic substitution; or intervention in the direction of research programmes and priorities . . ."	

"A European marketing authorization system may bring faster registration for some products, quicker pan-European access for more products, greater certainty concerning procedures and reduced costs in duplication of registration activity . . . But not all that much, and not all that soon. On the negative side, we will suffer some reduced flexibility regarding registration, and greater risks from increased parallel imports and the export of lowest prices to higher-priced countries . . . In addition, we are, in my opinion, going to see in any event a bigger part played by centralization, and the European Medicines Agency is one more step along this road. "	

"Increased transparency regarding national pricing systems may bring us some weapons to attack abuses - but how quickly they will work is a very open question. And at the same time, as a by-product of the transparency directive, the European Commission is steadily building up a network of centralized activities covering transfer pricing, therapeutic categories, national pricing and reimbursement systems - to say nothing of the data bank -- and whatever else may be introduced."	

"How different will our information and advertising practices be in 10 years time? Certainly there will be a greater degree of information and advertising coherence from country to country - but much of this will spring not so much from controls as from increased coherence of marketing authorizations and marketing strategies."				

"Where the biggest threat to industry self-determination may lie is perhaps that current efforts at control will lead later to the imposition of financial controls, ceilings of some sort on promotion or, worse still, a levy to finance some form of 'neutral' or 'independent' information. How far will other legislation continue to increase controls on our industry? There is no doubt that the environmental/consumer/social policy trend is still gathering strength. How far will it exact further costs from the pharmaceutical industry in Europe - in terms of cancelled research investment in threshold technologies, added costs of regulation of dubious value, or juridical uncertainty from conflicting regulation?"	

"More generally, are there likely to be dramatic changes in how health care spending and social security cover develop in Europe? Will Europe's economic dynamo generate enough energy to provide expensive medical technology in greater volume for the increasingly elderly population? And if spending does increase, how far will the pharmaceutical industry be able to demonstrate that its products, even when expensive, can provide net gains in health care spending? Or will economic growth lag behind and become swamped by greater demands for high-volume social provision? How far will the demand shift towards low-cost rather than high-value health care?"	

"How will the integration of eastern Europe into western Europe and the western world market economy affect conditions? Who is going to pay to raise health care standards in eastern Europe? It could mean bigger demands for pharmaceuticals, but who will supply them? And will demand be for generics or innovations? If, for instance, eastern European economies do grow, it is not only their demand for pharmaceuticals that will expand; so too, inevitably, will their production. How will that affect current suppliers? It's relatively easy to make a list of questions. What about some answers? Generally, I believe the fundamentals will remain the same: demand for pharmaceuticals will continue to grow."	

"But the combination of pressures during the next decade may see a consolidation among health care purchasers and regulators, leading to increased requirements imposed on the industry, such as need clauses; a focus on efficiency; medicine-acquisition practices favouring generic and therapeutic substitution; and price premiums permitted only for therapeutic advantage  . . .  It is more than likely that cost/benefit considerations will become attached to marketing authorization requirements, with the risk of placing massive and costly demands on industry to conduct additional wide-ranging epidemiological studies as a part of preregistration procedures. But much of the way those pressures will operate is still open to influence."				

"There could be a net gain out of all these changes in external circumstances for the European pharmaceutical industry. But it might only be slender. It could even be cancelled out completely if the price of patent term restoration proves to be more controls on research, if opening the internal market leads to unchecked parallel importing, and if tighter health insurance budgets lead to tighter cost control mechanisms . . .   Much will depend on the decisions made in 'political' circles."	

"For instance, how far will European health care budgets squeeze pharmaceuticals? Will the industry be able to demonstrate product value in a way that convinces the critical, sceptical, sophisticated audiences of health care providers and government departments, centralized European control agencies, increasingly influential consumer lobbies and maybe even patients? Will we be able to divert health care purchasers and users from insisting uniquely on short-term value for money? Will the industry successfully persuade national and European authorities that there is more at stake in completing the internal market than merely ensuring free circulation? Or how, in Europe, will the battlegrounds shape up regarding generics (with respect to bioequivalence), confidence concerning the reliability of submissions and of their evaluation, and legitimate strategies to maintain commercial protection for off-patent products?"	

"I believe that the future is still up for grabs. And for that reason, much of the fine-tuning, the way that the marginal changes affect the industry, will depend on how well the industry as a whole plays its own political cards. Insensitive handling will become an expensive mistake. The industry as a whole must make up its mind which card game it wants to be in; political coherence can come only from political cohesion, from a sense of political identity. 	

"Equally, it's no good discussing any of the major trends or key issues as if Europe, the European pharmaceutical market and the players in it were somehow fixed and unchanging. This background is quickly changing and it requires a response from individual companies. Each will find its own form of response - some have gone for mergers. We have already seen some notable examples of supply-side consolidation; I don't need to list the major (and not so major) mergers effected or announced during the last year or so. "	

"Are there any alternatives to the strategy of 'biggest is best'? I believe there are, because no matter how many European directives we see during the next decade, the way medicines are viewed, prescribed and taken will continue to vary from country to country. So there are no universal solutions, even for the largest firms and biggest products."				

"What successful companies in Europe will have to do, whatever their size, is adapt their structures to get the best of both worlds. They must ensure that they are not operating at a disadvantage to newly established firms that are tailored to the new European single market. However, any adaptations must still allow them to continue benefiting from local knowledge."	

"Whichever way firms set about dealing with the new challenges presented by the 21st century, there is no pretending that there will not be some pain. There are financial and human costs in restructuring, with concentrations, lay-offs and compensation payments. There are also costs from tougher competition - will it lead to an increase of unedifying inter-company conflict?"	

"Companies may change products to take maximum advantage of competitive circumstances - more cross-licensing, for instance. Or, more involvement by research-based generics firms - bigger generic demand, tighter regulation of the generic sector and higher generic prices could together amount to an attraction."	

"Whichever way things go in Europe, it is a Catch 22 situation. If operating conditions get worse, the industry will suffer. If they improve, it will attract more players and competition, so the local industry will suffer. The chances of success depend on the extent to which we can ensure that all our companies are successful, not only in generating valuable new products, but also in seeing with a clear eye that their way ahead depends on continually fighting for a better environment in which to operate. And just as you don't discover valuable new drugs without a lot of hard work and commitment, you don't get good results in the operating environment unless you work at it."	

How did you do? Not too hard to identify the year - 1990, just after the EU rules came in to restore patent terms and to impose minimum requirements on the way member states operated their pricing and reimbursement systems, and just before the proposals for the European Agency for the Evaluation of Medicinal Products were finalized.				

Not too hard to identify what was right in the predictions, either - tougher competition, tighter pressure on prices and promotion, clashes concerning intellectual property rights -- in fact, all the same stuff about a better operating environment that the European pharmaceutical industry is still having to say today.	

And as to the 'whom' - it was the then director general of the European Federation of Pharmaceutical Industries and Associations (EFPIA), Nelly Baudrihaye. Characteristically, she added at the end of her speech: "There are certain privileges attached to age. In my case, one of them is that I can speak authoritatively on this subject, secure in the knowledge that you won't be able to put me on the spot on 1 January 2001 to accuse me of having got it wrong." Right, Nelly.  	

This month, readers are offered the opportunity to take part in a quiz. How many predictions from an old blueprint for the European pharmaceutical industry were correct? Remember, no cheating.

Back to the Future: Does Anything Change, Ever?

Last month, a Nobel prizewinner urged Europe to take a more positive approach to health technology. Dr Kary Mullis, who won the Nobel Prize for chemistry in 1993 for the discovery of the polymerase chain reaction, advised the European Parliament (EP) that Europe was exaggerating the risks of biotechnology and was in danger of passing up valuable opportunities by being too cautious. Delivering the inaugural annual lecture for the EP's Scientific and Technological Options Assessment office, he said Europe should take account of the opportunities of the biotechnology era. He put into perspective what he referred to as the 'hysteria' surrounding biotechnology. "The new vocabulary of biotechnology scares us. What was once called horticulture is now called genetic modification," he stated. 	

"Politicians are over-legislating," he charged. He criticized them for demanding that up to 35000 chemicals, as yet untested, be monitored for toxicity - because it would lead to companies jumping on a bandwagon that should never have been set in motion in the first place - in the search to make money out of unnecessary testing. It would be impossible to test every single chemical for its possible effects on the endocrine system. "Everything is a chemical, there is an infinite number of chemical combinations and doses," he said.	

But Mullis failed to convince all his audience. Nuala Ahern, Euro-MP for the Irish Green group, alleged that research proved that the male reproductive system is affected by the release of genetically modified organisms, and Greek socialist, Konstantinos Alyssandrakis, claimed that the rapid rate of advance was driving biotechnology into fields that were "not always in equilibrium with the environment."	

During the same week, the EP committee for the environment and public health backed a call for tighter controls on another of the frontier technologies for health. It said there should be tougher limits on the donation, procurement, testing, processing, storage and distribution of human tissues and cells. The European Union (EU) has already proposed new rules in this area, but the Parliament committee demanded that they be toughened up. 				

It said there should be wider scope for the new rules, to ensure the traceability of tissues and cells of human origin. Guarantees were needed on donor consent and donor anonymity, it advised, and the committee urged further attention to be paid to the ethical issues raised. It insisted on a prohibition of research on human cloning for reproductive purposes and research designed to create human embryos solely for research purposes or to supply stem cells, including by means of the transfer of somatic cell nuclei. No tissues or cells derived from human embryos may be used for this purpose, it argued. And cloned human embryos and human/animal hybrid embryos produced by cloning, aggregation or any other procedure, and cells and tissues derived from them, should be excluded as sources of material for transplant.	

Many Euro-MPs on the committee said that even though there was bound to be a role for the private sector in this field, more encouragement should be given to strong public and non-profit sector involvement in the provision of tissue and cell transplant services, and the related research. Exceptionally, regenerative tissue and regenerative cells may be retrieved under strict conditions, such as when the recipient is a sibling of a donor, the donation is potentially life-saving for the recipient and the potential donor does not refuse. 	

The committee member in charge of the discussion - the rapporteur as he is termed in EU jargon - was German doctor and Euro-MP, Peter Liese. He cheerfully recognized that the transplantation of cells and tissue is a rapidly expanding field of medicine that offers great opportunities for patients who have so far been suffering from incurable diseases, and great potential for economic development. But he also stressed that "this new therapy also carries with it certain risks" - as, he claimed, was proved by experience in the US.	

So, on the one hand, although he said that the increase in cell and tissue transplantation and tissue engineering is to be welcomed; on the other hand, "care must be taken to ensure that quality and safety standards are observed and that fundamental ethical principles are respected." He evoked "the scandal of HIV-contaminated blood products … painfully present in the minds of many." And he went on to warn that cell and tissue transplants "present a greater risk than treatment with blood products" because procedures are lacking for destroying pathogens and the therapy process is very new. "There have already been fatalities that could have been avoided by observing stricter standards," he said.	

Among the changes, Liese urged for - and won backing from his fellow committee members - was an integration of ethical issues into the new rules. Blood safety and quality of cells and tissues cannot be considered irrespective of the ethical issues, because the manner in which cells and tissue are obtained will have an effect on quality and safety, he claimed. "The view is expressed that it is not appropriate to regulate ethical issues such as informed consent or voluntary unpaid donations under a European directive. Your rapporteur firmly rejects this view," he insisted, claiming that existing EU rules on blood products, on clinical testing and on biotechnology patents "are unequivocal evidence that matters, which are generally regarded as ethical issues, can be regulated by the EU."	

Liese accepts that there is "great controversy" in the member states and in the EP regarding the use of human embryonic stem cells and the cloning of human embryos. A majority of Euro-MPs has always rejected the production of embryos for research purposes and the cloning of humans at all phases of their development, he pointed out - even if, as he acknowledged, there are differing opinions regarding what approach to adopt to embryos produced for the purpose of artificial insemination and to embryonic stem cells in the laboratory. 	

In the business community, there is increasing dismay concerning these repeated calls for caution in every aspect of pharmaceutical development - whether it be the direction of research, the economics of the industry or the cost of health care. Brian Ager, the normally quiet-spoken director general of the European Federation of Pharmaceutical Industries and Associations (EFPIA), was driven to extravagant language recently when he defended the industry at a London (UK) conference. 				

"The European pharmaceutical industry is a key asset," he insisted, "one of the leading high technology sectors in Europe." Citing its ‚18.8 billion research spend, its ‚28 billion trade surplus during 2001 and its 560000 jobs, he described it as "a leading contributor to the EU science base and economy" making an "undeniable" contribution to health care.	

Yet, he went on, the industry is now at a crossroads because of government pressures to control health costs, tighter regulatory demands and controls, a deteriorating EU climate for business and escalating research costs. Most EU markets still do not allow drug firms to price their own products, there are widespread delays in market access for new medicines and the trade distortions in the fragmented EU market are about to be increased by EU enlargement. Above all, he spoke of "regulatory overkill" through "the patchwork of national controls" in Europe. "The world is getting tougher," he said, and "We need a new way forward."	

Ager repeated the industry's long-standing calls for encouragement for research and development (R&D) through the stimulation of research and adequate intellectual property protection, and adequate rewards for innovation by giving new medicines rapid access to the full European market at "equitable prices." And in a final gesture of impatience, he demanded that the EU should, at last,  move to "actions, not just words."	

EFPIA's president, Sir Tom McKillop, CEO of AstraZeneca, has recently been making the same point. "The pharmaceuticals industry is a major investor in EU R&D and a revealing barometer of innovation in Europe during recent years," he said in a recent statement. It is also a signpost to a possible road ahead to a better R&D future. 	

He too embraced the 'crossroads' theory: "Although we are still one of the leading high technology sectors, we face the challenge of declining competitiveness in the face of our main competitor, the United States," he warned. The US now represents 47% of the global market, having risen from 31% during the last 10 years. During the same period, European representation has decreased from 37% to 24%, said McKillop. And "the US appears more enthused by new scientific advances and Americans seem more interested in science itself."	

By contrast, "In Europe, patients are less well informed and health care systems are slower and less willing or able to accept, adopt and integrate new technologies." He attributed some of the slowness in access to regulatory delays in obtaining market approval, and to "the significant time needed for negotiation between companies and governments regarding the pricing and reimbursement of new products" - in some EU countries "with prolonged delays well in excess of a year."	

It's all at stake in the immediate future, McKillop argued. "A top level debate is currently taking place involving the European Commission, national governments and EFPIA - representing the research-based pharmaceuticals industry - which will decide whether Europe will maintain or, more desirably, improve its innovative strength during the coming years."	

What the EU has to do now, he said, is to develop some of the fine principles that have been enunciated by EU authorities into practical steps that will deliver a more competitive European environment for pharmaceuticals and health care. For McKillop, one of the principal targets is still the industry's old concerns regarding parallel trade in medicines between EU countries. He estimated they now affect sales of approximately ‚3.5 billion per annum, "and could be costing the R&D-based industry as much as ‚1 billion, much of which could have been re-invested in research and innovation." Overall, he said, the significant growth of parallel trade in recent years undermines the attractiveness of Europe as an environment for the pharmaceutical industry. As a result, there is a trend to increase investment overseas, he alleged; at the moment, investment in R&D in the US is growing at twice the rate of Europe. During the last 10 years, even the major EU pharmaceutical companies have changed the distribution of their R&D spending to the benefit of other regions.	

And for the EFPIA president, the prospect of EU enlargement makes this problem even more acute. "Changes resulting from enlargement could further weaken the European pharmaceutical industry through increased parallel trade," he warned. "All parties must work with the candidate countries to ensure that they achieve the full benefits of accession without damaging the EU health care market through parallel trade."	

Hamlet-like, Europe's pharmaceutical industry is poised between success and failure: external circumstances are not entirely propitious for its success - particularly the disregard for its capacity for imagination and innovation. So now it must decide: "Whether 'tis nobler in the mind … to take arms against a sea of troubles, and by opposing end them."	

Europe's pharmaceutical R&D has recently come under a barrage of criticism. Nobel laureate, Kary Mullis, highlighted the issue of over-legislating biotechnology and the business industry expressed its dismay concerning the EU's overly cautious approach to any kind of development. Action is needed before the sector's future resembles the plot of a Shakespearean tragedy.

Nobler in the Mind? The Dilemma for European Research

No matter how hard the European Union (EU) tries to keep the wheels of pharmaceutical development turning in Europe, it keeps having to admit that things are still not right. The latest example is an open admission that despite all the exhortations to give life sciences and biotechnology the right conditions for growth, EU member states are not yet fully playing their part.	

At the beginning of March, the European Commission (EC) issued yet another call to member states to intensify their efforts in life sciences and biotechnology. The call was provoked by a disappointing analysis of the progress they have made since the adoption of an EU strategy on life sciences and biotechnology in 2002. "The risk of diverging policies in member states could seriously hamper the effectiveness and consistency of the EU strategy in this field," warned the Commission in a public statement that had the backing of EC President, Romano Prodi, European Research Commissioner, Philippe Busquin, and Erkki Liikanen, European Commissioner for Enterprise and the Information Society.	

Progress has been made in some areas, such as the adoption of the EU's 6th Research Framework Programme and the EU regulatory framework for genetically modified organisms (GMOs); other vital policy areas, however, "are suffering from serious delays," the Commission said. 				

In particular, the Commission highlighted, once again, the fact that member states are slow in transposing biotechnology patents legislation. "These delays increase the risk of failing to meet" key EU objectives in the area of life sciences and biotechnology, according to the Commission's analysis - in particular the so-called Lisbon strategy, agreed by EU leaders at their summit in Lisbon (Portugal) in March 2000, which set the objective for Europe to become the most competitive and dynamic knowledge-based economy in the world by 2010, capable of sustainable growth with more and better jobs. 	

Aiming to foster competitiveness and innovation in this field, the Commission is insisting not only on better co-ordinated research across Europe and better access to finance, in particular to risk capital, but also on a "clear, equitable, affordable and effective intellectual property rights regime in Europe." And this, it says, in a direct appeal to the member states themselves, "requires the swift adoption of the Commission's proposal for a Community Patent and transposition into national legislation of the Directive on biotechnological inventions by non-compliant member states." After a decade of discussion, the Community Patent is still only a concept, and specific biotechnology patent rules that were agreed have still not been put into full effect in half the member states. 	

The European employers federation, UNICE, has also been pushing hard to persuade member state ministers. In a late-February statement on the Community Patent, it said that "innovation is closely linked to a strong system of intellectual property rights, more particularly patents. As things currently stand, European innovators are at a disadvantage when it comes to obtaining and enforcing patents compared with their competitors."	

The Commission, which is responsible for driving forward agreed EU policies, is conscious that time is slipping away without words being turned into deeds: "Decisive action and concrete commitments are now urgent - these include, in particular, more research and financial resources, and completing the system for the protection of intellectual property rights," it said. 				

Busquin, who has been trying with increasing desperation to get the European pharmaceutical industry and the EU member states to take seriously his programmes to stimulate research since he took over the Commission's research portfolio 4 years ago, spoke with evident feeling regarding the failures as he announced the findings of the analysis. "A recent Commission survey of private biotech companies and public research institutes reveals that 39% of the respondents have cancelled research projects on GMOs during the last 4 years," he said gloomily.	

 "In the private sector alone, 61% of respondents have cancelled research projects in this field. Furthermore, between 1998 and 2001, the number of notifications for GMO's field trials in the EU decreased by 76%."	

The palpable sense of Commission disappointment is all the sharper because major efforts have been made during recent years to overcome the reticence among the many EU member states with a strong anti-science and anti-biotechnology lobby. "Considerable progress has been made on the legislative framework surrounding GMOs. The new regulatory framework on GMOs, including the Commission's proposals on traceability and labelling of GMOs and on GM food and feed, provides legal certainty for operators. It also addresses public concerns and aids consumer choice, thereby encouraging further public acceptance of GMO use. It is also important that the regulatory framework is clear and predictable if the rapid decline in European GMO field research is to be reversed," the Commission points out. 	

And while rapid advances in life sciences have created high expectations for curing diseases and improving quality of life, they have raised concerns as to their ethical and social consequences, the Commission recognizes. So it stresses that it is more than doing its bit to ensure that ethical, legal, social and wider cultural aspects are taken into account in policymaking and research funding. These sensitive issues include human reproductive cloning - and the Commission has made clear it supports a worldwide ban on this issue. On human embryonic stem cell research, the Commission will present a report to the European Parliament and Council shortly, as the basis for an inter-institutional seminar on this kind of research.	

Similarly, because international issues also have their impact on European pharmaceutical and biotechnology policymaking and implementation, the Commission has been working away at improving understanding across a broad range of issues and institutions too. It is recommending the development of a multilateral consultative forum with the EU's main trading partners "to contribute to building an international consensus on biotechnology," because important questions of principle are repeatedly raised: "Biotechnology is currently discussed in many international fora. This is a reflection of the different concerns and objectives surrounding biotechnology, but raises a question of international governance. It is, therefore, essential to create an adequate forum for promoting an open and transparent dialogue between all stakeholders concerned, facilitating mutual understanding of the concerns and objectives of the different countries and regions."	

The Commission's view is that it has satisfactorily contained most of the anxieties that underpin member states' reluctance to give biotech the boost it needs. "Now that legitimate consumer and environmental concerns have been tackled by strict EU legislation, it is time to reverse this downward trend. If we do not react, we will be dependent on technology developed elsewhere in the world within the next 10 years," Busquin pointed out. 				

Ten years ahead is too long a time frame to affect Busquin's career directly - he will step down from his post in a little more than a year's time. But he clearly wants to leave his mark on the evolution of EU thinking and action on biotechnology, and he is keenly aware that this is turning into his last chance to do so.	

And Erkki Liikanen, the Commissioner responsible for business and business development in the EU, also feels the wind whistling around his ears. "Practically the entire European biotechnology industry is facing difficulties because of the collapse in investor confidence in knowledge-based industries. Many small biotechnology enterprises, working on medical, industrial, agricultural and environmental applications, are unable to obtain the funding they need to turn their research findings into a commercial reality. If a large number of such enterprises were to fail, it would seriously undermine knowledge that is critical to the long-term competitiveness of major European industries," he added, as the findings were released. Recognizing that time is running out, Liikanen insisted: "Concerted action, involving public authorities as well as the private sector, is needed to improve the investment climate for biotechnology in Europe."	

It is more than a year ago now (January 2002) that the Commission adopted a "Strategy for Europe on Life Sciences and Biotechnology," which included policy recommendations and a 30-point action plan. It proposes a road map up to 2010, in a bid to put the sector "at the forefront of frontier technologies," as the Commission termed it. 				

The action plan is supposed to persuade member states and industry to tackle a long list of issues crucial to making a success of Europe's potential as a producer of high-technology products. The comprehensive list covers areas as diverse as:	

human resources in life sciences research

the role of public authorities and regulators

public debate and dialogue with stakeholders

EU policy in developing countries, including agriculture, genetic resources and health.

The EU institutions -- the Commission, the European Parliament, the European Economic and Social Committee, and even the European Council (which is the formal gathering of EU ministers) -- have declared their support for this integrated approach as the way to promote this high-technology area. "Life sciences and biotech can foster growth, create new jobs and benefit a wide range of sectors such as health and agriculture, while at the same time contributing to broader goals such as sustainable development," the Commission has pointed out plaintively -- aghast at the limited on-the-ground action to make a reality out of expressions of good intention. 

The report assesses progress in implementing the strategy in fields such as research; science and society; competitiveness; innovation; access to finance and intellectual property; GMOs; and international issues such as the impact on EU relations with trade partners and developing countries involved in the current EU moratorium on authorizing new GMOs. 	

And whereas there is satisfaction that late last year the member states eventually agreed on the E2.22 billion research programme for 2003–2006 on life sciences, genomics and biotechnology for health, "this is a relatively small amount compared with private investment in this field," the Commission acknowledges. It knows that European biotech companies invested E7.5 billion in research last year and biotech-related industry, such as pharmaceuticals and chemicals, substantially more. It is also uncomfortably aware that if the current trend towards moving biotech research outside Europe continues, this contribution to building EU competitiveness and skilled jobs will decrease. 	

There is some small new hope of a breakthrough in Commission circles - and in the pharmaceutical industry, which finds itself largely the victim of the deficiencies in the operating circumstances member states have created for it. In anticipation of the EU's 2003 spring summit on 21 March, a trio of heavyweight EU leaders issued their own call for action in this field. German Federal Chancellor, Gerhard SchrÃ½, French President, Jacques Chirac, and British Prime Minister, Tony Blair, have publicly stressed the potential of biotechnology to improve European industrial competitiveness and ensure employment opportunities.	

The intensity of international concern regarding EU backsliding on biotechnology can be measured by the renewed vigour in the bid by the US to end the EU moratorium on import approvals for biotechnology-derived products. The Bush administration is working to build an international coalition to fight the EU, US Trade Representative, Robert Zoellick, announced in early March. "I'm trying to build a coalition" that would join the US in filing a challenge in the World Trade Organization (WTO) against the 4 year old EU moratorium, Zoellick said in testimony before the Senate Finance Committee on 5 March. "I don't want this to be just the US versus the EU," Zoellick said, indicating that he hoped action could be taken "soon."				

US industry groups say the EU moratorium on approvals of new biotech-derived products costs them more than $300 million in annual sales. Some members of Congress have been pressing the Bush administration to initiate action in the WTO, noting that virtually all experts agree that the US would win the case. Committee chairman, Charles Grassley, (Republican, Iowa) said he was "profoundly disappointed" with the slow pace of action. "I simply can't understand the administration's decision to delay bringing a WTO case against the EU on biotech policies," he said. 	

The ranking Democrat on the Committee, Max Baucus of Montana, USA, was similarly critical of the administration's decision not to move forward immediately with a WTO challenge to the EU. "I don't know any objective commentator who believes that we would not prevail at the WTO," Baucus said. "And yet the US is not bringing an action before the WTO. And I, for the life of me, cannot understand why."	

Zoellick said administration officials agree on the need to lift the EU moratorium "including by bringing the case, if appropriate and necessary." 	

But in an apparent reference to current US–EU tensions concerning Iraq, he also pointed to the "international context" in which such decisions are made. Moreover, Zoellick said that beyond winning EU compliance on import approvals, he was interested in addressing the larger need to educate the public on the benefits of biotechnology.	

By its own admission, as the European Union tries to keep pharmaceutical and biotechnology development moving in the right direction, things are not going exactly to plan. With companies cancelling research projects at an alarming rate, it is politics, yet again, that is clouding the main issues of research and financial resources. And increasing pressure from the US isn't making life easier.