Health insurers' preferential policy driving generic medicines off the market: report

Every year, pharmaceutical companies remove hundreds of cheap and essential medicines from the Dutch market. They find it pointless to keep incurring the annual marketing authorization costs while health insurers’ preferential policies prevent them from selling their medicines. The withdrawal of hundreds of medicines per year makes it even more difficult to solve persistent medicine shortages, NOS reports.

The number of medicines available in the Netherlands has halved since 2015, according to Bogin, the trade association for manufacturers who make patent-expired medicines cheaply - generics. “It is not that these pharmaceutical companies necessarily want to leave the Netherlands,” Bogin chairman Jean Hermans told the broadcaster. “But presence on the Dutch market is increasingly becoming a business economic risk.”

Health insurers’ preferential policy, in which they contract manufacturers that offer the cheapest pills and then only reimburse those medicines to the insured, is an important factor, Hermans said. “For almost 40 percent of generic medicines, we only have a turnover of between 0 and 50,000 euros per year,” Hermans said. “And if you are not contracted, you cannot sell anything for at least two years. Without the certainty that you will be contracted later, it is not worth it to stay in the Netherlands.”

Health insurers deny that their preferential policy exacerbates the medicine shortages, blaming other causes like the global raw material shortage and transport problems. “In most cases, the preference policy actually contributes to preventing shortages,” a spokesperson for Health Insurers Netherlands told NOS. Contracted manufacturers receive the benefit of market security, which in turn should strengthen the security of supply, they said.

But according to NOS, an unpublished study by Rotterdam’s Erasmus University tells a different story. “The few contracted manufacturers indeed have market security, but the many non-contracted manufacturers do not,” lead researcher and associate professor Harwin de Vries told the broadcaster. “That means that the negative effects of the preference policy are probably stronger than the positive ones.”

The Erasmus University researchers concluded that medicine shortages increased by 8.1 percent within three months after preferential contracting by health insurers. “We can, therefore, say with considerable certainty that there is a causal link between the preference policy and the shortages,” De Vries said. “We have this from data going back to 2020. At that time, this policy did not yet cover the entire market. There were also clusters of medicines that were reimbursed without the preferential policy.”

De Vries and his fellow researchers suspect that contracted manufacturers are still cutting back on production, logistics, and inventory costs due to the low prices agreed with he health insurers. Delivery problems and shortages are often the result. And because uncontracted manufacturers are withdrawing from the market, they cannot jump in with their medicines to solve a shortage.