The European pharmaceutical market presents a complex landscape for drug manufacturers seeking to launch innovative therapies, with fragmented reimbursement systems and diverse regulatory requirements creating significant barriers to patient access across the continent.
Unlike the United States' relatively homogeneous market, Europe's 27 EU member states—plus the UK and Switzerland—operate distinct national reimbursement systems, each with unique evaluation processes, timelines, and pricing mechanisms. This fragmentation creates substantial challenges for pharmaceutical companies and contributes to health inequities across European borders.
The European Reimbursement Challenge
"Differently from the US, in Europe most of the reimbursement is managed at the national level, so not at the European Union level," explains Paolo Correale, SVP Global Access & Pricing at EVERSANA. "Each country really has their own system; no two of them is equal."
These differences manifest in various ways. Germany, for instance, provides immediate reimbursement upon approval with price negotiations occurring later, allowing companies to generate revenue quickly. However, most European nations require completed price negotiations before granting reimbursement.
The timeline disparities are particularly striking. According to Mike Ryan, General Manager of Europe and Asia Pacific at EVERSANA, "In Germany, approvals can take anywhere from one to three months. In contrast, in Italy and Spain, our experiences show that it may take between 20 to 26 months for the same process."
These delays create significant access inequities. As Correale notes, "The reality is that a heterogeneous reimbursement also means that there are countries where reimbursement is not granted, or is granted later down the line." Since European healthcare systems primarily rely on government reimbursement, patients in countries with delayed approvals often have limited or no access to innovative treatments.
Five Emerging Strategies for Market Access Success
Despite these challenges, industry experts have identified five emerging approaches that pharmaceutical companies can leverage to navigate Europe's complex market access landscape:
1. Harmonization of HTA Processes
January 2023 marked the implementation of a new Health Technology Assessment (HTA) framework in Europe, introducing Joint Clinical Assessments (JCAs) for oncology products and Advanced Therapy Medicinal Products (ATMPs). This initiative aims to reduce duplication in evaluation processes across member states.
"This new framework is good for simplification of the initial part of the conversation with the National Ministries of Health because it summarises, in a sense, and provides consistency to the clinical evaluation that is performed on the drug," Correale explains. While pricing negotiations will remain at the national level, this harmonization streamlines the clinical assessment component.
2. Innovative Risk-Sharing Agreements
Risk-sharing agreements (RSAs) between pharmaceutical companies and healthcare payers offer potential solutions, particularly for high-cost cell and gene therapies. These arrangements help manage both financial and clinical uncertainties associated with innovative treatments.
"Cell and gene therapies are the most suitable because [they are] very high-cost drugs that are usually one-time treatments, and therefore the risk is typically associated with how long the efficacy is going to [last]," notes Correale. However, he cautions that implementation complexity could limit their adoption if not carefully designed.
3. Enhanced Data Integration
The European Health Data Space (EHDS) initiative aims to facilitate health data exchange across member states, standardizing data formats and protocols for electronic health records and medical devices. This harmonization could significantly improve real-world evidence collection and accelerate regulatory processes.
4. Incentives for Orphan Drug Development
Europe has made progress in incentivizing orphan drug development, with regulatory benefits that sometimes exceed those in the US. Correale points out that "some payers, like Germany, provide very meaningful benefits to orphan drugs [and] in Italy the Early Access Programs are mostly for orphan drugs."
However, pricing remains a challenge. "Regardless, the system in the US typically allows you to get a higher price," Correale adds, highlighting the ongoing tension between incentivizing innovation and ensuring affordability.
5. Addressing International Reference Pricing Challenges
International reference pricing (IRP)—where countries consider prices negotiated in other markets—creates additional complexity. Confidential discount agreements aim to prevent price spillover effects, but this approach has limitations.
"If every given government commercialises entirely on the basis of confidential agreements, the IRP system will become useless," Correale warns. He emphasizes the importance of maintaining some transparency in pricing, particularly in reference markets like Germany.
Navigating Market Entry Successfully
For pharmaceutical companies considering European market entry, several factors are critical for success. Ryan emphasizes the importance of finding partners with deep local expertise: "Companies should look for partners with a deep understanding of the European reimbursement landscape, experience in navigating HTAs, and the ability to manage price negotiations effectively."
Understanding cultural differences is equally important. "Europe is such a blend of countries with unique cultures and languages, and these all must be considered when determining what a market access approach may look like," Ryan explains. "For example, how a certain therapy might be perceived in Spain may be very different from how it is perceived in Finland."
Despite these challenges, both experts remain optimistic about the European market's potential. "The European system entails complexities in health equity, but can still be successfully solved with the right capabilities, with the right strategy in place. The European healthcare system is still a solid one," concludes Correale.
For pharmaceutical companies willing to invest in understanding the nuances of each market and developing tailored strategies, Europe remains a valuable opportunity to bring innovative therapies to patients while building sustainable commercial operations.
The Impact of US Policy on European Market Dynamics
Recent policy developments in the United States, including the Inflation Reduction Act and potential tariffs, may further complicate the European market access landscape. Correale notes that US tariffs could disproportionately affect generic and biosimilar manufacturers, as manufacturing costs represent a larger portion of their overall economics.
The contrasting pricing systems create additional challenges. "The reimbursement system in the US allows you to keep on increasing prices," Correale explains. "In Europe, the system is more rigid, because it's very rare for payers to allow price increases."
This rigidity means European operations may face margin pressure that cannot be offset through price increases, potentially affecting investment decisions for global pharmaceutical companies.
Looking Forward
As the European pharmaceutical landscape continues to evolve, successful market access will require increasingly sophisticated approaches that balance patient access, commercial sustainability, and healthcare system constraints. The five emerging strategies identified by industry experts offer promising pathways to navigate this complexity.
With proper planning, local expertise, and strategic partnerships, pharmaceutical companies can overcome Europe's market access challenges to deliver innovative therapies to patients across the continent while maintaining viable commercial operations.
