EU Court Allows Italy to Reduce Medicine Prices

(CN) - Italy and other European nations can reduce medicine prices without violating European Community law, the Court of Justice ruled.

The Italian Medicines Agency reduced pharmaceutical prices in 2005 and 2006. Menarini and other Italian drug companies challenged the price reduction in court.

The Court of Justice had to decide whether the price reduction complied with Directive 89/105, which relates to the transparency of price regulation in the pharmaceutical industry.

The court found that European states have broad powers to reduce medicine prices, even doing so more than once a year in order to "govern the consumption of pharmaceutical products in the interests of the financial stability of their health-care schemes."

Also, the court decided that when a country issues a price freeze on medicine, it must review the economic impact of that price freeze at least once a year. Then, it can decide whether to continue the price freeze.

In order to maintain transparency in the pricing process, the Court said European governments must set prices "on the basis of predicted expenditure, provided that the predictions are based on objective and verifiable data."

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