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A view from Europe

A view from Europe. 5 May 2009 John Wilkinson Chief Executive. Contents. Some facts about the sector in Europe How Europe works The financial crisis – How will it affect us in Europe What is going on in Europe Trends Regulation Politics. Some facts. Nearly 11.000 manufacturers

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A view from Europe

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  1. A view from Europe 5 May 2009 John Wilkinson Chief Executive

  2. Contents • Some facts about the sector in Europe • How Europe works • The financial crisis – How will it affect us in Europe • What is going on in Europe • Trends • Regulation • Politics

  3. Some facts

  4. Nearly 11.000 manufacturers 80% are SMEs Annual growth rate of ca 6% 8% of total sales reinvested in R&D (= EUR 5.8 billion) Average life cycle of 18 months 529,000 employees (EU+EFTA) 6.8% of total healthcare expenditure (= 0.55% of GDP) Total sales EUR 72.6 billion = nearly 33% of world market share (EUR 219 billion) Trade Germany (€14.0 bn), Ireland (€6.6 bn), France (€6.1 bn), and the UK (€5.6 bn) are major exporters of medical technology Germany, Ireland, the UK, Denmark, Sweden and Finland have trade surpluses in medical technology As a comparison (in billion EUR): USA = 98.0 (45%) Japan = 23.1 (11%) China = 3.7 (2%) Brazil = 3.0 (1%) The European medical technology industry Source: Eucomed

  5. The European medical technology industry 2007 Percent of Total European Medical Technology Sales (€72.6 bn) * Finland, Sweden, Denmark, Norway, Netherlands, Belgium, Luxembourg, Portugal, Austria, Greece, Ireland ** Estonia, Latvia, Lithuania, Poland, Czech Republic, Slovakia, Hungary, Slovenia, Malta, Cyprus, Bulgaria, Romania

  6. European Medical Technology Imports & Exports

  7. Ration of GDP Spending Source: OECD Health data 2006

  8. Percentage of total healthcare spending allocated to medical technologies Source: OECD Health data 2006

  9. Health Spending in Europe in 2005: Percent of GDP Europe Average = 8.7% Source: Eucomed Medical Technology Brief, May 2007

  10. Health Spending in Europe in 2005: Per Capita Europe Average = €2,073 Source: Eucomed Medical Technology Brief, May 2007

  11. How Europe works

  12. Subsidiarity • The “subsidiarity principle” means that EU decisions must be taken as closely as possible to the citizen. i.e. the Union does not take action (except on matters for which it alone is responsible) unless EU action is more effective than action taken at national, regional or local level. • The concept of subsidiarity has both a legal (EU Treaty) and a political dimension. As a result, there are varying views as to its legal and political consequences.

  13. Subsidiarity and Health • Article 152(5) of the EC Treaty states that the Community has to respect the ‘responsibilities of the Member States for the organisation and delivery of health services and medical care’. • In combination with Article 152(4)(c) of the EC Treaty, actionin the field ofpublic health is not allowed under the EC Treaty. • On the other hand, where the Commission has the competence to regulate, it should strive for a high level of public health protection according to Article 152(1) of the EC Treaty (e.g. in the Medical Device Directives and Cross Border Healthcare).

  14. EU Commission

  15. New technologies – a cost driver? “We all know that new technologies save lives, increase patient safety and greatly improve healthcare. But they can be very costly. We must therefore ensure that technology and medical devices are properly evaluated and used in the most effective way.“ Androulla Vassiliou, EU Health Commissioner 12 February 2009 Speech at European Policy Centre, Brussels

  16. So what is stopping us? • Barriers to information: Reliable and transparent information on available healthcare facilities and treatments should be made accessible to patients • Barriers of access & procurement: Silo budgeting and cost containment still main drivers for decision-making • Barriers of structure: One size fits all for >100,000 products? • Barriers of human resource: Most European countries have a shortage in healthcare personnel (quality and quantity) • However industry needs to improve communication of ‘value’

  17. How will financial crisis affect business in Europe?

  18. FT 9th April 2009

  19. Economic downturn is accentuating changes in treatmentpractices and reduction in healthcare consumption • Percent who say they or family member have done the following in the past year because of cost SIMILAR TRENDS SHOWING IN EUROPE Source:Kaiser Family Foundation Kaiser Health Tracking Poll – Election 2008 (10/8-13 | 4/3-13); McKinsey CF/PMP joint venture

  20. Mixed impact Short-term impact limited: - High public sector provision - Capital spending hit first Debt Mountain will mean: • Public spending under pressure • Years of cost cutting exercises • Danger that crude cost saving exercises will prevail • Innovation constrained or seen as answer?

  21. What is going on in Europe

  22. What is going on in Europe? • Erosion of ‘Subsidiarity’ of Health • Cross-Border healthcare (patients rights) directive • Patient safety initiative • Late payments directive • Free movement of labour • Steady increase in regulation

  23. Regulation Medical Devices Directives • Recast Consultation • Suspended but not gone away • Over-reaction to needed modifications of the management of the system Pthalates/PVC • Directive 2007/47/EC Annex I, Essential Requirement 7.5 related to phthalates classified as CMR 1 & 2 (comes into force March 2010) • Risk assessment, labelling, justification Reach DEHP, DBP and BBP on priority list of substances for Authorization • Use in medical devices would need special approval • ECHA consultation on this list was open until April 14 • Our focus: exempt DEHP from the need for authorization

  24. Legal certainty on patients‘ mobility, effective liability and insurance, simple redress Equal access to high quality and cost-effective health technology innovation Does the patients‘ rights directive have the answer?

  25. BUT • Still huge variation in resources across EU • Absolute and • Distribution of those resources (x2 number of MD’s in Italy versus UK) • Huge variation in reimbursement systems • Varying mix of public/private sector involvement

  26. New Parliament/New Commission 2010 Unknown new priorities but likely to include: • Security (includes energy) • Environment • Financial stability • ? Health

  27. What role for the EU going forward? • Reduce barriers and red tape for patients and industry alike • Invest commitment, time and leadership in the medical innovation sector -innovations are critical to sustain Europe's economic and social systems and to remain competitive • Promote long-term investment that will lead to considerable savings for national health security systems as well as strong EU exports • Safeguard incentives for industry to invest in R&D Industry perspective but what will happen?

  28. Uncertainty But opportunity for those aligned with system needs…

  29. More information? Visit www.eucomed.org

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