European nations may cut the prices of prescription drugs more than once a year - and for several years - without breaking Community law, the European Court of Justice has told drugmakers.

European Union (EU) legislation gives member states broad powers to organise their social security systems and regulate pharmaceutical consumption to ensure the financial stability of their health insurance schemes, the Court ruled this month, in a case brought by drugmakers against price reductions imposed by the Italian government.

The cuts, which the Italian medicines agency (AIFA) introduced in 2005 and 2006 in order to maintain drug spending levels within the limits set for the national health service (SSN), were challenged by court by drugmakers including Menarini, Sanofi-aventis and Schering-Plough. They sued the Health Ministry and the AIFA in the Regional Administrative Court of Lazio, claiming that Italy’s drug pricing system contravened the requirements of Directive 89/105/EEC, which governs the transparency of drug price regulation measures throughout the EU. The Lazio court subsequently sought an opinion on the matter from the ECoJ, which was delivered this month.

In its ruling, the European Court points out that, first of all, EU law does not prevent member states from organising their social security systems and adopting provisions to control drug consumption levels in order to keep their health systems financially stable. Moreover, it says, they are free to take steps to reduce the prices of all or certain categories of drugs, even if such cuts have not been preceded by a price freeze.

However, if governments have imposed a price freeze, Directive 89/105 stipulates that they should review this at least once a year to ensure it is still justified. Once the member state has met this requirement it is then free to cut prices, and to do so more than once a year and for several years, the Court says.

Nor does the directive prevent member states from adopting price-control measures based on spending predictions, provided these are based on “objective and verifiable data,” the ruling adds. Moreover, while the directive requires governments to review the conditions surrounding the price freeze, it leaves up to them which criteria to use for deciding this; ie, they may take account of pharmaceutical expenditure alone, health spending overall or “even other types of relevant expenditure,” it says.

Finally, if “in exceptional cases and for particular reasons” a drugmaker decides to challenge a price cut or freeze, it must provide the “particular reasons” under which it feels its application is justified, while the directive requires the member state to ensure it adopts a “reasoned decision” on any such application, the Court concludes.