European governments should spend more on drugs if they want to keep a lid on prices, the boss of global pharma group Merck has said.

Stefan Oschmann, chief executive of the $15bn (£13bn) revenue firm, which is based in Darmstadt, Germany and has a 1,400-strong UK arm, hit back at critics of high drug prices at an event in Brussels on Wednesday.

Rising drug prices have sparked scandals in a number of European countries in recent months, including in the UK – where Pfizer and Flynn were fined a record £84.2m and £5.2m respectively in December for ramping up the cost of an anti-seizure medication – as well as separate controversies in Germany and Italy.

Mr Oschmann said he understood “it is a topic of concern” in Europe, but in general terms politicians had to understand drugs were becoming more complex and costly and adjust accordingly.

He said: “Over the last decade pharma spending has increased less than total healthcare spending… All of us must collaborate to make sure we all have the best access to medicines.”

The German businessman, who has been at the helm of Merck KGaA since April 2016, also called on regulators across the world to allow more flexible pricing of drugs to accommodate an expected influx of ‘combination’ treatments for certain illnesses, including immuno-oncology medicines for cancer.

Merck KGaA is separate to Merck & Co, a larger American pharmaceutical firm that trades as MSD outside the States. Merck & Co was originally established as a subsidiary of Merck in 1891, but was nationalised by the US in 1917 before being privatised again.

Stefan Oschmann
Stefan Oschmann said European governments should spend more on pharmaceutical products CREDIT: FLORIAN SCHAUB

Pharmaceutical groups including Merck are developing a new wave of drugs that are most effective used in combination with others, and Mr Oschmann believes this could result in unprecedented levels of collaboration between rival firms.

“By 2020 most oncology drugs (for cancer) will be used in combination with drugs from other manufacturers,” Mr Oschmann told the European Federation of Pharmaceutical Industries and Associations conference.

“Yet there is no mechanism for sharing revenue streams to recognise the input of different manufacturers. We need more flexible pricing mechanisms.”

Mr Oschmann became the latest pharma boss to hail the potential of big data to revolutionise the sector, and called on companies and firms to share more information.

He said: “Health data must be more accessible and regulatory regimes must catch up.

“We need to get rid of data silos in companies and health providers and be better at making our case. Digital healthcare holds great potential.”

Martin Seychell, deputy director general for health and food safety at the European Commission, told the conference Brussels bureaucrats had identified spending on health as one of the ways to “strengthen” Europe’s “social market”.

He also said the European Commission would invest in a “digital single market to improve health outcomes”, adding: “Europe is a shrinking part of the (global pharma) market. We need to make better use of our critical mass, and data.”

Today the Competitions and Markets Authority (CMA) published its full decision on the Pfizer and Flynn case, which resulted in NHS expenditure on the drug phenytoin increasing from £2m in 2012 to £50m in 2013. Pfizer and Flynn have since reduced their prices, the CMA said, and they have lodged appeals, with the hearing to start on October 30 this year.