Share of pharmaceutical spending in total healthcare expenditure remains high across most EU countries

Most EU member states have publicly funded healthcare systems and the proportion of pharmaceutical expenditure, as a portion of GDP remains high, particularly in countries such as Italy, Portugal, France, Spain and Greece.

Also, a vast majority of the EU countries with the exception of Belgium, Ireland and Luxembourg are witnessing a rise in the share of pharmaceutical spending in the total healthcare expenditure thus prompting governments to adopt urgent cost containment measures through more stringent norms in their pharmaceutical policies.

One of the primary aims of pharmaceutical pricing and reimbursement policies is cost containment, using which governments try to streamline and manage pharmaceutical-based healthcare. Cost containment is achieved through regulatory measures such as controlling the supply-side and/or demand-side of the markets and a variety of controls and incentives are in use across different EU countries in order to better manage pharmaceutical expenditure.

"Reference pricing, delays in approval, strict procedures, restriction on dispensing and prescribing and reimbursement systems are some of the methods that are largely employed by governments in their efforts to control pharmaceutical costs," explains Frost & Sullivan Healthcare Analyst Himanshu Parmar. "Some European countries operate these policies in a non-transparent environment and certain governments negotiate drug prices with manufacturers before deciding on their eventual market price."

The reimbursement system operates differently across the region and each country has varying reimbursement system regulations that are implemented through tools such as internal or external reference pricing system, reimbursement groups, patient co-payment and prescription budget limit on doctors. While reference pricing has become more transparent, since the introduction of the Euro and the creation of the European Agency for the Evaluation of Medicinal Products (EMEA), the practice of price freezes is in use in countries such as the United Kingdom and Spain. With price freezes, the nominal price for a product is established and this price is not influenced by external factors such as exchange rates and it is fixed for a particular period.

In addition to this, positive and negative lists are also maintained in several countries and positive lists are generally a stronger form of price control when compared to negative lists. Those drugs that have better market alternatives available are included in the negative list and Germany, the United Kingdom and Spain are a few of the EU countries, which employ negative lists.

Considering these stringent price and reimbursement controls and the variance in policies across the region, pharmaceutical companies face persistent problems in accessing the markets of various EU countries. Moreover, these controls are limiting access to innovative pharmaceuticals and hampering ongoing R&D in Europe, while also encouraging intermediaries to buy medical products from a country with lower product prices and sell them in countries with higher price levels.

As an example of the restrictive effects of price and reimbursement controls, the Belgian pharmaceutical environment is considered highly discouraging to research and development initiatives due to taxes, pricing policies and patient access problems. Similarly, the low levels of pricing in Poland combined with a stringent reimbursement system are major causes for concern for European pharmaceutical industry.

Presented with these challenges, the identification and development of suitable pricing and reimbursement strategies will be crucial in determining a company's success. "In the drug development process, pharmaceutical companies normally focus on the third and fourth phase for the pricing and reimbursement strategies," says Mr. Parmar. "However, an increasing number of companies are beginning to focus on the early development stage and a strong management effort during the drug development pipeline will enable a company to obtain the optimum price for a product."

Comments

The opinions expressed here are the views of the writer and do not necessarily reflect the views and opinions of News Medical.
Post a new comment
Post

While we only use edited and approved content for Azthena answers, it may on occasions provide incorrect responses. Please confirm any data provided with the related suppliers or authors. We do not provide medical advice, if you search for medical information you must always consult a medical professional before acting on any information provided.

Your questions, but not your email details will be shared with OpenAI and retained for 30 days in accordance with their privacy principles.

Please do not ask questions that use sensitive or confidential information.

Read the full Terms & Conditions.

You might also like...
New UCL hub to advance cancer detection with imaging tech