Cost Containment Measures for Pharmaceuticals Expenditure in the EU Countries: A Comparative Analysis

ABSTRACT

A vast majority of the EU countries are witnessing a rise in the share of public pharmaceutical spending in the total drugs expenditure. This urges governments to adopt cost containment measures through more stringent norms in their pharmaceutical policies. The aim of this paper is to review the existing pharmaceuticals cost-containment policies in the EU in order to illustrate the complexity of the drug policy decision making and to assess the effectiveness of the cost containment measures introduced so far in the 27 selected countries. The paper is focused on measures aimed at reducing the public expenditures on pharmaceutical products.

It is shown that cost containment policies for pharmaceutical expenditure are mostly targeted towards supply side measures, as they are proved to be more effective than demand side measures. However, price control policies do not guarantee expenditure control as long as they are not accompanied by control over volume. Rationalizing consumption volume should be targeted as well by giving more importance to demand side measures.

We argue that, given the structurally imperfect pharmaceutical market and the dominant position of the supply side, it is maybe unrealistic to expect cost containment measures to be very successful. With an aging European population demanding more health care and an enlarging EU, it is likely that the debate concerning pharmaceutical expenditure will become a never ending story. At the same time, substantial evidence shows that the effect of innovative drugs is worth the increased cost. Therefore, a change of perspective from the cost of medicines per se to the cost-benefit ratio of the pharmaceuticals might be the solution, almost ignored so far.