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This paper describes and assesses pharmaceutical pricing and reimbursement policies in Canada, considering them in the context of the broader policy and market environment in which they operate, and investigating their role in contributing to Canada's achievements in meeting a range of objectives relating to the pharmaceutical policy. The federal government regulates prices of patented pharmaceutical products with the objective of protecting consumers against excessive prices. Regulation has very likely been responsible for bringing Canada's prices for patented medicines roughly in line with European comparators. Prices of generic products, which are not regulated, are relatively high although high penetration of the Canadian market has been achieved. All Canadians have coverage for drugs provided in hospitals through a publicly financed scheme that furnishes hospital and physician services free of charge to patients. Drugs dispensed outside the hospital setting are not included among the insured benefits guaranteed by the Canadian Health Act. Consequently, two-thirds of the Canadian population, including most employees and their families, obtains such coverage through private health insurance, while most senior citizens, together with designated groups of vulnerable populations, are covered by provincial, territorial or federal plans. In most cases, patients share in the costs of reimbursed medicines through copayments or co-insurance, sometimes after meeting a deductible. The lack of protection against the risk of catastrophic out-of-pocket spending for drugs remains an issue for a small part of the Canadian population, concentrated in the Atlantic Provinces. Reflecting these coverage and reimbursement arrangements, 54% of drug expenditures are financed by private insurances and households. Drug expenditures have been increasing very rapidly in recent years. Formulary management, now facilitated by a government initiative to undertake common drug reviews, and the promotion of generic substitution have been the main levers used by public plans to improve the efficiency of drug expenditures. Private plans have historically covered all medicines authorised for sale in Canada, although this is changing in light of cost pressure. Overall, new drugs are available in the Canadian market on a timely basis, but maintaining comprehensive availability and accessibility may be an emerging challenge.

This paper examines aspects of the policy environment and market characteristics of the Swedish pharmaceutical sector, assesses the degree to which Sweden has achieved certain policy goals, and puts forth some key findings and conclusions. Thanks to low markups in the distribution chain and no VAT for prescribed medicines, Sweden's public prices for pharmaceuticals are relatively low, in contrast to average prices received by manufacturers, which are among the highest in Europe. Recent reforms have helped to restrain pharmaceutical expenditure growth, following a period of double digit growth in the 1990s. Pharmaceutical expenditure per capita in Sweden is lower than the OECD average. Only five OECD countries devote less of their national income to pharmaceuticals. What limited evidence exists tends to suggest that relatively low pharmaceutical expenditures in Sweden are due to its low public prices, rather than to low levels of consumption. Sweden introduced a new pricing and reimbursement scheme in 2002. Its main features are the use of cost-effectiveness analysis for determining the reimbursement status of new pharmaceuticals and mandatory substitution of the lowest-cost generic alternative. The use of cost-effectiveness analysis in reimbursement decisions helps to relate the reimbursement price paid to the social value of the product, but does not necessarily result in the lowest possible price. The generic substitution policy has enabled Sweden to achieve fairly high penetration of generic drugs into the market in terms of volume, with a considerably low share of the total value of the market. However, the requirement to substitute only the lowest-priced listed drug risks undermining the competitiveness of the generic drug industry. The Swedish pharmacy monopoly, Apoteket, is unique among OECD countries. Retail and wholesale margins are notably low, but pharmacy density is lower than elsewhere and other factors also limit consumer convenience. Consumer welfare would likely increase by opening the retail market for over-thecounter drugs (which are normally not reimbursed) to competition.

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