Cost-Containment Policies in Public Pharmaceutical Spending in the EU

Abstract

This paper presents and evaluates pharmaceutical policies in the EU aimed at the rational use of medicines and at keeping pharmaceutical spending under control. Policy makers are growing more aware that by regulating pharmaceutical markets correctly, considerable savings can be achieved without compromising the quality of care. Specifically, the paper makes the case that, by following numerous best-practices in pharmaceutical sector regulations, the value for money of pharmaceutical consumption could be substantially increased. Appropriate regulations can be relevant for pricing, reimbursement, market entry and expenditure control, as well as specific policies targeted at the distribution chain, physicians and patients.JEL classification: I11, I18.

The perverse impact of external reference pricing (ERP): a comparison of orphan drugs affordability in 12 European countries. A call for policy change

“…On the contrary, countries with high purchasing power had lower PPP-adjusted prices rendering higher affordability and better access to innovative treatments [23]. In 2012, Carone et al noted in their report that drug prices adjusted using GDP per capita were higher in Poland, Romania, and Bulgaria as compared to Germany, Denmark, and Italy [25]. No study was found assessing the relative prices of orphan drugs.…”

“…Price differentials based on purchasing power have repercussions. High price differences may lead to parallel imports from low-priced countries to higher-priced countries resulting in drug shortages in low-priced countries [25]. As such, similarity in absolute prices among neighbouring countries is a rational method to avoid such a scenario and thus ERP is continuously utilised by pharmaceutical companies in Europe to avoid parallel trade.…”

Reference pricing with endogenous generic entry

“…7 An exception is Danzon and Chao (2000), who argue that reference pricing might be counterproductive in curbing pharmaceutical expenditures. 8 pricing has a negative e¤ect on generic entry, whereas a recent study by Brekke et al (2015) on the Norwegian market …nd that reference pricing has a positive e¤ect on generic entry. Our paper suggests that the mixed empirical …ndings can be explained by the presence and strictness of price cap regulation.…”

Reference Pricing with Endogenous Generic Entry

“…4 However, only a few studies have considered the impact 1 See, for instance, Carone et al (2012) for an overview and a discussion of the recent development of costcontainment policies in the EU. 2 The Medicare Modernization Act in 2003 established a standard drug bene…t that all Medicare Part D plans must o¤er, which basically is a coinsurance scheme (with a deductible).…”