The Public Financing of Pharmaceuticals

The Public Financing of Pharmaceuticals

An Economic Approach

Edited by Jaume Puig-Junoy

This book provides a complete approach to the economics of financing medicines and policy implications for the efficiency and equity of health systems. In all health systems with majority public financing, pharmaceutical reimbursement is one of the key factors in policies of change and transformation of health services in order to face the future with guarantees of financial sustainability.

Chapter 1: Introduction: Public Pharmaceutical Expenditure

J. Puig-Junoy

Subjects: economics and finance, health policy and economics, industrial economics, public finance


J. Puig-Junoy PHARMACEUTICALS AND EFFICIENT HEALTH PRODUCTION In the analysis of health care the price of care is often confused with the level of expenditure, particularly so in the analysis of the cost of pharmaceuticals. Pharmaceutical cost containment should never be the exclusive goal of public policies: emphasis on costs without paying attention to the value of the products may lead to inefficient policies. The value of a new pharmaceutical resides in its ability to improve health, not just in its contribution to the decrease or increase of health care costs. Increased spending on health care and pharmaceuticals is therefore compatible with a reduction in their price, if the resulting value increases more than the expenditure. According to a common cliché, health care spending on pharmaceuticals is excessive in Spain, although the figures do little to endorse this idea, and moreover do not in themselves serve to lay blame or pinpoint inefficiencies. Public and private pharmaceutical spending per capita in Spain is not among the highest in the European Union (EU): it is almost 10 per cent lower than the European average, and lower than the figure for nine of the 15 Member States. The proportion of spending on pharmaceuticals within health care expenditure as a whole stands at around 20 per cent (20.7 per cent in 1997), according to data published by the Organization for Economic Co-operation and Development (OECD). This indicator shows wide variation internationally, from less than 10 per cent in Denmark, Ireland and Switzerland to 26.5...