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 6: Reference pricing as a pharmaceutical reimbursement mechanism

G. López-Casasnovas and J. Puig-Junoy

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


G. López-Casasnovas and J. Puig-Junoy INTRODUCTION The concern voiced in Spain regarding the rationalization of pharmaceutical consumption has a logical foundation in both the trend and the level of drug expenditure borne by the Spanish public health system in comparison with those of the countries in its immediate vicinity. Spain undoubtedly constitutes an atypical case in the context of the European Union (EU) as regards the proportion of national health spending accounted for by pharmaceutical expenditure. According to the Organization for Economic Co-operation and Development (OECD) Health Data File, in 1997 public spending on pharmaceuticals in Spain amounted to 19.5 per cent of total public health expenditure, the highest proportion in any EU country except Portugal. This figure is notably higher than the average for EU countries, which stands at around 11.9 per cent. In per capita terms too, public pharmaceutical spending has begun to show values that are higher than the average for EU countries (129 ecus on average in EU countries as a whole in 1996 as opposed to 152 ecus per capita in Spain), in contrast to the figures for the rest of public health expenditure, which are lower than the European average. Spain’s public per capita spending on pharmaceuticals is clearly greater, in the EU context, than that of countries with a higher per capita income, such as the Netherlands, Belgium and the UK. Since 1990, responsibility for containing the public pharmaceutical bill in Spain has fallen to a variety of instruments, none of which...

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