European govt cost containment moves as pharma spending rises

Most European Union member states have publicly funded health care systems and the proportion of pharmaceutical expenditure, as a part of Gross Domestic Product remains high, particularly in countries such as Italy, Portugal, France, Spain and Greece. Also, the vast majority of the EU countries, with the exception of Belgium, Ireland and Luxembourg, are witnessing a rise in the share of pharmaceutical spending in the total health care expenditure thus prompting governments to adopt urgent cost containment measures through more stringent norms in their pharmaceutical policies, according to a review by Frost & Sullivan.

One of the primary aims of pharmaceutical pricing and reimbursement policies is cost containment. Using these mechanisims, governments try to streamline and manage drug-based health care. Cost containment is achieved through regulatory measures such as controlling the supply-side and/or demand-side of the markets and a variety of controls and incentives are in use across different EU countries in order to better manage pharmaceutical expenditure.

"Reference pricing, delays in approval, strict procedures, restriction on dispensing and prescribing and reimbursement systems are some of the methods that are largely employed by governments in their efforts to control pharmaceutical costs," explains F&S health care analyst Himanshu Parmar, adding: "some European countries operate these policies in a non-transparent environment and certain governments negotiate drug prices with manufacturers before deciding on their eventual market price."