Pharmaceutical procurement and pricing in European hospitals

Although sales through the retail pharmacy channel represent the largestsector of the European pharmaceutical market, an average of 10%-20% of turnover is generated through sales to hospitals serving statutory health care systems. However, the selection, procurement, pricing and distribution of hospital drugs in Europe is radically different to the supply chain that operates in the retail pharmacy sector. For example, many routine hospital-based procedures such as invasive surgery depend on hospital-only products not typically found in retail pharmacy.

According to a new report - Pharmaceutical Procurement and Pricing in European Hospitals - the result is that payers and industry operate in two very different markets, in which the priorities and criteria applied to buying and selling decisions have little in common. Not only are the size, frequency and nature of drug procurement and purchasing deals very different, but they are also negotiated under totally different conditions, usually by different buyers and sellers. For example, single source and multisource drugs (of which the hospital sector throughout Europe is a big consumer) are often handled separately, while therapeutic substitution and other hospital prescribing practices can also complicate matters and make direct comparisons with the retail sector impossible.

On top of the many differences between hospital and retail pharmacy, all European hospital markets have developed their own unique procedures and protocols for buying drugs. Unlike many other areas of the pharmaceutical market, the result is a heterogeneous network of different national systems, with no two countries alike - not even those with close cultural ties. At one extreme, there is virtually a single national buying group; at the other, all hospitals negotiate their own supplies independently. And there appears to be little or no impetus for the convergence and harmonization of hospital procurement and pricing systems in Europe.