EU drug spending fell after 2008 recession

Report finds fall in pharmaceutical spending since financial crisis and disparity in public medicines coverage across EU.

Thomas Allvin, director for healthcare systems at the European Federation of Pharmaceutical Industries and Associations (EFPIA)

Spending on medicines fell by an average of 1.1% across the EU in the six years following the 2008 financial crisis, finds a report by the OECD and the European Commission.

The reductions were “triggered” mainly by cuts in public spending over the 2009–2014 period, the ‘Health at a Glance: Europe 2016’ report says. Some countries saw greater falls than others, such as Greece and Portugal, where drug expenditure fell by more than 7%.

In 2014, the EU spent more than €200bn on pharmaceuticals — around 17% of its total health spending. Medicines were the EU’s third largest expense, after inpatient and outpatient care costs.

“Pharmaceuticals play a vital role in the health system and policy makers must balance the access of patients to new effective medicines, while providing the right incentives to manufacturers to go on developing new generations of drugs. At the same time, healthcare budgets are limited,” says the report.

Thomas Allvin, director for healthcare systems at the European Federation of Pharmaceutical Industries and Associations, the body representing the drug industry in Europe, says that the reduction in medicine sales could be attributed to budget changes of crisis-stricken states.

“[R]esource allocation of healthcare budgets must be based on a thorough assessment of the value of different health interventions for patients and societies as a whole”, says Allvin. An investment in medicines can help reduce expensive hospital costs in the same way that prevention measures can help cut treatment costs, he says.

The EU spent €402 per capita on medicines, on average, in 2014. However, there were wide differences when individual country spend was analysed. For instance, Germany (€551 per capita) and Ireland (€523) spent more than double that of Denmark (€201) and Estonia (€230). Expenditure per UK citizen was €361. All figures were adjusted for purchasing power in each country and included prescription and over-the-counter drugs but omitted medicines used in hospitals and other healthcare centres.

Public cost protection schemes covered about 64% of EU pharmaceutical expenses, but there was disparity in coverage between EU countries. Public coverage of medicines was greater than 80% in some northern and western European states, such as Germany, but lower in countries such as Bulgaria and Cyprus, which paid less than 25% of their citizens’ medicine expenses.

The report acknowledges the cost benefits derived from using generic medicines and encourages EU countries to take steps towards using them. The market for these products has grown rapidly since the 2000s. In countries, such as Portugal and Spain, where generic drugs had little or no presence in 2000, generic spending rose to cover more than 40% of the market in 2014.

More than 70% of medicines used (in volume terms) in the UK, Germany, the Netherlands and Slovakia were generic in 2014, but these products represented only around 20% of the market in other countries such as Italy and Greece, the report notes.

“All EU countries see the development of generic markets as a good opportunity to increase efficiency in pharmaceutical spending, but many do not fully exploit the potential of generics”, says the report.

The report presents a wide range of indicators of health and health systems in the EU, including increased life expectancy. Specifically, the report states that life expectancy across the EU has risen by 6 years from an average of 74.2 years in 1990, to around 80.9 years in 2014. However, it notes that there is inequality between western countries with the highest life expectancy, compared with countries in central and eastern Europe, where people die at a younger age.

Last updated
The Pharmaceutical Journal, EU drug spending fell after 2008 recession;Online:DOI:10.1211/PJ.2016.20202005

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