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Projecting Pharmaceutical Expenditure in EU5 to 2021: Adjusting for the Impact of Discounts and Rebates

Author

Listed:
  • Jaime Espin

    (Andalusian School of Public Health)

  • Michael Schlander

    (University of Heidelberg
    Institute for Innovation & Valuation in Health Care (InnoVal-HC))

  • Brian Godman

    (Karolinska Institutet
    Strathclyde University)

  • Pippa Anderson

    (Swansea University)

  • Jorge Mestre-Ferrandiz

    (Independent Economics Consultant)

  • Isabelle Borget

    (Gustave Roussy, Service de Biostatistique et d’Epidémiologie
    University Paris-Saclay, University Paris-Sud, UVSQ, CESP, INSERM
    GRADES, University Paris-Sud)

  • Adam Hutchings

    (Dolon Ltd)

  • Steven Flostrand

    (Celgene International)

  • Adam Parnaby

    (Celgene International)

  • Claudio Jommi

    (Università del Piemonte Orientale
    SDA Bocconi School of Management)

Abstract

Background Within (European) healthcare systems, the predominant goal for pharmaceutical expenditure is cost containment. This is due to a general belief among healthcare policy makers that pharmaceutical expenditure—driven by high prices—will be unsustainable unless further reforms are enacted. Objective The aim of this paper is to provide more realistic expectations of pharmaceutical expenditure for all key stakeholder groups by estimating pharmaceutical expenditure at ‘net’ prices. We also aim to estimate any gaps developing between list and net pharmaceutical expenditure for the EU5 countries (i.e. France, Germany, Italy, Spain, and the UK). Methods We adjusted an established forecast of pharmaceutical expenditure for the EU5 countries, from 2017 to 2021, by reflecting discounts and rebates not previously considered, i.e. we moved from ‘list’ to ‘net’ prices, as far as data were available. Results We found an increasing divergence between expenditure measured at list and net prices. When the forecasts for the five countries were aggregated, the EU5 (unweighted) average historical growth (2010–2016) rate fell from 3.4% compound annual growth rate at list to 2.5% at net. For the forecast, the net growth rate was estimated at 1.5 versus 2.9% at list. Conclusions Our results suggest that future growth in pharmaceutical expenditure in Europe is likely to be (1) lower than previously understood from forecasts based on list prices and (2) below predicted healthcare expenditure growth in Europe and in line with long-term economic growth rates. For policy makers concerned about the sustainability of pharmaceutical expenditure, this study may provide some comfort, in that the perceived problem is not as large as expected.

Suggested Citation

  • Jaime Espin & Michael Schlander & Brian Godman & Pippa Anderson & Jorge Mestre-Ferrandiz & Isabelle Borget & Adam Hutchings & Steven Flostrand & Adam Parnaby & Claudio Jommi, 2018. "Projecting Pharmaceutical Expenditure in EU5 to 2021: Adjusting for the Impact of Discounts and Rebates," Applied Health Economics and Health Policy, Springer, vol. 16(6), pages 803-817, December.
    • Handle: RePEc:spr:aphecp:v:16:y:2018:i:6:d:10.1007_s40258-018-0419-1
    DOI: 10.1007/s40258-018-0419-1
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    References listed on IDEAS

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    1. Jorge Mestre-Ferrandiz & Adrian Towse & Mikel Berdud, 2016. "Biosimilars: How Can Payers Get Long-Term Savings?," PharmacoEconomics, Springer, vol. 34(6), pages 609-616, June.
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    1. Vokinger, Kerstin N. & Muehlematter, Urs Jakob, 2020. "Accessibility of cancer drugs in Switzerland: Time from approval to pricing decision between 2009 and 2018," Health Policy, Elsevier, vol. 124(3), pages 261-267.
    2. Berger, Michael & Pock, Markus & Reiss, Miriam & Röhrling, Gerald & Czypionka, Thomas, 2023. "Exploring the effectiveness of demand-side retail pharmaceutical expenditure reforms: cross-country evidence from weighted-average least squares estimation," LSE Research Online Documents on Economics 116928, London School of Economics and Political Science, LSE Library.
    3. Juan Llano & Jorge Mestre-Ferrandiz & Jaime Espin & Jordi Gol-Montserrat & Alicia Llano & Carlos Bringas, 2022. "Public health policies for the common interest: rethinking EU states’ incentives strategies when a pandemic reshuffles all interests," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 23(3), pages 329-335, April.

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