1. Drug Price Cuts in Top Five Countries of Europe - Tougher
Reference Pricing Environment and Drug Price Freeze through
2013 Expected to Drive Down Healthcare Costs
Report Details:
Published:May 2012
No. of Pages: 66
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Drug Price Cuts in Top Five Countries of Europe - Tougher Reference Pricing Environment and
Drug Price Freeze through 2013 Expected to Drive Down Healthcare Costs
Summary
GBI Research, the leading business intelligence provider, has released its latest research “Drug
Price Cuts in Top Five Countries of Europe - Tougher Reference Pricing Environment and Drug
Price Freeze through 2013 Expected to Drive Down Healthcare Costs”. It provides a
comprehensive overview of the healthcare systems as well as pricing in five European nations
with a detailed analysis of the different regulatory mechanisms used in these countries. The report
closely scrutinizes major changes in pricing for pharmaceuticals in these European nations in the
recent past and their impact in the near future. The countries analyzed in the report are the UK,
Germany, France, Spain and Italy.
GBI Research’s analysis describes healthcare across the Five European nations, which is largely
publicly financed and is provided by health insurance systems; hence, the European governments
play a key role in providing healthcare for their citizens. Health is of high priority for Europe’s
citizens and pharmaceutical costs are the third most important component in the member states’
healthcare budgets. Currently, the governments of the member countries face substantially rising
costs for the provision of health care (average costs are rising at a faster rate than GDP) due to
over-prescription of drugs, their irrational usage, and other key factors such as Europe’s ageing
population and increasing cost of new medical technologies. Consumer preference for branded
drugs to generic drugs in cases where the patent for the drug has expired is also one of the
reasons for increasing healthcare costs. Austerity packages announced by the countries are
incorporating demand side and supply side policies to reduce the fiscal burden of which healthcare
costs command a major proportion. The governmental demand side policies include measures

2. that affect the reimbursements of drugs such as positive and negative lists, cost sharing, reference
pricing, risk-sharing contracts, tenders, pay-back arrangements and other provisions aimed at a
more rational use of pharmaceutical products and making demand more price sensitive. The most
applied supply policy is price regulation which includes price control and price negotiation. The
specific features of individual policies vary significantly across the member states. Single pricing
mechanism is still an issue in the Europe.
Scope
- Overview of the macroeconomic factors (PEST analysis of pharmaceutical industry) for top five
countries of Europe.
- Detailed study of the healthcare systems and roles of the key players in the respective
pharmaceutical systems of top five countries of Europe – the UK, France, Germany, Italy and
Spain;.
- Analysis of the major pricing mechanisms in each country.
- Key trends that follow from the recent changes brought about in the pricing of drugs.
- Build an understanding of the possible major challenges brought about by the enactment of
changes in drug price cuts in the countries covered.
Reasons to buy
- Build understanding of the pharmaceuticals related key pricing mechanisms in top five countries
of Europe.
- Optimize your investment through identification and understanding of the changes in the
pharmaceuticals regulatory mechanism in the economies.
- Develop effective business strategies related to new drug launches through the analytical insight
gained from key trends in pricing mechanism scene for the countries covered.
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Major points covered in Table of Contents of this report include
1 Table of Contents
1 Table of Contents 5
1.1 List of Tables 7
1.2 List of Figures 8
2 Introduction 9
3 Drug Price Cuts in Top Five Countries of Europe - Economic Overview 10
3.1 Healthcare Expenditure as a Percentage of GDP by Country 10
3.2 Health Expenditure Per Capita With Respect to GDP Per Capita 11
3.3 Pharmaceutical Expenditure Per Capita with Respect to GDP Per Capita 12
3.4 Pharmaceutical Expenditure as a Percentage of Healthcare Expenditure 13

3. 3.5 Estimated Costs Paid by the Patient and Health Insurance System in the Total Reimbursed
Pharmacy Market Value at Retail Prices 14
4 Drug Price Cuts in Top Five Countries of Europe – Introductory Concepts 15
4.1 Industry Analysis 15
4.1.1 PEST Analysis of European Pharmaceutical Industry 15
4.1.2 Porters Five Forces Analysis 19
4.2 Role of Pharmacoeconomics in Pricing 20
4.3 Pricing Models 21
4.3.1 External Price Referencing or Internal Price Referencing 21
4.3.2 Internal Reference Pricing 21
4.3.3 Price Capping Regulations for Generic Pharmaceuticals 21
4.3.4 Use of Positive and Negative Formulary 21
4.3.5 Value-Based Pricing and Risk-Sharing Models 22
4.3.6 Tendering 23
4.3.7 VAT Rates for Outpatient Prescription Medicines 24
4.3.8 Regulatory Mechanisms in Top Five Countries of Europe 25
5 Drug Price Cuts in Top Five Countries of Europe - Recent Developments in Pricing of Drugs 27
5.1 EU Single Pricing 27
5.2 Parallel Trade Impact on Pricing 27
6 Drug Price Cuts in Top Five Countries of Europe – Geographical Landscape 28
6.1 The UK 28
6.1.1 Macroeconomic Factors (PEST Analysis) 28
6.1.2 Healthcare System in Country 29
6.1.3 Total Expenditure on Health as a % of GDP 29
6.1.4 Public Expenditure on Health, % Total Expenditure on Health 30
6.1.5 Drug Pricing Authority and Procedures 30
6.1.6 Key Trends in Pricing of Drugs and Cuts 32
6.1.7 Major Challenges 34
6.2 France 35
6.2.1 Macroeconomic Factors (PEST Analysis) 35
6.2.2 Healthcare System in Country 36
6.2.3 Total Expenditure on Health as a % of GDP 38
6.2.4 Public Expenditure on Health, Percentage of Total Expenditure on Health 39
6.2.5 Drug Pricing Authority and Procedures 40
6.2.6 Key Trends in Pricing of Drugs and Cuts 42
6.2.7 Major Challenges 44
6.3 Germany 44
6.3.1 Macroeconomic Factors (PEST Analysis) 44
6.3.2 Healthcare System in Country 45
6.3.3 Total Expenditure on Health as a Percentage of GDP 46
6.3.4 Public Expenditure on Health, Percentage Total Expenditure on Health 47

4. 6.3.5 Drug Pricing Authority and Procedures 48
6.3.6 Key Trends in Pricing of Drugs and Cuts 48
6.3.7 Current Challenges and Future Developments 50
6.4 Spain 51
6.4.1 Macroeconomic Factors (PEST Analysis) 51
6.4.2 Healthcare System in Spain 51
6.4.3 Total Expenditure on Health as a Percentage of GDP 52
6.4.4 Public Expenditure on Health, Percentage of Total Expenditure on Health 53
6.4.5 Drug Pricing Authority and Procedures 53
6.4.6 Key Trends in Pricing of Drugs and Cuts 54
6.4.7 Current Challenges and Future Developments 55
6.5 Italy 55
6.5.1 Macroeconomic Factors (PEST Analysis) 55
6.5.2 Healthcare System in Country 56
6.5.3 Total Expenditure on Health as a Percentage of GDP 57
6.5.4 Public Expenditure on Health, Percentage of Total Expenditure on Health 58
6.5.5 Drug pricing authority and procedures 58
6.5.6 Key Trends in Pricing of Drugs and Cuts 59
6.5.7 Current Challenges and Future Developments 61
7 Drug Price Cuts in Top Five Countries of Europe - Appendix 62
7.1 Market Definitions 62
7.2 Abbreviations 62
7.3 Sources 64
7.4 Research Methodology 65
7.4.1 Macroeconomic Factors (PEST Analysis) 65
7.4.2 Healthcare Systems 65
7.4.3 Key Trends in Pricing of Drugs and Cuts 65
7.4.4 Current Challenges and Future Developments 66
7.5 Contact Us 66
7.6 Disclaimer 66
1.1 List of Tables
Table 1: Pricing and Reimbursement in Europe, Supply-Side Pharmaceutical Regulations 16
Table 2: Pricing and Reimbursement in Europe, Demand-Side Pharmaceutical Regulations 17
Table 3: Drug Price Cuts in Top Five Countries of Europe, Average Time Delay Between Approval
And Market Access, (Days), 2001 - 2005 18
Table 4: Drug Price Cuts in Top Five Countries of Europe, Tax Rate, (%), 2011 24
Table 5: Pricing and Reimbursement in Europe, Regulatory Mechanisms in Top Five Countries of
Europe 25
Table 6: Pricing and Reimbursement in Europe, General Price Changes (%), The UK, 2009-2013
33

5. Table 7: Drug Price Cuts in Top Five Countries of Europe, France, Types of Treatment and
Reimbursement Levels, France, 2011 37
Table 8: Drug Price Cuts in Top Five Countries of Europe, France, Social Security Deficit, €bn and
$bn, France, 2009-2011 41
Table 9: Drug Price Cuts in Top Five Countries of Europe, National Target for Expenditure in
Public Healthcare/ONDAM, France, €bn and $bn, 2010-2011 41
Table 10: Drug Price Cuts in Top Five Countries of Europe, List of Innovative Drugs for Regions,
AIFA, Italy, 2010 60
1.2 List of Figures
Figure 1: Drug Price Cuts in Top Five Countries of Europe, Health Expenditure Per Capita With
Respect to GDP per capita, $PPP, 2008 10
Figure 2: Drug Price Cuts in Top Five Countries of Europe, Pharmaceutical Expenditure Per
Capita and GDP Per Capita ($PPP), 2008 11
Figure 3: Drug Price Cuts in Top Five Countries of Europe, Pharmaceutical Expenditure Per
Capita with Respect to GDP Per Capita ($PPP), 2008 12
Figure 4: Drug Price Cuts in Top Five Countries of Europe, Pharmaceutical Expenditure as a
Percentage of Healthcare Expenditure, 2007 – 2009 13
Figure 5: Drug Price cuts in Top Five Countries of Europe, Estimated Costs Paid by the Patient
and Health Insurance System in the Total Reimbursed Pharmacy Market Value at Retail Prices
(%), 2008 14
Figure 6: Drug Price Cuts in Top Five Countries of Europe, PEST Analysis, Europe, 2011 15
Figure 7: Drug Price Cuts in Top Five Countries of Europe, Porters Five Force Model, 2011 19
Figure 8: Pricing and Reimbursement in Europe, ISPOR 33 Guidelines for Pharmacoeconomics
Assessment 20
Figure 9: Drug Price Cuts in Top Five Countries of Europe, Value-based pricing – Concept and
Process 22
Figure 10: Drug Price Cuts in Top Five Countries of Europe, PEST Analysis, The UK, 2011 28
Figure 11: Drug Price Cuts in Top Five Countries of Europe, Total Expenditure on Health as a %
of GDP, The UK, (%), 2000- 2009 29
Figure 12: Drug Price Cuts in Top Five Countries of Europe, Public Expenditure on Health, as a %
of total Expenditure on Health, The UK, 2000- 2009 30
Figure 13: Drug Price Cuts in Top Five Countries of Europe, NHS expenditure on medicines ($bn)
Vs NHS Medicines Cost per capita ($),The UK, 2000-2009 31
Figure 14: Drug Price Cuts in Top Five Countries of Europe, PEST Analysis, France, 2011 35
Figure 15: Drug Price Cuts in Top Five Countries of Europe, European Counties, The US, Japan,
Total healthcare expenditure Vs out-of-pocket expenditure in European Countries, 2008 36
Figure 16: Drug Price Cuts in Top Five Countries of Europe, Pharmaceutical Expenditure Per
Capita Among the Highest in France, $PPP, 2007-2008 37
Figure 17: Drug Price Cuts in Top Five Countries of Europe, Expenditure on Health as a
Percentage of GDP, France, (%), 2000- 2009 38

6. Figure 18: Drug Price Cuts in Top Five Countries of Europe, The Public Expenditure on Health as
a Percentage of Total Expenditure on Health, France, 2000- 2009 39
Figure 19: Drug Price Cuts in Top Five Countries of Europe, LFSS, France, 2011 40
Figure 20: Drug Price Cuts in Top Five Countries of Europe, PEST Analysis, Germany, 2011 44
Figure 21: Drug Price Cuts in Top Five Countries of Europe, Germany, Healthcare expenditure, $
per inhabitant, Germany, 2008 45
Figure 22: Drug Price Cuts in Top Five Countries of Europe, Total Expenditure on Health as
Percentage of GDP, Germany, (%), 2000- 2009 46
Figure 23: Drug Price Cuts in Top Five Countries of Europe, Public Expenditure on Health as
Percentage of Total Expenditure on Health, Germany, 2000-2009 47
Figure 24: Drug Price Cuts in Top Five Countries of Europe, Cost Containment Measures,
Germany, 1980-2011 48
Figure 25: Drug Price Cuts in Top Five Countries of Europe, Structural Reforms by AMNOG,
Germany, 2011 49
Figure 26: Drug Price Cuts in Top Five Countries of Europe, PEST Analysis, Spain, 2011 51
Figure 27: Drug Price Cuts in Top Five Countries of Europe, Total Expenditure on Health as a
Percentage of GDP, Spain, (%), 2000-2009 52
Figure 28: Drug Price Cuts in Top Five Countries of Europe, Public Expenditure on Health as
Percentage of Total Expenditure on Health, Spain, (%), 2000- 2009 53
Figure 29: Drug Price Cuts in Top Five Countries of Europe, PEST Analysis, Italy, 2011 55
Figure 30: Drug Price Cuts in Top Five Countries of Europe, Total Expenditure on Health as
Percentage of GDP, Italy, (%), 2000- 2009 57
Figure 31: Drug Price Cuts in Top Five Countries of Europe, Public Expenditure on Health as a
Percentage of Total Expenditure on Health, Italy, (%), 2000-2009 58
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