European healthcare policies for controlling drug expenditure

Pharmacoeconomics. 2003;21(2):89-103. doi: 10.2165/00019053-200321020-00002.


In the last 20 years, expenditures on pharmaceuticals - as well as total health expenditures - have grown faster than the gross national product in all European countries. The aim of this paper was to review policies that European governments apply to reduce or at least slow down public expenditure on pharmaceutical products. Such policies can target the industry, the wholesalers and retailers, prescribers, and patients. The objectives of pharmaceutical policies are multidimensional and must take into account issues relating to public health, public expenditure and industrial incentives. Both price levels and consumption patterns determine the level of total drug expenditure in a particular country, and both factors vary greatly across countries. Licensing and pricing policies intend to influence the supply side. Three types of pricing policies can be recognised: product price control, reference pricing and profit control. Profit control is mainly used in the UK. Reference pricing systems were first used in Germany and The Netherlands and are being considered in other countries. Product price control is still the most common method for establishing the price of drugs. For the aim of fiscal consolidation, price-freeze and price-cut measures have been frequently used in the 1980s and 1990s. They have affected all types of schemes. For drug wholesalers and retailers, most governments have defined profit margins. The differences in price levels as well as the introduction of a Single European Pharmaceutical Market has led to the phenomenon of parallel imports among member countries of the European Union. This may be facilitated by larger and more powerful wholesalers and the vertical integration between wholesalers and retailers. To control costs, the use of generic drugs is encouraged in most countries, but only few countries allow pharmacists to substitute generic drugs for proprietary brands. Various interventions are used to reduce the patients' demand for drugs by either denying or limiting reimbursement of products and providing an incentive for patients to reduce their consumption of drugs. These interventions include defining a list either of drugs reimbursed (positive list) or one of drugs not reimbursed (negative list), and patient co-payments, which require patients to pay a proportion of the cost of a prescribed product or a fixed charge. Policies intended to affect physicians' prescribing behaviour include guidelines, information (about price and less expensive alternatives) and feedback, and the use of budgetary restrictions.

Publication types

  • Research Support, U.S. Gov't, P.H.S.

MeSH terms

  • Cost Control / legislation & jurisprudence
  • Cost Control / methods
  • Cost Sharing
  • Drug Costs / legislation & jurisprudence*
  • Drug Industry / economics
  • Drug Industry / legislation & jurisprudence
  • Drug Utilization Review
  • Drug and Narcotic Control / economics
  • Drug and Narcotic Control / legislation & jurisprudence*
  • Drugs, Generic / economics
  • Economics, Pharmaceutical
  • Europe
  • Female
  • Formularies as Topic
  • Guidelines as Topic
  • Health Expenditures / legislation & jurisprudence*
  • Health Policy / economics
  • Health Policy / legislation & jurisprudence*
  • Humans


  • Drugs, Generic