International Health Care Systems Pharmaceuticals

Cancer drug pricing in Europe

How do Euroepan countries reimburse for pharmaceuticals? A paper by Pauwels et al. (2014) provides an nice summary. I review that article today.

With the exception of Germany, most countries had a national and/or regional drug budget.  Germany is also unique in that only Germany and the UK allow for free pricing, whereas other countries use reference pricing or price negotiation.

Note that the hospital drug market differs from the outpatient pharmacy setting.  In the inpatient setting, most countries except the Netherlands all for price negotiation and only the Netherlands and Germany do not use tendering. According to the Better Pharmacare Coalition:

Tendering is a process in which government, as payer, negotiates the lowest price for a pharmaceutical drug1. In exchange for this low price, the supplier of the drug gets their product listed on the public drug plan. Often, the lowest bidder becomes the sole tender meaning their drug is the only one available in an entire class of drugs (such as statins) to patients on the public drug plan2.


Belgium evaluates drugs based on  therapeutic value, cost-effectiveness, budget impact and positioning in clinical practice, although orphan drugs are exempt from pharmaco-economic investigation.  Reimbursement decisions are made nationally. Unauthorized drug use should be paid by the pharmaceutical company in a compassionate use program.

In France, prices are set through negotiations between the Economic Committee on Health Care Products and the pharmaceutical companies.  Cost effectiveness is used to determine reimbursement eligibility, but in some cases of very severe disease, treatments with modest benefits may be covered.  “Payback mechanisms are imposed in case of unexpected sales per therapeutic indication based on the budget impact evaluation. New drugs are exempt from these agreements for a period of time which depends on the level of medical benefit.”

Germany grants full reimbursement for every prescription drug that has received marketing authorization.  “Whether or not a drug provides added benefit determines if the drug falls within the internal reference system or can be the subject of price negotiations. Also patented drugs can be included in reference groups. Orphan drugs are exempt from this early benefit assessment if annual sales in the preceding 12 months did not exceed €50 million.” Germany relies on its Institut für Qualität und Wirtschaftlichkeit im Gesundheitswesenis (IQWiG) to conduct health technology assessments.   The Pauwels paper states “performance-based risk-sharing arrangements exist in the form of rebate contracts between sickness funds and pharmaceutical companies to accelerate market access of drugs with doubtful value.”

Italy finances cancer pharmaceuticals based on a system that has national, regional and local components. “Although pricing and reimbursement are a national competence, regions can charge copayments to patients, resulting in price differentiation across the country.” Drug prices are negotiated, but Italy also has fixed drug spending ceilings: “The expenditures to pharmacological products in primary care cannot exceed 11.35 %, while pharmaceutical expenses in the hospital have to remain below 3.5 % of the national and regional health care budget.   In case of overspending, companies have to pay back the complete budget excess in primary care and half of the budget excess in hospitals.”

The Netherlands uses external reference pricing is used to set a maximum price for drugs based on the average price in other European countries.   The pricing considers both both patented and generic drugs and generally compares drugs to therapeutic equivalents.  If therapeutic equivalents are not available, cost effectiveness methods are used to determine price with a willingness to pay threshold of €20,000 to 80, 000/QALY; orphan drugs, however, can apply for an exception.  The Netherlands has introduced performance-based risk-sharing arrangements (e.g., coverage with evidence development, performance-linked reimbursement).

Poland sets prices based largely on internal reference prices (i.e., the price of branded and unbranded products in the same therapeutic class).  HTA is used and cost-effectiveness thresholds are set by law, but the ministry of health can ignore the Polish HTA’s advice.  Beginning in 2012, a new Reimbursement Act will allow for performance-based risk-sharing.

Sweden has  21 county councils all having the responsibility over their local health care budget and drug formularies.  Although reimbursement is generally determined nationally, local councils can cover additional treatments not covered nationally.  Sweden uses cost effectiveness analysis to inform price, but “Sweden is one of the few countries that apply a societal perspective to consider costs and benefits of healthcare in cost-effectiveness analysis.”

The United Kingdom sets prices of branded pharmaceuticals based on the Pharmaceutical Price Regulation Scheme (PPRS).  “In England, the National Health Service (NHS) is entrusted with allocation of the budget to the Primary Care Trusts (PCT), which are grouped within regional Strategic Health Authorities (SHA) [68]. The PCTs are responsible for delivering health care and health improvements within the local area: they have their own budgets and set their own priorities.”  England and Wales rely on the National Institute for Health and Care Excellence (NICE) to determine cost effectiveness with a cost/QALY threshold of generally around £20,000–30,000 (€23, 600–35,400) per QALY.  In Scotland, the HTA agency is the Scottish Medicines Consortium (SMC) and in Wales there is the All Wales Medicines Strategy Group (AWMSG).  Almost all drugs allowed by the NHS to be prescribed are completely reimbursed.  The UK is exploring including more value-based pricing schemes starting in 2014.  The UK does use performance based pricing: “Performance-based risk-sharing arrangements are designed for oncology drugs such as bortezomib for multiple myeloma: the NHS will continue funding after the fourth cycle when a reduction of 50 % in serum plasmaprotein M is obtained.”


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