Projecting pharmaceutical expenditure in EU5 to 2021: adjusting for the impact of discounts and rebates

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 United Kingdom). Methods: We adjust 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 move from “list” to “net” prices, as far as data are available. Results: We find an increasing divergence between expenditure measured at list and net prices. When the forecasts for the five countries are aggregated, the EU5 (unweighted) average historical growth (2010 – 2016) rate falls from 3.4% compound annual growth rate (CAGR) at list to 2.5% at net. For the forecast, the net growth rate is estimated at 1.5% versus 2.9% at list. Conclusions: The results from this study suggest that future growth in pharmaceutical expenditure in Europe is likely to be (i) lower than previously understood from forecasts based on list prices; and (ii) 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.