Pharmaceutical care is highly complex and evolves over time as a result of novel medicines entering the market. While new medicines may offer alternatives to existing treatments, and in some cases, the prospect of treating conditions previously considered incurable, costly innovations can have major implications for overall healthcare budgets. Across the EU, spending on retail pharmaceutical spending is generally the third largest cost component – after the inpatient and outpatient sector – accounting for around one‑seventh of all health spending.
In 2022, EU countries spent on average EUR 500 per capita on retail pharmaceuticals (including other medical non-durables) but with substantial differences across countries (Figure 5.13). A variety of factors influence the level of per capita spending on retail pharmaceuticals, including distribution, prescribing and dispensing; pricing and procurement policies; and patterns of uptake of novel and generic medicines. With EUR 721, pharmaceutical spending per capita was highest in Germany and nearly three times higher than in Denmark (EUR 266). In this latter country, a comparably high proportion of medicines is however dispensed as part of inpatient or outpatient treatments and thus outside traditional retail channels. Other high pharmaceutical spenders are Malta and Switzerland where per capita spending is 30‑35% above the EU average. On the other hand, in Poland, the Netherlands and Estonia, per capita pharmaceutical spending is at least one‑third below the EU average.
Prescription medicines account for three out of every four Euros spent on retail pharmaceuticals (including other medical non-durables) in the EU. Over-the‑counter medicines (i.e. medicines that do not require a prescription from a physician and are generally paid out of patients’ pockets) and other medical non-durables make up the remaining part. One exception to this spending pattern can be found in Poland, where over-the‑counter medicines represent more than half of all retail pharmaceutical spending.
Across the EU, retail pharmaceutical spending is predominantly financed by public payers. On average, around 70% of the total pharmaceutical bill in the EU is covered by government and compulsory insurance schemes (Figure 5.14). Public coverage is particularly high in Cyprus where 90% of all pharmaceutical retail spending is financed from the public purse, followed by Germany, France and Ireland with coverage rates of over 80%. However, public coverage is below 40% in Bulgaria and Poland. An exception to EU-wide financing patterns of retail pharmaceuticals can be observed in Slovenia, where voluntary health insurance covers more than one‑fifth of the costs.
Analysing retail pharmaceutical spending only gives a partial picture of the cost of pharmaceuticals in the health system. Spending on medicines in the hospital sector and other settings can be significant – typically accounting for 20% or more on top of retail spending (Morgan and Xiang, 2022[1]). Over the last decade, hospital pharmaceutical spending has grown substantially, partly due to the advent of new high-cost treatments, particularly in oncology and immunology (IQVIA, 2021[2]). Hospital and other non-retail pharmaceutical spending increased more rapidly than retail medicines in most countries, with the highest growth rates in Germany, Spain and Czechia (Figure 5.15).
