Prescription drug prices in the UK, Norway and Sweden are the lowest among a group of 10 European nations, while the most expensive are in Ireland, Belgium and – usually – Germany, according to a new report.

Out of the 10 countries constituting the reference price “basket” for prescription drug prices in Norway – which also include Austria, Denmark, Finland and the Netherlands – the UK is usually the cheapest country, apart for those generic drugs which are subject to reference pricing in Norway, in which case it will of course be the cheapest market, says the study, which was conducted for the Norwegian Pharmacy Association (Apotekforeningen) by the country’s Institute for Research in Economics and Business Administration (SNF).
The study examines prices across Europe during the first half of 2009, using data from IMH Health.

Overall, retail prices of prescription drugs are about 17% less expensive in the UK than in Norway, but wholesale prices in Norway are the lowest of the 10-nation group, with UK prices being the second-cheapest, according to the researchers. Pharmacy-level prices of patented prescription drugs in the UK are on average 19.8% cheaper than Norway, while those in Sweden are 6.9% more expensive and Belgium has the highest prices of the group, averaging 68.4% more than Norway. Generic drugs which are subject to reference pricing are the cheapest by far in Norway of the 10 nations, with prices in Sweden, the second-cheapest country, averaging 13% more than in Norway.

Pharmacy margins among the 10-nation group are the highest in Ireland, where they are 25 percentage points higher than in Norway, says the study; the average margin in Norway is approximately 18% while in Ireland it is around 43%. Finland, the Netherlands and Germany also have relatively high margins, as do Austria and the UK albeit to a lesser extent, while those in Sweden, Denmark and Belgium are not significantly different from Norway. Pharmacy margins in the UK are lower than in Norway for products without generic competition, while the opposite applies for those with generic competition, it adds.

Looking at pricing developments during 2007- 9, the researchers note that while most of the 10 countries experienced price reductions during the period, those in Norway were “fairly strong” compared with the reference countries. Norway’s low prices and margins are due its strict regulation of prices and margins in the patented sector, combined with incentives creating competition in the reference-priced generic segment (trinnpris). “These factors are also likely to explain why Norway is one of the cheapest countries in Western Europe when it comes to prescription drugs,” they add.

Commenting on the report’s findings, analysts at IHS Global Insight forecast that drug price levels are likely to widely fluctuate in the short-to-medium term, given that several countries among Norway’s basket of reference countries now implementing major cost-containment measures. For example, Finland’s introduction of reference pricing for generics in April 2009 is likely to put serious downward pressure on prices of off-patent products, not only in that market but also in Norway.

Also Germany - whose system currently tends to encourage high pricing of branded medicines - is in the process of overhauling its drug pricing scheme, with the aim of requiring makers of patented drugs to negotiate prices, and with an interim three-year freeze on pharmaceutical prices expected to take effect from August 1, if Parliament agrees to the drug package presented by the coalition government. If it does so, these measure are likely to reduce the prices of patented drugs in Germany significantly and this will, inevitably, lead to a Europe-wide decrease in prices, since Germany is a reference for many member states, says IHS Global Insight.