The heterogeneity of markets for drugs in Europe

Abstract

The cost of distribution of drugs in European countries is one of the factors causing differences in prices among countries. Twenty countries are analyzed, to demonstrate the differential impact of margins paid to distributors. In most cases, distribution channels include two intermediaries, a wholesaler-distributor and a pharmacist. Three models can be observed: a fixed margin in percentage, either on the ex factory price, or on the public price; a regressive margin model, with more or less complex formulas; and a loosely regulated model, within which the revenue of each actor is set by market competition under a global cap on the difference between ex factory prices and public prices. The multiplicative coefficient varies between 1.14 and 2.44 according to countries and to models. The prices in different countries of three drugs, omeprazole, setraline and ramipril were studied. The cost of distribution tends to increase the variability of the public price, when compared to the variability of ex factory prices. This may explain a part of the often observed difference in cost-effectiveness of a treatment across countries. The efficiency of distribution is also an important factor of the efficiency in health care services