Do pharmaceutical budgets deliver financial sustainability in healthcare? Evidence from Europe

Abstract Payers have increasingly implemented a variety cost-containment measures to promote sustainability within the pharmaceutical sector. This paper provides an assessment of a range of different applications of budgets within the pharmaceutical sector and assesses the impact of pharmaceutical budgets in the context of health financing goals. A comprehensive literature review was carried out in order to identify evidence on the presence and impact of budget capping in the pharmaceutical sector and an analytical framework was developed. Evidence generated from the literature was validated by experts in pharmaceutical policy through a round-table meeting and a series of semi-structured interviews. Five broad types of budgets were employed in the pharmaceutical sector: global, regional, disease-specific, product-specific, and prescribing. Global budgets on total pharmaceutical expenditure are relatively straightforward tools for promoting cost-containment however their use often restricts flexibility in terms of total health budget allocation. Disease specific budgets without consequences for exceeding the budget are unlikely to promote fiscal sustainability as these budgets are frequently exceeded. Product specific budgets and prescribing budgets can play an important role in promoting microeconomic efficiency however evidence on their impact is mixed. Overall, budgets are present at both macroeconomic and microeconomic levels. While they are important tools for promoting fiscal sustainability, additional policy measures are needed to further enhance value for money within the pharmaceutical sector.