Historically, healthcare spending across developed countries has constantly outpaced economic growth.[1] It is expected that our aging population will keep putting healthcare budgets under pressure for the foreseeable future. The OECD Joint Network of Senior Budget and Health Officials estimates that “the average annual change in health spending will be twice as high as the change in government revenues from 2023 to 2040.”[2] At the same time, health spending has led to considerable improvements in the health of populations and is also an important source of economic growth and jobs.[3]

In this context, despite representing a fraction of healthcare budgets (see table), the introduction of new technologies, in particular novel pharmaceuticals, has often been the primary target of cost-containment interventions. In the five years prior to the pandemic, pharmaceutical spending growth was below the growth rate of non-pharmaceutical interventions, or put more simply, “the share of pharmaceutical spending has been shrinking”.[4] Nevertheless, payers continue to struggle to make cost-effective treatments available to patients despite the value they provide to patients, health systems, and society.[5]

Public debates and lay media often focus on the unit price of innovative pharmaceuticals. This single focus on the price generally overlooks the actual budget impact, as well as the health and economic benefits new treatments deliver. Obviously, health authorities are concerned with budget impact. However, such impact is often over-estimated, which leads to restricted and delayed patient access.[6] For example, the introduction of hepatitis C curative treatments after 2015 was forecasted to push health systems to the verge of bankruptcy. Looking back, one may be hard pressed to identify their impact on health spending in the chart above. Similarly, despite increased spending on cancer medicines (driven by demographics and the ability to treat more tumour types), the overall cost of cancer care as a share of health spending has remained stable over 20 years – representing 4-7% of total health expenditure across European countries.[7]

The assumption that affordability of pharmaceuticals is a one-dimensional problem (i.e., the unit price) to be solved within annual and siloed pharmaceutical budgets can only result in delayed and restricted access for patients. It is striking that price-volume agreements – whereby the unit price decreases in relation with increased use – are still classified as “innovative pricing agreements”[8] and remain implemented in only a few countries. A broader understanding of affordability is thus needed. One that would take into account the budget impact over several years, the benefits of improved health outcomes across the health systems, including cost offsets, and the productivity gains for our economies.

Today, we’re launching “Broadening the perspective”, a report produced by Vintura and commissioned by EFPIA’s Health Systems Working Group. This report is the result of several months of research, stakeholders’ interviews, and roundtables to explore the other side of the affordability “coin” and potential solutions to improving affordability of medicines.

The report has identified five specific policy solutions to improve pharmaceutical affordability starting from the application of a long-term, cross-budget perspective. This includes multi-year budgeting to treat pharmaceutical spending as an investment, adding a societal value perspective in health technology assessment, integrated budget design across the health system, and innovative reimbursement agreements that allow both the company and the payer to make a novel treatment affordable.

Beyond pharmaceutical spending, we also need to look at the other 85% of health spending. The Vintura report finds a place in the work done by various groups who are also calling for a new perspective and solutions to address the future challenges facing health systems financing. To name a few, I would point to the work done by the OECD Joint Network of Senior Budget and Health Officials on the fiscal sustainability of health systems since 2011, as well as the recommendations from the World Economic Forum’s Global Coalition for Value in Healthcare, a multistakeholder network exchanging experiences and accelerating healthcare transformation towards value-based healthcare systems.[9]

The ability for health systems to afford novel therapeutics can only be addressed by looking beyond unit price and improving budget design beyond annual and siloed budgeting. There is a strong consensus that health spending must be treated as an investment.[10] This is particularly true for innovative pharmaceuticals. A new perspective on pharmaceutical expenditures requires moving the spotlight from legitimate, but short-term budgetary concerns leading to delayed patient access and opportunity costs, towards new payment and assessment models that improve affordability of medicines and ensure rapid patient access.

EFPIA believes that faster, more equitable access across Europe is an achievable goal. After years of research and development, companies want their medicines to reach patients as quickly as possible. We hope that this report will stimulate a much-needed discussion on the financing of health systems and pharmaceuticals, and we are ready to take part in that discussion. 

Download our new report

Watch the recording of EFPIA's session at Gastein 2023

[1] World Economic Forum, McKinsey, The Financial Sustainability of Health Systems - A Case for Change, 2012.

[2] OECD Joint Network of Senior Budget and Health Officials home page. Accessed August 18, 2023.

[3] OECD, Fiscal sustainability of health systems brochure, 2019.

[4] IQVIA Institute, Understanding Net Pharmaceutical Expenditure Dynamics in Europe, April 2022.

[5] See various examples in EFPIA and Vintura, Demonstrating the power of innovation in Europe, October 2022.

[6] Geenen et al., Affordability of oncology drugs: accuracy of budget impact estimations, Journal of Market Access & Health Policy, 2019.

[7] Hofmarcher et al., Comparator Report on Cancer in Europe 2019 – Disease Burden, Costs and Access to Medicines, Institute for Health Economics.

[8] Flume et al., Innovative pharmaceutical pricing agreements in five European markets, Health Policy, 2018.

[9] WEF, The Moment of Truth for Healthcare Spending: How Payment Models can Transform Healthcare Systems, January 2023.

[10] Health as an investment: We must rethink how we view health spending (guest blog), Professor Mauro Marè