Denmark
From WikiPharmaceutical
Denmark’s per capita consumption of pharmaceuticals is well below that of western European countries, Japan and the United States (measured as sales in ex-factory prices and including both prescription and non-prescription medicines and in the primary care and hospital sectors) (see Table 13). As a percentage of GDP (0.7%), pharmaceutical consumption in Denmark is lower than in any other western European country, Japan or the United States, where the average value is 1.3%. Special initiatives have also resulted in much lower use of antibiotics in Denmark than in other countries in the EU.
Price levels
As a result of general rises in the price of drugs in Denmark, resulting in some prices well above the European average, legislation passed in November 2000 introduced two temporary price ceilings. Prior to June 2001 pharmacy purchase prices could not exceed the price in force in November 2000 or the European average price (the average price of drugs in Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden and the United Kingdom). For drugs that were not on the market in November 2000, the pharmacy purchase price could not exceed the price that was set when the product first appeared on the market. Although the temporary price ceilings are no longer in force, members of the Medicine Producers’ Organization have guaranteed that pharmaceutical prices will not rise beyond the European average price for 12 months from June 2001. Since November 2000 the definition of the European average price has changed slightly to include all countries in the EU and the European Economic Area (Norway, Iceland and Lichenstein) with the exception of Spain, Portugal, Greece and Luxembourg. Pharmaceutical companies are obliged to inform the Danish Medicines Agency of the price of individual drugs in the remaining countries every six months. Unfortunately no full price comparison has been made yet, but in the light of the initiatives mentioned above, it is expected that the price of drugs in Denmark will not, for the time being, exceed the European average price.
Pharmaceutical expenditure
The steady rise in the level of pharmaceutical expenditure through the NHSS has focused political attention on the pharmaceutical market for many years, although this focus has intensified since the late 1980s. In spite of several initiatives to control this development, such as price freezes, price cuts, generic substitution and reference pricing, pharmaceutical expenditure continues to rise. However, a new reimbursement system launched in March 2000 aims to make public savings of up to 325 million DKr a year. The issue of liberalization has been subject to conflicting political interests and lobbying by strong interest groups in the pharmaceutical sector. With the exception of a minor liberalisation of the sale of non-prescription drugs from October 2001, there are no further plans to liberalise this sector. In 1999 pharmaceutical consumption in the hospital sector accounted for 18.8% of total pharmaceutical consumption. In the primary care sector pharmaceutical expenditure was financed by the NHSS (54.6%), patient copayments (40.1%) and municipalities (5.2%).
Practice guidelines
Practice guidelines are usually produced by the medical colleges for various specialties and by the Danish College of General Practice. The Institute for Rational Pharmacotherapy, established on 1 October 1999 as an independent unit attached to the Medicines Agency, also provides information and guidelines on the rational use of pharmaceuticals, with a special focus on new drugs or drugs for rare diseases (orphan drugs), although there are no incentives or penalties for adhering or failing to adhere to these guidelines. Because pharmaceutical expenditure is financed by the counties, most attempts to influence doctors’ prescribing behaviour are based on decentralized initiatives. Most counties have units that undertake medical audits. They also disseminate statistical data on prescribing, newsletters and other material to improve quality. Some counties have set up projects to make routine outreach visits to individual general practitioners to discuss prescribing patterns.
Criteria for reimbursement
Any pharmaceutical product that has marketing approval from the Danish Medicines Agency can be sold by private pharmacies and distributed by hospital pharmacies. The Danish Medicines Agency is a parallel board to the National Board of Health under the Ministry of Health. It is responsible for legislation concerning pharmaceuticals and medical devices, approval of new products, clinical trials, deciding which drugs should be reimbursed, and licensing of companies that produce or distribute pharmaceuticals. The Institute for Rational Pharmacotherapy aims to provide objective information and guidelines on the rational use of pharmaceuticals, both in pharmacological and economic terms. However, marketing approval is based on chemical, pharmaceutical, clinical and safety documentation, without any assessment of need or cost effectiveness, which means that there is no essential drugs list in the Danish pharmaceutical sector. Instead, consumption is partly regulated through the reimbursement system.
The Danish Medicines Agency decides on the reimbursement status of each pharmaceutical product in Denmark. The NHSS Committee advises the Danish Medicines Agency before any decision is taken to reimburse a particular drug. In general, reimbursement is granted for drugs that have a definite and valuable therapeutic effect when used on a well defined indication. The price of a drug must also be proportionate to this effect. Reimbursement is not granted in the following cases:
where treatment with the drug requires special examination and diagnosis where there is a risk that the drug will be used outside its approved indication where there is a risk that the drug will be used for purposes which cannot expect reimbursement from the NHSS where the drug’s effect is not clinically documented where there is a risk that the drug will be used as a first choice even though this is not desirable where it is unclear whether the drug should be used as a first choice where there is a risk that the drug will be abused where the drug is primarily used in hospitals where it is not possible for the patient to take the drug him/herself Usually only drugs subject to prescription are eligible for reimbursement. Non-prescription drugs may be added to the list of reimbursable drugs, but in such cases reimbursement is only granted to pensioners and patients suffering from a chronic illness that requires continuous treatment with the drug, and only if a prescription has been issued for the drug in question.
Certain characteristics of a drug, its specific use or the way in which it is prescribed may lead to a decision not to reimbursement it, even though it meets the normal criteria for reimbursement. Where this type of drug is in principle valuable and is likely to be prescribed, the Danish Medicines Agency may, on application from the prescribing doctor, determine that the NHSS should reimburse the patient. This procedure is known as individual reimbursement.
The Danish government urges doctors to consider costs when prescribing drugs. In order to help doctors and patients to choose the cheapest drugs, a scheme to favour generic substitution (the so-called ‘G scheme’) has been in force since 1991. The general rule is that pharmacists should dispense generic drugs unless the prescribing doctor has marked on the prescription that the prescribed drug is the one that should be dispensed. Patients are permitted to refuse substitution.
Denmark has a high proportion of generic and parallel-imported products on the market. Parallel importing of pharmaceuticals has been permitted since 1990 and generic prescription of pharmaceuticals since 1991. In 1999 generic products accounted for 49% of total expenditure on pharmaceuticals, while parallel-imported products accounted for 15%; in 1995 these figures were 46% and 6% respectively. A further initiative to contain costs has been to promote the use of generic and parallel-imported products through a reference pricing system for reimbursement. Under this system, introduced in 1993, reimbursement was based on the average price of the two cheapest versions of a specific product. If patients want more expensive drugs they must make a higher copayment. In 1993 about 389 out of 2256 registered drugs were influenced by reference prices; prices for 48% of all packets decreased, 40% remained the same and only 12% showed increased prices (28). The price index for packages covered by a reference price decreased by 13.9% between December 1992 and December 1993. In the same period the price index for other packages increased by 2.9%. The changes resulted in a total decrease of 2.7% for all packages. From June 2001 the reference price in a group of drugs is either the price of the cheapest drug in the group or the lowest European average price in the group.
Distribution of pharmaceuticals
Denmark has three wholesalers distributing drugs to private pharmacies in addition to some wholesalers that only deal with drugs for veterinary use. Wholesale profits are fixed through individual negotiations between manufacturers or importers and wholesalers and the profit level is determined through competition.
Pharmaceutical products are distributed by privately owned pharmacies in the primary care sector and by hospital pharmacies in the hospital sector (with each county running several hospital pharmacies). Private pharmacies are organized as a liberal profession, but subject to comprehensive state regulation. The Ministry of Health decides on the number and geographical location of pharmacies and pharmacy owners must be authorized by the Ministry of Health. There are currently 287 pharmacies in Denmark, but drugs may be sold in as many as 1700 different retail outlets. From October 2001 other outlets have been authorized to sell non-prescription drugs. Pharmacies are organized in such a way as to ensure that everybody has reasonable access to a pharmacy, even in rural areas where pharmacies may not be profitable. A collective financial equalization system is in place, with pharmacies with above average turnovers contributing to pharmacies with below average turnovers.
Pharmacies’ total gross profits are fixed by the Ministry of Health and the Danish Association of Pharmacists every two years on the basis of current figures and forecasts. In 2000 and 2001 the total gross profit of the 287 pharmacies was DKK 2015 and DKK 2044 million per year respectively, corresponding to less than 25% of expected annual turnover (exclusive of value added tax).
Hospitals can choose to buy drugs from these private pharmacies or through hospital pharmacies. Hospitals buy approximately 90% of their drugs from hospital pharmacies. Where hospitals buy drugs from private pharmacies, the retail price is based on the hospital’s drug purchases in the preceding year. Some of the hospital pharmacies have established AMGROS, a wholesaler that invites tenders for pharmaceutical contracts. Most hospital pharmacies buy drugs through AMGROS.
