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Medicines are extremely cheap in Norway
Report to the Minister of Health with clear conclusion
06.06.2008
Norway is the cheapest or among the cheapest countries for medicines in Western Europe. This applies both for medicines covered by patents and for medicines with generic competition. At the same time, profits for Norwegian pharmacies and medical wholesalers are among the lowest.
These are the main findings in the most comprehensive analysis of the price of medicines ever carried out in Norway. The report was compiled by the Institute for Research in Economics and Business Administration (SNF) on behalf of the Minister of Health, Mrs. Sylvia Brustad. The report compares the price of medicines and margins in Norway with the nine European countries selected by the Norwegian authorities as being the most comparable. There has previously been disagreement about how low the Norwegian prices are compared to other countries.
Comment from the Norwegian Pharmacy Association: Strong documentation, which confirms that prices of medicines are low
The Norwegian Pharmacy Association is very satisfied that the Minister of Health, Mrs. Sylvia Brustad, has cut through the disagreements about what the facts are regarding the price of medicines, and with this has placed unusually strong documentation on the table. The report from SNF is factually and methodically impressively strong, and is a more comprehensive analysis than anything published in Norway about the price of medicines.
The investigation used several methods, all of which place Norway as the cheapest or one of the very cheapest countries, based on prices and consumption during the first six months of 2007. The findings are entirely in line with the documentation that the Pharmacy Association has worked out over the last few years. The report also shows that the political goal of low prices on medicines in Norway is satisfied to a particularly high degree. The report also establishes that the distribution margins in Norway – the total earnings of pharmacies and pharmaceutical wholesalers – are among the lowest in Europe. This confirms that the Norwegian distribution system is very efficient.
The price level in Norway is now even lower than the report states. The prices of a number of medicines with generic competition were cut by a further NOK 113 million as from 1 January 2008. This price cut was not picked up by the investigation, which was based on figures from 2007.
It is important to measure the price level of medicines in Norway compared to other countries. Therefore, such an investigation should be carried out every year, so that there always is solid documentation about price levels.
The report in greater detail
Mrs. Sylvia Brustad, Minister of Health, informed the Norwegian parliament on 17 April 2007 that she wanted to initiate an external examination of the price of medicines in Norway. The Ministry of Health and Care Services (HOD) chose the Institute for Research in Economics and Business Administration (SNF) to draw up a report, which has now been published (in Norwegian).
http://www.regjeringen.no/upload/HOD/Dokumenter%20LMS/Endelig%20rapport%20SNF.pdf
HOD presents the main findings of the investigation as follows:
http://www.regjeringen.no/nb/dep/hod/aktuelt/nyheter/2008/billige-legemidler-i-norge.html?id=514810
The price investigation shows that Norway is among the very cheapest countries, whether you look at:
Volume-weighted average prices for each substance were calculated for the wholesalers' purchase price (GIP) and the pharmacies’ selling price (AUP), as well as total mark-up for wholesalers and pharmacies (relative margin). Average prices and relative margins were compared to those of the other countries in the investigation.
The data were then analysed by calculating price indices and by regression analysis in order to test whether the differences in price were statistically significant.
Actual results
Bilateral indices (Public Price, excl VAT) for all substances, Norwegian weights
The investigation shows that Norway has the lowest prices on medicines of all the ten comparison countries, when the Norwegian consumption of medicines is used as the basis (line A). The price difference compared to other countries is particularly great for the medicines included in the tiered pricing system (line D). These are the most consumed medicines with generic competition.
These are the main findings in the most comprehensive analysis of the price of medicines ever carried out in Norway. The report was compiled by the Institute for Research in Economics and Business Administration (SNF) on behalf of the Minister of Health, Mrs. Sylvia Brustad. The report compares the price of medicines and margins in Norway with the nine European countries selected by the Norwegian authorities as being the most comparable. There has previously been disagreement about how low the Norwegian prices are compared to other countries.
Comment from the Norwegian Pharmacy Association: Strong documentation, which confirms that prices of medicines are low
The Norwegian Pharmacy Association is very satisfied that the Minister of Health, Mrs. Sylvia Brustad, has cut through the disagreements about what the facts are regarding the price of medicines, and with this has placed unusually strong documentation on the table. The report from SNF is factually and methodically impressively strong, and is a more comprehensive analysis than anything published in Norway about the price of medicines.
The investigation used several methods, all of which place Norway as the cheapest or one of the very cheapest countries, based on prices and consumption during the first six months of 2007. The findings are entirely in line with the documentation that the Pharmacy Association has worked out over the last few years. The report also shows that the political goal of low prices on medicines in Norway is satisfied to a particularly high degree. The report also establishes that the distribution margins in Norway – the total earnings of pharmacies and pharmaceutical wholesalers – are among the lowest in Europe. This confirms that the Norwegian distribution system is very efficient.
The price level in Norway is now even lower than the report states. The prices of a number of medicines with generic competition were cut by a further NOK 113 million as from 1 January 2008. This price cut was not picked up by the investigation, which was based on figures from 2007.
It is important to measure the price level of medicines in Norway compared to other countries. Therefore, such an investigation should be carried out every year, so that there always is solid documentation about price levels.
The report in greater detail
Mrs. Sylvia Brustad, Minister of Health, informed the Norwegian parliament on 17 April 2007 that she wanted to initiate an external examination of the price of medicines in Norway. The Ministry of Health and Care Services (HOD) chose the Institute for Research in Economics and Business Administration (SNF) to draw up a report, which has now been published (in Norwegian).
http://www.regjeringen.no/upload/HOD/Dokumenter%20LMS/Endelig%20rapport%20SNF.pdf
HOD presents the main findings of the investigation as follows:
http://www.regjeringen.no/nb/dep/hod/aktuelt/nyheter/2008/billige-legemidler-i-norge.html?id=514810
The price investigation shows that Norway is among the very cheapest countries, whether you look at:
- all medicines together,
- the segment for patented medicines, or
- the segment for medicines with generic competition.
Method and data used
SNF purchased data from IMS Health about the 300 most used substances in Norway during the first six months of 2007. The data set included price, volume (packaging and dosages), patent status, original/generic, packaging size, presentation form, strength, etc. In addition to data from Norway, data from Sweden, Finland, Denmark, Germany, the UK, the Netherlands, Austria, Belgium and Ireland were also collected. It is prices from these countries that are used to set maximum prices for prescription medicines in Norway.Volume-weighted average prices for each substance were calculated for the wholesalers' purchase price (GIP) and the pharmacies’ selling price (AUP), as well as total mark-up for wholesalers and pharmacies (relative margin). Average prices and relative margins were compared to those of the other countries in the investigation.
The data were then analysed by calculating price indices and by regression analysis in order to test whether the differences in price were statistically significant.
Actual results
Bilateral indices (Public Price, excl VAT) for all substances, Norwegian weights
The investigation shows that Norway has the lowest prices on medicines of all the ten comparison countries, when the Norwegian consumption of medicines is used as the basis (line A). The price difference compared to other countries is particularly great for the medicines included in the tiered pricing system (line D). These are the most consumed medicines with generic competition.