Price types

Understanding the prices applied for medicines in hospitals is even more difficult than for the out-patient sector. As explained in section 4.1, in the out-patient sector prices are regulated

at all levels in most countries (price control of the ex-factory or pharmacy purchasing price plus regulation of the remuneration of the distribution actors). In the in-patient sector several countries regulate the maximum list price, which is the ex-factory price or the pharmacy purchasing price (cf. Table 4.3). The maximum list price builds the basis for the actual hospi-tal price which is achieved during the procurement process (by tendering or by negotiations).

Whereas discounts and rebates are usually forbidden or limited by regulation in the out-patient sector (cf. section 4.1), different forms of price reductions without any limitations may be granted in the in-patient sector.

To visualise the price types in the in-patient sector compared to the out-patient sector, a schematic overview is given in Figure 4.2.

Figure 4.2: European survey – Build-up of medicine prices in the in-patient compared to the out-patient sector, 2009

Source: Developed by PHIS Hospital Pharma (GÖG/ÖBIG, SUKL) 2010

In many PHIS countries (BE, BG, CZ, DE, EE, LT, NL, NO, PL, RO, SK, TR, UK) the hospital price includes a fixed mark-up and a VAT rate.

Table 4.3: European survey – Understanding hospital prices in European countries, 2009

Hospital price corresponds to ... Countries Ex-factory price AT, DE, ES, FR, IT, PT

Out-patient WS mark-up applicable (AT), BG, CZ, HU, LV, RO, TR WS mark-up not regulated CY¹, DK, FI, LT, NL, NO, PL, SE

Fixed hospital WS mark-up BE (21.746%), DE (6%), IE (17.66%), SK (9%)

VAT BE (6%), BG (20%), CZ (10%), DE (19%), EE (9%), LT (5%),

NL (6%), NO (25%), PL (7%), PT (5%), RO (9%), SK (10%), TR (8%), UK (17.5%)

NHS = National Health Service, PPP = Pharmacy Purchasing Price, VAT = Value Added Tax, WS = Wholesale Data not available for EL, LU

1 Only valid for public hospitals; private hospitals PPP plus 20% administration costs Source: PHIS 2009c-u, PHIS 2009v

As shown in Table 4.3, in six countries (AT, DE, ES, FR, IT, PT) the hospital price corre-sponds to the ex-factory price; in nine other countries (CY, DK, FI, HU, IE, LV, MT, SI, SE) the official hospital price is the net pharmacy purchasing price. Hence, in the majority of countries the hospital price corresponds to the gross pharmacy purchasing price, meaning that on the ex-factory price a wholesale mark-up plus a VAT rate is added to the price. The wholesale mark-up for medicines used in hospitals might be the same as in the out-patient sector, but might also not be regulated at all. Four countries (BE, DE, IE, SK) have specific hospital wholesale mark-ups. They range between 6% in Germany and 21.7% in Belgium.

(for further specific information see Box 4.5).

Box 4.5: European survey – Wholesale mark-up schemes for medicines in hospitals in Austria, Belgium, Germany, Ireland, Portugal and Slovakia, 2009

In Austria hospital prices are usually set at ex-factory price level. However, several hospi-tals do not have a hospital pharmacy and therefore they are obliged by law to be supplied by other (hospital) pharmacies. Hence, the hospital price for medicines in those hospitals corresponds to the net pharmacy purchasing price (incl. e.g. wholesale mark-ups). The price build-up in Austria is explained in more detail under section 9.1.1.

In Belgium the official maximum hospital price is the gross pharmacy purchasing price, which is calculated by adding a 21.746% wholesale mark-up as well as 6% VAT rate on the ex-factory price.

In case a medicine is delivered through a wholesaler in Germany, a fixed mark-up of 6% is added on the ex-factory price. Hospital prices in Germany include 19% VAT.

In general, hospital prices in Ireland include a wholesale mark-up of 17.66% if hospitals are supplied by wholesalers (direct delivery by industry are also possible). However, under nationally agreed arrangements public hospitals are exempt from the wholesale mark-up if their individual orders reach pre-defined thresholds. In fact, most hospitals can avoid the wholesale mark-up due to a substantial proportion of their purchases.

In Portugal the hospital price corresponds to the ex-factory price including 5% VAT. In practice wholesale mark-ups are not relevant in the in-patient sector due to direct deliveries from industry. Wholesale mark-ups for the in-patient sector are not regulated, but when applied usually the out-patient mark-ups are taken. The price build-up of medicines used in hospitals in Portugal is explained in more detail in section 9.4.1.

In Slovakia hospital prices include a linear wholesale mark-up of 9%, in contrary to the out-patient sector, where a regressive wholesale mark-up scheme is applied. Prices of medi-cines used in hospitals include 10% VAT. The price build-up of medimedi-cines used in hospitals in Slovakia is explained in more detail in section 9.5.1.

Source: PHIS 2009c, PHIS 2009d, PHIS 2009q, PHIS 2009s, PHIS 2009v

In contrary to the out-patient sector, there is no pharmacy mark-up applied in the in-patient sector. This is linked to the distribution system in the in-patient sector where hospitals are mainly delivered by industry and wholesalers (cf. section 3.4). Should a hospital pharmacy dispense medicines to out-patients, then a specific remuneration might be applied (e.g. in Belgium where the hospital pharmacy receives a fee of up to € 7.11 per package).

Hospital prices in 14 of 27 PHIS countries include VAT rates. The VAT rates vary between 5% in Portugal and 25% in Norway. The VAT rates for medicines used in the hospital sector are the same as for medicines applied in the out-patient sector.