Surging drug costs straining national budgets, health insurers warn

Rising pharmaceutical prices, particularly for novel therapies and cancer treatments, are driving increased health spending across Europe, placing significant strain on national budgets, according to a new study published this week.

The report by the European Social Insurance Platform (ESIP) examined levels of national public spending on medicines and focused on which therapeutics absorb the bulk of the expenditure.
“We found that, unsurprisingly, spending on medicines continues to increase,” said Benedetta Baldini, senior policy advisor at ESIP, presenting the outcomes of the study that collected data from 15 EU member states and Norway.
The study highlights a steady rise in pharmaceutical expenditure, both in hospitals and retail pharmacies—referred to as in-patient and out-patient expenditure, respectively.
The main factor driving these hikes is the rising cost of medicines, rather than an increase in the volume of prescriptions.
For example, in Austria, the number of prescribed drugs has not grown significantly, the study notes, whereas the cost per prescription in out-patient care has surged by 78% since 2013.
Among the costliest therapeutic areas, cancer drugs stand out, dominating both out- and in-patient spend.
In France, for instance, oncology drugs make up 29% of out-patient pharmaceutical spending, with an annual growth rate of 11%. In the hospital setting, this number jumps dramatically, with 77% of in-patient drug spending dedicated to cancer treatments.
Reimbursed prescription medicines, which are covered by national health insurers, represent just a portion of overall healthcare expenditure.
However, these rising costs are putting severe pressure on national budgets, many of which are already stretched thin due to austerity measures in certain countries.
“These trends are placing immense strain on healthcare budgets, and by extension, on the people who pay for them,” said Max Blindzellner, senior manager at GKV-Sitzenverband, Germany’s association of compulsory health insurance funds.
He noted that out-patient pharmaceutical spending in Germany has risen by 22%, increasing from €41 billion to €50 billion over the 2019-2023 period.
If this trend continues, Blindzellner warned that contributions to compulsory health insurance may not keep pace, potentially leading to higher contribution rates.
“To put it simply, the crisis of rising pharmaceutical costs is also a crisis of affordability, particularly in Germany,” he added.
Another common trend across the countries surveyed is that the increased spending is partly due to the introduction of novel, often more expensive, therapies.
Baldini from ESIP pointed out that these new, costly treatments are taking a larger share of national pharmaceutical budgets.
“We are seeing a shift in patients’ preference towards new products over older, well-established medicines,” she said, highlighting Finland as a prime example of this trend.
While decisions on pharmaceutical marketing authorisations are based on efficacy and safety, reimbursement decisions on novel drugs are typically made based on a drug’s relative effectiveness compared to existing treatments.
This can lead to uncertainty, as some newly introduced drugs come with limited clinical evidence, despite their higher price tags.
“This uncertainty means that patients and doctors may not know which treatment is truly the best option, leading to the risk of sub-optimal or even ineffective therapies,” said Blindzellner from GKV-Sitzenverband.
Sophie Kelly, from France’s national health insurance fund CNAM, warned that while patients benefit from early access to supposedly innovative treatments—especially for serious diseases with unmet needs—there are risks.
According to Kelly, approximately 21% of drugs granted early access in France were later deemed non-innovative by the country’s national agency.
Kelly also highlighted the rising costs of orphan medicines, which treat rare diseases affecting fewer than one in 2,000 people.
In France, the average annual growth rate of orphan drug spending was 20.5% between 2019 and 2022. “This is so much higher than the growth rates for a global drug market,” she said, hinting that these escalating costs present a major challenge for overall pharmaceutical spending.