Rationalizing Pharmaceutical Spending

IMF Working Papers, September 16, 2022

Source details

Author: Manuel García-Goñi
Publication date: September 16, 2022
Paper series: IMF Working Papers, Working Paper No. 2022/190
Core focus: Review of literature and databases on the level and composition of pharmaceutical spending; estimation of potential efficiency gains from increased use of generics; review of procurement and tendering arrangements and their implications for spending; identification of channels of spending inefficiencies and reform options to reduce pharmaceutical spending while ensuring quality health outcomes.
Key subjects: Consumption, Expenditure, Health, Health care, Health care spending, National accounts
Keywords: biosimilar, Consumption, economic evaluation, efficiency gain, Europe, generics, Global, Health care, Health care spending, percentage value share, pharmaceutical policy, Pharmaceutical spending, procurement, share of generic, volume share

Pharmaceutical spending accounts for a large share of health spending worldwide.
The large variation in pharmaceutical spending across countries suggests substantial potential efficiency gains.
The paper:
- Reviews existing literature and databases on the level and composition of pharmaceutical spending.
- Estimates potential efficiency gains from increased use of generics.
- Reviews how countries organize procurement and tendering of pharmaceuticals and the implications for spending.
- Identifies the various channels through which spending inefficiencies can arise.
- Identifies reform options for reducing pharmaceutical spending while ensuring quality health outcomes.

Increase use of generics to realize potential efficiency gains.
Optimize procurement and tendering mechanisms to reduce spending without compromising quality.
Address identified channels of spending inefficiencies with targeted reforms to preserve or improve health outcomes.