Pricing and reimbursement of drugs in Denmark

Abstract

The Danish health care system is decentralized and tax financed. Reimbursable drugs are financed by the national health insurance, which despite its official name, is a tax-funded system for paying for drugs,practicing physicians outside hospitals, dentists, etc. Most issues related to pricing and reimbursement of drugs are placed centrally, however, with the Danish Medicines Agency, and in contrast to most of the health care system reimbursement is thoroughly grounded in legislation. Pricing in principle is free. In the 1990s a number of agreements between industry and government in practice introduced regulated price competition. Generic substitution at the pharmacy level and the agreements between government and industry have led to a decline in the overall price level for drugs from 1995 and onwards. The still increasing drug expenditures hence must be attributed to increasing volume and the introduction of new drugs. Reimbursement is divided into two: general reimbursement meaning unconditional reimbursement for a given drug or single reimbursement based on an application from the patient's physician on behalf of individual patients. The criteria for granting general reimbursement are relatively clear. Economic evaluations on a voluntary basis can be used to support documentation of a reasonable relationship between price and therapeutic effects. Reimbursement is calculated on the basis of an average European price level.