Belgian Pharma Market Worth 4.4 Bil. Euro in 2010, Drug Makers to Pay Clawback on Budget Overrun

Latest figures published by pharma.be suggest that Belgium's pharmaceutical market will be worth 4.4 billion euro (US$5.84 billion) in 2010. This would represent a 1.4% growth compared with the year 2009 when pharmaceutical sales reached a total of 4.3 billion euro. Among pharmaceutical sales, those achieved in the ambulatory sector remain the majority (72.6% in 2009) but tend to slightly decrease compared with the total market with a share of 71.5% in 2010. This is due to the fact that the growth in the hospital sector has become largely superior to that in the ambulatory sector while the average annual growth rate in the total pharmaceutical market has slowed down. In 2009, Belgium's pharmaceutical market grew by 3.1% y/y (compared with 7.4% in 2008) as the ambulatory and hospital sector respectively rose 2.4% and 5.1% y/y. It is worth mentioning that the growth in the hospital sector is mainly driven by ambulatory patients whose use of medicines grew 12.4% in 2009. By comparison, sales of hospital drugs prescribed to hospitalised patients declined 0.7% y/y over the period.

Belgium's retail market represented 74.9% of the total market (in retail price) in value terms and 50.4% in volume terms in 2009. In value terms, a share of 74.8% of this retail market is composed of reimbursable medicines, while non-reimbursable over-the-counter (OTC) drugs and non-reimbursable prescription drugs respectively represent 15.6% and 9.6% of the total ambulatory market. National public spending on reimbursed pharmaceuticals at pharmacy level grew by 3.9% y/y to reach 2.7 billion euro in 2009 while total spending on pharmaceuticals grew 4.1% y/y to attain 3.9 billion euro. Hospital drugs prescribed to ambulatory patients recorded the strongest growth in sales in 2009 as spending was up 9.6% y/y over the period.

Outlook and Implications

Spending on pharmaceuticals is, despite a pharma contribution to cost-containment efforts estimated at around 5 billion euro since 1990, continuing to grow at a fast pace. Taxes deducted from the turnover achieved on reimbursable medicines represent 67.8% of the pharma effort, or 3.385 million euro, of which around 1.26 billion euro were deducted in the last five years. Meanwhile, price and reimbursement cuts respectively saved 543 million and 852.5 million euro to the public health insurer INAMI/RIZIV over the period 1990-2011. In 2011, the following taxes will be deducted from the turnover achieved on reimbursable medicines in Belgium:

• 6.73% tax to be paid by 1 June 2011 via an advance of 6.73% of the turnover achieved on reimbursable drugs in 2010;
• 1% crisis tax to be paid by 1 June 2011 via an advance of 1% of the turnover achieved on reimbursable drugs in 2010;
• A subsidiary tax of 1.03% deducted as the 2010 budget was exceeded by 32 million euro.

A total budget of 3.9 billion euro has been specifically allocated to pharmaceuticals in 2010 and the government recently approved a total budget of 25.9 billion euro for 2011 with 4.0 billion euro specifically designated for medicines. Cost-containment measures approved by the government for 2011 are expected to bring total savings of 100 million euro. Savings will be achieved through the reinforcement of prescription quotas for low-cost drugs, pricing cuts affecting off-patent drugs reimbursed for more than 12 and 15 years and through additional price cuts related to the quarterly review of prices of drugs included in the reference-pricing system. Similar savings are to be achieved in 2010 with price-cutting measures implemented for old off-patent drugs and medicines subsidised for more than two or four years (see Belgium: 12 May 2010: Drug Spending Under Control in Belgium As Q1 Prices Drop 2.3% on Cost-Cutting Measures).