OBJECTIVES: With constant incentives for healthcare payers to contain their pharmaceutical budgets forecasting has become critically important. Some countries even developed pharmaceutical horizon scanning units. The objective of this project was to build a model to assess net effect of the entrance of new patented medicinal products versus medicinal products going off-patent, with a forecast horizon until 2016, on seven selected EU Member States’ pharmaceutical budgets: France, the United Kingdom, Germany, Poland, Portugal, Greece and Hungary. This model should take into account the ageing population, as well as current and future country-specific pricing, reimbursement and market access policies. (performed for the EU Commission -http://ec.europa.eu/health/healthcare/key_documents/index_en.htm) METHODS: A model was developed for generics and biosimilars for each country. This model estimated a separate and combined effect of the direct and indirect impact of patent cliff. A model was also developed for new entrants, which estimated the sales development and risk of development failure. New entrants were reviewed individually to assess their clinical potential and translate into commercial potential. Forecast was performed according to three perspectives (health care public payer, society and manufacturer), several types of distribution chain (retail, hospital, combined retail and hospital). Probabilistic and deterministic sensitivity analyses were carried out. RESULTS: All countries would experience drug budget reduction except Poland (€+41 million). Savings are expected to be the highest in the United Kingdom (€-9367 million), France (€-5589 million), and far behind, followed by Germany (€-831 million), Greece (€-808 million), Portugal (€-243 million) and Hungary (€-84 million). Cardiovascular, central nervous system , respiratory areas and biosimilar entry will be the source of savings, while oncology, immunology and inflammation will lead for additional expenditure. The model is very sensitive to time to market branded products, generic prices, geneneric penetration, distribution of biosimilars. CONCLUSIONS: Pharmaceutical expenditures are expected to decrease in the analyzed period. The model is sensitive to policy decisions.