Impact of the Pharma Economic Act on Diffusion of Innovation and Reduction of Costs in the Hungarian Prescription Drug Market (2007–2010)



In this study, we examined the impact of the Pharma Economic Act, which was introduced in Hungary in 2007.


We used detailed data on the Hungarian prescription drug market, which had been made publicly available by the authorities. We evaluated the effect of the Pharma Economic Act on both dynamic and static efficiencies and also on equity, which has been historically a controversial issue in Hungary. We analyzed the overall prescription drug market and statin and atorvastatin markets; as a proxy for determining dynamic efficiency, we examined the oncology drug market for some specific products (e.g., bortezomib) and the long-acting atypical antipsychotic drugs market.


There is no denying that the authorities managed to control the overall prescription drug costs; however, they were still paying excessive rents for off-patent drugs. Examples of oncology and long-acting atypical antipsychotic drugs showed that the diffusion of innovation was on per-capita basis at least comparable to G-5 countries. While the share of out-of-pocket co-payments markedly increased and the reimbursement was lowered, the concurrent price decreases often meant that the co-payment per milligram of a given dispensed drug was actually lower than that before the Act, thereby benefiting the patient.


It appears that strong mechanisms to control volume rather than price on the supply side (marketing authorization holders) contained the drug expenditure, while offering enough room to strive for innovation. Making data on prescription drug expenditures and associated co-payments publicly available is an item that should be definitely followed by the surrounding jurisdictions.


Rok Hren

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