Global pharmaceutical expenditure as a share of health expenditure

Although health expenditure as a share of GDP may have increased for many countries, pharmaceutical expenditure as a share of health expenditure has declined in the last 15 years for many of the leading OECD economies, and most particularly since 2008. Figures are available for the UK since 2013. The UK had the lowest pharmaceutical spend as a share (12.1%) of health expenditure in 2015, just below the US (12.2%).  This likely reflects in part the extensive use of generic medicines as a percentage of overall pharmaceutical treatments in the UK and US, compared to other OECD countries.

The OECD defines pharmaceutical spending as expenditure on prescription medicines and self-medication, often referred to as over-the-counter products. In some countries, other medical non-durable goods are also included. Pharmaceuticals consumed in hospitals and other healthcare settings are excluded.

Final expenditure on pharmaceuticals includes wholesale and retail margins and value-added tax. Total pharmaceutical spending refers in most countries to “net” spending, i.e. adjusted for possible rebates payable by manufacturers, wholesalers or pharmacies. This indicator is measured as a share of total health spending, in USD per capita (using economy-wide PPPs) and as a share of GDP.