European drug pricing

Due to lower drug prices in EU, per capita spending on drugs had been much less as compared to US. Despite huge savings, economists feared that EU might be losing in terms of investment and innovation destination for big pharma cos. 

1) Germany and Netherlands were the first countries in Europe to adopt a system of Reference pricing. Under this system the government established a reimbursement level for a particular drug and if the price of any drug exceeded that level, that patient had to bear the difference. 

In theory, reference pricing limits reimbursement, not prices. 

2) Traditionally, Europeans had been monopolist price setters ( public health under the government) for drugs, thereby keeping drug prices low. European nations followed two basic models for healthcare syatems. The first was comprehensive social insurance model with public and private funding. SeconD was NHS, which was funded through taxpayers money.