In 2023, retail pharmaceuticals – defined as those dispensed outside hospitals and other care facilities – accounted for around one‑sixth of total health spending across OECD countries. This represented the third largest area of expenditure after spending on inpatient and outpatient services. However, growth in retail pharmaceutical spending over the past decade has generally fallen behind spending in other health services, reflecting continued efforts to manage costs, particularly through pricing policies and the expanded use of generics (see section on “Health expenditure by type of service” in Chapter 7).
Per capita expenditure on retail pharmaceuticals averaged USD 766 (adjusted for differences in purchasing power) in OECD countries in 2023 (Figure 9.1). The United States (USD 1 713) reported the highest per capita spending, at more than double the average, followed by Germany (USD 1 158) and Switzerland (USD 1 061). At the lower end, Denmark (USD 404), Chile (USD 455) and Estonia (USD 458) all spent below 60% of the OECD average. Variation can be due to differences in prescribing practices, the uptake of generics, and the regulatory frameworks in place. The relatively low spending in Denmark reflects widespread provision of medicines within hospital or ambulatory care settings, rather than through retail outlets. Prescription medicines accounted for more than 75% of total expenditure in most countries, with the rest going on over-the‑counter medicines (OTC). Poland stands out as the only OECD country where OTC spending exceeded that of prescription medicines.
In terms of financing, governments and compulsory insurance schemes are the principal source of retail pharmaceutical funding, accounting for almost 60% of spending on average across OECD countries in 2023 (Figure 9.2). This share exceeded 80% in France and Germany where public or statutory schemes provide broad coverage for outpatient medicines. Out-of-pocket spending by households, including co-payments and direct purchases, accounts for much of the remaining cost, at around 38%, although it financed around two‑thirds of spending in Chile and Poland. Only in a handful of countries does voluntary health insurance play any role in pharmaceutical spending. Canada is an outlier with a third of spending covered by private insurance. Complementary health insurance also accounted for almost a quarter of retail pharmaceutical spending in Slovenia, although from 2024 this is no longer available as a voluntary option for pharmacy or basic medical coverage.
Spending on retail pharmaceuticals provides only a partial view of total pharmaceutical expenditure. Medicines used in hospital and other non-retail settings are a growing component of overall pharmaceutical costs, driven in part by the introduction of high-cost therapies in areas such as oncology, immunology, and rare diseases. Across 15 OECD countries, non-retail pharmaceuticals accounted for 25% of total pharmaceutical expenditure in 2023, up from 21% in 2013 (Figure 9.3). The largest increases were observed in Portugal, Spain and Czechia, where hospital use of pharmaceuticals grew significantly. Denmark continued to report the highest share (49%) of non-retail spending, reflecting a longstanding practice in hospital-based dispensing. By contrast, Switzerland and Lithuania, recorded the lowest proportions at only around 6% of total pharmaceutical spending in 2023. A growing body of evidence, including recent analysis from the OECD (Morgan and Xiang, 2022[1]), highlights the need to account for both retail and hospital pharmaceutical expenditures when planning budgets and assessing long-term financial sustainability.
