Denmark: #14 in the 2020 World Index of Healthcare Innovation
Denmark’s socialized health care system is supplemented by an innovative, consumer-driven approach to prescription drug prices.
By Gregg Girvan and Avik Roy
Introduction
Denmark ranks #14 in the World Index of Healthcare Innovation, with an overall score of 47.59. Denmark excelled in Science & Technology (#2, 52.63), thanks to its broad access to novel treatments, its contributions to scientific discoveries, and its adoption of health information technology.
Denmark’s socialized system, however, leaves few choices to the patient outside of prescription drugs (Choice score 34.15, #26). And the scale and growth of public health spending in Denmark raises questions about the system’s fiscal sustainability (Fiscal Sustainability score 46.03,#22).
Background
Denmark has a comprehensive, socialized health care system, combining a single, government-run insurance agency with publicly owned hospitals. After a landmark health reform enacted in 1970, health care and coverage is administered at the regional level through block grants.
Notably, Denmark does not regulate prescription drug prices. Instead, the Danish insurance system reimburses for any drug at the lowest price offered by a market participant for a given active pharmaceutical substance. Price transparency is universal; pharmacy prices are posted every two weeks by the Danish Medicines Agency (Lægemiddelstyrelsen). This encourages use of generic drugs. Consumers are free to pay out-of-pocket to use a costlier drug. However, since pharmaceutical companies would lose market share if their prices were too high, they have an incentive to price their products competitively. The Danish Ministry of Social Affairs and Health also has the latitude to choose not to reimburse for drugs in therapeutic areas with a monopoly supplier, though consumers are free to pay for these drugs out-of-pocket.
For a country of its size, Denmark has a remarkably large innovative health care sector, led by Novo Nordisk, the world’s leading producer of insulin; Demant, a leading producer of hearing aids; and companies like Genmab, Novozymes, Symphogen, Ascendis, Zealand, Bavarian Nordic, Lundbeck and Coloplast.
Quality
Despite a life expectancy of 80.9 years, Denmark’s health care system ranks #17 overall in Quality. While Denmark’s score on infrastructure (#9) is boosted by optimal hospital capacity, its ranking on measures of preventable disease (#21) indicates room for improvement to prevent hospitalizations and treat cardiovascular and cancer conditions.
Choice
Denmark ranks #26 overall for Choice. Though it has better-than-average access to new treatments (#10), Denmark struggles to provide freedom to choose health care services (#29), largely because its citizens have only one option for insurance coverage while also having more restrictions on the choice of providers than most European countries.
Science & Technology
At #2, Denmark’s greatest strength is in Science and Technology, leading all nations in the Index except for the United States. Besides fully embracing health digitization (#1), Denmark is a world leader in medical advances (#3), led by its pharmaceutical and medical device industries. Both its research and development spending per capita and health care patents per capita are larger than the United States.
Fiscal Sustainability
With a reliance on public health spending, Denmark ranks #22 overall on Fiscal Sustainability. On the bright side, Denmark’s overall fiscal situation is healthy, with a debt-to-GDP ratio of about 30% (#5). While its public health spending is higher than any other European country other than Germany and France, its public health spending has remained relatively stable over the last 10 years.
