Spain has traditionally devoted a high proportion of its healthcare budget on pharmaceuticals – up to 25%. In recent years the government has had to face increasing healthcare costs (particularly linked to an increase in consumption of pharmaceuticals), associated with the ageing Spanish population and the significant increase in population brought about by immigration. As a result, the government has pursued a number of cost-cutting measures, including reference pricing, negative lists, price cuts and profit controls.

The decentralized nature of the Spanish healthcare system has made it harder to reach a consensus on the direction cost containment and pharmaceutical policy should go. In January 2004, the Socialist party came to power and in November 2004 the Minister of Health, Elena Salgado, announced a New Strategic Pharmaceutical Policy Plan (Plan Estratégico de Política Farmacéutica para el Sistema Nacional de Salud Español). The first measure taken under the plan was the legislation of the Real Decreto 2.402/2004 which instituted major changes such as suspending the reference price system and mandating significant price cuts on pharmaceuticals.

These measures have been met with strong opposition by certain regional governments and the industry. They claim that the strategic plan and the Real Decreto were implemented without consultation with all the parties concerned. Certain regional authorities argue that the government’s new pharmaceutical policy will in fact worsen their capacity to stabilize their expenditure on pharmaceuticals

Spain has low prices and is a major parallel exporter and it has been at the centre of a pricing competition case with the EC.