Talkin' About a Resolution: Issues in the Push for Greater Transparency of Medicine Prices

Exploring the Association Between Surgical Out-of-Pocket Costs and Healthcare Quality Outcomes: A Retrospective Cohort Study

OBJECTIVES

Rising out-of-pocket (OOP) costs paid by healthcare consumers can inhibit access to necessary healthcare. Yet, it is unclear if higher OOP payments are associated with better care quality. This study aimed to identify the individual and socio-contextual predictors of OOP costs and to explore the association between OOP costs and quality of care outcomes for 4 surgical procedures.

METHODS

A retrospective cohort analysis was conducted using data from Medibank Private health insurance members aged ≥18 years who underwent hip replacement, knee replacement, cholecystectomy, and radical prostatectomy during 2015 to 2020 across >300 hospitals in Australia. Healthcare quality outcomes investigated were hospital-acquired complications, unplanned intensive care unit admissions, prolonged length of stay, and readmissions within 28 days. Socio-contextual determinants of OOP costs examined were patient demographics, socioeconomic status, health insurance, and procedure complexity. Generalized linear mixed modeling examined the risk of each outcome, adjusting for covariates and considering patient clustering within surgeons and hospitals.

RESULTS

Patients were more likely to pay OOP costs if they were aged 65 to 74 years compared with aged 18 to 44 years for all 4 surgical procedures. No association between OOP payments and the risk of hospital-acquired complications, intensive care unit admission, or hospital readmission was identified. Patients who paid OOP costs were less likely to have a prolonged length of stay for all 4 procedure types.

CONCLUSIONS

Higher OOP payments were not linked to improved care quality except for shorter hospital stays. Greater transparency on OOP costs is needed to inform consumer decisions.

Pharmaceutical procurement profits and universal health coverage: Reform to a sustainable healthcare and financing system

BACKGROUND

In this study, using Taiwan's National Health Insurance (NHI) as an example of a single-payer system, we examined the extent of pharmaceutical procurement profits (PPP) and evaluated their impact on the financial performance of healthcare institutions.

METHODS

We extracted data from financial statements and healthcare service declarations of NHI-contracted hospitals from 2015 to 2021. Financial data concerning PPP, health service profits (HSP), and total operating profits (TOP) from each hospital were analyzed. The impact of PPP on hospitals with positive and negative HSP was further investigated.

RESULTS

The total PPP across all hospitals studied gradually increased from NT$30.6 billion in 2015 to NT$47.0 billion in 2021. In 2021, 28.1% of all hospitals reported a deficit in HSP. PPP appeared to have a significantly positive impact on the financial performance of these hospitals. It not only enhanced positive profits, but also helped mitigate or completely offset the negative profits from HSP. The effect of PPP seems to be more pronounced for hospitals with larger HSP values, suggesting that larger hospitals benefit more from PPP in absolute terms.

DISCUSSION

Average PPP increased during the study period, increasingly affecting hospitals' financial stability across all strata. The gap between TOP and HSP in medical centers has gradually widened, suggesting an increase in non-health service profits. In this study, we propose a payment policy reform that fosters sustainability of the healthcare and financing system under universal health coverage and corrects the potential distortions caused by PPP.

Drug pricing and transparency in Europe and the United States: what is it and how does it work?

INTRODUCTION

As drug prices are viewed to be opaque, there have been increasing societal demands on policy and decision makers to implement initiatives that promote drug price transparency.

AREAS COVERED

This Perspective discusses what drug price transparency is and how it works in theory and in practice.

EXPERT OPINION

Transparency on drug prices may target payers, patients and health care professionals; and may relate to prices at each stage in a drug's distribution system. Although proponents claim that drug price transparency will reduce prices and increase patient access, others expect the opposite effect. Nevertheless, a number of international organizations, countries and consumer groups have taken steps to enhance drug price transparency. This has occurred despite a lack of theoretical clarity and of evidence about its likely impact. Policy and decision makers need to consider how payers and pharmaceutical companies are likely to react to drug price transparency and need to be aware that transparency may produce different effects depending on the country to which it is applied. Even though we believe that full drug price transparency is elusive, various incremental measures can be taken to move toward it.

Evidence on the effectiveness of policies promoting price transparency - A systematic review

Policies promoting price transparency may be an important approach to control medicine prices and achieve better access to medicines. As part of a wider review, we aimed to systematically determine whether policies promoting price transparency are effective in managing the prices of pharmaceutical products. We searched for studies published between January 1, 2004 and October 10, 2019, comparing policies promoting price transparency against other interventions or a counterfactual. Eligible study designs included randomized trials, and non-randomized or quasi-experimental studies such as interrupted time-series (ITS), repeated measures (RM), and controlled before-after studies. Studies were eligible if they included at least one of the following outcomes: price (or expenditure as a proxy for price and volume), volume, availability or affordability of pharmaceutical products. The quality of the evidence was assessed using the GRADE methodology. A total of 32011 records were retrieved, two of which were eligible for inclusion. Although based on evidence from a single study, public disclosure of medicine prices may be effective in reducing prices of medicines short-term, with benefits possibly sustained long-term. Evidence on the impact of a cost-feedback approach to prescribers was inconclusive. No evidence was found for impact on the outcomes volume, availability or affordability. The overall lack of evidence on policies promoting price transparency is a clear call for further research.

Does price disclosure in pharmaceutical advertising result in price transparency? Evidence from a randomized experiment

Background

Policies that mandate list price disclosure in direct-to-consumer pharmaceutical advertising (DTCPA) cite price transparency among the benefits. The expectation is that price transparency will lead to changes in consumer behavior that will ultimately lower healthcare costs.

Objective

The objective of this study was to assess the impact of price transparency on perceived level of information and consumer behaviors, specifically intentions to seek treatment and intentions to comparison shop.

Methods

A nine-arm randomized experiment was conducted to expose respondents to television advertisements for prescription drugs that varied by price disclosure type (no price/control, list price only, or price plus, which disclosed the list price and typical out-of-pocket cost) and indicated condition (deep vein thrombosis/pulmonary embolism [DVT/PE], diabetes, or rheumatoid arthritis [RA]). The sample was recruited from US adult members of the nationally representative Amerispeak online panel.

Results

The sample included 2138 respondents. For ads featuring prescription drugs for DVT/PE, findings provide no evidence of an impact from price disclosure on perception of sufficient information. For ads for prescription drugs for diabetes, there was no evidence of an impact from list price only, but the price plus group was more likely than the control group to report the ad provided sufficient information (OR = 2.475). For ads for RA prescription drugs, both the list price only group (OR = 3.380) and price plus group (OR = 2.720) were more likely to report sufficient information than the control. Findings provide no evidence of an impact from price disclosure on consumer behaviors (i.e., intention to seek treatment or intention to comparison shop).

Conclusions

Mandatory DTCPA list price disclosure may not be the most effective tool for improving price transparency and affecting consumer behavior.

Pricing of HPV tests in Italian tender-based settings

BACKGROUND AND AIM

Human papillomavirus (HPV) testing has been recommended by the WHO as the first choice method in cervical cancer screening. So far, only a limited number of countries have implemented primary HPV testing, partly because of the assumed high costs of HPV testing. We assessed tender-based prices of HPV testing in Italy, where programmatic HPV-based screening has been implemented at the regional level.

MATERIALS AND METHODS

Procurement notices and awards, published between 2014 and December 2021, were retrieved from the European online platform for public procurement. The unit price per HPV test was calculated as the ratio of the contract award price and contract volume. The association between the unit price and contract volume, calendar year, number of offers, region's per capita gross domestic product and population density was assessed by linear regression. Fractional polynomials were used to describe the association between the unit price and contract volume.

RESULTS

We retrieved data from 29 procurement procedures. The median unit price per HPV test was €10.75, ranging from €4.30 to €204.80. The unit price was not higher than €5 for 6 out of 11 contract awards with a volume of at least 100,000 tests. After discarding two low-volume contracts with very high contract prices (€182.40 and €204.80), volume explained 86.5% of the variation in unit price. The unit price was not associated with other variables.

CONCLUSIONS

The Italian experience showed that the tender-based unit price of an HPV test is very low when procured at high volume, indicating that there is no reason for countries to further delay the implementation of HPV-based screening because of prohibitively high HPV testing costs.

How Much Does It Cost to Research and Develop a New Drug? A Systematic Review and Assessment

BACKGROUND

Debate over the viability of the current commercial research and development (R&D) model is ongoing. A controversial theme is the cost of bringing a new molecular entity (NME) to market.

OBJECTIVE

Our aim was to evaluate the range and suitability of published R&D cost estimates as to the degree to which they represent the actual costs of industry.

METHODS

We provided a systematic literature review based on articles found in the Pubmed, Embase and EconLit electronic databases, and in a previously published review. Articles published before March 2020 that estimated the total R&D costs were included (22 articles with 45 unique cost estimates). We included only literature in which the methods used to collect the information and to estimate the R&D costs were clearly described; therefore, three reports were excluded. We extracted average pre-launch R&D costs per NME and converted the values to 2019 US dollars (US$) using the gross domestic product (GDP) price deflator. We appraised the suitability of the R&D estimated costs by using a scoring system that captures three domains: (1) how success rates and development time used for cost estimation were obtained; (2) whether the study considered potential sources contributing to the variation in R&D costs; and (3) what the components of the cost estimation were.

RESULTS

Estimates of total average capitalized pre-launch R&D costs varied widely, ranging from $161 million to $4.54 billion (2019 US$). Therapeutic area-specific estimates were highest for anticancer drugs (between $944 million and $4.54 billion). Our analysis identified a trend of increasing R&D costs per NME over time but did not reveal a relation between cost estimates and study ranking when the suitability scores were assessed. We found no evidence of an increase in suitability scores over time.

CONCLUSION

There is no universally correct answer regarding how much it costs, on average, to research and develop an NME. Future studies should explicitly address previously neglected variables, which likely explain some variability in estimates, and consider the trade-off between the transparency and public accessibility of data and their specificity. Use of our proposed suitability scoring system may assist in addressing such issues.

A systematic review of pharmaceutical price mark-up practice and its implementation

Pharmaceutical products, apart from being essential for medical treatment, are of high value and heavily regulated to ensure the prices are controlled. This systematic review was conducted to identify pharmaceutical pricing mark-up control measures, specifically in the wholesale and retail sectors. The search method comprised the following databases: PubMed, Science Direct, Springer Link, ProQuest, and EBSCOhost and Google Scholar. The results were filtered systematically from the inception of the aforementioned databases until 23 April 2021. Eligible studies were those focusing on the implementation of pharmaceutical pricing strategies that involve a) mark-ups of medicine, and b) pharmaceutical cost control measures. A total of 13 studies were included in this review: seven covered European countries, four covered Asian countries, one covered the USA and one covered Canada. The main points of discussion in the qualitative synthesis were the implementation of medicine mark-ups, price mark-up regulatory strategies and the outcomes of these regulatory strategies. Our findings suggest that Western countries have a lower mark-up margin, around 4% to 25% of the original purchased price, compared to Asian countries, up to 50%.

Factors Impacting Pharmaceutical Prices and Affordability: Narrative Review

Increasing prescription drug pricing often reflects additional work stress on medical professionals because they function as financial advisors for patients and help them manage out-of-pocket expenses. Providers or prescribers wish to help patients with prescription costs but often lack related information. Healthcare plan providers try to display prescription and drug cost information on their websites, but such data may not be linked to electronic prescription software. A mark-up is defined as the additional charges and costs that are applied to the price of a product for the purpose of covering overhead costs, distribution charges, and profit. Therefore, the policies implemented in the pharmaceutical distribution chain might include the regulation of wholesale and retails mark-ups and pharmaceutical remuneration. If mark-ups are regulated, countries are highly recommended to use regressive mark-ups rather than fixed percentage mark-ups. This narrative review provides insights into the framework of pharmaceutical mark-up systems by describing different factors impacting pharmaceutical prices and affordability. These include the interplay of medicine pricing and the supply chain, the impact of pertinent laws and regulation and out-of-pocket expenditure.

Integrative Review of Managed Entry Agreements: Chances and Limitations

BACKGROUND AND OBJECTIVE

Managed entry agreements (MEAs) consist of a set of instruments to reduce the uncertainty and the budget impact of new high-priced medicines; however, there are concerns. There is a need to critically appraise MEAs with their planned introduction in Brazil. Accordingly, the objective of this article is to identify and appraise key attributes and concerns with MEAs among payers and their advisers, with the findings providing critical considerations for Brazil and other high- and middle-income countries.

METHODS

An integrative review approach was adopted. This involved a review of MEAs across countries. The review question was 'What are the health technology MEAs that have been applied around the world?' This review was supplemented with studies not retrieved in the search known to the senior-level co-authors including key South American markets. It also involved senior-level decision makers and advisers providing guidance on the potential advantages and disadvantages of MEAs and ways forward.

RESULTS

Twenty-five studies were included in the review. Most MEAs included medicines (96.8%), focused on financial arrangements (43%) and included mostly antineoplastic medicines. Most countries kept key information confidential including discounts or had not published such data. Few details were found in the literature regarding South America. Our findings and inputs resulted in both advantages including reimbursement and disadvantages including concerns with data collection for outcome-based schemes.

CONCLUSIONS

We are likely to see a growth in MEAs with the continual launch of new high-priced and often complex treatments, coupled with increasing demands on resources. Whilst outcome-based MEAs could be an important tool to improve access to new innovative medicines, there are critical issues to address. Comparing knowledge, experiences, and practices across countries is crucial to guide high- and middle-income countries when designing their future MEAs.

Value-based tiered pricing for universal health coverage: an idea worth revisiting

The pricing of medicines and health products ranks among the most hotly debated topics in health policy, generating controversy in richer and poorer markets alike. Creating the right pricing structure for pharmaceuticals and other healthcare products is particularly important for low- and middle-income countries, where pharmaceuticals account for a significant portion of total health expenditure; high medicine prices therefore threaten the feasibility and sustainability of nascent schemes for universal health coverage (UHC). We argue that a strategic system of value-based tiered pricing (VBTP), wherein each country would pay a price for each health product commensurate with the local value it provides, could improve access, enhance efficiency, and empower countries to negotiate with product manufacturers. This paper attempts to further understanding on the potential value of tiered pricing, barriers to its implementation, and potential strategies to overcome those.

Value-based tiered pricing for universal health coverage: an idea worth revisiting

The pricing of medicines and health products ranks among the most hotly debated topics in health policy, generating controversy in richer and poorer markets alike. Creating the right pricing structure for pharmaceuticals and other healthcare products is particularly important for low- and middle-income countries, where pharmaceuticals account for a significant portion of total health expenditure; high medicine prices therefore threaten the feasibility and sustainability of nascent schemes for universal health coverage (UHC). We argue that a strategic system of value-based tiered pricing (VBTP), wherein each country would pay a price for each health product commensurate with the local value it provides, could improve access, enhance efficiency, and empower countries to negotiate with product manufacturers. This paper attempts to further understanding on the potential value of tiered pricing, barriers to its implementation, and potential strategies to overcome those.