The German experience in reference pricing

Exploring the effectiveness of demand-side retail pharmaceutical expenditure reforms : Cross-country evidence from weighted-average least squares estimation

Increasing expenditures on retail pharmaceuticals bring a critical challenge to the financial stability of healthcare systems worldwide. Policy makers have reacted by introducing a range of measures to control the growth of public pharmaceutical expenditure (PPE). Using panel data on European and non-European OECD member countries from 1990 to 2015, we evaluate the effectiveness of six types of demand-side expenditure control measures including physician-level behaviour measures, system-level price-control measures and substitution measures, alongside a proxy for cost-sharing and add a new dimension to the existing empirical evidence hitherto based on national-level and meta-studies. We use the weighted-average least squares regression framework adapted for estimation with panel-corrected standard errors. Our empirical analysis suggests that direct patient cost-sharing and some-but not all-demand-side measures successfully dampened PPE growth in the past. Cost-sharing schemes stand out as a powerful mechanism to curb PPE growth, but bear a high risk of adverse effects. Other demand-side measures are more limited in effect, though may be more equitable. Due to limitations inherent in the study approach and the data, the results are only explorative.

Indication-wide drug pricing: Insights from the pharma market

Background

Pharmaceutical spending has been increasing rapidly for years and is higher than ever before. To control the rising costs, countries are implementing regulatory frameworks such as (internal) reference pricing, price cuts or generics substitution. Internal reference pricing establishes a reference price within a country which serves as the maximum level of reimbursement for a group of pharmaceuticals. Price setting in the German market is especially relevant for many European countries, which use Germany as a reference country for their own price setting.

Methods

We evaluate pharmaceutical price dynamics for not reference priced pharmaceuticals (NRPs) as well as for reference priced pharmaceuticals (RPs) in Germany—referring to the internal reference price system. 64,862 medication packs have been extracted from the German pharmaceutical pricing register Lauer-Taxe. For each pack, we extracted detailed data on the company, manufacturer rebates, pharmacy retail prices, reference prices, co-payments, import quotas, and discount agreements. We then investigated price setting and dynamics of NRPs vs. RPs for all 14 indication areas by ATC code level 1.

Results

The average manufacturer price per pack was 604.84€ for NRPs and 112.11€ for RPs. Similar differences were found for the wholesale price and the pharmacy retail price. The reference price was—as expected—0.00€ for NRPs, and 154.40€ for RPs. NRP packs were imported in 42.38%, while RP packs were imported only in 24.62%. Highest average pharmacy retail prices could be found in the therapeutic areas ‘antineoplastic and immunomodulating agents’ (1711.47€), ‘systemic hormonal preparations’ (1331.95€), and ‘blood and blood forming organs’ (1260.58€). We detected high fluctuations in pharmacy retail prices per indication, as well as for reference prices per indication. The indications with the highest number of reference price regulated medical packs are ‘cardiovascular system’, ‘musculo-skeletal system’, and ‘nervous system’. Highest co-payments were found in the indications ‘antineoplastic and immunomodulating agents’, ‘blood and blood forming organs’, and ‘antiinfectives for systemic use’.

Conclusion

Price setting and price dynamics vary substantially between NRP and RP medication packs. Further, we saw major differences across all indication areas as well as when comparing medication packs launched by top 20 pharma companies vs. the rest.

Supplementary Information

The online version contains supplementary material available at 10.1186/s40545-022-00451-x.

Prediction of Change in Prescription Ingredient Costs and Co-payment Rates under a Reference Pricing System in South Korea

BACKGROUND

The reference pricing system (RPS) establishes reference prices within interchangeable reference groupings. For drugs priced higher than the reference point, patients pay the difference between the reference price and the total price.

OBJECTIVES

To predict potential changes in prescription ingredient costs and co-payment rates after implementation of an RPS in South Korea.

METHODS

Korean National Health Insurance claims data were used as a baseline to develop possible RPS models. Five components of a potential RPS policy were varied: reference groupings, reference pricing methods, co-pay reduction programs, manufacturer price reductions, and increased drug substitutions. The potential changes for prescription ingredient costs and co-payment rates were predicted for the various scenarios.

RESULTS

It was predicted that transferring the difference (total price minus reference price) from the insurer to patients would reduce ingredient costs from 1.4% to 22.8% for the third-party payer (government), but patient co-payment rates would increase from a baseline of 20.4% to 22.0% using chemical groupings and to 25.0% using therapeutic groupings. Savings rates in prescription ingredient costs (government and patient combined) were predicted to range from 1.6% to 13.7% depending on various scenarios. Although the co-payment rate would increase, a 15% price reduction by manufacturers coupled with a substitution rate of 30% would result in a decrease in the co-payment amount (change in absolute dollars vs. change in rates).

CONCLUSIONS

Our models predicted that the implementation of RPS in South Korea would lead to savings in ingredient costs for the third-party payer and co-payments for patients with potential scenarios.

The simultaneous effects of pharmaceutical policies from payers' and patients' perspectives: Italy as a case study

OBJECTIVES

This paper aims at covering a literature gap on the effects of copayments, prescription quotas and therapeutic reference pricing on public and private expenditures and volumes (1) When these policies are implemented in different areas at different times, (2) estimating their impact in the short and long run, (3) assessing the extent to which these impacts are interdependent, (4) scrutinising the extent to which the effects are mediated by prescribers' and patients' behaviours.

METHODS

Monthly regional data on pharmaceutical expenditures, volumes and policies in Italy from 2000 to 2014 are analysed using a difference-in-differences model enriched to capture short- versus long-term effects and simultaneous and interactive effects. Sobel-Goodman test and bootstrap analyses were used to test for mediation.

RESULTS

The three policies have different short- and long-run effects. Interactions support the hypothesis of reinforcing effects. Behavioural reactions to policies such as reducing the demand or total per capita expenditures mediate the impact of policies, thus explaining the different effects between the short and long term.

CONCLUSIONS

Evidence on the impact over time of regional policies diversely introduced in different times have important policy implications. First, pharmaceutical policies interact with each other, and the combined effect may be different from what we would expect from the sum of each single policy. Hence, policymakers should be very careful in designing mixed policies for their unexpected combined effects. Second, the impact of policies tends to reduce over time. If longer-term impact is desired, it would be appropriate to introduce some adjustments over time. Third, policies have multiple effects, and this should be considered when they are designed. Finally, pharmaceutical policies may have an unintended impact on health and health care.

The impact of reference pricing and extension of generic substitution on the daily cost of antipsychotic medication in Finland

OBJECTIVE

To assess the impact of reference pricing and extension of generic substitution on the daily cost of antipsychotic drugs in Finland during the first year after its launch. Furthermore, the additional impact of reference pricing on prior implemented generic substitution is assessed.

METHODS

A retrospective analysis was performed between 2006 and 2010. A segmented linear regression analysis of interrupted time series was used to estimate changes in the levels and trends in the cost of one day of treatment. Of the study drugs, clozapine belonged to generic substitution already at the start of the study period while olanzapine and quetiapine were included in generic substitution alongside with reference pricing in 2009. Risperidone was included in generic substitution in 2008, before reference pricing.

RESULTS

A substantial decrease in the daily cost of all four antipsychotic substances was seen after one year of the implementation of reference pricing and the extension of generic substitution. The impact ranged from -29.9% to -66.3%, and it was most substantial on the daily cost of olanzapine. Also in the daily cost of risperidone a substantial decrease of -43.3% was observed. However, most of these savings, -32.6%, were generated by generic substitution which had been adopted prior.

CONCLUSIONS

Reference pricing and the extension of generic substitution produced substantial savings on antipsychotic medication costs during the first year after its launch, but the intensity of the impact differed between active substances. Furthermore, our results suggest that the additional cost savings from reference pricing after prior implemented generic substitution, are comparatively low.

Pharmaceutical policies: effects of reference pricing, other pricing, and purchasing policies

BACKGROUND

Pharmaceuticals are important interventions that could improve people's health. Pharmaceutical pricing and purchasing policies are used as cost-containment measures to determine or affect the prices that are paid for drugs. Internal reference pricing establishes a benchmark or reference price within a country which is the maximum level of reimbursement for a group of drugs. Other policies include price controls, maximum prices, index pricing, price negotiations and volume-based pricing.

OBJECTIVES

To determine the effects of pharmaceutical pricing and purchasing policies on health outcomes, healthcare utilisation, drug expenditures and drug use.

SEARCH METHODS

We searched the Cochrane Central Register of Controlled Trials (CENTRAL), part of The Cochrane Library (including the Effective Practice and Organisation of Care Group Register) (searched 22/10/2012); MEDLINE In-Process & Other Non-Indexed Citations and MEDLINE, Ovid (searched 22/10/2012); EconLit, ProQuest (searched 22/10/2012); PAIS International, ProQuest (searched 22/10/2012); World Wide Political Science Abstracts, ProQuest (searched 22/10/2012); INRUD Bibliography (searched 22/10/2012); Embase, Ovid (searched 14/12/2010); NHSEED, part of The Cochrane Library (searched 08/12/2010); LILACS, VHL (searched 14/12/2010); International Political Science Abstracts (IPSA), Ebsco (searched (17/12/2010); OpenSIGLE (searched 21/12/10); WHOLIS, WHO (searched 17/12/2010); World Bank (Documents and Reports) (searched 21/12/2010); Jolis (searched 09/10/2011); Global Jolis (searched 09/10/2011) ; OECD (searched 30/08/2005); OECD iLibrary (searched 30/08/2005); World Bank eLibrary (searched 21/12/2010); WHO - The Essential Drugs and Medicines web site (browsed 21/12/2010).

SELECTION CRITERIA

Policies in this review were defined as laws; rules; financial and administrative orders made by governments, non-government organisations or private insurers. To be included a study had to include an objective measure of at least one of the following outcomes: drug use, healthcare utilisation and health outcomes or costs (expenditures); the study had to be a randomised trial, non-randomised trial, interrupted time series (ITS), repeated measures (RM) study or a controlled before-after study of a pharmaceutical pricing or purchasing policy for a large jurisdiction or system of care.

DATA COLLECTION AND ANALYSIS

Two review authors independently extracted data and assessed the risk of bias. Results were summarised in tables. There were too few comparisons with similar outcomes across studies to allow for meta-analysis or meaningful exploration of heterogeneity.

MAIN RESULTS

We included 18 studies (seven identified in the update): 17 of reference pricing, one of which also assessed maximum prices, and one of index pricing. None of the studies were trials. All included studies used ITS or RM analyses. The quality of the evidence was low or very low for all outcomes. Three reference pricing studies reported cumulative drug expenditures at one year after the transition period. Two studies reported the median relative insurer's cumulative expenditures, on both reference drugs and cost share drugs, of -18%, ranging from -36% to 3%. The third study reported relative insurer's cumulative expenditures on total market of -1.5%. Four reference pricing studies reported median relative insurer's expenditures on both reference drugs and cost share drugs of -10%, ranging from -53% to 4% at one year after the transition period. Four reference pricing studies reported a median relative change of 15% in reference drugs prescriptions at one year (range -14% to 166%). Three reference pricing studies reported a median relative change of -39% in cost share drugs prescriptions at one year (range -87% to -17%). One study of index pricing reported a relative change of 55% (95% CI 11% to 98%) in the use of generic drugs and -43% relative change (95% CI -67% to -18%) in brand drugs at six months after the transition period. The same study reported a price change of -5.3% and -1.1% for generic and brand drugs respectively six months after the start of the policy. One study of maximum prices reported a relative change in monthly sales volume of all statins of 21% (95% CI 19% to 24%) after one year of the introduction of this policy. Four studies reported effects on mortality and healthcare utilisation, however they were excluded because of study design limitations.

AUTHORS' CONCLUSIONS

The majority of the studies of pricing and purchasing policies that met our inclusion criteria evaluated reference pricing. We found that internal reference pricing may reduce expenditures in the short term by shifting drug use from cost share drugs to reference drugs. Reference pricing may reduce related expenditures with effects on reference drugs but the effect on expenditures of cost share drugs is uncertain. Reference pricing may increase the use of reference drugs and may reduce the use of cost share drugs. The analysis and reporting of the effects on patients' drug expenditures were limited in the included studies and administration costs were not reported. Reference pricing effects on health are uncertain due to lack of evidence. The effects of other purchasing and pricing policies are until now uncertain due to sparse evidence. However, index pricing may reduce the use of brand drugs, increase the use of generic drugs, and may also slightly reduce the price of the generic drug when compared with no intervention.

Priority-setting, rationing and cost-effectiveness in the German health care system

Germany has just started a public debate on priority-setting, rationing and cost-effectiveness due to the cost explosion within the German health care system. To date, the costs for German health care run at 11,6% of its Gross Domestic Product (GDP, 278,3 billion €) that represents a significant increase from the 5,9 % levels present in 1970. In response, the German Parliament has enacted several major and minor legal reforms over the last three decades for the sake of cost containment and maintaining stability of the health care system. The Statutory Health Insurance--SHI (Gesetzliche Krankenversicherung--GKV) is based on the fundamental principle of solidarity and provides an ethical and legal framework for implementing equity, comprehensiveness and setting the principles and rules for financing and providing health care services and benefits. Within the SHI system, several major actors can be identified: the Federal Ministry of Health, the 16 state ministries of health, the Federal Joint Committee (G-BA), the physicians (with their associations) and the hospitals (with their organizations) on the provider side, and the sickness funds with their associations on the purchasers' side. This article reviews the structure and complexities of the German health care system with its major players and participants. The focus will be put on relevant ethical, legal and economic aspects for prioritization, rationalization, rationing and cost-effectiveness of medical benefits and services. In conclusion, this article pleads for open discussion on the challenging subject of priority-setting instead of accepting the implicit and non-transparent rationing of medical services that currently occurs at many different levels within the health care system, as it stands today.

UPTAKE AND DIFFUSION OF PHARMACEUTICAL INNOVATIONS IN HEALTH SYSTEMS

Multiple interacting factors influence the uptake and diffusion of medicines which are critical to improving health. However, there is a gap in our knowledge on how regulatory policies and other national health systems attributes combine to impact on the utilisation of innovative drugs, and health system goals and objectives.

Our review demonstrates that strong regulation adversely affects, access to innovation, reduces incentives for research-based firms to develop innovative products and leads to short- and long-term welfare losses. Short-term efficiency gains from reducing pharmaceutical expenditures may actually increase total healthcare costs, reduce user choice, and in some cases, adversely affect health outcomes.

Decision makers need to adopt a holistic approach to policy making, and consider potential impact of regulations on the uptake and diffusion of innovations, innovation systems and health system goals.

Effects of reference pricing in pharmaceutical markets: a review

This work aims to provide a systematic and updated survey of original scientific studies on the effect of the introduction of reference pricing (RP) policies in Organisation for Economic Co-operation and Development (OECD) countries. We searched PubMed, EconLit and Web of Knowledge for articles on RP. We reviewed studies that met the inclusion criteria established in the search strategy. From a total of 468 references, we selected the 35 that met all of the inclusion criteria. Some common themes emerged in the literature. The first was that RP was generally associated with a decrease in the prices of the drugs subject to the policy. In particular, price drops seem to have been experienced in virtually every country that implemented a generic RP (GRP) policy. A GRP policy applies only to products with expired patents and generic competition, and clusters drugs according to chemical equivalence (same form and active compound). More significant price decreases were observed in the sub-markets in which drugs were already facing generic competition prior to RP. Price drops varied widely according to the amount of generic competition and industrial strategies: brand-named drugs originally priced above RP values decreased their prices to a greater extent. A second common theme was that both therapeutic RP (TRP) and GRP have been associated with significant and consistent savings in the first years of application. A third general result is that generic market shares significantly increased whenever the firms producing brand-named drugs did not adopt one of the following strategies: lowering prices to RP values; launching new dosages and/or formulations; or marketing substitute drugs still under patent protection. Finally, concerning TRP, although more evidence is needed, studies based on a large number of patient-level observations showed no association between the RP policy and health outcomes.

Antipsychotics and antidepressants: an analysis of cost growth in Finland from 1999 to 2005

BACKGROUND

Antipsychotics and antidepressants are among the fastest-growing therapeutic classes, but the reasons behind recent cost growth are not clear.

OBJECTIVE

The aim of this study was to assess the explicit factors behind ambulatory antipsychotic and antidepressant cost growth in Finland, as well as the relative importance of the factors associated with the drug group-specific cost growth.

METHODS

The data used in this study were retrospectively collected from the Finnish National Health Insurance's register on reimbursed drug purchases. The study period ranged from January 1, 1999, through December 31, 2005, and the obtained data included information on the patient identity number, total cost of the purchase, Anatomic Therapeutic Chemical classification code of the purchased product, and defined daily dose amount of the purchase. Using the retrieved data, antipsychotic and antidepressant cost growth was disaggregated into price and volume factors to create a formula that includes factors about the size of the population, patients per population, volume of treatment per patient, and the mean cost per 1 day of treatment. The relative effect of the factors associated with the drug group-specific cost growth was also examined. Because the purpose of this work was to analyze the factors contributing to the cost growth, we disregarded factors that were negative.

RESULTS

During the study period, the proportion of antipsychotic users of the total population decreased from 2.4% to 2.2% and the mean cost per 1 day of treatment with antipsychotics increased from euro1.37 to euro2.94. The proportion of antidepressant users increased from 4.8% to 6.3%, and mean cost per 1 day of treatment decreased from euro1.06 to euro0.79. In 1999, the consumption of second-generation antipsychotics accounted for 22% of total consumption, and in 2005 their proportion was 62%. Drug choices among anti-depressants did not change substantially. The total cost growth of antipsychotics and antidepressants was 211% and 19%, respectively. Approximately 80% of the antipsychotic cost growth resulted from the rise in the mean cost per 1 day of treatment. The increase in patients per population accounted for approximately 60% of the antidepressant cost growth.

CONCLUSION

This retrospective analysis found that the factors associated with the growing antipsychotic and antidepressant expenditures in Finland from 1999 through 2005 varied between these 2 drug classes.

The influences of Taiwan's generic grouping price policy on drug prices and expenditures: evidence from analysing the consumption of the three most-used classes of cardiovascular drugs

BACKGROUND

Controlling the growth of pharmaceutical expenditures is a major global challenge. Promotion of generic drug prescriptions or use is gaining increased support. There are substantial contextual differences in international experiences of implementing pharmaceutical policies related to generic drugs. Reporting these experiences from varied perspectives can inform future policy making. This study describes an experience of Taiwan, where patients with chronic (long-term) conditions are usually managed in hospitals and drugs are provided in this setting with costs reimbursed through the National Health Insurance (NHI). It investigates the effects of Taiwan's reimbursement rate adjustment based on chemical generic grouping in 2001. This research also demonstrates the use of micro-level longitudinal data to generate policy-relevant information. The research can be used to improve efficiency of health care resource use.

METHODS

We chose the three most-used classes of cardiovascular drugs for this investigation: beta blocking agents, calcium channel blockers mainly with vascular effects, and plain ACE inhibitors. For each drug class, we investigated changes in daily expense, consumption volume, and total expenditures from a pre-action period to a corresponding post-action period. We compared an exposure or "intervention" group of patients targeted by the action with a comparisonor "control" group of patients not targeted by the action. The data sources are a longitudinal database for 200,000 NHI enrolees, corresponding NHI registration data of health care facilities, and an archive recording all historical data on the reimbursement rates of drugs covered by the NHI. We adopted a fixed effects linear regression model to control for unobserved heterogeneity among patient-hospital groups. Additional descriptive statistics were applied to examine whether any inappropriate consumption of drugs in the three classes existed.

RESULTS

The daily drug expense significantly decreased from the pre-action period to the post-action period for the exposure group. The average magnitudes of the decreases for the three classes of drugs mentioned above were 14.8%, 5.8% and 5.8%, respectively. In contrast, there was no reduction for the comparison group. The number of days of the prescription increased significantly from the pre- to the post-action period for both exposure and comparison groups. The total expense also significantly increased for both patient groups. For the exposure group, the average magnitudes of the growth in the total expenditure for the three classes of drugs were 47.7%, 60.0% and 55.3%, respectively. For the comparison group, they were 91.6%, 91.6% and 63.2%, respectively. After the action, approximately 50% of patients obtained more than 180 days of prescription drugs for a six-month period.

CONCLUSION

The 2001 price adjustment action, based on generic grouping, significantly reduced the daily expense of each of the three classes of cardiovascular drugs. However, in response to this policy change, hospitals in Taiwan tended to greatly expand the volume of drugs prescribed for their regular patients. Consequently, the total expenditures for the three classes of drugs grew substantially after the action. These knock-on effects weakened the capability of the price adjustment action to control total pharmaceutical expenditures. This means that no saved resources were available for other health care uses. Such expansion of pharmaceutical consumption might also lead to inefficient use of the three drug classes: a large proportion of patients obtained more than one day of drugs per day in the post-action period, suggesting manipulation to increase reimbursement and offset price controls. We recommend that Taiwan's government use the NHI data to establish a monitoring system to detect inappropriate prescription patterns before implementing future policy changes. Such a monitoring system could then be used to deter hospitals from abusing their prescription volumes, making it possible to more effectively save health care resources by reducing drug reimbursement rates.

Assessing the impact of global price interdependencies

Documented launch delays and the ensuing debate over their underlying causes have focused on assessment from the individual country's perspective. Seen in a larger game theoretical framework this may cause problems, because although the countries see an individual game, the pharmaceutical firm sees a repeated linked game. The links are due to external reference pricing and parallel trade. Behaviours that are optimal in the single, individual game (for either the country or the pharmaceutical firm) may no longer be optimal when considering the global repeated game. A theoretical mixed integer linear model of the firm's launch and pricing decisions is presented along with examples wherein international price dependencies most likely played a role. This model can help countries understand the implication of their external reference pricing policies on the global repeated pricing game. Understanding the behaviour of the pharmaceutical firm in this global context aids countries in designing policies to maximize the welfare of their citizens.

Challenges for Australia's Bio/Nanopharma Policies: trade deals, public goods and reference pricing in sustainable industrial renewal

Industrial renewal in the bio/nanopharma sector is important for the long term strength of the Australian economy and for the health of its citizens. A variety of factors, however, may have caused inadequate attention to focus on systematically promoting domestic generic and small biotechnology manufacturers in Australian health policy. Despite recent clarifications of 'springboarding' capacity in intellectual property legislation, federal government requirements for specific generic price reductions on market entry and the potential erosion of reference pricing through new F1 and F2 categories for the purposes of Pharmaceutical Benefits Scheme (PBS) assessments, do not appear to be coherently designed to sustainably position this industry sector in 'biologics,' nanotherapeutics and pharmacogenetics. There also appears to have been little attention paid in this context to policies fostering industry sustainability and public affordability (as encouraged by the National Medicines Policy). One notable example includes that failure to consider facilitating mutual exchanges on regulatory assessment of health technology safety and cost-effectiveness (including reference pricing) in the context of ongoing free trade negotiations between Australia and China (the latter soon to possess the world's largest generic pharmaceutical manufacturing capacity). The importance of a thriving Australian domestic generic pharmaceutical and bio/nano tech industry in terms of biosecurity, similarly appears to have been given insufficient policy attention.Reasons for such policy oversights may relate to increasing interrelationships between generic and 'brand-name' manufacturers and the scale of investment required for the Australian generics and bio/nano technology sector to be a significant driver of local production. It might also result from singularly effective lobbying pressure exerted by Medicines Australia, the 'brand-name' pharmaceutical industry association, utilising controversial interpretations of reward of pharmaceutical 'innovation' provisions in the Australia-US Free Trade Agreement (AUSFTA) through the policy-development mechanisms of the AUSFTA Medicines Working Group and most recently an Innovative Medicines Working Group with the Department of Health and Ageing. This paper critically analyses such arguments in the context of emerging challenges for sustainable industrial renewal in Australia's bio/nanopharma sector.

The impact of therapeutic reference pricing on innovation in cardiovascular medicine

Therapeutic reference pricing (TRP) places medicines to treat the same medical condition into groups or 'clusters' with a single common reimbursed price. Underpinning this economic measure is an implicit assumption that the products included in the cluster have an equivalent effect on a typical patient with this disease. 'Truly innovative' products can be exempt from inclusion in the cluster. This increasingly common approach to cost containment allocates products into one of two categories - truly innovative or therapeutically equivalent. This study examines the implications of TRP against the step-wise evolution of drugs for cardiovascular conditions over the past 50 years. It illustrates the complex interactions between advances in understanding of cellular and molecular disease mechanisms, diagnostic techniques, treatment concepts, and the synthesis, testing and commercialisation of products. It confirms the highly unpredictable and incremental nature of the innovation process. Medical progress in terms of improvement in patient outcomes over the long-term depends on the cumulative effect of year after year of painstaking incremental advances. It shows that the parallel processes of advances in scientific knowledge and the industrial 'investment-innovative cycle' involve highly developed sets of complementary capabilities and resources. A framework is developed to assess the impact of TRP upon research and development investment decisions and the development of therapeutic classes. We conclude that a simple categorisation of products as either 'truly innovative' or 'therapeutically equivalent' is inconsistent with the incremental processes of innovation and the resulting differentiated product streams revealed by our analysis. Widespread introduction of TRP would probably have prematurely curtailed development of many incremental innovations that became the preferred 'product of choice' by physicians for some indications and patients in managing the incidence of cardiovascular disease.

Pricing and reimbursement of in-patent drugs in seven European countries: a comparative analysis

The main objective of this comparative analysis was to assess regulations applied by EU governments to reward potentially innovative drugs. We focused on the pharmaceutical policy for in-patent drugs in seven EU countries: Belgium, France, Germany, Italy, the Netherlands, Spain, and the UK. A common scheme was applied to all seven countries: first, pricing and reimbursement procedures for new and innovative drugs were investigated; secondly, we focused on the use in the regulatory process of economic evaluations. The analysis involved reviewing the literature and interviewing a selected panel of local experts in each country. According to our comparative analysis, a first sensible step might be to classify active ingredients as those addressing neglected pathologies and those for diseases that are already successfully treated, thus offering more limited therapeutic gains by definition. A reasonable solution to reward real innovation could be to admit a premium price for very innovative drugs according to their estimated cost-effectiveness. New drugs with modest improvement could be grouped in therapeutic clusters and submitted to a common reference price, despite patent expiration. Such a "dual approach" could be a sensible compromise to restrict pharmaceutical expenditure while at the same time rewarding companies that invest in high-risk basic research.

Impact of a generic substitution reform on patients' and society's expenditure for pharmaceuticals

Sweden's pharmaceutical expenditure has increased during the last decades. On 1 October 2002 mandatory generic substitution was introduced in Sweden with the purpose to reduce the growth in pharmaceutical expenditure. The aim of the present study was to investigate if the implementation of generic substitution was associated with changes in patients' expenses and reimbursed cost for prescribed pharmaceuticals included in the Swedish Pharmaceutical Benefits Scheme (PBS). Monthly pharmacy sales data was obtained from the National Corporation of Swedish Pharmacies (Apoteket AB). The study period ranged between 1 January 2000 and 31 December 2004. Changes in pharmaceutical expenditure associated with the introduction of generic substitution were analysed with a linear segmented regression. The study comprised outpatient prescription pharmaceuticals encompassed by PBS for Sweden in total and each county council. Two different data sets were analysed. The first comprised all prescribed pharmaceuticals. The second contained only pharmaceuticals on regular prescriptions (i.e. exclusion of multidose dispensed drugs). Changes in patient co-payment per 1000 inhabitants and working day and subsidised cost per 1000 inhabitants and working day associated with the introduction of generic substitution were analysed. Expenditure was expressed in Swedish krona, SEK (SEK 1=US$ 0.14/euro 0.11, 7 July 2006). The Swedish Consumer Price Index was used to inflation-adjust expenditures with 2004 as base. The introduction of generic substitution was associated with a significant change in slope for patient co-payment in both all prescribed pharmaceuticals and pharmaceuticals on regular prescriptions (p<0.005) for Sweden in total. The slope shifted direction from a slight increase before the reform into a decline after the reform was implemented. This was also found for the average slope of patient co-payment for all county councils (p<0.0001). The introduction of generic substitution was associated with a statistically significant shift in slope for subsidised cost for Sweden in total (p<0.001). The slope shifted from a monthly increase before October 2002 to a monthly decline for all prescribed pharmaceuticals afterwards. Similar results were found for the average slope of subsidised cost for all county councils both for all prescribed pharmaceuticals and pharmaceuticals on regular prescriptions (p<0.0001). The introduction of generic substitution was associated with a shift in trend from an increase into a decrease both for patients' and society's expenditures. This suggests that generic substitution has contributed to a reduction in the growth of pharmaceutical expenditure.

Reference drug programs: effectiveness and policy implications

In the current economic environment, health care systems are constantly struggling to contain rapidly rising costs. Drug costs are targeted by a wide variety of measures. Many jurisdictions have implemented reference drug programs (RDPs) or similar therapeutic substitution programs. This paper summarizes the mechanism and rationale of RDPs and presents evidence of their economic effectiveness and clinical safety. RDPs for pharmaceutical reimbursement are based on the assumption that drugs within specified medication groups are therapeutically equivalent and clinically interchangeable and that a common reimbursement level can thus be established. If the evidence documents that a higher price for a given drug does not buy greater effectiveness or reduced toxicity, then under RDP such extra costs are not covered. RDPs or therapeutic substitutions based on therapeutic equivalence are seen as logical extensions of generic substitution that is based on bioequivalence of drugs. If the goal is to achieve full drug coverage for as many patients as possible in the most efficient manner, then RDPs in combination with prior authorization programs are safer and more effective than simplistic fiscal drug policies, including fixed co-payments, co-insurances, or deductibles. RDPs will reduce spending in the less innovative but largest market, while fully covering all patients. Prior authorization will ensure that patients with a specified indication will benefit from the most innovative therapies with full coverage. In practice, however, not all patients and drugs will fit exactly into one of the two categories. Therefore, a process of medically indicated exemptions that will consider full coverage should accompany an RDP. In the current economic environment, health care systems are constantly struggling to contain rapidly rising costs. Drug costs are targeted by a wide variety of measures. Many jurisdictions have implemented reference drug programs, and others are considering them. This paper summarizes the mechanism and rationale of RDPs, presents evidence of their economic effectiveness and clinical safety, and concludes with some practical implications of implementing RDP policies.

Does therapeutic reference pricing always result in cost-containment? The Hungarian evidence

Therapeutic reference pricing is one of the potential cost containment methods for pharmaceuticals. The most critical question of reference pricing is how to select reference product(s) if their efficacy is different, especially if different strengths of the same substance are available. Authors describe the Hungarian experience related to the introduction of therapeutic reference pricing for statin therapies as of 1 September 2003. The National Health Insurance Fund selected the reference products based on their low price per DDD. Therapeutic reference pricing was expected to reduce the expenditure on statins by switching therapy to cheaper alternatives and therefore decreasing the average price per prescribed unit. The National Health Insurance Fund expected price erosion not only for branded products directly affected by generics but even for patented ones. Despite generic price erosion of simvastatin, the average unit price of statins was reduced by only 3% at 7 months after the introduction of the reference pricing system. During the same period the average DDD per prescription was increased from 1.14 to 1.65. The price of patented statins did not change over this period. Introduction of therapeutic reference pricing neglected evidence-based medicine results and ultimately increased the expenditure on statins in Hungary. Selection of the cheapest DDD per unit as the reference product resulted in growth of DDD per prescription, and consequently increased price per prescribed unit of statins. The failure of the system could have been even more dramatic if increased utilisation of generic statins had not reduced the negative effect of therapeutic reference pricing. Based upon the first experiences of the Hungarian implementation, the method described in this paper for the extension of generic reference pricing to therapeutic categories is not justifiable.

Pharmaceutical policies: effects of reference pricing, other pricing, and purchasing policies

BACKGROUND

Pharmaceuticals can be important for people's health. At the same time drugs are major components of health care costs. Pharmaceutical pricing and purchasing policies are used to determine or affect the prices that are paid for drugs. Examples are price controls, maximum prices, price negotiations, reference pricing, index pricing and volume-based pricing policies. The essence of reference pricing is to establish a maximum level of reimbursement for a group of drugs assumed to be therapeutically equivalent.

OBJECTIVES

To determine the effects of pharmaceutical pricing and purchasing policies on drug use, healthcare utilisation, health outcomes and costs (expenditures).

SEARCH STRATEGY

We searched the following databases and web sites: Effective Practice and Organisation of Care Group Register (date of last search: 22/08/03), Cochrane Central Register of Controlled Trials (15/10/03), MEDLINE (07/09/05), EMBASE (07/09/05), ISI Web of Science (08/09/05), CSA Worldwide Political Science Abstracts (21/10/03), EconLit (23/10/03), SIGLE (12/11/03), INRUD (21/11/03), PAIS International (23/03/04), International Political Science Abstracts (09/01/04), NHS EED (20/02/04), PubMed (25/02/04), NTIS (03/03/04), IPA (22/04/04), OECD Publications & Documents (30/08/05), SourceOECD (30/08/05), World Bank Documents & Reports (30/08/05), World Bank e-Library (04/05/05), JOLIS (22/08/05), Global Jolis (22/08/05 and 23/08/05), WHOLIS (29/08/05).

SELECTION CRITERIA

Policies in this review were defined as laws, rules, financial and administrative orders made by governments, non-government organisations or private insurers. To be included a study had to include an objective measure of at least one of the following outcomes: drug use, healthcare utilisation, health outcomes, and costs (expenditures); the study must be a randomised controlled trial, non-randomised controlled trial, interrupted time series analysis, repeated measures study or controlled before-after study of a pharmaceutical pricing or purchasing policy for a large jurisdiction or system of care.

DATA COLLECTION AND ANALYSIS

Two reviewers independently extracted data and assessed study limitations. Quantitative analysis of time series data, for studies with sufficient data, and qualitative analyses were undertaken.

MAIN RESULTS

We included 10 studies of reference pricing and one study of index pricing. Most of the reference pricing studies were for senior citizens in British Columbia, Canada. The use (dispensing) of reference drugs increased in five studies, between 60% and 196% immediately after introduction of reference drug pricing, whereas the use of cost sharing drugs decreased by between 19% and 42% in four studies. In three studies the reference drug group expenditures decreased (range 19% - 50%), whereas in the fourth study the expenditures increased by 5% in the short term. The results after six months of reference pricing do not show any clear pattern in relationship to the immediate effects. We found no evidence of adverse effects on health and no clear evidence of increased health care utilisation. For index pricing the evidence was much more limited than for reference drug pricing. A small reduction in drug prices was found.

AUTHORS' CONCLUSIONS

We found relatively few studies of pricing policies. The majority of the studies dealt with reference pricing. They had few methodological limitations. Based on the evidence in this review, mostly from senior citizens in British Columbia, Canada, reference drug pricing can reduce third party drug expenditures by inducing a shift in drug use towards less expensive drugs. We found no evidence of adverse effects on health and no clear evidence of increased health care utilisation. The analysis and reporting of the effects on patient drug expenditures were limited in the included studies and administration costs were not reported.

Toward a treaty on safety and cost-effectiveness of pharmaceuticals and medical devices: enhancing an endangered global public good

Expert evaluations of the safety, efficacy and cost-effectiveness of pharmaceutical and medical devices, prior to marketing approval or reimbursement listing, collectively represent a globally important public good. The scientific processes involved play a major role in protecting the public from product risks such as unintended or adverse events, sub-standard production and unnecessary burdens on individual and governmental healthcare budgets. Most States now have an increasing policy interest in this area, though institutional arrangements, particularly in the area of cost-effectiveness analysis of medical devices, are not uniformly advanced and are fragile in the face of opposing multinational industry pressure to recoup investment and maintain profit margins. This paper examines the possibility, in this context, of States commencing negotiations toward bilateral trade agreement provisions, and ultimately perhaps a multilateral Treaty, on safety, efficacy and cost-effectiveness analysis of pharmaceuticals and medical devices. Such obligations may robustly facilitate a conceptually interlinked, but endangered, global public good, without compromising the capacity of intellectual property laws to facilitate local product innovations.

Do policy changes in the pharmaceutical reimbursement schedule affect drug expenditures? Interrupted time series analysis of cost, volume and cost per volume trends in Sweden 1986-2002

The last decades increasing pharmaceutical expenditures in Sweden and other western countries have created a need for reforms to reduce the trend. The aim was to analyse if reforms concerning the pharmaceutical reimbursement scheme in Sweden during the years 1986-2002 were associated with changes in cost, volume and cost per volume of pharmaceuticals. Effects of changes in the reimbursement schedule during the study period were evaluated for all registered pharmaceuticals in Sweden and for five indicator drug groups. Five policy changes during the study period were assessed. Three concerned increased patient co-payment (January 1, 1991; January 1, 1995 and June 1, 1999), one the introduction of reference based pricing and increased co-payment (January 1, 1993) and one a new structure of the reimbursement schedule (January 1, 1997). The National Corporation of Swedish Pharmacies provided pharmaceutical delivery data for all Swedish pharmacies. Possible breaks in the trend associated with the investigated reforms were analysed with linear segmented regression analysis. This showed that increased co-payments were not associated with changed level or slope of cost and volume. The new reimbursement schedule was associated with a decreased level of cost and volume, both for all drugs combined and for several of the indicator drug groups. It was also associated with an increased slope for both volume and cost in some indicator drug groups and for all drugs. Introduction of reference based pricing was associated with a reduced slope of cost/defined daily doses (DDD) in all of the indicator drug groups and for all drugs. The analysis showed that major changes in the reimbursement system such as the introduction of a new reimbursement schedule and reference based pricing were associated with reductions in cost and volume for the new reimbursement schedule and cost per volume for reference based pricing.

Impact of cross-reference pricing on pharmaceutical prices: manufacturers' pricing strategies and price regulation

OBJECTIVE

Several EU countries are determining reimbursement prices of pharmaceuticals by cross-referencing prices of foreign countries. Our objective is to quantify the theoretical cross-border spill-over effects of cross-reference pricing schemes on pharmaceutical prices in the former EU-15 countries.

METHODS

An analytical model was developed estimating the impact of pharmaceutical price changes in Germany on pharmaceutical prices in other countries in the former EU-15 using cross-reference pricing. We differentiated between the direct impact (from referencing to Germany directly) and the indirect impact (from referencing to other countries that conduct their own cross-reference pricing schemes).

RESULTS

The relationship between the direct and indirect impact of a price change depends mainly on the method applied to set reimbursement prices. When applying cross-reference pricing, the reimbursement price is either determined by the lowest of foreign prices (e.g. Portugal), the average of foreign prices (e.g. Ireland) or a weighted average of foreign prices (e.g. Italy). If the respective drug is marketed in all referenced countries and prices are regularly updated, a price reduction of 1.00 euro in Germany will reduce maximum reimbursement prices in the former EU-15 countries from 0.15 euros in Austria to 0.36 euros in Italy.

DISCUSSION

On one side, the cross-border spill-over effects of price reductions are undoubtedly welcomed by decision makers and may be favourable to the healthcare system in general. On the other side, these cross-border spill-over effects also provide strong incentives for strategic product launches, launch delays and lobbying activities, and can affect the effectiveness of regulation.

CONCLUSIONS

To avoid the negative effects of cross-reference pricing, a weighted index of prices from as many countries as possible should be used to determine reimbursement prices in order to reduce the direct and indirect impact of individual countries.

Impacts of cost containment strategies on pharmaceutical expenditures of the National Health Insurance in Taiwan, 1996-2003

INTRODUCTION

Pharmaceutical expenditure (PE) of the National Health Insurance (NHI) programme in Taiwan grew from 62.2 billion Taiwan new dollars (NT dollars) in 1996 to NT94.5 dollars billion in 2003.The government has been introducing many strategies to control PE since the inception of NHI including price adjustment based on the prices of international products or existing products (inter-brands comparison), or market price and volume survey; delegation of financial responsibility to regional bureaux; co-payment for outpatient drugs; generic grouping (the reference pricing scheme based on chemical equivalence); a global budget payment system for clinics and hospitals; and reduction in the flat daily payment rate of the drugs for clinics. The aim of this study was to evaluate the impact of these cost containment strategies on the PE of the NHI programme from 1996 to 2003.

METHODS

To take the growth and seasonal trends of monthly PE into consideration, Box and Tiao's time-series event intervention analysis based on the Box-Jenkins auto-regressive integrated moving-average model was applied to evaluate the impact of various cost containment strategies on total and subsector (outpatient, inpatient, clinic and hospital sectors) PE. Monthly data of PE of the NHI programme from 1996 to 2003 (the dependent variables) were obtained from the Bureau of the NHI. Drugs prescribed by dentists and Chinese medical doctors at outpatient departments were excluded.

RESULTS

After fitting the patterns of time series and controlling for the calendar effect of the Chinese New Year and the severe acute respiratory syndrome outbreak in 2003, three strategies (generic grouping, delegation of financial responsibility and reduction of the flat payment rate of clinics) were significantly associated with a reduction in PE. However, the hospital global budget strategy offset partial savings from these three strategies. Cumulative savings during the study period were estimated to be NT25.442 dollars billion (US0.80 dollars billion). Of all the strategies, generic grouping was the most effective although it had less effect on the clinic subsector. Neither drug co-payment nor price adjustment based on the international or inter-brand price comparison had significant impacts on PE.

CONCLUSION

Generic grouping, reduction of the flat payment rate and delegation of financial responsibility were effective in controlling PE. A global budget alone would be unable to control PE without other direct financial incentives. Neither drug co-payment nor brand-specific price adjustment based on prices of international/existing products had a significant impact on PE.

Regulation of pharmaceutical markets in Germany: improving efficiency and controlling expenditures?

Rising pharmaceutical expenditure has become a major concern for policy makers in Germany over recent years. Therefore, the pharmaceutical market has been increasingly targeted by different kinds of regulation, focussing on both the supply and the demand side, using price, volume and spending controls. Specific regulations include price reductions, reference pricing, pharmacy rebates for sickness funds, increasing co-payments, an 'autidem' substitution, parallel imports, a negative list, directives, and finally, spending caps for pharmaceutical expenditure per physicians' association. Although it is difficult to attribute certain effects to single measures, some measures like reference pricing and physician spending caps are more effective and long-lasting than others. In spite of being opposed by physicians, the spending caps applied between 1993 and 2001 have limited pharmaceutical expenditure for an entire decade. However, while some measures do effectively control expenditures, their effect on allocative efficiency may be detrimental.

Pharmaceutical policy in Italy: towards a structural change?

Italian pharmaceutical policy has recently moved towards a "two lanes" approach, with regulation differing according to a drug's patent status. This study analyses the Italian regulatory framework, focusing on policies related to "off-patent" drugs. Three main regulatory innovations have been examined: (i) generics, introduced in Italy for the first time in 1996; (ii) the reference pricing (RP) scheme, under which consumers pay part of the cost of high-priced products; (iii) pharmacists' right of substitution, supported by a regressive margins system. The recent reforms are already producing some worthwhile results, at least in terms of competitive pressure on the (few) substances that run out of patent protection. However, further intervention could be required to achieve long-term sustainability.

What is required to evaluate the impact of pharmaceutical reference pricing?

OBJECTIVE

To describe empirical studies evaluating the impact of reference pricing (RP) interventions in pharmaceutical markets in order to discuss the requirements for these evaluations.

METHODS

Ten studies were included in this review. For each study, the nature of the intervention, the nature of the data available, the nature of the question to be answered and the requirements of the evaluation method were examined through a questionnaire. The most frequently used evaluation method was the conventional before-after estimator, and only three studies used the difference-in-differences method.

RESULTS

Nine studies evaluated a therapeutic RP system and one evaluated a generic RP system. All of the papers reported how the reference price level was established, but only one study directly reported the updating frequency and criteria of the RP system. In four studies, details of simultaneous interventions were not reported. There is no paper providing evidence on overall social welfare impact. Four papers estimated the impact of intervention on the consumer price of drugs covered by the RP system. Only one provided information about the impact on the price of related drugs not covered by the system. Three studies included an outcome variable for the use of health services. The impact of RP intervention on the level of competition in the market for those medicines covered by the system was reported in only three of ten papers.

DISCUSSION/CONCLUSION

Despite the rigorous effort made to evaluate the impact of RP policies in some countries, several limitations may affect both their internal validity (the nature of the data available, statistical problems common to non-experimental data, etc.) and their external validity (heterogeneity in the nature of the intervention).

Pharmaceutical reform and physician strikes in Korea: separation of drug prescribing and dispensing

Before the recent pharmaceutical reform in Korea that mandates the separation of drug prescribing and dispensing, physicians and pharmacists both prescribed and dispensed drugs, resulting in the overuse and misuse of drugs. The pharmaceutical reform attempts to change the provider's economic incentives by eliminating the providers' profit from drugs that have been a major source of their income. It also influences the pharmaceutical industry that has thrived on offering high margins to physicians rather than on producing high-quality drugs. However, physician strikes forced the government to modify some critical elements of the reform package and to raise medical fees substantially to compensate for the income loss of physicians. Lack of a strategic plan of implementation, failure to appreciate the change in the paradigm of health policy process, and failure to convince consumers of the benefits of the reform, are the major reasons that the historic reform of the separation of drug prescribing and dispensing has resulted in greater social cost than expected.

European healthcare policies for controlling drug expenditure

In the last 20 years, expenditures on pharmaceuticals - as well as total health expenditures - have grown faster than the gross national product in all European countries. The aim of this paper was to review policies that European governments apply to reduce or at least slow down public expenditure on pharmaceutical products. Such policies can target the industry, the wholesalers and retailers, prescribers, and patients. The objectives of pharmaceutical policies are multidimensional and must take into account issues relating to public health, public expenditure and industrial incentives. Both price levels and consumption patterns determine the level of total drug expenditure in a particular country, and both factors vary greatly across countries. Licensing and pricing policies intend to influence the supply side. Three types of pricing policies can be recognised: product price control, reference pricing and profit control. Profit control is mainly used in the UK. Reference pricing systems were first used in Germany and The Netherlands and are being considered in other countries. Product price control is still the most common method for establishing the price of drugs. For the aim of fiscal consolidation, price-freeze and price-cut measures have been frequently used in the 1980s and 1990s. They have affected all types of schemes. For drug wholesalers and retailers, most governments have defined profit margins. The differences in price levels as well as the introduction of a Single European Pharmaceutical Market has led to the phenomenon of parallel imports among member countries of the European Union. This may be facilitated by larger and more powerful wholesalers and the vertical integration between wholesalers and retailers. To control costs, the use of generic drugs is encouraged in most countries, but only few countries allow pharmacists to substitute generic drugs for proprietary brands. Various interventions are used to reduce the patients' demand for drugs by either denying or limiting reimbursement of products and providing an incentive for patients to reduce their consumption of drugs. These interventions include defining a list either of drugs reimbursed (positive list) or one of drugs not reimbursed (negative list), and patient co-payments, which require patients to pay a proportion of the cost of a prescribed product or a fixed charge. Policies intended to affect physicians' prescribing behaviour include guidelines, information (about price and less expensive alternatives) and feedback, and the use of budgetary restrictions.

Outpatient antibiotic use and prevalence of antibiotic-resistant pneumococci in France and Germany: a sociocultural perspective

The prevalence of penicillin-nonsusceptible pneumococci is sharply divided between France (43%) and Germany (7%). These differences may be explained on different levels: antibiotic-prescribing practices for respiratory tract infections; patient-demand factors and health-belief differences; social determinants, including differing child-care practices; and differences in regulatory practices. Understanding these determinants is crucial for the success of possible interventions. Finally, we emphasize the overarching importance of a sociocultural approach to preventing antibiotic resistance in the community.

Reference-based pricing schemes: effect on pharmaceutical expenditure, resource utilisation and health outcomes

Pharmaceutical expenditure is rising more rapidly than the general inflation rate in most advanced countries. One strategy that has been introduced to control pharmaceutical costs is reference-based pricing (RBP). Its potential is restricted to those specific segments of the drug market where several drugs (and/or their generic forms) exist without substantial evidence that any particular agent is superior. Three broad approaches have been adopted. These involve the aggregation of drugs into generic groups, related drug groups (e.g. ACE inhibitors) or drugs grouped by therapeutic indication (e.g. antihypertensives). For each drug group, a single reimbursement level or reference price is set. Drugs above the reference price require part or total payment by the patient. The experience with RBP ranges from over 10 years in Germany (involving all levels of RBP) to the more recent implementation of RBP for related drug groups in Australia. This review summarises the current state of knowledge on RBP from the published experiences in the countries where RBP has been adopted. The published systematic reviews of RBP from the countries that have implemented it suggest that RBP has been successful at temporarily capping drug prices for the RBP drug groups and achieving short term cost savings. However, other factors influencing total pharmaceutical expenditure have often occurred simultaneously and make it difficult to isolate specific effects of RBP. Further investigation is required before any valid conclusions can be drawn about the net effect of RBP on healthcare costs. RBP has withstood the initial legal challenges of pharmaceutical companies and the criticisms of some clinicians. Where the reference price is based on the lowest priced drug(s) in the group, RBP appears to be one of the few strategies likely to be effective at encouraging doctors to use the least expensive agents as first-line therapy and utilise more expensive agents in those who experience side effects or poor efficacy.

Control of multiply resistant cocci: do international comparisons help?

Antibiotic resistance has become a worldwide problem. However, the reasons for the uneven geographic distribution of antibiotic-resistant microorganisms are not fully understood. For instance, there are striking differences in the epidemiology of multiresistant gram-positive cocci between the USA and Germany. According to recent reports, the prevalence of high-level penicillin-resistant pneumococci (PRP), meticillin-resistant Staphylococcus aureus (MRSA), and vancomycin-resistant enterococci (VRE) in clinically relevant isolates of hospitalised patients in the USA and Germany are: PRP, 14% versus less than 1%; MRSA, 36% versus 15%; and VRE, 15% versus 1%. These disparities may be explained by several determinants: (1) diagnostic practice and laboratory recognition (all three pathogens); (2) clonal differences and pathogen transmissibility (VRE); (3) antibiotic prescribing practices (all three pathogens); (4) population characteristics, including extensive daycare exposure in the USA (PRP); (5) cultural factors (all three pathogens); (6) factors related to the health-care and legal system (all three pathogens); and (7) infection-control practices (MRSA and VRE). Understanding these determinants is important for preventing further spread of multiresistant cocci within the USA. A rational approach to national surveillance is urgently needed in Germany to preserve the favourable situation and decrease MRSA transmission. Finally, we suggest that a macro-level perspective on antibiotic resistance can broaden the understanding of this worldwide calamity, and help prevent further dissemination of multiply resistant microorganisms.

Review of the literature on reference pricing

This paper reviews the literature on reference pricing (RP) in pharmaceutical markets. The RP strategy for cost containment of expenditure on drugs is analyzed as part of the procurement mechanism. We review the existing literature and the state-of-the-art regarding RP by focusing on its economic effects. In particular, we consider: (1) the institutional context and problem-related factors which appear to underline the need to implement an RP strategy; i.e. its nature, characteristics and the sort of health care problems commonly addressed; (2) how RP operates in practice; that is, how third party-payers (the insurers/buyers) have established the RP systems existing on the international scene (i.e. information methods, monitoring procedures and legislative provisions); (3) the range of effects resulting from particular RP strategies (including effects on choice of appropriate pharmaceuticals, insurer savings, total drug expenditures, prices of referenced and non-referenced products and dynamic efficiency; (4) the market failures which an RP policy is supposed to address and the main advantages and drawbacks which emerge from an analysis of its effects. Results suggest that RP systems achieve better their postulated goals (1) if cost inflation in pharmaceuticals is due to high prices rather than to the excess of prescription rates, (2) when the larger is the existing difference in prices among equivalent drugs, and (3) more important is the actual market for generics.

A comparative analysis of generics markets in five European countries

A generic medicine is a faithful copy of a mature drug--no longer under patent marketed with the chemical name of the active ingredient. This article analyses generics markets in five European countries: France, Germany Italy, The Netherlands and the U.K. The study investigate all the main issues--patent, approval to market, pricing and reimbursement, prescription and distribution--which affect the life cycle of a pharmaceutical product. The situation in the five countries varied widely. Because of European harmonization, patent legislation and approval procedures no longer affect much the development of generics. Only national legislation on patent protection approved before the EU directive came into force still plays a role. Approval differences seem to be due mainly to common practice, rather than to the regulations themselves. None of the countries have an efficient public information system on patent expiry. Generics have had more success in countries with more flexible pricing policies. Reimbursement has not yet been used widely to discriminate between generics and proprietary drugs. Financial incentives are based more on physicians' prescribing behaviour than on pharmacists. The freedom of pharmacy ownership and the consequent possibility of dispensing pharmaceuticals through different channels affects dramatically the structure of generics markets. A free market of wholesalers and retailers can enhance a comparative market, through horizontal and vertical integration all along the distribution chain. Such an environment has stimulate the success of unbranded generics by delegating strong purchasing power to distributors.