The impact of reference pricing of nonsteroidal anti-inflammatory agents on the use and costs of analgesic drugs

Explaining why increases in generic use outpace decreases in brand name medicine use in multisource markets and the role of regulation

BACKGROUND

Healthcare systems worldwide face escalating pharmaceutical expenditures despite interventions targeting pricing and generic substitution. Existing studies often overlook unwarranted volume increases in multisource markets due to differential physician perceptions of brand name and generics.

OBJECTIVE

This study aims to explain the outpacing of generic medicine use over brand name use in multisource markets and assess the regulatory role, specifically examining the impact of reference pricing on volume and intensity increases.

METHODS

Analyzing German multisource prescription medicine markets from 2011 to 2014, we evaluate regulatory mechanisms and explore whether brand name and generic medicines constitute separate market segments. Using an Oaxaca-Blinder decomposition approach, we divide the differential in brand name versus generic medicine use rates into market structure and unobserved segment effects.

RESULTS

Generic use rates surpass same-market brand name substitution by 3.87 prescriptions per physician and medicine, on average. Reference pricing mitigated volume increase, treatment intensity and expenditure. Disparities in quantity and expenditure dynamics between brand name and generic segments are partially explained by market structure and segment effects.

CONCLUSION

Generic medicine use effectively reduces expenditures but contributes to increased net prescription rates. Reference pricing may control medicine use, but divergent physician perceptions of brand name and generics, revealed by identified segment effects, call for nuanced policy interventions.

Identifying therapeutic candidates for endometriosis through a transcriptomics-based drug repositioning approach

Existing medical treatments for endometriosis-related pain are often ineffective, underscoring the need for new therapeutic strategies. In this study, we applied a computational drug repurposing pipeline to stratified and unstratified disease signatures based on endometrial gene expression data to identify potential therapeutics from existing drugs, based on expression reversal. Of 3,131 unique genes differentially expressed by at least one of six endometriosis signatures, only 308 (9.8%) were in common; however, 221 out of 299 drugs identified, (73.9%) were shared. We selected fenoprofen, an uncommonly prescribed NSAID that was the top therapeutic candidate for further investigation. When testing fenoprofen in an established rat model of endometriosis, fenoprofen successfully alleviated endometriosis-associated vaginal hyperalgesia, a surrogate marker for endometriosis-related pain. These findings validate fenoprofen as a therapeutic that could be utilized more frequently for endometriosis and suggest the utility of the aforementioned computational drug repurposing approach for endometriosis.

The impact of the reference pricing policy in China on drug procurement and cost

High drug costs are putting pressures on health care budgets and posing an obstacle for China to achieve universal coverage. Policies such as the direct price ceiling, and the Essential Medicines Program-with the Zero Markup Drug Policy (ZMDP) one key component-were implemented, coming out with limited evidence for a success. As a benchmark of China's recent health reform, Sanming city initiated the ZMDP in January 2013; and further piloted the first reference pricing (RP) policy in China in September 2014, with the intention to dis-incentivize the use of costly original drugs. In this study, we used hospital-based drug procurement data of 14 drug substances that were subjected to the RP, from four hospitals in Sanming and a neighbouring city Longyan, between 2012 and 2016. Adopting the difference-in-difference (DID) approach, we evaluated the impacts of the RP together with the ZMDP. On the one hand, we found that the ZMDP had no impact on drugs' procurement prices, volumes and costs. While on the other hand, we found that the introduction of RP was not associated with changes in unit prices for the 14 drugs in Sanming. However, the RP pilot was associated with a 25.9% [95% confidence interval (CI), 12.9-37.0%] decrease in monthly drug procurement volumes and a 47.7% (95% CI, 33.7-58.7%) decrease in the total drug costs. In particular, it reduced the procurement volumes of original drugs by 56.8% (95% CI, 47.0-64.7%). Subgroup analyses by hospital level and therapeutic class found similar results. We draw lessons for the Chinese government to experiment RP on a larger scale, considering the development and effective regulation of the generic market. This is a first report on the effects of RP in China, Asia and middle-income countries.

Effectiveness of National Pricing Policies for Patent-Protected Pharmaceuticals in the OECD: A Systematic Literature Review

OBJECTIVES

The aim of this review is to assess the current state of empirical research regarding the effectiveness of national pricing regulations of the patent-protected market for prescription pharmaceuticals. Effectiveness is understood to be the capacity of policies to have a desired impact on outcomes, such as health status, patient access, healthcare expenditure, and research investments, among others.

METHODS

A systematic review of the published literature on pricing regulations in OECD countries was performed. The PubMed, MEDLINE, Scopus, Web of Science, Cochrane Library and the OECD iLibrary databases were searched in September 2016 and December 2017, with an update in August 2018. Interrupted time series studies and additional empirical studies were included, as well as systematic reviews if appropriate methods were applied. The risk of bias was assessed based on the recommendations of the BMJ guidelines, Cochrane EPOC criteria, QHES instrument, HTA good practice guidelines, CRD's guidance and the CHEC criteria. The quality of evidence was evaluated using the suggestions from EPOC and GRADE.

RESULTS

Thirty-one publications met the inclusion criteria. Most of the assessed empirical research included therapeutic (TRP) and/or external reference pricing (ERP), with a clear majority focusing on TRP. The main outcomes that were analysed were drug prices, expenditures and drug use. For value-based pricing (VBP), only limited empirical data were found.

CONCLUSIONS

We found evidence that TRP may reduce pharmaceutical prices and expenditures in the short term. Furthermore, TRP may lead to substitution effects towards lower-priced pharmaceuticals. The effects of TRP on patient access, healthcare utilisation and R&D investments were found to be uncertain. No conclusions were drawn for ERP and VBP. No evidence was found for the effects on health outcomes for any of the analysed policies. There is a strong need for evidence generation regarding effective pricing policies, particularly for VBP, managed entry agreements and non-financial outcomes.

Influence of generic reference pricing on medicine cost in Slovenia: a retrospective study

Aim

To assess the impact of the generic reference pricing (GRP) system on the prices and cost of medicines in Slovenia approximately 8 years after its introduction in 2003 and before the implementation of the therapeutic reference pricing system.

Methods

A retrospective study of all medicines (N = 789) included in the GRP system on January 31, 2012 was performed. Medicine prices and cost were analyzed between January 31, 2012 and December 31, 2013 after every update (N = 11) of the maximum reimbursable price (MRP) and were compared to the price and cost on January 31, 2012 (index date). Time trends of different types of medicine prices (maximum allowed price, MRP, and actual wholesale price) were graphically analyzed, and actual wholesale price adjustments to the MRP changes and the budget impact of the GRP were assessed.

Results

In the 2-year study period, the long-term performance of the GRP system was associated with an approximate 45% decrease in the average MRP or an approximate 20% cost reduction. For each MRP update period, the GRP reduced the cost based on the maximum allowed price for approximately 30%. The wholesale price adjustments were mostly made for medicines priced above the MRP and reduced patients’ out-of-pocket cost.

Conclusions

In the long term, the GRP system effectively reduced medicine prices and the cost of reimbursed products.

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.

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.

International experience in controlling pharmaceutical expenditure: influencing patients and providers and regulating industry - a systematic review

Objective

To review international policies to control expenditure on pharmaceuticals by influencing the behaviour of patients and providers and regulating the pharmaceutical industry.

Method

Systematic review of experimental and quasi-experimental studies. Published studies were identified with an electronic search strategy using MEDLINE and EMBASE from 1980 to May 2012. Studies were eligible if they assessed the effect of policies aimed at influencing the behaviour of patients and providers, and regulating the pharmaceutical industry. Outcome measures included pharmaceutical expenditure, prices or utilization; other resource use relating to pharmaceuticals; and health outcomes and patients’ or providers’ behaviour relating to pharmaceutical use. Quality assessment criteria for each study design were developed based on the standard criteria recommended by the Cochrane Effective Practice and Organisation of Care (EPOC) group.

The review includes studies based on randomized controlled trials and rigorous quasi-experimental designs (interrupted time-series and controlled before-and-after studies). Studies were excluded if they were conducted within a single hospital or practice; related to pharmaceutical care services or disease management; had less than 6 months of follow-up period (or less than 12 months overall for interrupted time series); if data in controlled before-and-after studies were not collected contemporaneously or if no rationale was stated for the choice of control group; or if relevant and interpretable data were not presented.

Results

A total of 255 studies met the inclusion criteria for this review. The majority of the studies relating to patients evaluated cost sharing interventions such as user charges (52 studies). User charges do reduce utilization of pharmaceuticals, and reduce public expenditure by shifting costs to patients. But they reduce the use of essential as well as non-essential drugs, and without adequate exemptions they affect vulnerable groups disproportionately.

The majority of studies relating to doctors evaluated the effects of educational approaches (78 studies), reimbursement restrictions (48 studies) and incentive systems (22 studies). Evidence on these policies is of mixed quality. It appears possible to influence prescribing modestly, through various means, but it is essential that messages to prescribers are based on good evidence of effectiveness and cost-effectiveness.

Twenty-nine studies related to industry regulation, and they were of mixed quality. Evidence from studies of reference pricing suggests that this may result in cost savings. These are, however, achieved not by companies reducing or restraining prices, or by reductions in the overall volume of prescriptions, but by some shifts in use and shifting costs to patients, with consequent adverse effects on the equity of access to medicines. Other price and profit controls remain almost completely lacking in evaluative evidence.

Conclusions

It may be that the undesirable consequences of policies influencing patients, particularly user charges, can outweigh the benefits. To influence demand for pharmaceuticals, it is more appropriate to influence prescribing doctors and although interventions to improve prescribing practice have been developed, they often achieve relatively modest benefits and sometimes at high cost. Good evaluative evidence related to industry regulation is scarce despite its policy importance.

The impact of generic reference pricing in Italy, a decade on

OBJECTIVES

The generic reference price (GRP) was introduced in Italy in 2001. The main purpose of this paper is: (a) producing evidence regarding the effect of GRP on prices; (b) testing the hypothesis that there is a reallocation of demand from the genericated (and reference-priced) molecules to patent-protected products that have the same therapeutic indication.

METHODS

The analysis used a unique dataset of quantities and revenues of six therapeutic groups that were observed for more than a decade. Difference-in-differences analysis is applied. Prices are adjusted for all the regulatory interventions in the ten years of observations, to control for confounding impact of these interventions.

RESULTS

On average, prices dropped 13% more in groups to which GRP was applied than in other groups. Moreover, each entry of a new generic was associated with a price drop of around 2.8%. On the other hand, GRP did not induce any significant switching towards in-patent molecules.

CONCLUSIONS

We provide the first empirical results of the impact of GRP on prices in Italy and evidence that GRP cannot be held solely responsible for the often reported demand reallocation towards new and in-patent molecules.

Multiple drug cost containment policies in Michigan's Medicaid program saved money overall, although some increased costs

Michigan's Medicaid program implemented four cost containment policies--preferred drug lists, joint and multistate purchasing arrangements, and maximum allowable cost--during 2002-04. The goal was to control growth of drug spending for beneficiaries who were enrolled in both Medicaid and Medicare and taking antihypertensive or antihyperlipidemic prescription drugs. We analyzed the impact of each policy while holding the effect of all other policies constant. Preferred drug lists increased both preferred and generic drugs' market share and reduced daily cost--the cost per day for each prescription provided to a beneficiary. In contrast, the maximum allowable cost policy increased daily cost and was the only policy that did not generate cost savings. The joint and multistate arrangements did not affect daily cost. Despite these policy trade-offs, the cumulative effect was a 10 percent decrease in daily cost and a total cost savings of $46,195 per year. Our findings suggest that policy makers need to evaluate the impact of multiple policies aimed at restraining drug spending, and further evaluate the policy trade-offs, to ensure that scarce public dollars achieve the greatest return for money spent.

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.

Pharmaceutical policies: effects of restrictions on reimbursement

BACKGROUND

Public policy makers and benefit plan managers need to restrain rising pharmaceutical drug costs while preserving access and optimizing health benefits.

OBJECTIVES

To determine the effects of a pharmaceutical policy restricting the reimbursement of selected medications on drug use, health care utilization, health outcomes and costs (expenditures).

SEARCH STRATEGY

We searched the 14 major bibliographic databases and websites (to January 2009).

SELECTION CRITERIA

Included were studies of pharmaceutical policies that restrict coverage and reimbursement of selected drugs or drug classes, often using additional patient specific information related to health status or need. We included randomised controlled trials, non-randomised controlled trials, interrupted time series (ITS) analyses, repeated measures studies and controlled before-after studies set in large care systems or jurisdictions.

DATA COLLECTION AND ANALYSIS

Two authors independently extracted data and assessed study limitations. Quantitative re-analysis of time series data was undertaken for studies with sufficient data.

MAIN RESULTS

We included 29 ITS analyses (12 were controlled) investigating policies targeting 11 drug classes for restriction. Participants were most often senior citizens or low income adult populations, or both, in publically subsidized or administered pharmaceutical benefit plans. Impact of policies varied by drug class and whether restrictions were implemented or relaxed. When policies targeted gastric-acid suppressant and non-steroidal anti-inflammatory drug classes, decreased drug use and substantial savings on drugs occurred immediately and for up to two years afterwards, with no increase in the use of other health services (6 studies). Targeting second generation antipsychotic drugs increased treatment discontinuity and the use of other health services without reducing overall drug expenditures (2 studies). Relaxing restrictions for reimbursement of antihypertensives and statins increased appropriate use and decreased overall drug expenditures. Two studies which measured health outcomes directly were inconclusive.

AUTHORS' CONCLUSIONS

Implementing restrictions to coverage and reimbursement of selected medications can decrease third-party drug spending without increasing the use of other health services (6 studies). Relaxing reimbursement rules for drugs used for secondary prevention can also remove barriers to access. Policy design, however, needs to be based on research quantifying the harm and benefit profiles of target and alternative drugs to avoid unwanted health system and health effects. Health impact evaluation should be conducted where drugs are not interchangeable. Impacts on health equity, relating to the fair and just distribution of health benefits in society (sustainable access to publically financed drug benefits for seniors and low income populations, for example), also require explicit measurement.

The impact of reference pricing on switching behaviour and healthcare utilisation: the case of statins in Germany

This paper analyses (1) the impact of the inclusion of statins in the German reference pricing scheme in 2005 on the statin market, and (2) the effect of switching behaviour subsequent to the policy change on healthcare utilisation and costs. Patients with prescriptions for statins in 2004 were observed for 1 year before and 1 year after the policy change, which went into effect on 1 January 2005. Data on outpatient and inpatient visits, pharmaceutical consumption, and cost to the sickness fund were collected from a sickness fund with more than 5.8 million insured members in 2005. Compared to patients who were not affected by the policy change, patients treated previously with atorvastatin experienced higher non-adherence and increased discontinuation of treatment (P < 0.0001). Compared to patients who continued treatment with atorvastatin (non-switchers), patients who switched to another statin were hospitalised more often (P = 0.0439). However, difference-in-differences in hospitalisation due to coronary heart disease (P = 0.8751) and emergency visits (P = 0.5624) did not differ significantly between the two groups. Patients who switched more than once experienced a significant increase in hospital visits (P = 0.0061) and hospital visits due to cardiovascular disease (P = 0.0096) compared to non-switchers. Difference-in-differences in outpatient healthcare utilisation did not differ between non-switchers and switchers. Total savings resulting from the policy change ranged from <euro> 94.4 million to <euro> 108.7 million. Although manufacturers usually comply with reference pricing by reducing their retail prices to the reference price, regulators have to be aware of the consequences in cases where manufacturers react as in this situation.

Effects of the German reference drug program on ex-factory prices of prescription drugs: a panel data approach

This paper examines effects of the German social health insurance system's reference drug program (RDP) for prescription drugs on ex-factory prices. Moreover, we analyze whether manufacturers adapt prices of their products that are not subject to reference pricing as a consequence of changes in reference prices of their products that are subject to reference pricing. We use econometric panel data methods based on a large panel data set of nearly all German prescription drugs on a monthly basis between October 1994 and July 2005. They provide information on ex-factory prices, reference prices, manufacturers, type of prescription drug, and market entries and exits. Our results show that there is no full price adjustment: A 1%-change in reference prices leads to a 0.3%-change in market prices. Price adjustment, however, is fast - it mostly happens in the first month. Furthermore, the first introduction of a reference price reduces market prices of the affected products by approximately 7%. Finally, we observe a significant time effect that is positive in the market without reference prices and negative in the market with reference prices.

Impact of Drug Plan Management Policies in Canada: A Systematic Review

Background/objective:

In Canada, pharmaceutical expenditures require an increasing proportion of total health care dollars. Drug plan managers use various policies to manage medication use and control costs, but these policies can have unintended consequences. The objective of this systematic review is to evaluate the impact of drug policies on economic, clinical and humanistic (quality of life or satisfaction) outcomes.

Methods:

Articles in which the primary objective was to evaluate the impact of a drug policy tool or technique in Canada and that measured one or more economic, clinical or humanistic outcomes were considered for inclusion. Studies were excluded if they were based in institutions or not published in peer-reviewed journals. The search process included searching 9 electronic databases, searching the reference lists of identified articles and working papers and contacting drug policy researchers. Studies were assessed for quality and suitability for meta-analysis. We performed a qualitative synthesis of the study design, study sample and outcomes.

Results:

Thirty-five articles satisfied the inclusion criteria. Most ( n= 25, 71%) determined that drug policies reduced the costs, utilization or both of the studied drug therapy. Only 13 studies (37%) measured the impact of the drug policy on the cost or utilization of medical care, and the impact of the policy was favourable in only 4 of these cases. Six studies (17%) evaluated the impact of the policy on clinical outcomes; none reported a favourable impact. No studies evaluated the impact of the drug policy on humanistic outcomes.

Discussion:

Although the drug policies in most of the studies included in this systematic review did achieve the desired goal of reducing drug costs, utilization or both, the impact on other outcomes was seldom examined. In the 6 studies in which clinical outcomes were included in the evaluation framework, the impact was inconclusive. Humanistic outcomes have been completely excluded from evaluations to date.

What impact do prescription drug charges have on efficiency and equity? Evidence from high-income countries

As pharmaceutical expenditure continues to rise, third-party payers in most high-income countries have increasingly shifted the burden of payment for prescription drugs to patients. A large body of literature has examined the relationship between prescription charges and outcomes such as expenditure, use, and health, but few reviews explicitly link cost sharing for prescription drugs to efficiency and equity. This article reviews 173 studies from 15 high-income countries and discusses their implications for important issues sometimes ignored in the literature; in particular, the extent to which prescription charges contain health care costs and enhance efficiency without lowering equity of access to care.

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.

Prescription drug cost sharing: associations with medication and medical utilization and spending and health

CONTEXT

Prescription drugs are instrumental to managing and preventing chronic disease. Recent changes in US prescription drug cost sharing could affect access to them.

OBJECTIVE

To synthesize published evidence on the associations among cost-sharing features of prescription drug benefits and use of prescription drugs, use of nonpharmaceutical services, and health outcomes.

DATA SOURCES

We searched PubMed for studies published in English between 1985 and 2006.

STUDY SELECTION AND DATA EXTRACTION

Among 923 articles found in the search, we identified 132 articles examining the associations between prescription drug plan cost-containment measures, including co-payments, tiering, or coinsurance (n = 65), pharmacy benefit caps or monthly prescription limits (n = 11), formulary restrictions (n = 41), and reference pricing (n = 16), and salient outcomes, including pharmacy utilization and spending, medical care utilization and spending, and health outcomes.

RESULTS

Increased cost sharing is associated with lower rates of drug treatment, worse adherence among existing users, and more frequent discontinuation of therapy. For each 10% increase in cost sharing, prescription drug spending decreases by 2% to 6%, depending on class of drug and condition of the patient. The reduction in use associated with a benefit cap, which limits either the coverage amount or the number of covered prescriptions, is consistent with other cost-sharing features. For some chronic conditions, higher cost sharing is associated with increased use of medical services, at least for patients with congestive heart failure, lipid disorders, diabetes, and schizophrenia. While low-income groups may be more sensitive to increased cost sharing, there is little evidence to support this contention.

CONCLUSIONS

Pharmacy benefit design represents an important public health tool for improving patient treatment and adherence. While increased cost sharing is highly correlated with reductions in pharmacy use, the long-term consequences of benefit changes on health are still uncertain.

A re-examination of the impact of reference pricing on anti-hypertensive drug plan expenditures in British Columbia

Reference pricing (RP) limits drug plan reimbursement of interchangeable medicines to a reference price, which is typically equal to the price of the lowest-cost interchangeable drug; any cost above that is borne by the patient. Much of the evidence of the effects of RP comes from 'before and after' studies of the RP scheme adopted by Pharmacare, the publicly funded drug plan for seniors and others in British Columbia, Canada. We critically assess the identifying assumption inherent in the before and after design - namely, that pre-RP trends accurately predict counterfactual outcomes - in the context of estimating the impact of RP on Pharmacare's expenditure on anti-hypertensive drugs for its senior beneficiaries. We use similar data from a public plan that has not introduced RP to estimate the effects on drug expenditures of patent expiration, secular changes in prescribing patterns and various other factors common to all Canadian public drug plans that could potentially confound the before and after estimates of the effect of RP on drug plan expenditures. We find that controlling for such factors reduces estimates of drug plan savings attributable to RP of the Calcium Channel Blockers by about half.

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.

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.