The 1996 pricing and reimbursement policy in The Netherlands

Pharmaceutical pricing and reimbursement reforms in Greece

Pharmaceutical price regulation in Greece is centralized. The National Drug Organization (EOF) is the main regulatory authority functioning under the auspices of the Ministry of Health and Social Solidarity. In 2004, total pharmaceutical expenditure in Greece reached the level of 2.9 billion euro, of which 77.9% were public expenditure and the remaining 22.1% private. According to Organization for Economic Cooperation and Development (OECD) data the total per-capita expenditure on pharmaceutical care in Greece is among the lowest in Europe, representing 58% of the EU-12 average. In 1998, Greece introduced a reimbursement list, and the lowest reference pricing system among the 15 European Union member states with the purpose of controlling the growth of pharmaceutical expenditure. The measures proved to be ineffective since pharmaceutical expenditure, after a short-term reduction, continued to increase at similar rates to those before the introduction of price control mechanisms. The average annual increase of pharmaceutical expenditure in Greece over the period 1998-2003 was 7.9%, which is among the highest in the OECD countries (average 6.1%). New pharmaceutical legislation, no. 3457, was enacted on May 8th 2006, aiming at greater access to medicines, improvements to citizens' quality of life, effective and efficient utilization of health resources, transparency in public management, protecting public health, and maintaining long-term financial viability of the insurance system. The innovative aspect of the new legislation is the abolition of the positive list and the establishment of a rebate system granting the National Insurance Funds a rebate rate paid by the pharmaceutical companies. The purpose of this paper is twofold. First to assess the effectiveness of the positive list introduced in 1988 in Greece, using simple econometric models. Second to present the recent pharmaceutical reforms aimed at the introduction of a rebate system and establishing reimbursement pricing based on the average of the three lowest European prices.

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.

[Pharmaceutical distribution and retail pharmacy]

In this chapter, the main characteristics of pharmaceutical distribution and retail pharmacy are described. The author analyses the structure of this sector, the agents operating in it -wholesalers, hospital pharmacy services and chemists- and the very few modifications introduced in it in the recent years, focusing on the incentives of its current structure and their consistency with health aims. On the basis of this analysis, the author outlines some possible ways to redefine the sector, which should focus on the promotion of desirable health objectives rather than on the survival of the inefficacies that hinder its evolution. The author pays special attention to the need to modify the inadequate existing retribution system and to substitute it for a different one, which focuses on the professionalism of the service provided, rather than on the profit margin or the sales.

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.

What is Germany's experience on reference based drug pricing and the etiology of adverse health outcomes or substitution?

Germany is frequently cited as an example of reference based pricing (RBP) in ongoing controversial discussions on the effect of RBP. There are thorough analyses of phase I and II RBP on Germany's drug market. However, any conclusions on the overall economic and public health impact of RBP, solely on the basis of aggregated data, must be suspect to substantial bias, since too many factors in a rapidly changing health care system remained uncontrolled. Parallel to the introduction of phase II RBP in 1992/1993, the second health care reform became active. The two major confounding factors were the introduction of fixed drug budgets and the many changes due to the unification of Germany that took place in the beginning of the 1990s. Published and unpublished aggregated data do not allow any conclusions on the etiology of adverse health events due to this change in drug reimbursement policy. Conclusions drawn from the German experience will be based on assumptions or speculations that are hard to prove. A health care system that identifies enough evidence and need to introduce RBP as a measure of cost control should make every effort to evaluate the effects in order to increase program compliance or, if indicated, make adaptations to the RBP policy. The introduction of RBP in British Columbia in 1995-1997 and its computerized administrative health databases covering a large proportion of the population should give rise to a thorough analysis of this policy.