Regulating pharmaceutical markets: improving efficiency and controlling costs in the UK

Pharmaceutical policies: effects of financial incentives for prescribers

BACKGROUND

The proportion of total healthcare expenditures spent on drugs has continued to grow in countries of all income categories. Policy-makers are under pressure to control pharmaceutical expenditures without adversely affecting quality of care. Financial incentives seeking to influence prescribers' behaviour include budgetary arrangements at primary care and hospital settings (pharmaceutical budget caps or targets), financial rewards for target behaviours or outcomes (pay for performance interventions) and reduced benefit margin for prescribers based on medicine sales and prescriptions (pharmaceutical reimbursement rate reduction policies). This is the first update of the original version of this review.

OBJECTIVES

To determine the effects of pharmaceutical policies using financial incentives to influence prescribers' practices on drug use, healthcare utilisation, health outcomes and costs (expenditures).

SEARCH METHODS

We searched the Cochrane Central Register of Controlled Trials (CENTRAL) (searched 29/01/2015); MEDLINE, Ovid SP (searched 29/01/2015); EMBASE, Ovid SP (searched 29/01/2015); International Network for Rational Use of Drugs (INRUD) Bibliography (searched 29/01/2015); National Health Service (NHS) Economic Evaluation Database (searched 29/01/2015); EconLit - ProQuest (searched 02/02/2015); and Science Citation Index and Social Sciences Citation Index, Institute for Scientific Information (ISI) Web of Knowledge (citation search for included studies searched 10/02/2015). We screened the reference lists of relevant reports and contacted study authors and organisations to identify additional studies.

SELECTION CRITERIA

We included policies that intend to affect prescribing by means of financial incentives for prescribers. Included in this category are pharmaceutical budget caps or targets, pay for performance and drug reimbursement rate reductions and other financial policies, if they were specifically targeted at prescribing or drug utilisation. Policies in this review were defined as laws, rules, regulations and financial and administrative orders made or implemented by payers such as national or local governments, non-government organisations, private or social insurers and insurance-like organisations. One of the following outcomes had to be reported: drug use, healthcare utilisation, health outcomes or costs. The study had to be a randomised or non-randomised trial, an interrupted time series (ITS) analysis, a repeated measures study or a controlled before-after (CBA) study.

DATA COLLECTION AND ANALYSIS

At least two review authors independently assessed eligibility for inclusion of studies and risks of bias using Cochrane Effective Practice and Organisation of Care (EPOC) criteria and extracted data from the included studies. For CBA studies, we reported relative effects (e.g. adjusted relative change). The review team re-analysed all ITS results. When possible, the review team also re-analysed CBA data as ITS data.

MAIN RESULTS

Eighteen evaluations (six new studies) of pharmaceutical policies from six high-income countries met our inclusion criteria. Fourteen studies evaluated pharmaceutical budget policies in the UK (nine studies), two in Germany and Ireland and one each in Sweden and Taiwan. Three studies assessed pay for performance policies in the UK (two) and the Netherlands (one). One study from Taiwan assessed a reimbursement rate reduction policy. ITS analyses had some limitations. All CBA studies had serious limitations. No study from low-income or middle-income countries met the inclusion criteria.Pharmaceutical budgets may lead to a modest reduction in drug use (median relative change -2.8%; low-certainty evidence). We are uncertain of the effects of the policy on drug costs or healthcare utilisation, as the certainty of such evidence has been assessed as very low. Effects of this policy on health outcomes were not reported. Effects of pay for performance policies on drug use and health outcomes are uncertain, as the certainty of such evidence has been assessed as very low. Effects of this policy on drug costs and healthcare utilisation have not been measured. Effects of the reimbursement rate reduction policy on drug use and drug costs are uncertain, as the certainty of such evidence has been assessed as very low. No included study assessed the effects of this policy on healthcare utilisation or health outcomes. Administration costs of the policies were not reported in any of the included studies.

AUTHORS' CONCLUSIONS

Although financial incentives are considered an important element in strategies to change prescribing patterns, limited evidence of their effects can be found. Effects of policies, including pay for performance policies, in improving quality of care and health outcomes remain uncertain. Because pharmaceutical policies have uncertain effects, and because they might cause harm as well as benefit, proper evaluation of these policies is needed. Future studies should consider the impact of these policies on health outcomes, drug use and overall healthcare expenditures, as well as on drug expenditures.

Factors affecting the uptake of new medicines: a systematic literature review

BACKGROUND

The successful diffusion of new drugs is crucial for both pharmaceutical companies and patients-and of wider stakeholder concern, including for the funding of healthcare provision. Micro-level characteristics (the socio-demographic and professional characteristics of medical professionals), meso-level characteristics (the prescribing characteristics of doctors, the marketing efforts of pharmaceutical companies, interpersonal communication among doctors, drug attributes, and the characteristics of patients), and macro-level characteristics (government policies) all influence the diffusion of new drugs. This systematic literature review examines the micro- and meso-level characteristics of early prescribers of newly introduced drugs. Understanding the characteristics of early adopters may help to speed up the diffusion process, promote cost-efficient prescribing habits, forecast utilisation, and develop targeted intervention strategies.

METHODS

The PubMed and Scopus electronic databases were chosen for their extensive coverage of the pertinent literature and used to identify 205 potentially relevant studies by means of a four-layered search string. The 35 studies deemed eligible were then synthetized carefully and critically, to extract variables relevant to this review.

RESULTS

Early adoption of new drugs is not a personal trait, independent of drug type, but early adopters share both micro- and meso-level characteristics. At prescriber level, doctors' interest in particular therapeutic areas, participation in clinical trials, and volume of prescribing-either in total or within the therapeutic class of the new drug-increase the likelihood of early adoption. The marketing efforts of pharmaceutical companies and doctors' professional and social interactions leading to prescribing contagion are very powerful predictors of new drug uptake. At patient level, doctors with younger patients, patients with higher socioeconomic statuses and/or patients with poorer health statuses are more inclined to prescribe new drugs early. In contrast, the socio-demographic characteristics of prescribers and many practice-related factors play little role in the adoption process.

CONCLUSIONS

The most powerful predictors of new drug uptake include the doctors' strong scientific commitment, high prescribing volume in total or in within the therapeutic class of the new drug, high exposure to marketing, and intense communication with colleagues.

The establishment and expansion of an innovative centre for rational pharmacotherapy--determinants and challenges

INTRODUCTION

The regional Board of Health in Stockholm, Sweden, established the Pharmacotherapy Centre (PTC) to enhance the rational use of medicines. The PTC initiated computerised decision support systems and developed a range of electronic service products to sustain rational prescribing. However, knowledge about which determinants have supported or hindered the sustainability of this type of healthcare organisation is limited.

OBJECTIVE

This study aims to identify and explore determinants that support or challenge the development and sustainability of the PTC organisation, as well as investigate the key elements of their implementation efforts.

METHODS

An in-depth interview study among key informants involved in the establishment of the PTC organisation was conducted. Data were analysed using qualitative content analysis.

RESULTS

Findings suggest that determinants enabling the development and expansion of this organisation include the presence of innovative characteristics among the PTC leadership and the ability of leaders to nurture visionary innovation in others, as well as the instigation of informal social networks and to identify end-user needs. Challenges included an ambiguous relationship to the pharmaceutical industry, an underestimation of the innovation-system fit and to undertake systematic evaluation of created impact by the organisation. Although prescriber use of electronic service products and adherence to an essential drug list increased over time, it remains difficult to identify methods required for demonstrating patient effects.

CONCLUSION

Whereas some determinants enabled the successful expansion of the PTC organisation, others served to substantially hinder it. The determinants identified can pave the way for systematic investigations into organisational change and development research in the pharmaceutical field.

Legal status of the pharmacy practice in the European Union and the Republic of Macedonia

From a historical point of view, one can notice that the role of the pharmacists employed in community and hospital pharmacies became more complex. Today, they do not only supply, store, prepare and dispense medicines with ensured quality, but they also provide professional services based on the concept of pharmaceutical care and good pharmacy practice. In this paper, detailed review on the current legislative regulating the status and practice of the community and hospital pharmacies in some EU-member countries and in Macedonia is given. The implementation of the concept of pharmaceutical care and good pharmacy practice in selected EU member-countries, Great Britain, Germany and Slovenia, and in Croatia as a future EU member as well as in Macedonia is also discussed. In addition, set of recommendations for establishing the good pharmacy practice standards is prepared and presented. At the end, an attempt is made to establish a basis for development a modern Law on Pharmacy Practice in the Republic of Macedonia.

Economic analysis of nutrition interventions for chronic disease prevention: methods, research, and policy

Increased interest in the potential societal benefit of incorporating health economics as a part of clinical translational science, particularly nutrition interventions, led the Office of Dietary Supplements at the National Institutes of Health to sponsor a conference to address key questions about the economic analysis of nutrition interventions to enhance communication among health economic methodologists, researchers, reimbursement policy makers, and regulators. Issues discussed included the state of the science, such as what health economic methods are currently used to judge the burden of illness, interventions, or healthcare policies, and what new research methodologies are available or needed to address knowledge and methodological gaps or barriers. Research applications included existing evidence-based health economic research activities in nutrition that are ongoing or planned at federal agencies. International and US regulatory, policy, and clinical practice perspectives included a discussion of how research results can help regulators and policy makers within government make nutrition policy decisions, and how economics affects clinical guideline development.

Impact of European pharmaceutical price regulation on generic price competition: a review

Although economic theory indicates that it should not be necessary to intervene in the generic drug market through price regulation, most EU countries intervene in this market, both by regulating the maximum sale price of generics (price cap) and by setting the maximum reimbursement rate, especially by means of reference pricing systems. We analyse current knowledge of the impact of direct price-cap regulation of generic drugs and the implementation of systems regulating the reimbursement rate, particularly through reference pricing and similar tools, on dynamic price competition between generic competitors in Europe. A literature search was carried out in the EconLit and PubMed databases, and on Google Scholar. The search included papers published in English or Spanish between January 2000 and July 2009. Inclusion criteria included that studies had to present empirical results of a quantitative nature for EU countries of the impact of price capping and/or regulation of the reimbursement rate (reference pricing or similar systems) on price dynamics, corresponding to pharmacy sales, in the generic drug market. The available evidence indicates that price-cap regulation leads to a levelling off of generic prices at a higher level than would occur in the absence of this regulation. Reference pricing systems cause an obvious and almost compulsory reduction in the consumer price of all pharmaceuticals subject to this system, to a varying degree in different countries and periods, the reduction being greater for originator-branded drugs than for generics. In several countries with a reference pricing system, it was observed that generics with a consumer price lower than the reference price do not undergo price reductions until the reference price is reduced, even when there are other lower-priced generics on the market (absence of price competition below the reference price). Beyond the price reduction forced by the price-cap and/or reference pricing regulation itself, the entry of new generic competitors is useful for lowering the real transaction price of purchases made by pharmacies (dynamic price competition at ex-factory level), although this effect is weaker or non-significant for official ex-factory prices and consumer prices in some countries. When maximum reimbursement systems such as reference pricing or similar types are applied, pharmacies are seen to receive large discounts on the price they pay for the pharmaceuticals, although these discounts are not transferred to the consumer price. The percentage discount offered to pharmacies in a country that uses a price-cap system combined with reference pricing is positively and significantly related to the number of generic competitors in the market for the pharmaceutical (dynamic price competition at ex-factory level).

Soft regulations in pharmaceutical policy making: an overview of current approaches and their consequences

It is a challenge to improve public health within limited resources. Pharmaceutical policy making is a greater challenge due to conflicting interests between key stakeholder groups. This paper reviews current and future strategies to help improve the quality and efficiency of care, with special emphasis on demand-side controls for pharmaceutical prescribing. A large number of different educational, organizational, financial and regulatory strategies have been applied in pharmaceutical policy making. However, the effectiveness of most strategies has not been thoroughly evaluated and there is evidence that the behaviour of healthcare professionals is difficult to influence with traditional methods. During the last decades, new modes of governing and new governing constellations have also appeared in healthcare. However, relationships between those who regulate and those regulated are often unclear. New approaches have recently been introduced, including extensive dissemination strategies for guidelines and extensive quality assessment programmes where physicians' performances are measured against agreed standards or against each other. The main components of these 'soft regulations' are standardization, monitoring and agenda setting. However, the impact of these new modes on health provision and overall costs is often unknown, and the increased focus on monitoring may result in a higher conformity and uniformity that may not always benefit all key stakeholders. Alongside this, a substantial growth of auditing associations controlling a diminishing minority of people actually performing the tasks may be costly and counter-productive. As a result, new effective strategies are urgently needed to help maintain comprehensive healthcare without prohibitively raising taxes or insurance premiums. This is especially important where countries are faced with extreme financial problems. Healthcare researchers may benefit from researching other areas of society. However, any potential strategies initiated must be adequately researched, debated and evaluated to enhance implementation. We hope this opinion paper is the first step in the process to develop and implement new demand-side initiatives building on existing 'soft regulations'.

Having your cake and eating it: office of fair trading proposal for funding new drugs to benefit patients and innovative companies

There are insufficient resources in the UK to fund all new technologies and new indications approved by the National Institute for Health and Clinical Excellence (NICE). Diverting funding from existing sources will have a detrimental effect on the provision of other priority services. The UK Office of Fair Trading (OFT) recently suggested a value-based pricing approach that appears workable but has generated considerable debate. Their proposal of a 25% premium for the originator product once generics are available is more generous than seen in a number of other European countries, where typically only the lowest priced product is reimbursed. The OFT proposal for a maximum 50% premium for patent-protected products, versus the prices of generics in a class or related classes, is also more generous than the proposed reforms for the pricing of proton pump inhibitors in Sweden or current reforms in Germany. In our opinion, the OFT proposals are persuasive and in accordance with the reforms seen in other European countries, and therefore should be adopted. The alternatives to fully funding new drugs or new indications as approved by NICE are either tightening the cost per QALY threshold, giving NICE an annual national budget to fund its advice alongside suggested areas for disinvestment, proactively switching patients from high-cost brand-name drugs to generics, or further delaying funding for new drugs and new indications approved by NICE. The majority of these suggestions are not in the best interests of patients or innovative pharmaceutical companies seeking to reap the rewards of their efforts.

The last decade of Italian pharmaceutical policy: instability or consolidation?

Pharmaceutical policy in Italy has been reshaped as a result of the 1993-4 crisis in which it was revealed that pharmaceutical companies, policy makers and top Department of Health officers had constructed an illegal system to set prices. Following this crisis, the rise of technical competency and leadership in the Italian Department of Health and, since 2000, in the Drug Regulatory Agency (Agenzia Italiana del Farmaco; AIFA) has achieved major improvements in many aspects of Italian pharmaceutical policy. These improvements have included increased transparency of decision making, the use of evidence-based medicine principles for reimbursement and pricing, and the use of generic drugs to lower prices.As a result of these changes, pharmaceutical expenditure has been controlled and equity has improved, mainly because co-payments have been reduced, thus reducing private expenditure on reimbursable drugs. However, a short-term approach to cost containment has prevailed, and Italian pharmaceutical policy has neglected industrial parameters. Hence, the trend in pharmaceutical expenditure has been erratic, and Italy has not favoured localization of research and development and production in its territory. The dominant issue of Italian health policy in recent years has been devolution of powers to regions, the intermediate tier of the Italian State. Overall, devolution has increased regional accountability on healthcare spending. However, regions react to enhanced freedom in different ways, reflecting their institutional capacity and competencies. This process has also affected pharmaceutical policy, more than in other decentralized healthcare systems (such as Germany and Spain). Such a situation is causing increasing regional variations and geographical equity concerns. In addition, the regional level appears rather inadequate to promote an industrial perspective unless it is supported by national initiatives.

New drug prescribing by hospital doctors: The nature and meaning of knowledge

In the UK the high cost of new drugs is partly accountable for the growth in spending on prescription drugs. Most prescribing takes place in general practice and the influence of secondary care prescribing on primary care prescribing is well recognized; yet the factors that influence hospital prescribing have been little researched. Drawing on accounts of actual prescribing events from hospital doctors from a range of specialties, we investigated the processes by which new drugs come into practice, from hospital doctors' awareness of new drugs to the assimilation and interpretation of evidential sources. The determinants of new drug prescribing were interconnected within four forms of knowledge: scientific knowledge, social knowledge, patient knowledge and experiential knowledge. Furthermore, the nature of knowledge could only be understood within its situated context. The revelation of multiple and contingent forms of knowledge highlights the problematic nature of knowledge construction within the approaches of evidence-based medicine.

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.