Does drug price-regulation affect healthcare expenditures?

Generic Price Regulation and Drug Expenditures: Evidence From Canada

OBJECTIVES

Rapid growth in pharmaceutical spending is a major challenge in Canada. To control rising costs, the Canadian government implemented a generic pricing policy in 2013, which reduced prices for some prescription generic drugs by roughly 50%. This article explores the effects of the Canadian pricing policy on drug expenditures and drug utilization among seniors.

METHODS

Using a unique prescription claims data, this article adopts a difference-in-differences methodology to estimate the policy effects, and it further investigates the mechanisms by exploring the demand-side incentives and the role of health insurance design with a triple-difference approach.

RESULTS

Exploiting the policy variation across drugs and provinces, the results suggest that the policy has reduced drug expenditure per capita, largely because of the inelastic demand among seniors. Although the policy leads to lower out-of-pocket costs for seniors facing coinsurance than for those with a fixed copayment, individual utilization and total demand display no differences across cost sharing.

CONCLUSIONS

The price regulation in Canada was successful in reducing drug expenditures per capita. The success rests on the interaction with demand-side regulations and demand incentives. The evidence of cost containment in Canada can provide some insights to other countries with similar needs and priority.

Switch from public to private retail pharmaceutical expenditures: evidence from a time series analysis in Italy

OBJECTIVES

To analyse trajectories of retail pharmaceutical expenditures from 2010 to 2019 in Italy to investigate whether there was a switch from public to private expenditure, how the composition of private and public expenditure changed, and whether there are correlations with supply/demand variables. Answering these questions is important to assure pharmaceutical care to all citizens in a public health system where expenditure containment is the issue of pharmaceutical policies.

DESIGN AND SETTING

Time-trend analysis was carried out in the Italian National Health System (NHS), between 2010 and 2019. We considered the following: public pharmaceutical expenditure with/without direct distribution of drugs, copayments, household out-of-pocket payments for drugs reimbursable/non-reimbursable by the NHS, and for drugs without prescription requirement. Correlations were tested between expenditure items and relevant statistics (Gini coefficient, resident population demographics, ages and categories of physicians, and current expenditure on health).

RESULTS

The switch feared between public and private pharmaceutical expenditures was not found: private expenditure increased (average annual per cent change 1.5%; 95% CI 0.3% to 2.6%), but public spending remained stable (-1.0%; 95% CI -3.0% to 1.1%). Single items of expenditure exhibited significant pattern changes over the study period. A switch from public expenditure without direct distribution of drugs (-3.9%) to expenditure with direct distribution was found (+8.4%). Unexpected increases in household out-of-pocket payments for drugs reimbursable by the NHS (+6.1%) and in copayments (+4.9%) were shown. No notable correlations were found.

CONCLUSIONS

This study offers insights into Italian experience that can be applied to other contexts and the results provide policy-makers issues to reflect on. The findings suggest that policies of pharmaceutical-expenditure management may have multiple effects and unexpected combined effects over time that should be considered when they are designed, and suggest that health policies must be adopted with a systematic logic and a broad and unified vision.

Analysis of Healthcare Expenditures in Bulgaria

The growth of public expenditure worldwide has set the priority on assessment of trends and establishment of factors which generate the most significant public costs. The goal of the current study is to review the tendencies in public healthcare expenditures in Bulgaria and to analyze the influence of the demographic, economic, and healthcare system capacity indicators on expenditures dynamics. A retrospective, top-down, financial analysis of the healthcare system expenditures was performed. Datasets of the National Statistical Institute (NSI), National Health Insurance Fund (NHIF), and National Center of Public Health and Analysis (NCPHA) were retrospectively reviewed from2014–2019 to collect the information in absolute units of healthcare expenditures, healthcare system performance, demographics, and economic indicators. The research showed that increasing GDP led to higher healthcare costs, and it was the main factor affecting the cost growth in Bulgaria. The number of hospitalized patients and citizens in retirement age remained constant, confirming that their impact on healthcare costs was negligible. In conclusion, the population aging, average life expectancy, patient morbidity, and hospitalization rate altogether impacted healthcare costs mainly due to the multimorbidity of older people and the rising need for outpatient hospital services and medications.

Does price deregulation increase drug price in China? An interrupted time series analysis

BACKGROUND

The Chinese government removed the price ceiling of most drugs in June 2015 to establish a market-driven pricing system. The purpose of this study is to examine the impact of the elimination of drug ceiling price (EDCP) policy on drug prices.

METHODS

Using a national macro-level dataset, we employed an interrupted time series method to study the abrupt level and gradual trend changes of Chinese and Western medicine consumer price index (CPI) between June 2014 and June 2017.

RESULTS

The policy exerted level change on Chinese medicine CPI, increasing 0.201% (95% CI 0.026% to 0.376%, p = 0.026). And the trend in Chinese medicine CPI was still decreased nonsignificantly after the EDCP policy. However, there was no significant price change in Western medicine.

CONCLUSION

The EDCP policy has different effects on the prices of Chinese and Western medicines. Therefore, we need to pay more attention to the drug pricing mechanism in the future.

Evaluation of the effectiveness of comprehensive drug price reform: a case study from Shihezi city in Western China

BACKGROUND

China carried out a comprehensive drug price reform (CDPR) in 2017 to control the growing expense of drug effectively and reduce the financial burden of inpatients. However, early studies in pilot regions found the heterogeneity in the effectiveness of CDPR from different regions and other negative effects. This study aimed to evaluate the effects of the reform on medical expenses, medical service utilisation and government financial reimbursement for inpatients in economically weaker regions.

METHODS

Shihezi was selected as the sample city, and 238,620 inpatients, who were covered by basic medical insurance (BMI) and had complete information from September 2016 to August 2018 in public hospitals, were extracted by cluster sampling. An interrupted series design was used to compare the changing trends in medical expenses, medical service utilisation and reimbursement of BMI for inpatients before and after the reform.

RESULTS

Compared with the baseline trends before the CDPR, those after the CDPR were observed with decreased per capita hospitalisation expenses (HE) by ¥301.9 per month (p < 0.001), decreased drug expense (DE) ratio at a rate of 0.32% per month (p < 0.05) and increased ratio of diagnosis and treatment expenses (DTE) at a rate of 0.25% per month (p < 0.01). The number of inpatients in secondary and tertiary hospitals declined by 458 (p < 0.001) and 257 (p < 0.05) per month, respectively. The BMI reimbursement in tertiary hospitals decreased by ¥254.7 per month (p < 0.001).

CONCLUSION

The CDPR controlled the increase in medical expenses effectively and adjusted its structure reasonably. However, it also reduced the medical service utilisation of inpatients in secondary and tertiary hospitals and financial reimbursement for inpatients in tertiary hospitals.

Effects of different mark-up drug policies on drug-related expenditures in tertiary public hospitals: an interrupted time series study in Shanghai, China, 2015-2018

Irrational use of drugs remains a major challenge especially in developing countries, which contributed to a heavy pharmaceutical expenditure burden. Price regulation has been taken to curb the growth of pharmaceutical expenditures in many countries. This study aimed to investigate the impact of different mark-up drug policies on drug-related expenditures in tertiary public hospitals in Shanghai, China. Data were drawn from the audited financial statement in 24 tertiary public hospitals in Shanghai from January 2015 to December 2018. Drug-related revenue data and per capita cost data pre- and post-intervention were included. Interrupted time series design was applied to assess the actual effects of Fixed Percent Mark-up Drug (FPM) policy and Zero Mark-up Drug (ZMD) policy respectively. Results showed that ZMD policy achieved better intervention effects on declining drug-related expenditures than FPM policy. Apart from a declining trend in drug proportion (coefficient = -0.0017, p = 0.031), no other significant changes were found during FPM implementation. However, ZMD policy was associated with a level decline in per capita outpatient drug cost (coefficient = -12.21, p = 0.025) and a trend decline in per capita inpatient drug cost (coefficient = -25.12, p < 0.001), as well as a level decrease (coefficient = -0.0256, p = 0.001) and a downward tendency (coefficient = -0.0018, p < 0.001) in drug proportion. ZMD policy was effective in regulating drug-related expenditures, while FPM policy was difficult to achieve expected results due to the existence of profit space. Further regulation should be strengthened in the future, especially on drug revenue and per capita drug cost.

Drug price, dosage and safety: Real-world evidence of oral hypoglycemic agents

OBJECTIVES

Drug price reduction is one of the major policies to restrain pharmaceutical expenses worldwide. This study explores whether there is a relationship between drug price and clinical quality using real-world data.

METHODS

Patients with newly-diagnosed type 2 diabetes receiving metformin or sulfonylureas during 2001 and 2010 were identified using the claim database of the Taiwan universal health insurance system. Propensity score matching was performed to obtain comparable subjects for analysis. Pharmaceutical products were categorized as brand-name agents (BD), highpriced generics (HP) or low-priced generics (LP). Indicators of clinical quality were defined as the dosage of cumulative oral hypoglycemic agents (OHA), exposure to other pharmacological classes of OHA, hospitalization or urgent visit for hypoglycemia or hyperglycemia, insulin utilization and diagnosis of diabetic complications within 1 year after diagnosis.

RESULTS

A total of 40,152 study subjects were identified. A generalized linear mix model showed that HP and BD users received similar OHA dosages with comparable clinical outcomes. By contrast, LP users had similar outcomes to BD users but received a 39% greater OHA dosage. A marginally higher risk of poor glycemic control in LP users was also observed.

CONCLUSIONS

Drug price is related to indicators of clinical quality. Clinicians and health authorities should monitor the utilization, effectiveness and clinical safety indicators of generic drugs, especially those with remarkably low prices.

Higher pharmaceutical public expenditure after direct price control: improved access or induced demand? The Colombian case

Background

High pharmaceutical expenditure is one of the main concerns for policymakers worldwide. In Colombia, a middle-income country, outpatient prescription represents over 10% of total health expenditure in the mandatory benefits package (POS), and close to 90% in the complementary government fund (No POS). In order to control expenditure, since 2011, the Ministry of Health introduced price caps on inpatient drugs reimbursements by active ingredient. By 2013, more than 400 different products, covering 80% of public pharmaceutical expenditure were controlled. This paper investigates the effects of the Colombian policy efforts to control expenditure by controlling prices.

Methods

Using SISMED data, the official database for prices and quantities sold in the domestic market, we estimate a Laspeyres price index for 90 relevant markets in the period 2011-2015, and, then, we estimate real pharmaceutical expenditure.

Results

Results show that, after direct price controls were enacted, price inflation decreased almost - 43%, but real pharmaceutical expenditure almost doubled due mainly to an increase in units sold. Such disproportionate increase in units sold maybe attributable to better access to drugs due to lower prices, and/or to an increase in marketing efforts by the pharmaceutical industry to maintain profits.

Conclusions

We conclude that pricing interventions should be implemented along with a strong market monitoring to prevent market distortions such as inappropriate and unnecessary drug use.

Addressing the challenge of high-priced prescription drugs in the era of precision medicine: A systematic review of drug life cycles, therapeutic drug markets and regulatory frameworks

CONTEXT

Recent public outcry has highlighted the rising cost of prescription drugs worldwide, which in several disease areas outpaces other health care expenditures and results in a suboptimal global availability of essential medicines.

METHOD

A systematic review of Pubmed, the Financial Times, the New York Times, the Wall Street Journal and the Guardian was performed to identify articles related to the pricing of medicines.

FINDINGS

Changes in drug life cycles have dramatically affected patent medicine markets, which have long been considered a self-evident and self-sustainable source of income for highly profitable drug companies. Market failure in combination with high merger and acquisition activity in the sector have allowed price increases for even off-patent drugs. With market interventions and the introduction of QALY measures in health care, governments have tried to influence drug prices, but often encounter unintended consequences. Patent reform legislation, reference pricing, outcome-based pricing and incentivizing physicians and pharmacists to prescribe low-cost drugs are among the most promising short-term policy options. Due to the lack of systematic research on the effectiveness of policy measures, an increasing number of ad hoc decisions have been made with counterproductive effects on the availability of essential drugs. Future challenges demand new policies, for which recommendations are offered.

CONCLUSION

A fertile ground for high-priced drugs has been created by changes in drug life-cycle dynamics, the unintended effects of patent legislation, government policy measures and orphan drug programs. There is an urgent need for regulatory reform to curtail prices and safeguard equitable access to innovative medicines.