Impact of the Pilot Volume-Based Drug Purchasing Policy in China: Interrupted Time-Series Analysis with Controls.

Yilin Chen,Zongfu Mao,Kai Yeung,Yi Cai,Joseph M Unger,Xu Ji,Hong Xiao

doi:10.3389/fphar.2021.804237

Yilin Chen, Zongfu Mao + Show 5 more

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https://doi.org/10.3389/fphar.2021.804237

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Abstract

Centralizing procurement for prescription drugs has the potential to reduce drug spending by creating economies of scale and by improving purchasing power. In March 2019, the Chinese government launched a volume-based purchasing (VBP) pilot program using a competitive bidding process to purchase accredited generic drugs for which branded drug substitutes were available. We performed an interrupted time-series design to estimate the change in monthly drug purchase quantity and spending comparing 14 months before and 7 months after the VBP pilot. We obtained monthly prescription drug purchase data for all purchases from public medical institutions in the three large pilot cities (Beijing, Shanghai and Xi’an) and two non-pilot cities (Changsha and Zhengzhou) between January 2018 to September 2019. We used negative binomial regression and log-linked Gamma Generalized Linear Model for purchase quantity and spending respectively. We evaluated heterogeneity of impact by pilot city, drug type (selected or non-selected drugs), and therapeutic class (cardiovascular disease, mental disorder and cancer) separately. The implementation of the pilot reform was associated with a 132% (95%-CI: 104–165%, p < 0.001) increase in the purchase quantity of selected drugs in pilot cities compared to an 17% decrease (95%-CI: 9–25%, p < 0.001) in control cities. In contrast, the purchase quantity of branded and other drugs in pilot cities decreased by 38% (95%-CI: 27–46%, p < 0.001) and 77% (95%-CI: 71–81%, p < 0.001), respectively; while in control cities, these remained at similar levels. Overall, in pilot cities, there was a 35% (95%-CI: 28–41%, p < 0.001) decrease in the purchase spending for all drugs in the first post-policy month, from 8.1 billion CNY estimated in the absence of VBP down to 5.3 billion CNY; in control cities, the change was negligible. The largest reduction in spending occurred for drugs for the treatment of cardiovascular diseases. The evidence suggests a positive impact of the VBP pilot in reducing overall drug spending and increasing the use of accredited generics in three pilot cities. This overall trend is not observed in two non-pilot cities. Assessments of long-term impact of the VBP policy on additional key outcomes including drug prescriptions, drug utilization, patients’ health outcomes and payments on drugs are needed.

Highlights

Growing healthcare spending remains a persistent challenge in many countries worldwide, especially in those experiencing rapid economic growth
Our study aims to evaluate the impact of the pilot on drug procurement using an interrupted time series analysis with controls in the three large pilot cities (i.e., Beijing, Shanghai, and Xi’an) with a total population of about 60 million
We examined changes in the pattern of drug procurement associated with the implementation of the pilot using interrupted time-series (ITS) design, a quasi-experimental design for strong causal inference in the evaluation of population-based health interventions introduced at a clear point in time (Wagner et al, 2002; Yeung et al, 2020; Xiao et al, 2021a)

Summary

Introduction

Growing healthcare spending remains a persistent challenge in many countries worldwide, especially in those experiencing rapid economic growth. Pharmaceutical expenses in 2017 constituted 34% of total healthcare spending in China, much higher than most other Asian countries including Japan (18%) and South Korea (20%), and higher than the OECD average (16%) (China National Health Dev, 2018; (2021). Volume-based purchasing (VBP) is expected to reduce pharmaceutical spending through three mechanisms: 1) pooled procurement process for drugs across multiple buyers increases negotiation power over pricing, and urges pharmaceutical companies to offer lower unit costs in exchange for a larger volume of purchase; 2) reduced operational expenses due to fewer negotiations and more bulk shipments; 3) potentially reshaped market share of pharmaceuticals from substituting branded with generic drugs and lower prices from generic drugs (World Health Organization, 2007; Waning et al, 2009; Lybecker, 2013)

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