PHP30 Using Nationwide Administrative Data to Evaluate Generic Drug Pricing and Physician Prescription

Abstract

Promotion of generic drug utilization to reduce patient's out-of-pocket costs and improve insurance finance is a cross-national policy. The share of generics in Japan, 8.6% on a value basis, is lower than in other OECD countries. Although safety concerns, inventory management, drug charge margins and patient/physician brand preferences are cited as restraints to adoption of generic drugs prescriptions, their price-setting remains to be studied empirically. The purpose of this study is to verify the effects of price markups/levels of generic drugs on their prescription in hospitals under Diagnosis-Procedure-Combination (DPC) based payment system considered unaffected by drug charge margins and wherein prescription of the lowest-priced generic drugs is economically rational. A retrospective cohort study of inpatients with drug prescriptions for which generic drug is already marketed. 732 drugs of 20 categories from among calcium channel blockers, gastric secretion inhibitors, antibacterial drugs, hEPOs, cancer drugs and radiocontrast agents were included. Data were collected from 980 acute care hospitals in Japan during April 1, 2010 to March 31, 2011. A total of 2,768,456 (54.9%) among the study population of 5,041,157 cases were analyzed. An average of six price ranges existed for each dosage form of each drug, and price variability, such as 89 price ranges in total for calcium channel blockers, was found. Even after adjusting for other covariates, the share of prescriptions of the highest-priced generic drugs was the greatest among the price ranges of generic drug. Physician prescription was nearly uninfluenced by markups. Out results suggest that positive financial effects on medical insurance may result from lowering prices of generic drug in the highest price range rather than by aggregating those in the lowest range.