Public Pharmaceutical Expenditure Research Articles

PHP77 - Current estimates of the Public Pharmaceutical expenditure in Mongolia

PHP77 - Current estimates of the Public Pharmaceutical expenditure in Mongolia

Investigating the Economic Impacts of New Public Pharmaceutical Policies in Greece: Focusing on Price Reductions and Cost-Sharing Rates

ObjectiveSince 2010, cost-containment efforts in Greece focused on the reduction of public pharmaceutical expenditure. Changes in cost-sharing levels, reductions in prices, and generic substitution are some of the measures implemented after the second quarter of 2012. The objective of this study was to investigate the economic impact of the measures on public funds and households. MethodsData on volume and value for prescribed drugs for each therapeutic category and cost-sharing levels were obtained from the National Organization for Health Care Services Provision (EOPYY), the main reimbursement agency covering 95% of the population. Four different periods were compared, taking into consideration the implementation of different regulation, data availability, and disease seasonality. The periods compared were January-March 2012 versus January-March 2013 and April-August 2012 versus April-August 2013. ResultsIn 2013, only 8% of prescribed drug boxes were provided with 0% cosharing arrangement versus 13% in 2012. Α 25% cost-sharing level was imposed on 77% of the prescribed medicines in 2013 compared with 53% in 2012. Consequently, the mean cost-sharing burden for pharmaceuticals in 2013 was estimated at 18% versus 13.3% in 2012. The average price per package declined in 2013 by 28%, from €17.8 in 2012 to €12.8 in 2013. Major (>50%) savings were achieved in cardiovascular and nervous system drugs, accounting in volume for almost 60% of total pharmaceutical consumption. ConclusionsThe economic results of the measures for third-party payers were positive. The measures, however, should be reconsidered and examined more closely considering social effects, such as accessibility, especially for vulnerable groups in need of essential pharmaceutical care.

The power of r – pharmaceutical sales decomposition in Cyprus public healthcare sector and determinants of drug expenditure evolution: any lessons learned?

The pharmaceutical sector has been established as the primary cost driver in health. The scope of this paper is to explore the drivers of pharmaceutical expenditure in Cyprus by decomposing sales and assessing impact of prices, volumes and substitution effect. We used a statistical approach to decompose the growth of public pharmaceutical expenditure during 2005–2011 into three elements: 1) substitution effect; 2) price effect; and 3) increase of consumption. We further decomposed consumption into: 1) prescription/visits; 2) visits/beneficiaries; and 3) beneficiaries. Pharmaceutical expenditure grew by 31.4 % and volume of medicines dispensed increased by 55%. Prices declined by 11% and product-mix residual was -5.5%, indicating that Cyprus experienced a switch to cheaper medicines (generics) without compromising access of patients to innovative medicines. This was enhanced by guidelines, monitoring of prescribing behavior, generic substitution and efficient tendering. The increasing number of products per prescriptions should be monitored with caution.

Pharmaceutical Regulation at the Wholesale Level and Parallel Trade

This paper studies the effect of pharmaceutical regulation at the wholesale level, if markets are integrated by parallel trade, i.e. trade outside the manufacturers authorized distribution channel. In particular, maximum wholesale margins, a restriction of pricing by the intermediary, and mandatory rebates, a restriction of the pricing by the manufacturer, are analyzed with respect to their effect on drug prices, quantities, and public pharmaceutical expenditure. Maximum wholesale margins enhance the manufacturers ability to reduce competition from parallel trade in the destination country by increasing wholesale prices. In a symmetric equilibrium, maximum wholesale margins of both countries partly offset each other. Mandatory rebates may be a policy alternative, as they exhibit a reinforcing effect with respect to drug prices.

A new entity for the negotiation of public procurement prices for patented medicines in Mexico.

As countries expand health insurance coverage, their expenditures on medicines increase. To address this problem, WHO has recommended that every country draw up a list of essential medicines. Although most medicines on the list are generics, in many countries patented medicines represent a substantial portion of pharmaceutical expenditure. To help control expenditure on patented medicines, in 2008 the Mexican Government created the Coordinating Commission for Negotiating the Price of Medicines and other Health Inputs (CCPNM), whose role, as the name suggests, is to enter into price negotiations with drug manufacturers for patented drugs on Mexico's list of essential medicines. Mexico's public expenditure on pharmaceuticals has increased substantially in the past decade owing to government efforts to achieve universal health-care coverage through Seguro Popular, an insurance programme introduced in 2004 that guarantees access to a comprehensive package of health services and medicines. Since 2008, the CCPNM has improved procurement practices in Mexico's public health institutions and has achieved significant price reductions resulting in substantial savings in public pharmaceutical expenditure. The CCPNM has successfully changed the landscape of price negotiation for patented medicines in Mexico. However, it is also facing challenges, including a lack of explicit indicators to assess CCPNM performance; a shortage of permanent staff with sufficient technical expertise; poor coordination among institutions in preparing background materials for the annual negotiation process in a timely manner; insufficient communication among committees and institutions; and a lack of political support to ensure the sustainability of the CCPNM.

PHP73 Government Reduces Public Pharmaceutical Expenditure in Hungary: Rational Decisions in Challenging Economic times?

PHP73 Government Reduces Public Pharmaceutical Expenditure in Hungary: Rational Decisions in Challenging Economic times?

Comparing pharmaceutical pricing and reimbursement policies in Croatia to the European Union Member States

AimTo perform a comparative analysis of the pharmaceutical pricing and reimbursement systems in Croatia and the 27 European Union (EU) Member States.MethodsKnowledge about the pharmaceutical systems in Croatia and the 27 EU Member States was acquired by literature review and primary research with stakeholders.ResultsPharmaceutical prices are controlled at all levels in Croatia, which is also the case in 21 EU Member States. Like many EU countries, Croatia also applies external price referencing, ie, compares prices with other countries. While the wholesale remuneration by a statutorily regulated linear mark-up is applied in Croatia and in several EU countries, the pharmacy compensation for dispensing reimbursable medicines in the form of a flat rate service fee in Croatia is rare among EU countries, which usually apply a linear or regressive pharmacy mark-up scheme. Like in most EU countries, the Croatian Social Insurance reimburses specific medicines at 100%, whereas patients are charged co-payments for other reimbursable medicines. Criteria for reimbursement include the medicine’s importance from the public health perspective, its therapeutic value, and relative effectiveness. In Croatia and in many EU Member States, reimbursement is based on a reference price system.ConclusionThe Croatian pharmaceutical system is similar to those in the EU Member States. Key policies, like external price referencing and reference price systems, which have increasingly been introduced in EU countries are also applied in Croatia and serve the same purpose: to ensure access to medicines while containing public pharmaceutical expenditure.

Public pharmaceutical expenditure: identification of spatial effects

The aim of the present study is to analyse the spatio-temporal dynamics underlying Spanish pharmaceutical expenditure increases. We suggest alternative ways to resolve the problem of identifying exogenous and endogenous spatial spillover in a seemingly unrelated regression framework, while parametric instability is captured using linear time trends in the coefficients. The results highlight the need of considering these dynamic aspects in the pharmaceutical expenditure analysis.

The relationship between pharmaceutical expenditure and life expectancy: evidence from 21 OECD countries

The purpose of this article is to examine the effect of pharmaceutical expenditures on life expectancy for 21 OECD countries. An unbalanced panel data model is used to investigate the role of socio-economic, lifestyle and demographic factors as well as public and private pharmaceutical expenditures in determining life expectancy for six age–gender strata over the period 1985 to 2002. The empirical results show that pharmaceutical expenditure has a positive, but different effect on life expectancy for females and males with various ages.

Reference Pricing System and Competition: Case Study from Portugal

To characterize the patterns of competition for a sample of drugs in the Portuguese pharmaceutical market before (January 2002-March 2003) and after (April 2003-June 2003) the introduction of the reference pricing system (RPS). We performed a descriptive, retrospective, longitudinal analysis, with monthly observations from January 2002 until June 2003 of 15 homogeneous groups. The groups represented the upper limit of public pharmaceutical expenditure in the RPS segment in 2003 (n=270). Measures of competition were: 1) number of presentations; 2) prescriptions' concentration in the generic and originator (brand) segments, using Herfindahl-Hirschman Index (HHI); and 3) dominant positions of market leader in the homogeneous group. A correlation analysis between the number of presentations, the HHI, and the dominant position of the market leader was performed using Pearson coefficient of correlation. The structure of the market changed with the introduction of RPS. We found an increasing number of generic presentations (from 4+/-3 to 7+/-4; mean+/-standard deviation) and a decrease in the HHI for the generics market segment (from 0.7+/-0.2 to 0.6+/-0.3). There was a negative correlation between those variables that increased after the introduction of RPS (from -0.6 to -0.8). The HHI for brands and the dominant positions remained unchanged. After the implementation of RPS, the increased competition was mainly driven by economic and social agents in the generics market segment but not in the brands market segment.

Co-payments and the demand for pharmaceuticals: Evidence from Italy

This study exploits a natural experiment in Italy to estimate how the demand for pharmaceuticals responds to variations in co-payment levels. After a period where co-payments were set to zero by a national law, the decision over co-payments was devolved to the Italian regions. While some regions re-introduced the co-payment, others did not. Using a difference-in-difference approach on regional monthly data for years 2001 and 2003, we find that an increase in the co-payment by one Euro reduces the per capita number of prescriptions by 4% and per capita public pharmaceutical expenditure by 3.4%. We also find evidence that when in 2006 some regions reduced (but not removed) the co-payment, a reduction in the co-payment by one Euro increased the per capita number of prescriptions by 3.4%, and per capita public pharmaceutical expenditure by 4.9%.

Patient experiences of over-the-counter medicine purchases in Flemish community pharmacies

Patient use of over-the-counter (OTC) medicines contributes to improving public health and reducing public pharmaceutical expenditure. However, little is known of patient experiences of pharmacy distribution and services related to OTC medicines. The aim of this study is to explore patient experiences of purchasing OTC medicines in Flemish community pharmacies. Data were gathered from an anonymous postal questionnaire survey of patients purchasing OTC medicines in a random sample of Flemish community pharmacies in April 2008. The self-administered questionnaire related to the most recent purchase of OTC medicines by a patient in a community pharmacy. The questionnaire included questions about: (a) sources of information about OTC medicines; (b) the patient relationship with pharmacist and physician; (c) organization and layout of the pharmacy; (d) distribution channels; and (e) patient satisfaction. Questions were generally measured using Likert scales. The questionnaire was piloted among patients. One hundred and fifty-five pharmacies consented to distribute questionnaires to five patients each, yielding a total of 358 useable questionnaires (response rate of 46%). The first point of contact about OTC medicines was the pharmacist (61% of patients), followed by the physician (29%). Newspapers and the internet were not viewed as primary sources of advice on OTC medicines. Patients tended to purchase OTC medicines for the acute treatment of pain, gastro-intestinal conditions, common cold, cough or musculo-skeletal pain. More than 75% of patients felt that pharmacists provided sufficient information about the health condition and OTC medicine use. About one-third of patients did not wish the physician to be informed of their OTC medicine use. Patients did not seem to agree with distribution channels for OTC medicines other than the community pharmacy. Flemish patients were satisfied with pharmacy distribution and services related to OTC medicines. They see an important role for pharmacists and physicians to accompany them in their OTC medicine use. Our results highlighted the need to strengthen communication between patients, pharmacists and physicians. It is also recommended that pharmacists keep an individual record detailing patient use of OTC and prescription medicines.

A spatiotemporal analysis of public pharmaceutical expenditure

A regression model for per capita public pharmaceutical expenditure, based on aggregate data from fifty Spanish provinces, observed annually for the period 1996–2002 is analyzed. The necessity of simultaneously controlling for dynamic patterns and spatial autocorrelation is demonstrated. As the aim of the present and related studies of small-area variation is to control for spatial association rather than to formulate it as an explicit part of a model, the traditional application of parametric spatial autocorrelation or spatial autoregression specifications seems unnecessarily restrictive and superfluous. The present study analyzes the effects of spatial association using a non-parametric spatial filtering approach. The importance of adjusting for spatial association is confirmed, but it is further shown that the parametric and the non-parametric approaches may lead to substantially different conclusions regarding explanation of pharmaceutical expenditure variations. Thus, the need for further evidence on the implications of spatial association—and the recognition that this is more than just spatial autocorrelation and/or spatial autoregression—when analyzing complex large area behavior using small area data is demonstrated.

Pricing and reimbursement of pharmaceuticals in Italy

In Italy the price setting of medicines reimbursed by the National Health Service is regulated at the central level by AIFA, the national regulatory authority. Prices of non reimbursed medicines are indeed freely established, with some limitations, by pharmaceutical companies. To contain pharmaceutical expenditure and rationalise the whole sector the following measures have been introduced in the past years: a threshold to public pharmaceutical expenditure (PPE); a reference price system (RPS) for off-patent medicines; a pay-back mechanism as an alternative to price cut. In 2008 Italy launched a reform of the pharmaceutical expenditure governance system with the aim to introduce stability and promote development and competitiveness in the pharmaceutical sector.

Geographic and Temporal Heterogeneity in Public Prescription Pharmaceutical Expenditures in Spain

A panel of aggregate data for 50 provinces is used to analyze Spain’s per capita public pharmaceutical expenditures. In contrast to previous practice, our approach permits the analysis of the effects determinants on pharmaceutical expenditure to be heterogeneous across years and provinces. Considerable parametric heterogeneity over time as well as across provinces is found, even after controlling for residual temporal heterogeneity and interdependence as well as residual spatial spillovers. This underlines the need for using disaggregate spatial data when attempting to model macroeconomic behavior.

The breakthrough of public pharmaceutical expenditure in 2005

The breakthrough of public pharmaceutical expenditure in 2005

The Determinants of Public Pharmaceutical Expenditures: Does Italian Health Federalism Impact on Them?

Public drug expenditures increased markedly in recent years across Italian Regions and they have become an important issue in the debate on health care cost containment. This paper uses Italian regional data to investigate the determinants of pharmaceutical expenditures. The study differs from previous studies in two principal ways. First, it uses a somewhat larger sample for estimation, with pooled time-series, cross-section data for 20 regions for a 9-year period. Most previous works have used a purely cross-section approach: in this case, the small sample size reduces the statistical reliability of results and limited the number of hypotheses that can be tested simultaneously. Secondly, and following from this, a more extensive range of hypotheses is tested over the period 2001-2003, with particular emphasis on those relating to the relations between national and local measures to control pharmaceutical expenditures and drug consumption. The findings show that the use of co-payments (user charges) and direct distribution result in lower public regional drug expenditure, while genericables seem to reduce public regional drug expenditures.

Current national initiatives about drug policies and cost control in Europe: the Italy example.

Pharmaceutical expenditure is a challenge to the financial compatibility of health systems because it is growing faster (+11% per year in the last 5 years in Italy) than any other health sector. In order to curb public pharmaceutical expenditure 2 interventions are commonly used: delisting (de-reimbursement) and reference price, with the difference being paid by patients. The Italian Ministry of Health implemented a set of interventions with the general aim of pharmaceutical governance based on the following criteria: (a) to assure a complete coverage of all clinically and epidemiologically relevant diseases; (b) to provide health professionals with a range of different active drugs with the same therapeutic indications within the same therapeutic class; and (c) to identify a reimbursement threshold in order to save public money by narrowing the (wide) price differentials among drugs with comparable efficacy and safety. In this context, interventions have been undertaken at several levels including drug price reduction, generic drug promotion, delisting of drugs reimbursed, and direct distribution of medicines (by hospital services). Furthermore, a new National Pharmaceutical Formulary has been implemented. Medicines have been classified into homogeneous categories (ie, medicines with the same main indication(s) and with similar clinical efficacy and safety profile). Within each homogeneous category, a reimbursement level (cutoff) was then identified and, accordingly, pharmaceutical companies were asked to adjust their price. This adjustment was based on price per daily drug dose (DDD), cumulative expenditure (at least 50%), and cumulative utilization (at least 60%). This readjustment, at no cost for patients, is expected to save more than Euro 280 million of public money. Seventy-seven percent of this saving will be due to price readjustment of antiulcers, calcium channel blockers, angiotensin-converting enzyme (ACE) inhibitors, and some antibiotics (mainly cephalosporins). The Italian system was able to cover all relevant diseases and ensured citizens and health professionals a choice among a wide range of valid pharmacological therapies. At the same time it was able to save public money by narrowing wide price differentials among drugs with comparable clinical properties. The set of interventions yielded a new national formulary that was able to have a significant influence on the trend of drug expenditure in Italy. This experience can be a useful reference for other European and non-European states.

Reference Prices and Generic Medicines: What Can We Expect?

The aim of this paper is to analyse the relationship between reference prices (RPs), generic medicines and generic substitution at pharmacy level. In particular, the focus is on generic reference pricing. RPs in general aim to control reimbursement prices to reduce public pharmaceutical expenditure. In addition, generic reference pricing also aims to increase the use of generic medicines. The link between generic reference pricing and generic medicines is that the RP is usually set as a function of generic prices. Generic RPs are also linked with generic substitution because, without the possibility of substitution at pharmacy level, the potential cost savings from reference pricing will be reduced. RPs in general have been relatively successful in reducing prices, but less successful at controlling pharmaceutical expenditure. Moreover, generic reference pricing has not necessarily led to significant increases in generic drug use in those countries where such a system has been implemented. This paper analyses the reasons for these results, and discusses further issues that need to be considered when considering an RP system, concentrating in particular on generic reference pricing.

Guidelines for Economic Evaluations in Italy: Recommendations from The Italian Group of Pharmacoeconomic Studies

Since 1997, in order for a new drug to obtain its price and reimbursement in Italy, the negotiation between authorities and the pharmaceutical industry must include an economic evaluation. The economic evaluation study leads to price and reimbursement negotiations together with such other requirements as the price of the new drug in other countries, the impact on the domestic market in terms of public pharmaceutical expenditure, and the effects on the national economy (employment and investments).