Does drug price-regulation affect healthcare expenditures?

Abstract

BackgroundIncreasing health costs in developed countries are a major concern for decision makers. A variety of cost containment tools are used to control this trend, including maximum price regulation and reimbursement methods for health technologies. Information regarding expenditure-related outcomes of these tools is not available.ObjectiveTo evaluate the association between different cost-regulating mechanisms and national health expenditures in selected countries.MethodsPrice-regulating and reimbursement mechanisms for prescription drugs among OECD countries were reviewed. National health expenditure indices for 2008–2012 were extracted from OECD statistical sources. Possible associations between characteristics of different systems for regulation of drug prices and reimbursement and health expenditures were examined.ResultsIn most countries, reimbursement mechanisms are part of publicly financed plans. Maximum price regulation is composed of reference-pricing, either of the same drug in other countries, or of therapeutic alternatives within the country, as well as value-based pricing (VBP). No association was found between price regulation or reimbursement mechanisms and healthcare costs. However, VBP may present a more effective mechanism, leading to reduced costs in the long term.ConclusionsMaximum price and reimbursement mechanism regulations were not found to be associated with cost containment of national health expenditures. VBP may have the potential to do so over the long term.

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

“…However, the effects upon total pharmaceutical expenditure are ambiguous. Among OECD countries, maximum price, IPR and health technologies reimbursement mechanism regulations were not found to be associated with cost containment of national health expenditures [ 28 ]. Evidence shows that pharmaceutical companies often diversify their portfolios into regulated markets and unregulated markets [ 21 ].…”

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

“…To curb the increasing growth of pharmaceutical expenditures, price regulation was put forward in many countries by setting, agreeing and cutting prices of drugs, aimed at increasing accessibility and restraining exorbitant prices (5,(15)(16)(17)(18). Separation of prescribing and dispensing was one of the essential price regulation measures, which has originally been formed since the 12 th century and followed and adopted by numerous countries (19).…”

“…Pharmaceutical expenditure was assumed to account for 25%-70% of total healthcare expenditures in developing countries and approximately 10% in most developed countries (4). In OECD countries, the pharmaceutical expenditure was estimated to be approximately 800 billion USD, accounting for 17% of total healthcare expenditures, with the range of less than 10% in Denmark to more than 30% in Hungary (5). For Japan and South Korea, pharmaceutical expenditure constituted 20.6% and 25.1% of total healthcare expenditure respectively (6,7).…”

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

“…In some cases, a drug’s price is based on the old standard of care plus a premium,[ 5 ; 6 ] the uncertainty associated with the drug[ 93 ] or simply the government’s willingness to pay. [ 92 ; 115 ] Ultimately, a drug’s price is unrelated to the cost of development[ 4 ; 5 ; 51 ] or a country’s gross domestic product,[ 12 ] and only related to cost-effectiveness if the payer introduces this into negotiations[ 30 ; 53 ; 107 ].…”

“…[ 34 ; 49 ; 50 ] On the one hand, there is a growing life expectancy (and aging population worldwide), while there are increasing medical options for disease control. [ 51 ; 52 ] Therefore, following drug innovation expectations and usage growth statistics, it is likely that costs will continue to rise. [ 53 ; 54 ] Many countries are striving towards universal health coverage, with guidance from the global public community,[ 55 – 57 ] to reduce individual catastrophic spending.…”