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What are the effects of reference pricing and other pharmaceutical pricing and purchasing policies?

Pharmaceutical pricing and purchasing policies are used to determine or affect the prices that are paid for drugs. This review found evidence for reference pricing, index pricing, and maximum prices. In reference pricing a reference drug is chosen amongst identical or similar medicines or therapeutically equivalent and the price of the reference drug is reimbursed for all the drugs in that group of drugs. For drugs that are more expensive than the reference drug, the patient has to pay the cost above the reference price. An index price is the maximum refundable price to pharmacies for drugs within an index group of therapeutically interchangeable drugs. A maximum price is a fixed price that attempts to secure pharmaceutical prices that are considered ‘reasonable’ for a given health system.

 

Key messages

 

  •  Reference pricing may reduce insurers’ cumulative drug ex-penditures by shifting drug use from cost share drugs to ref-erence drugs.
  •  Index pricing may increase the use of generic drugs, reduce the use of brand drugs, slightly reduce the price of generic drugs, and have little or no effect on the price of brand drugs.
  •  It is uncertain whether maximum pricing affects drug expenditures.
  •  The effects of these policies on healthcare utilisation or health outcomes is uncertain.
  •  None of the included studies were conducted in a low-income country.
  •  The effects of other pharmaceutical pricing and purchasing policies are uncertain.

 

 

Background

Large amounts of healthcare money are spent on drugs and these amounts are increasing. These increases put pressure on policymakers and insurers to control drug expenditures and to do so without causing adverse effects on health or increasing healthcare utilisation or other costs. Pharmaceutical pricing and purchasing policies are used as cost-containment measures to determine or affect the prices that are paid for drugs. Reference prices can be established based on external prices (from other countries) or, more frequently, internal prices (within a country). Reference pricing establishes a benchmark or reference price within a country which is the maximum level of reimbursement for a group of drugs. Other policies include price controls, maximum prices, index pricing, price negotiations, and volume-based pricing. They can be targeted at different components of drug prices – such as wholesale prices, retail prices, drug taxes and reimbursement prices. These policies can have an impact on drug expenditures in two main ways – directly, through price changes, and indirectly, through drug use changes related to the price changes.

 

 



About the systematic review underlying this summary

About the systematic review underlying this summary

Review objectives:  To determine the effects of pharmaceutical pricing and purchasing policies on drug use, healthcare utilisation, health outcomes and costs (expenditures).


Type of What the review authors searched for What the review authors found

Study designs & interventions


Randomized trials, non-ran-

domized trials, controlled re-

peated measures studies

(CRM), interrupted time series 

(ITS) studies and controlled

before-after (CBA) studies of

pharmaceutical pricing and

purchasing policies

18 studies were included. Some used

more than one design: 14 ITS, 1

ITS/CBA/CRM, 1 CRM/RM and 2 

CBA/RM studies. 17 studies evaluated

reference pricing, one of which also as-

sessed maximum prices, and 1 study

evaluated index pricing.

Participants


Healthcare users and providers

 

In 8 Canadian studies, the patients were

Pharmacare beneficiaries in British Co-

lumbia: senior citizens aged 65 years 

and older. The other studies included all

beneficiaries of national drug insurance

plans, including vulnerable groups of

people from all ages. One German and

one Spanish study did not provide in-

formation about the participants.

 

Settings


Large jurisdictions or systems

of care. Jurisdictions could be

regional, national or interna-

tional. Studies within organi-

sations, such as health 

maintenance organisations

were included if the organisa-

tion was multi-sited and

served a large population.

Canada (8), USA (2), Spain (2), Germany

(2), Norway (2), Australia (1) and Sweden (1)

Outcomes


Drug use, healthcare utilisa-

tion, health outcomes, costs

(expenditures), including drug

costs and prices, other

healthcare costs and administra-

tion costs

Drug use (10), third party (insurance)

drug expenditures (9), drug prices (4),

drug expenditures savings (5), and pa-

tient costs 

Date of most recent search:    December 2012

Limitations: This is well-conducted systematic review with only minor limitations.

 


 

Acosta A, Ciapponi A, Aaserud M, et al. Pharmaceutical policies: effects of reference pricing, other pricing, and purchasing policies. Cochrane Database of Systematic Reviews 2014, Issue 10. Art. No.: CD005979.

Acosta A, Ciapponi A, Aaserud M, et al. Pharmaceutical policies: effects of reference pricing, other pricing, and purchasing policies. Cochrane Database of Systematic Reviews 2014, Issue 10. Art. No.: CD005979. 

 

Summary of findings

This review included 18 studies evaluating the effects of pharmaceutical pricing and purchasing policies.

1) Reference pricing

17 studies included in the review evaluated the effect of internal reference pricing on reference drugs (drugs that determine the reference price level, which are fully reimbursed) and cost share drugs (more expensive drugs in the same group as the reference drugs, which patients have to pay the difference between reference price drugs and the price of these drugs).

Three studies reported these outcomes one year after the transition period for insurers’ cumulative drug expenditures; four studies for insurer’s drug expenditures at specific time points, four studies for drug use, and no studies reported healthcare utilisation or health outcomes.

 

  • Reference pricing may reduce insurers' drug expenditures by shifting drug use from cost share drugs to reference drugs. The certainty of this evidence is low.

 


Reference pricing policy compared to no reference pricing

People: Beneficiaries drug insurance plans

Settings: Canada, USA, Germany 
Intervention
: Reference pricing
Comparison
: No reference pricing

Outcomes Impact: Median relative effect (Range)
Certainty of the evidence
(GRADE)

Insurer’s cumulative drug expenditures

one year after the transition period

Reference Drug*: Median relative reduction in

comulative drug expenditures of -18% (range -36%

to 3%).

Reference drug + cost share drug:

relative reduction in comulative drug expenditures

of -1.54% 

 

 

 

 

 

Insurer’s drug

expenditures one year after

the transition period

Reference drug:* Median relative reduction in drug expenditures

of -10%(Range: from 53% to 4%)

 

 

Drug use one year after the transition

period                                                                       Reference Drug: Median Relative increase in prescription of 15%                                 [ Grade

                                                                                  to 166%                                                                                                                          Quality= Low]                                                                                  

 

                                                                                  Cost share drug:*Median relative decrease in prescription of -39%                              

                                                                  

Healthcare Utilization 

 

No Estudies met the inclusion criteria 

 

Healthcare Utization

 

No Estudies met the inclusion criteria 



GRADE: GRADE Working Group grades of evidence (see above and last page)

 * Reference drugs: drugs that determine the reference price level. There is no cost share by the pa-tients for these drugs, which are fully reimbursed. The expectation is that reference pricing will lead to an increase in use of these drugs.

† Reference + cost share drugs: both the reference drugs and the cost share drugs. The expectation is that reference pricing will lead to little or no change in the overall use of these drugs.

‡ Cost share drugs: drugs in the same group as the reference drugs that cost more. Patients have to pay the difference between reference price drugs and the price of these drugs. The expectation is that reference pricing will lead to a decrease in use of these drugs.

2) Index pricing

The review included one study from Norway that evaluated index pricing.

 

  • Index pricing may increase the use of the generic drugs, reduce the use of brand drugs, slightly reduce the price of generic drugs, and have little or no effect on the price of brand drugs. The certainty of this evidence is low.

 


Index pricing compared to no index pricing

People: Beneficiaries of a national drug insurance plan taking on og the followin drugs:

citolopran, (depression), omeoprazol (anti-ulcer), ceterizin and loratadin

(allergy), enalapril, amlodipin and lisinopril (hypertension), or simvastatin (higth cholesterol)
Settings:  Norway 
Intervention
: Introduction of index pricing
Comparison
: prior to introdction of index pricing 

Outcomes

Relative effect 

(95% confidence interval)

Certainty of the evidence
(GRADE)

Drug use at 6 months after

policy start date

Generic Citolopran: Relative increase 55%

(95% CI 11% to 98%)

 

 

Brand citolopran: relative decrease -43%

(95% CI 18% to 67%)

 

 

 

 

 

 

 

 

Drug Expenditures 

 

No studies met the inclusion criteria.

 

            -  

Healthcare utilisation 

 

No studies met the inclusion criteria.

 

            -  

Healthcare utilisation

 

No studies met the inclusion criteria.

 

            -    

3) Maximum prices

The review included one study from Spain that evaluated maximum prices.

 

  •   It is uncertain whether maximum prices affect drug expenditures because the certainty

    of this evidence is very low.

Maximum pricing compared to no maximum pricing

People: Patients taking statins

Settings: Andalusia, Spain 

Intervention: Introduction of maximum prices
Comparison
: Prior introduction maximum prices

Outcomes

Relative effect 

(95% confidence interval)

Certainty of the evidence
(GRADE)

Drug expenditure one year

after the transition period

21.4% (19.0 to 23.7) increase in volume of sales for all statins

 

 

 

Drug prices 

 

Not studies met the inclusion criteria 

 

     -  

Healthcare Utilisation 

 

Not studies met the inclusion criteria 

 

     -  

Health Outcomes 

 

Not studies met the inclusion criteria 

 

     -  

Drug use 

 

Not studies met the inclusion criteria 

 

     -  
GRADE : GRADE working Group grades of evidence  (see above and last page)

 


 

 

 

Relevance of the review for low-income countries

Findings Interpretation*
APPLICABILITY

 

  • All of the 18 included studies were in high-income countries. 

►The effectiveness of reference pricing in low-

income countries may depend on factors such as: 

-  Health systems financial arrangements,

such as copayments, reimbursment,

and cost sharing

-  Access to data sources for prices

Availability of adequate incentives for

healthcare providers, patients, physicians,

-  pharmacists and pharmaceutical companies

to comply with the reference pricing policy

-  Significant price differences between the

drugs in the intervention group before

reference pricing is introduce

-  Clear information for managers, clinicians

and patients

-  Availability and access to drugs in the

reference group

-  A regulatory framework that allows generic

substitution or prescribing by International

Non-Proprietary Name (INN)

Appropriate exemptions (Exemptions that

are too limited could lead to higher co-

payments for appropriate use of more

expensive drugs and incentives to use a

less effective drug. Exemptions that are too

broad could reduce savings by not shifting

drug use towards appropriate use of less

expensive drugs.)

 


   
EQUITY

•The included studies provided little data

regarding differential effects of the

interventions for disadvantaged

populations. 

►Reference pricing might exacerbate health

inequities if disadvantaged populations have less

access to clear information or the reference drug,

or if doctors do not recomend the less expensive

drugs to those patients.

ECONOMIC CONSIDERATIONS

•Long-term effects of reference pricing

are uncertain.

•No studies reported the cost-

effectiveness of pricing policies.

►Administrative costs, costs associated with

potential impacts on health service utilisation,

patients’ out-of-pocket costs, and long term

impacts on costs  should be considered if reference

pricing is implemented.

MONITORING & EVALUATION

•Evaluations in the majority of included

studies focus on relatively short term 

 effects of reference pricing policies.

•Only one study was found that

evaluated the effects of index pricing

and, maximum prices.

►The long term effects of reference pricing are uncertain and  should be montitored and evaluated, including impacts on health and healthcare utilisation.

►Index pricing, price controls, maximum prices, price negotiations, volume-based pricing and other pricing and purchasing policies should be rigoursly evaluated.

►Randomized trials or interrupted time series studies should be used to assess effects on health, overall expenditure, and cost effectiveness.


*Judgements made by the authors of this summary, not necessarily those of the review authors, based on the findings of the review and consultation with researchers and policymakers in low-income countries. For additional details about how these judgements were made see: http://www.support-collaboration.org/summaries/methods.htm

 

 

Additional information

Related literature

Systematic reviews of other pharmaceutical policies:

Luiza VL, Chaves LA, Silva RM, Emmerick ICM, Chaves GC, Fonseca de Araújo SC, Moraes EL, Oxman AD. Pharmaceutical policies: effects of cap and co-payment on rational use of medicines. Cochrane Database of Systematic Reviews 2015, Issue 5. Art. No.: CD007017.

Rashidian A, Omidvari AH, Vali Y, Sturm H, Oxman AD. Pharmaceutical policies: effects of financial incentives for prescribers. Cochrane Database of Systematic Reviews 2015, Issue 8. Art. No.: CD006731.

Green CJ, Maclure M, Fortin PM, Ramsay CR, Aaserud M, Bardal S. Pharmaceutical policies: effects of restrictions on reimbursement. Cochrane Database of Systematic Reviews 2010, Issue 8. Art. No.: CD008654. DOI: 10.1002/14651858.CD008654.

Faden L, Vialle-Valentin C, Ross-Degnan D, Wagner A. Active pharmaceutical management strategies of health insurance systems to improve cost-effective use of medicines in low- and middle-income countries: a systematic review of current evidence. Health Policy 2011; 100:134-43.

Puig-Junoy J. Impact of European pharmaceutical price regulation on generic price competition: a review. Pharmacoeconomics 2010;28(8):649-63.

 

This summary was prepared by

Agustín Ciapponi, Instituto de Efectividad Clínica y Sanitaria, Buenos Aires, Argentina

 

Conflict of interest

None declared. For details, see: www.supportsummaries.org/coi

 

Acknowledgements

This summary has been peer reviewed by: Morten Aaserud, Andy Oxman, Sabine Vogler, Anban Pillay, Esperança Sevene, Alda do Rosário Elias Mariano, Julie Cliff, and Angela Acosta

 

This review should be cited as

Acosta A, Ciapponi A, Aaserud M, et al. Pharmaceutical policies: effects of reference pricing, other pricing, and purchasing policies. Cochrane Database of Systematic Reviews 2014, Issue 10. Art. No.: CD005979.


The summary should be cited as

Ciapponi A. What are the effects of reference pricing and other pharmaceutical pricing and purchasing policies? A SUPPORT Summary of a systematic review. August 2016. www.supportsummaries.org

 

Keywords

evidence-informed health policy, evidence-based, systematic review, health sys-tems research, healthcare, low and middle-income countries, developing coun-tries, primary healthcare, pharmaceutical policies, reference pricing, index pricing, pricing and purchasing policies

 

 

 



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