Health Affairs, 22, no. 3 (2003): 15 doi: 10.1377/hlthaff.22.3.15 © 2003 by Project HOPE	New Online   Pay Cuts For Medicare Docs   Access To Care Woes   Public Coverage More Efficient   Empowering Consumers

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Prescription Drugs

PROLOGUE

International Experience With Prescription Drug Policy

In a study of reference pricing (RP) systems in several countries, for example, Panos Kanavos and Uwe Reinhardt find evidence of troubling theoretical contradictions. One of the arguments against RP systems that include on-patent products grouped in therapeutic clusters with generic drugs is that since patients must pay a premium for the brand-name alternative, they will tend to buy only generics. Consequently, patented drugs will fail to command enough market share to produce blockbuster revenues, and investment in innovative research and development will suffer. But if patients won’t pay more for better products, what happens to the theory of competitive, "consumer-driven" health reform, in which insurance is redesigned to make patients and physicians more sensitive to price?

Students of the U.S. policy process are aware of the ambitious efforts that have gone into developing the practice of evidence-based medicine in recent years. But Alan Maynard and Karen Bloor argue that in a world of finite resources, studies of treatment effectiveness will not be enough, and that the cold calculus of cost-benefit analysis must eventually be applied to public insurance systems for drugs. Maynard and Bloor survey the types of interventions that could be used with patients, providers, and industry to optimize cost, quality, and access; they find that all have mixed or limited effects. Although satisfactory metrics for definitive cost-benefit analysis remain to be developed, they assert that none of these interventions can achieve desirable levels of efficiency and equity without them.

Steven Morgan and colleagues from the University of British Columbia examine some revealing characteristics of publicly financed pharmacy benefits in Canada. Like the United States, Canada does not as a matter of federal policy provide drug coverage to its elderly population. But its provincial health insurance plans, to varying degrees, do provide such coverage. All of the provinces control prices by making formulary inclusion contingent on manufacturers’ bids. "While some policies have been successful in temporarily slowing spending growth, a lack of comprehensive utilization management tools has resulted in ongoing spending increases that now constitute a threat to the sustainability of a public drug subsidy for Canadian seniors," Morgan and colleagues conclude.

Additional perspectives are offered by Adrian Towse of the Association of the British Pharmaceutical Industry and Richard Frank of Harvard University.

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