Drugs and Money – Prices, Affordability and Cost Containment

Citation

Drabu, S., Khatri, S., Singh, S., Lohani, P. and Sahu, R.K. (2011), "Drugs and Money – Prices, Affordability and Cost Containment", International Journal of Pharmaceutical and Healthcare Marketing, Vol. 5 No. 1, pp. 67-69. https://doi.org/10.1108/17506121111121596

Society has placed great importance on improved health, and has witnessed a fast rising demand for healthcare. Countries have found themselves confronted with the problem of meeting growing expenditure on healthcare. The Health Technologies and Pharmaceuticals Programme of the WHO Regional Office undertook a study under the title “Drugs and Money”; it produced a concise report, providing a detailed overview of the effectiveness of older cost‐containment schemes while also paying attention to innovative ventures. This aims to provide policy makers and regulators a practical review of the various approaches, which have been developed and tested to date in an effort to contain the overall costs of pharmaceutical services and drug treatment. This volume devotes considerable attention to the special problems of developing countries and those where the economy is currently in transition. This book has been divided into two parts in which the first part with the heading “Problems and approaches to a solution” includes five chapters.

The first chapter of this book titled “Scope of problem” discusses the financing of pharmaceuticals, recognizing the gap between the cost of drugs to the average patient, and his or her ability to pay. In this chapter cost containment, causes of cost increases and implementing cost‐containment programs are discussed in detail.

In second chapter deals with “Data needed for developing and monitoring policies”. This chapter focuses on the types of data needed to develop and monitor drug policies, whether using data on drug expenditure, utilization, price, and health outcomes or on the pharmaceutical industry. There are a number of common issues, which should be taken care of particularly when making regional or international comparisons.

In chapter three “Policy options for cost containment of pharmaceuticals”, cost‐containment policies are discussed along with ways in which one can hope to control pharmaceutical expenditure. Various experiences in this chapter provide us with effective tools for improving the rationality of prescribing and preventing the waste of public funds resulting from excessive and inappropriate use of drugs.

Chapter 4, “Methods for monitoring and evaluating processes and outcomes”, pays careful consideration to how the pharmaceutical service is structured, how it functions and how the goals and objectives of intended policy measures affect it. Cost‐containment policies can themselves be costly as well as time consuming, and only with good planning, the setting of clear priorities and careful assessment over time can one ensure that they are worthwhile and will do more good than harm.

The last chapter of the first part of the book is “Making use of economic evaluation” which deals with the facilitation of the use of economic evaluation knowledge in the policy making process which is complex, and as yet there is little evidence to demonstrate that economic evaluation is used systematically in a decision‐making arena. The ability to assess objectively and inform the policy‐making process is of particular importance given the inconsistencies in the use of economic evaluation within and between countries. Such inconsistencies extend to guidelines themselves, with several well‐known guidelines holding very different opinions on the role of cost‐effectiveness and cost‐benefit analysis. One possible vehicle for overcoming these difficulties may be the establishment of an international clearinghouse for economic evaluation, which would identify methodological differences and help to facilitate the transfer of such knowledge between different settings.

In the second part of the book “Selected experiences with policy options” ten chapters are covered. The first two chapters “Measures relating to use of drug subsidy lists” and to regulation and “Experiences with budgets” explain that the pattern of public payments for drugs is built largely around the compilation of “drug subsidy lists” – i.e. lists of those drugs considered eligible for such payment and national ceilings on drug expenditures. Professional measures such as fund holding; factors determining response; health‐related aspects are discussed in detail.

The two subsequent chapters “Experiences with reference pricing” and “Experiences with patient charges” discuss limiting expenditure on the quality of drugs by making use of the existence of equivalent drugs on the national market and setting a quality tariff for groups of drugs which are considered to be interchangeable. It is based purely on a comparison of prices in the home country along with the advantage of the proportional system. The costs to the patient are directly related to the duration of treatment; this prevents individuals from partly evading charges by arranging to receive prescriptions for a large quantity of a drug at once.

In the next chapters “Switching to non‐prescription status” and “Experiences with generics” the authors discuss the concept and effects of generic competition and the situation of generic prescribing, manufacturing and trading, and the generic situation in developing transitional countries. Two subsequent chapters, “Experiences with pharmacy benefit management programmers in the USA” and “Professional education”, discuss in detail pharmacy benefit management strategies using pharmacy benefit management activities as an important part of their cost control efforts. Further, they explore the well‐designed methods specifically created and proven to influence prescribing in a favorable manner.

Finally, in the last part of this book, two chapters titled “Providing affordable medicines in transitional countries” and “Access to medicines in low‐income countries” are discussed. In these chapters, the situations of the countries of Central and Eastern Europe and newly independent states have been discussed which is immensely variable, as is their rate of progress, both economically and in the development of health systems and would seem essential to contemplate the application of strongly differentiated pricing for drugs available internationally. Similarly challenging for governments of developing countries (and discussed at the end of the book) is to find a balance between the need to attain national health objectives, the effort to respond to the health needs of the population, the political climate, and the capacities existing in the public and private health and pharmaceutical sectors.

During recent decades, the community has placed great importance on improved health, and has encountered a rapid rising demand for healthcare. The fast growth of expenditure on medicines is of particular concern and it has attracted huge political attention, in part no doubt because it is a concrete issue which at first sight appears easily amenable to economic control. This volume devotes considerable attention to the special problems of developing countries and those where the economy is currently in transition. This present seventh edition aims, as its predecessors have done, to provide policy makers and regulators with a covenant and practical review of the various approaches that have been developed and tested to date in an effort to minimize the overall costs of pharmaceutical services and drug treatment. New measures, enjoying a greater or lesser degree of success, have continued to emerge during the 1990's and the end is not yet in sight. In this small volume particular emphasis is again placed on those principles which may prove helpful in downplaying costs without introducing a disproportionate risk of adverse consequences. The true art of good housekeeping in this field is clearly to ensure that drugs continue to benefit society wherever they can, while exterminating every form of waste of public funds. In comparison to earlier editions of “Drugs and Money” this volume devotes considerable attention to the special problems of developing countries and those where the economy is currently in metamorphosis. While lessons learnt in one type of national environment may prove applicable in another, it is important to realize that the situation in Western industrialized countries still differs substantially from that elsewhere.

Sushma Drabu, Smriti Khatri, Surinderjeet Singh, Pratyush Lohani, Roshan Kumar Sahu

Maharaja Surajmal Institute of Pharmacy, New Delhi, India