The new Dutch health insurance system and its implications for pharmaceutical innovation

The purpose of this paper is to provide commentary on the state of affairs regarding implementation of Dutch health insurance reform, focusing on whether such reform is conducive to pharmaceutical innovation.

The general characteristics of the Dutch healthcare system is outlined, together with a brief synopsis of the 2006 health insurance reform initiative. This is followed by a description of the four market intervention mechanisms and their implications for pharmaceutical innovation. Finally, these implications and the potential for policy transfer to other European countries are discussed.

The new Dutch health insurance system represents a novel approach that closely follows Enthoven's managed competition model. Certain features of the new system are conducive to pharmaceutical innovation. These positive features include more flexibility on the part of private insurers to deviate from the national formulary, speedier reimbursement appraisals, and more earmarked funding for certain highly innovative pharmaceutical products. Other features, however, appear detrimental to drug innovation. These include direct price controls, reference pricing, and the still highly centralized nature of decision making with respect to drug reimbursement. On the whole, one could say that, despite many challenges, Dutch health insurance reform is a step in the right direction that may prove to be a boon to biopharmaceutical innovation if further steps are taken to remove obstacles.

It is premature to draw firm conclusions on whether Dutch health insurance reform is conducive to pharmaceutical innovation. The new system is at an early stage in its evolution. Further, one should be cautious about the extent to which lessons can be drawn from the new Dutch system for other European countries, given the limited size of the Dutch biopharmaceutical industry relative to some of its European neighbors.

While much is known about how changes in the drug regulatory framework impact pharmaceutical innovation, very little is known about how changes in health care insurance impact pharmaceutical innovation. This paper aims to fill that void by examining the impact of the new Dutch health insurance system on drug innovation.