Health services utilization with reference drug pricing of histamine(2) receptor antagonists in British Columbia elderly. Impact of reference-based pricing for angiotensin-converting enzyme inhibitors on drug utilization. Clinical and economic consequences of reference pricing for dihydropyridine calcium channel blockers. Adverse events associated with prescription drug cost-sharing among poor and elderly persons. Impact of reference-based pricing for histamine-2 receptor antagonists and restricted access for proton pump inhibitors in British Columbia. Impact of the Minimum Pricing Policy and introduction of brand (generic) substitution into the Pharmaceutical Benefits Scheme in Australia. The impact of reference pricing of nonsteroidal anti-inflammatory agents on the use and costs of analgesic drugs.
In October 1995, British Columbia introduced a reference pricing policy for five therapeutic classes of drugs, including histamine(2) receptor antagonists (H(2)RAs), for beneficiaries of its prescription drug program, Pharmacare.
                To evaluate utilization trends in consumption of health services in a cohort of Pharmacare beneficiaries to determine if a worsening of health outcomes could be detected after implementation of the reference pricing policy.
                Two cohorts, "control" (21 months before the reference pricing policy) and "exposed" (at risk for policy effects), were followed for 21 months. Using a longitudinal generalized linear model (Poisson), and controlling for age, sex, and prescriptions in unique drug classes, trend lines in each of these time series were compared for 3 periods: 9 months before policy implementation (or corresponding index date in the control cohort), 6 months after policy implementation, and a subsequent 6-month period.
                Two cohorts, each of size 10,000, were constructed by randomly sampling the population of Pharmacare beneficiaries exposed to H(2)RAs and other antisecretory drugs for 1993 through 1996.
                Prescriptions, physician office visits and associated transactions (ie, laboratory tests), emergency room visits, hospitalizations, hospital length of stay, and vital statistics.
                Differences between periods and between cohorts for health services utilization were not significant or decreased after imposition of the reference pricing policy.
                For these measures, there has been no worsening of health outcomes associated with implementing the reference pricing policy. Increasing copayments for higher-priced prescription medications has been suggested as a means to help finance drug coverage for elderly patients, but evaluations of the impact of such policies are rare. The objective of this study was to analyze the effect of reference-based pricing of angiotensin-converting enzyme (ACE) inhibitors on drug utilization, cost savings and potential substitution with other medication classes.
                We analyzed 36 months of claims data from British Columbia for 2 years before and 1 year after implementation of reference-based pricing (in January 1997). The 119,074 patients were community-living Pharmacare beneficiaries 65 years of age or older who used ACE inhibitors during the study period. The main outcomes were changes over time in use of ACE inhibitors, use of antihypertensive drugs and expenditures for antihypertensive drugs, as well as predictors of medication switching related to reference-based pricing.
                We observed a sharp decline (29%) in the use of higher-priced cost-shared ACE inhibitors immediately after implementation of the policy (p < 0.001). After a transition period, the post-implementation utilization rate for all ACE inhibitors was 11% lower than projected from pre-implementation data. However, overall utilization of antihypertensives was unchanged (p = 0.40). The policy saved $6.7 million in pharmaceutical expenditures during its first 12 months. Patients with heart failure or diabetes mellitus who were taking a cost-shared ACE inhibitor were more likely to remain on the same medication after implementation of reference-based pricing (OR 1.12 [95% confidence interval, CI, 1.06-1.19] and 1.28 [95% CI 1.20-1.36] respectively). Patients with low-income status were more likely than those with high-income status to stop all antihypertensive therapy (OR 1.65 [95% CI 1.43-1.89]), which reflects a general trend toward discontinuation of therapy among these patients even before implementation of reference-based pricing.
                Reference-based pricing in British Columbia achieved a sustained reduction in drug expenditures, and no changes in overall use of antihypertensive therapy were observed. Further research is needed on the overall health and economic effects of such policies. Reference pricing is a medication cost-sharing policy that fully covers medications which are less expensive than a standard reference price and requires patients to pay the extra cost of higher-priced drugs in a class of therapeutically substitutable drugs. Little information exists on the clinical and economic consequences. We analyzed changes in drug utilization, physician visits, hospitalizations, long-term care admissions, and expenditures after the introduction of reference pricing for dihydropyridine calcium channel blockers (CCBs) among patients aged 65 years or older in British Columbia, Canada.
                This quasiexperimental longitudinal study was performed in the setting of Pharmacare, the state-funded drug benefits plan of all elderly persons in British Columbia. Study patients comprised all elderly residents of British Columbia who were enrolled in the provincial health insurance program and received dihydropyridine CCBs at the time of the policy change (35,886) and a subgroup of high-priced dihydropyridine CCB users (23,116). We studied the implementation of reference drug pricing on Jan 1, 1997, affecting all elderly Pharmacare beneficiaries. The main outcome measures were drug utilization, drug expenditures, physician visits, hospitalizations, long-term care, and net savings.
                The start of reference pricing was followed by a significant reduction in high-priced dihydropyridine CCBs (-150 monthly doses per 10,000 elderly persons), with a corresponding increase in fully covered dihydropyridine CCBs (+116). Overall, antihypertensive use did not decline (P =.46). Low-income status was a risk factor for discontinuing treatment (odds ratio, 1.64; 95% confidence interval [CI], 1.36 to 1.99); however, this was already observed to a similar magnitude 12 months before reference pricing (odds ratio, 1.46). In the overall study cohort, there was no increase in rates of physician visits, hospitalizations, and long-term care admissions. However, the 9% of patients who actually switched medications showed an 18% increase (95% CI, 8% to 28%) in physician visits and an increase of Canadian $13 (95% CI, Canadian $3 to Canadian $24) in costs of physician visits per patient as compared with nonswitchers during the transition but not afterward. This temporary increase may have been a result of additional prescribing and monitoring in switchers. Changes in drug expenditures and physician services resulted in net savings of Canadian $1.6 million in the first 12 months of policy implementation.
                Reference pricing as implemented in British Columbia may be a model for successful pharmaceutical cost-containment without adversely affecting patients or cost-shifting. Rising costs of medications and inequities in access have sparked calls for drug policy reform in the United States and Canada. Control of drug expenditures by prescription cost-sharing for elderly persons and poor persons is a contentious issue because little is known about the health impact in these subgroups.
                To determine (1) the impact of introducing prescription drug cost-sharing on use of essential and less essential drugs among elderly persons and welfare recipients and (2) rates of emergency department (ED) visits and serious adverse events associated with reductions in drug use before and after policy implementation.
                Interrupted time-series analysis of data from 32 months before and 17 months after introduction of a prescription coinsurance and deductible cost-sharing policy in Quebec in 1996. Separate 10-month prepolicy control and postpolicy cohort studies were conducted to estimate the impact of the drug reform on adverse events.
                A random sample of 93 950 elderly persons and 55 333 adult welfare medication recipients.
                Mean daily number of essential and less essential drugs used per month, ED visits, and serious adverse events (hospitalization, nursing home admission, and mortality) before and after policy introduction.
                After cost-sharing was introduced, use of essential drugs decreased by 9.12% (95% confidence interval [CI], 8.7%-9.6%) in elderly persons and by 14.42% (95% CI, 13.3%-15.6%) in welfare recipients; use of less essential drugs decreased by 15.14% (95% CI, 14.4%-15.9%) and 22.39% (95% CI, 20.9%-23.9%), respectively. The rate (per 10 000 person-months) of serious adverse events associated with reductions in use of essential drugs increased from 5.8 in the prepolicy control cohort to 12.6 in the postpolicy cohort in elderly persons (a net increase of 6.8 [95% CI, 5.6-8.0]) and from 14.7 to 27.6 in welfare recipients (a net increase of 12.9 [95% CI, 10.2-15.5]). Emergency department visit rates related to reductions in the use of essential drugs also increased by 14.2 (95% CI, 8.5-19.9) per 10 000 person-months in elderly persons (prepolicy control cohort, 32.9; postpolicy cohort, 47.1) and by 54.2 (95% CI, 33.5-74.8) among welfare recipients (prepolicy control cohort, 69.6; postpolicy cohort, 123.8). These increases were primarily due to an increase in the proportion of recipients who reduced their use of essential drugs. Reductions in the use of less essential drugs were not associated with an increase in risk of adverse events or ED visits.
                In our study, increased cost-sharing for prescription drugs in elderly persons and welfare recipients was followed by reductions in use of essential drugs and a higher rate of serious adverse events and ED visits associated with these reductions. Two programs to reduce expenditures for common gastrointestinal drugs were introduced simultaneously by British Columbia (BC) Pharmacare in 1995. Reference-based pricing restricted reimbursement for all histamine-2 receptor antagonists (H2RAs) to the cost of the least expensive H2RA available, generic cimetidine. Special authority restricted reimbursement for proton pump inhibitors (PPIs) to patients who met certain eligibility criteria. We evaluated the effect of reference-based pricing for H2RAs and special authority for PPIs on dispensing and reimbursement for senior citizen beneficiaries of BC Pharmacare.
                Itemized monthly claims data for upper gastrointestinal drugs were obtained from BC Pharmacare for all beneficiaries 65 years of age or older. Periods before and after implementation of reference-based pricing and special authority were compared with respect to defined daily doses dispensed per 100,000 beneficiaries, BC Pharmacare reimbursement per 100,000 beneficiaries, BC Pharmacare reimbursement per defined daily dose and beneficiary contributions per defined daily dose. We used regression models to project forward trends in expenditures observed before implementation of the new policies and hence to estimate accrued cost savings.
                Before reference-based pricing and special authority, the numbers of defined daily doses that were dispensed and total BC Pharmacare reimbursements for H2RAs appeared to be declining gradually, whereas those for PPIs were rising. With reference-based pricing, the monthly defined daily dose of cimetidine dispensed increased more than 4-fold, to 116,257 per 100,000 beneficiaries, while those of other restricted H2RAs decreased by more than half, to 50,927 per 100,000 beneficiaries. Special authority immediately reduced the dispensed volumes of PPIs by one-fourth, but growth in volume then appeared to resume at its previous rate. The estimated annualized cost savings achieved by reference-based pricing and special authority were $1.8 million to $3.2 million for H2RAs (depending on the estimation method used) and $5.5 million for PPIs. However, beneficiary contributions for H2RAs increased from negligible amounts to approximately 16% of total drug expenditures.
                Reference-based pricing and special authority appear to have been successful in altering prescribing habits and reducing provincial expenditures for upper gastrointestinal drugs, but they have increased the financial burden on senior citizen beneficiaries. To describe the effects of introducing the Minimum Pricing Policy (MPP) and generic (brand) substitution in 1990 and 1994 respectively on the dispensing of Pharmaceutical Benefits Scheme (PBS) prescriptions both at the aggregate and individual patient level.
                The relative proportion of prescriptions with a brand premium and those at benchmark was examined 4 years after introduction of the MPP and again 5 years later after generic substitution by pharmacists was permitted. To determine the impact of a price signal at the individual level, case studies involving a patient tracking methodology were conducted on two drugs (fluoxetine and ranitidine) that received a brand premium.
                From a zero base when the MPP was introduced in 1990, there were 5.4 million prescriptions (17%) dispensed for benchmark products 4 years later in 1994. At this stage generic (brand) substitution by pharmacists was then permitted and the market share of benchmark brands increased to 45% (25.2 million) by 1999. In the patient tracking studies, a significantly lower proportion of patients was still taking the premium brand of fluoxetine 3 months after the introduction of a price signal compared with patients taking paroxetine which did not have a generic competitor. This was also the case for the premium brand of ranitidine when compared to famotidine. The size of the price signal also had a marked effect on dispensing behaviour with the drug with the larger premium (fluoxetine) showing a significantly greater switch away from the premium brand to the benchmark product.
                The introduction in 1990 of the Minimum Pricing Policy without allowing generic substitution had a relatively small impact on the selection of medicines within the Pharmaceutical Benefits Scheme. However the effect of generic substitution at the pharmacist level, which was introduced in December 1994, resulted in a marked increase in the percentage of eligible PBS items dispensed at benchmark. Case studies showed a larger premium resulted in a greater shift of patients from drugs with a brand premium to the benchmark alternative. To estimate the effect of reference pricing (RP) of nonsteroidal anti-inflammatory drugs (NSAIDs) on drug subsidy program and beneficiary expenditures on analgesic drugs.
                Monthly claims data from Pharmacare, the public drug subsidy program for seniors in British Columbia, Canada, over the period of February 1993 to June 2001.
                RP limits drug plan reimbursement of interchangeable medicines to a reference price, which is typically equal to the price of the lowest cost interchangeable drug; any cost above that is borne by the patient. Pharmacare introduced two different forms of RP to the NSAIDs, Type 1 in April 1994 and Type 2 in November 1995. Under Type 1 RP, generic and brand versions of the same NSAID are considered interchangeable, whereas under Type 2 RP different NSAIDs are considered interchangeable. We extrapolated average reimbursement per day of NSAID therapy over the months before RP to estimate what expenditures would have been without the policies. These counterfactual predictions were compared with actual values to estimate the impact of the policies; the estimated impacts on reimbursement rates were multiplied by the postpolicy volume of NSAIDS dispensed, which appeared unaffected by the policies, to estimate expenditure changes.
                After Type 2 RP, program expenditures declined by $22.7 million (CAN), or $4 million (CAN), annually cutting expenditure by about half. Most savings accrued from the substitution of low-cost NSAIDs for more costly alternatives. About 20 percent of savings represented expenditures by seniors who elected to pay for partially reimbursed drugs. Type 1 RP produced one-quarter the savings of type 2 RP.
                Type 2 RP of NSAIDs achieved its goal of reducing drug expenditures and was more effective than Type 1 RP. The effects of RP on patient health and associated health care costs remain to be investigated.
We found relatively few studies of pricing policies. The majority of the studies dealt with reference pricing. They had few methodological limitations. Based on the evidence in this review, mostly from senior citizens in British Columbia, Canada, reference drug pricing can reduce third party drug expenditures by inducing a shift in drug use towards less expensive drugs. We found no evidence of adverse effects on health and no clear evidence of increased health care utilisation. The analysis and reporting of the effects on patient drug expenditures were limited in the included studies and administration costs were not reported.