Elsevier

Health Policy

Volume 80, Issue 3, March 2007, Pages 402-412
Health Policy

Does therapeutic reference pricing always result in cost-containment?: The Hungarian evidence

https://doi.org/10.1016/j.healthpol.2006.04.002Get rights and content

Abstract

Therapeutic reference pricing is one of the potential cost containment methods for pharmaceuticals. The most critical question of reference pricing is how to select reference product(s) if their efficacy is different, especially if different strengths of the same substance are available.

Authors describe the Hungarian experience related to the introduction of therapeutic reference pricing for statin therapies as of 1 September 2003. The National Health Insurance Fund selected the reference products based on their low price per DDD.

Therapeutic reference pricing was expected to reduce the expenditure on statins by switching therapy to cheaper alternatives and therefore decreasing the average price per prescribed unit. The National Health Insurance Fund expected price erosion not only for branded products directly affected by generics but even for patented ones.

Despite generic price erosion of simvastatin, the average unit price of statins was reduced by only 3% at 7 months after the introduction of the reference pricing system. During the same period the average DDD per prescription was increased from 1.14 to 1.65. The price of patented statins did not change over this period.

Introduction of therapeutic reference pricing neglected evidence-based medicine results and ultimately increased the expenditure on statins in Hungary. Selection of the cheapest DDD per unit as the reference product resulted in growth of DDD per prescription, and consequently increased price per prescribed unit of statins.

The failure of the system could have been even more dramatic if increased utilisation of generic statins had not reduced the negative effect of therapeutic reference pricing. Based upon the first experiences of the Hungarian implementation, the method described in this paper for the extension of generic reference pricing to therapeutic categories is not justifiable.

Section snippets

Methods

August 2003 has been selected for baseline period of the analysis, as it was the last month before the introduction of the therapeutic reference pricing system. In April 2004 the Hungarian government mandated a 15% price cut for all products; so the last month (March 2004) before the price reduction has been selected the comparator month for calculating the impact of the therapeutic reference pricing system on prices, reimbursement levels, co-payments and DDDs. In sensitivity analyses

Results

Public price, reimbursement level and patient co-payment of statins before and after the introduction of therapeutic reference pricing are depicted in Table 1. The National Health Insurance Fund allows pharmaceutical companies to change the prices of their products only at the certain occasions, i.e. at September 2003 and 1 January 2004 within our investigation period.

One of the expected benefits of reference pricing is the incentive for manufacturers to reduce the prices of original products.

Discussion

Therapeutic reference pricing is one of the potential cost containment methods for pharmaceuticals. However, therapeutic reference pricing could induce potential medical adverse events [5] if differences in therapeutic effects (see efficacy, safety and interaction profile) of included products are not taken into account, and switching is not closely controlled by physicians. In these cases switching requires careful monitoring and consequently could increase the cost of non-pharmaceutical

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  • OECD Health data;...
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