Elsevier

Health Policy

Volume 81, Issues 2–3, May 2007, Pages 376-384
Health Policy

Impact of a generic substitution reform on patients’ and society's expenditure for pharmaceuticals

https://doi.org/10.1016/j.healthpol.2006.07.005Get rights and content

Abstract

Sweden's pharmaceutical expenditure has increased during the last decades. On 1 October 2002 mandatory generic substitution was introduced in Sweden with the purpose to reduce the growth in pharmaceutical expenditure. The aim of the present study was to investigate if the implementation of generic substitution was associated with changes in patients’ expenses and reimbursed cost for prescribed pharmaceuticals included in the Swedish Pharmaceutical Benefits Scheme (PBS). Monthly pharmacy sales data was obtained from the National Corporation of Swedish Pharmacies (Apoteket AB). The study period ranged between 1 January 2000 and 31 December 2004. Changes in pharmaceutical expenditure associated with the introduction of generic substitution were analysed with a linear segmented regression. The study comprised outpatient prescription pharmaceuticals encompassed by PBS for Sweden in total and each county council. Two different data sets were analysed. The first comprised all prescribed pharmaceuticals. The second contained only pharmaceuticals on regular prescriptions (i.e. exclusion of multidose dispensed drugs). Changes in patient co-payment per 1000 inhabitants and working day and subsidised cost per 1000 inhabitants and working day associated with the introduction of generic substitution were analysed. Expenditure was expressed in Swedish krona, SEK (SEK 1 = US$ 0.14/€ 0.11, 7 July 2006). The Swedish Consumer Price Index was used to inflation-adjust expenditures with 2004 as base.

The introduction of generic substitution was associated with a significant change in slope for patient co-payment in both all prescribed pharmaceuticals and pharmaceuticals on regular prescriptions (p < 0.005) for Sweden in total. The slope shifted direction from a slight increase before the reform into a decline after the reform was implemented. This was also found for the average slope of patient co-payment for all county councils (p < 0.0001). The introduction of generic substitution was associated with a statistically significant shift in slope for subsidised cost for Sweden in total (p < 0.001). The slope shifted from a monthly increase before October 2002 to a monthly decline for all prescribed pharmaceuticals afterwards. Similar results were found for the average slope of subsidised cost for all county councils both for all prescribed pharmaceuticals and pharmaceuticals on regular prescriptions (p < 0.0001).

The introduction of generic substitution was associated with a shift in trend from an increase into a decrease both for patients’ and society's expenditures. This suggests that generic substitution has contributed to a reduction in the growth of pharmaceutical expenditure.

Introduction

Between 1990 and 2000, the total expenditure for pharmaceuticals more than doubled in Sweden [1]. Important elements contributing to escalating expenditures were an increase in the overall volume of pharmaceuticals, a shift in the assortment towards more expensive drugs and costs associated with the introduction of new pharmaceuticals [1], [2].

Several strategies to reduce growth in pharmaceutical expenditures and enhance cost containment have been proposed and implemented. Some strategies have aimed to reduce demand through introduction of or by increasing co-payments [3], [4], [5], [6], [7], [8]. Increased co-payments have shown to be associated with reduced volumes dispensed in several countries [5], [7], [8] as well as reduced spending in some [4], [6]. Some policies concerned restricted volumes subsidised in order to reduce volumes of dispensed drugs [6] or restriction of which drugs should be reimbursed using either positive or negative lists [9], [10], [11]. Other strategies used, such as different kinds of price control, have also been implemented. Direct price control affect the supply side (producers) for example by requirement of cost-effectiveness data [12], [13], [14]. Indirect price control has also been implemented which aim to decrease the cost per unit through price competition as with reference based pricing. Reference based pricing mainly affect the supply side and to some extent the demand side (i.e. doctors, patients and pharmacists) [3], [10], [15], [16], [17], [18]. Reference based pricing has been associated with lowered prices on pharmaceuticals where patent has expired [2], [12], [15] and savings for third party payers of pharmaceutical reimbursement schemes [18], [19]. The price per unit can also be reduced by promoting the use of cheaper generic equivalents through generic prescribing [20], [21], [22], generic substitution [22], [23], [24], [25] and generic dispensing [22], [26]. Several countries have introduced generic substitution, both within [17], [27], [28] and outside Europe [24], [29], [30]. Generic substitution has shown to be associated with notable monetary savings for the society in several settings [23], [26], [27], [29], [30]. However, effects on patient co-payments have seldom been investigated. Use of generic substitutes was not associated with savings for employers and employees in a private insurance scheme [31].

Two major pharmaceutical benefits reforms that aimed to cut the escalating pharmaceutical expenditures and promote rational drug use were implemented in Sweden in 1997 and 2002. The reform in 1997 contained a new construction of the pharmaceutical benefits scheme (PBS) and an obligation for all county councils to have a Drug and Therapeutics Committee. It also comprised the decision to transfer the budget responsibility for prescribed drugs from the government to the county councils in order to integrate pharmaceutical treatment with other health care interventions. This shift was initiated in January 1998, further realised in January 2002 and fully implemented in January 2005. The second reform was implemented on 1 October 2002 and comprised several elements [32]. Two new requirements for a prescription to be covered by PBS were introduced. First, workplace codes that identify the prescriber's place of work became mandatory on prescriptions. Secondly, mandatory generic substitution in pharmacies was introduced for drugs with one or more medically equivalent drug containing the same active ingredient [33]. Additionally a new government agency, the Pharmaceutical Benefits Board, was introduced. The Board decides on which drugs should be included in the PBS as well as pricing of pharmaceuticals and other medical items within the scheme.

The focus of the present study was the implementation of generic substitution and its’ effects on development of the Swedish pharmaceutical expenditure. The aim was to analyse if the implementation of generic substitution was associated with changes in patients’ expenses and reimbursed cost for prescribed pharmaceuticals included in the Swedish Pharmaceutical Benefits Scheme.

Section snippets

The Swedish Pharmaceutical Benefits Scheme

The PBS entails a subsidised reduction of the individual's costs for drugs and medical items [33]. It applies to drugs included in the PBS prescribed for human use by an authorised prescriber and provided that the prescription is labelled with a workplace code. The workplace code identifies the prescriber's place of work with the purpose to facilitate the linkage of costs of prescribed pharmaceuticals to the prescribing provider.

The subsidy of pharmaceuticals is increased on a stepwise scale

Results

The average yearly patient co-payment for all prescribed pharmaceuticals within the PBS for Sweden in total was SEK 580 per inhabitant in the year 2000, SEK 580 per inhabitant in the year 2002 and SEK 550 per inhabitant in the year 2004. The subsidised cost for all prescribed pharmaceuticals within the PBS was SEK 1730 per inhabitant in 2000, SEK 1930 per inhabitant in 2002 and SEK 1900 per inhabitant in 2004. The corresponding figures for pharmaceuticals on regular prescriptions was SEK 550

Discussion

In this study the development of pharmaceutical expenditure both for the society and the patient during five years was assessed. The present study showed a shift in trend for both patients’ and society's costs associated with the introduction of generic substitution. Before the reform was introduced, both average co-payment (although very moderately) and average subsidised cost increased and this changed into a decline for both after October 2002. Furthermore, the county councils’ subsidised

Conclusion

The introduction of generic substitution was associated with a shift in trend from an increase into a decrease both for patients’ and society's expenditures indicating that the reform has had an impact on the growth of pharmaceutical expenditure. This study analysed a 5 years period, it is too early to tell whether this shift will last or if the trend will return to its original pattern.

Acknowledgments

The authors are grateful to Knut Lönnroth for comments on the manuscript. The present study is part of a larger project that was funded by grants from the Region Västra Götaland. Design and performance of the study was conducted independent of the funding organisation. The authors have no conflicts of interest to declare.

All authors were involved in the design of the study, in discussing results and writing the paper. KA undertook data collection and performed main part of the data analysis. MP

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