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