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Pharmaceutical benefit management under health
insurance – common issues in emerging economies
Zagreb, January 19, 2010
Andreas Seiter
World Bank
Navigating between two extremes
Political death if
drug coverage
becomes too
skimpy
Bankruptcy if
drug coverage is
too generous
Sustainable path
Common Features
Insurance funds cover majority or all of population
Insurance “drug benefit” = coverage for drugs is major enabling factor
for drug market
Coverage based on positive list (formulary)
Two challenges for suppliers:
• Getting on the list
• Once on the list, sell as much as possible
Two intervention points for insurance funds to control costs
• Decide what is covered, at which price, under which conditions
• Control/manage consumption
Sleeping giants?
Bureaucratic tradition, but have to endure increasingly tough
negotiations with stakeholders
Politicized governance: mixed signals are common due to high
sensitivity of coverage decisions
Status and credibility gap to providers (doctors)
Technical challenges: many drugs and formulations, difficulty to get
reliable data on clinical benefit and pricing
Millions of transactions to be monitored
What happened in “Old Europe”?
Insurance funds were ahead of the curve – total coverage in the 60s
and 70s was affordable (young population, rapid growth)
Systems, tools and skills could emerge over time
Financial room to maneuver is significantly greater
Significant power shift to insurance funds over time
Key success factors
Good
decisionmaking
processes
Clear laws
and
regulations
Power and
accountability
aligned
Confidence;
business and
negotiation
skills
Successful
drug benefit
management
Analytical
tools and
data
Information /
communicatio
n tools
Technical
know-how
Reimbursement decisions
Principles:
• Only cost-effective choices should be reimbursed
• Reimbursement should be sufficient to ensure access
without discriminating against low-income groups or
chronically ill patients
Cost control from an insurer and patient
perspective
Cost = price x volume
Insurance funds often look at reimbursement rates as proxy for price,
but this is not fair to patients
Two types of co-payments:
• Statutory as fixed amount or percentage of a theoretical reimbursement
•
price
Difference between reimbursed price and full market price of selected
product
When products are being clustered for reimbursement purposes,
choices made by doctors, pharmacists, patients can lead to
significant variations of out-of-pocket payments
Tolerance for co-payment varies based on patient experience
Brand loyalty is a hurdle
More relevant in markets with traditionally high co-payments
Usually “brokered” by doctor or pharmacist in response to incentives
Patients are rarely loyal* to a specific drug (even chronic patients go
through frequent changes in their medication), but easily scared by
remarks made by experts on quality, strength
*except in cases where there is a “stand-alone treatment” like in certain cancers, immunological
diseases, transplantation etc. – here switching to a generic or alternative, cheaper treatment may
require appropriate consultation to ensure patient compliance
Neutralizing incentives that work against policy
Generic prescribing should be the rule
Pharmacist’s income based on flat dispensing fee rather than
percentage of sales
Prescribing targets and monitoring for physicians; feedback, ranking,
academic detailing, incentives, fines
Measures to stimulate price competition within clusters, for example
“preferred brand” status with lower co-payment
Variations of clustering
Same molecule (example all simvastatin products) - with adjustments
for strength and formulation
Same chemical class as long as effects and tolerability are similar
(example all statins) – with adjustment for different per-mg activity
Equivalent clinical efficacy and tolerability without chemical class limit
How manufacturers fight clustering
Same molecule: special formulations, packaging variations, shift to
other, more expensive drugs in the same class (example
esomeprazole instead of omeprazole)
Same class: shift to other classes (example from ACE inhibitors to
ARBs), clinical differentiation in head-to-head trials or large scale
trials to establish long term outcomes
Across classes: ?
Questions to be answered
Scientific criteria for clustering beyond “same molecule” category?
Adequate decision making process?
Expected budget impact – is it worth the fight?
Is know-how from other countries transferrable?
Should patented drugs get a special status / be exempt from clustering?
Are there good alternatives that are easier to implement?
What is the “maintenance” process, for example if a manufacturer
launches a variation of a clustered product?
Which other measures are necessary to achieve the desired impact
without exposing patients to higher co-payments?