The impact of repeated cost containment policies on pharmaceutical expenditure: experience in Spain

Eur J Health Econ (2011) 12:563573 DOI 10.1007/s10198-010-0271-1

ORIGINAL PAPER

The impact of repeated cost containment policieson pharmaceutical expenditure: experience in Spain

Ivn Moreno-Torres Jaume Puig-Junoy

Josep M. Raya

Received: 25 February 2010 / Accepted: 4 August 2010 / Published online: 1 September 2010 Springer-Verlag 2010

Abstract The growth in expenditure on the nancing of pharmaceuticals is a factor that accounts for a large part of the increase in public health spending in most developed countries. In an attempt to kerb this growth, many health authorities, particularly in Europe, have introduced numerous regulatory measures that have affected the market, especially on the supply side. These measures include the system of reference pricing, the reduction of wholesale distributors and retailers markups and compulsory reductions of ex-factory prices. We assess the impact of these cost containment measures on expenditure per capita, prescriptions per capita and the average price of pharmaceuticals nanced by the public sector in Catalonia (Spain), from 1995 to 2006. We apply an autoregressive integrated moving average (ARIMA) time series model using dummy variables to represent the various cost containment measures implemented. Twelve of the 16 interventions analysed that were intended to contain the overall pharmaceutical expenditure were not effective in reducing it even in the short term, and the four that were effective were not so in the long term, thus amounting to a moderate annual saving.

Keywords Pharmaceutical expenditure

Pharmaceutical policy Cost containment measures

Time series

JEL Classication H51 I18

Introduction

In recent years, the growth in expenditure on the nancing of pharmaceuticals has been one of the factors that accounts for a large part of the increase in public health spending in most developed countries. In an attempt to kerb this growth, health authorities have introduced regulatory measures that have affected the market, especially on the supply side. Some of the most commonly used measures have been the system of reference pricing, the reduction of wholesale distributors and retailers markups, compulsory reductions of ex-factory prices, the exclusion of some pharmaceuticals from public nancing and incentives to improve prescribing practices.

Demographic factors such as the ageing of the population, the inclusion of new services and innovative treatments, and, in general terms, greater demand for health care, puts increasing pressure on public resources...