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Does drug price-regulation affect healthcare expenditures?

Author

Listed:
  • Omer Ben-Aharon

    (Bar Ilan University)

  • Oren Shavit

    (Bar Ilan University)

  • Racheli Magnezi

    (Bar Ilan University)

Abstract

Background Increasing health costs in developed countries are a major concern for decision makers. A variety of cost containment tools are used to control this trend, including maximum price regulation and reimbursement methods for health technologies. Information regarding expenditure-related outcomes of these tools is not available. Objective To evaluate the association between different cost-regulating mechanisms and national health expenditures in selected countries. Methods Price-regulating and reimbursement mechanisms for prescription drugs among OECD countries were reviewed. National health expenditure indices for 2008–2012 were extracted from OECD statistical sources. Possible associations between characteristics of different systems for regulation of drug prices and reimbursement and health expenditures were examined. Results In most countries, reimbursement mechanisms are part of publicly financed plans. Maximum price regulation is composed of reference-pricing, either of the same drug in other countries, or of therapeutic alternatives within the country, as well as value-based pricing (VBP). No association was found between price regulation or reimbursement mechanisms and healthcare costs. However, VBP may present a more effective mechanism, leading to reduced costs in the long term. Conclusions Maximum price and reimbursement mechanism regulations were not found to be associated with cost containment of national health expenditures. VBP may have the potential to do so over the long term.

Suggested Citation

  • Omer Ben-Aharon & Oren Shavit & Racheli Magnezi, 2017. "Does drug price-regulation affect healthcare expenditures?," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 18(7), pages 859-867, September.
    • Handle: RePEc:spr:eujhec:v:18:y:2017:i:7:d:10.1007_s10198-016-0832-z
    DOI: 10.1007/s10198-016-0832-z
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    References listed on IDEAS

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    1. Pierre Moïse & Elizabeth Docteur, 2007. "Pharmaceutical Pricing and Reimbursement Policies in Sweden," OECD Health Working Papers 28, OECD Publishing.
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    Cited by:

    1. Lin, Yu-Shiuan & Lin, Min-Ting & Cheng, Shou-Hsia, 2019. "Drug price, dosage and safety: Real-world evidence of oral hypoglycemic agents," Health Policy, Elsevier, vol. 123(12), pages 1221-1229.
    2. Joosse, Iris R. & Tordrup, David & Bero, Lisa & Mantel-Teeuwisse, Aukje K. & van den Ham, Hendrika A., 2023. "A critical review of methodologies used in pharmaceutical pricing policy analyses," Health Policy, Elsevier, vol. 134(C).
    3. Toon van der Gronde & Carin A Uyl-de Groot & Toine Pieters, 2017. "Addressing the challenge of high-priced prescription drugs in the era of precision medicine: A systematic review of drug life cycles, therapeutic drug markets and regulatory frameworks," PLOS ONE, Public Library of Science, vol. 12(8), pages 1-34, August.

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    More about this item

    Keywords

    Drug price; Price regulation; Drug reimbursement; Healthcare expenditure; Value-based pricing;
    All these keywords.

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health

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