Pharmaceutical policies: effects of reference pricing, other pricing, and purchasing policies (Review)

Transcription

1 Pharmaceutical policies: effects of reference pricing, other pricing, and purchasing policies (Review) Aaserud M, Dahlgren AT, Kösters JP, Oxman AD, Ramsay C, Sturm H This is a reprint of a Cochrane review, prepared and maintained by The Cochrane Collaboration and published in The Cochrane Library 2007, Issue 4 1

2 T A B L E O F C O N T E N T S ABSTRACT PLAIN LANGUAGE SUMMARY BACKGROUND OBJECTIVES CRITERIA FOR CONSIDERING STUDIES FOR THIS REVIEW SEARCH METHODS FOR IDENTIFICATION OF STUDIES METHODS OF THE REVIEW DESCRIPTION OF STUDIES METHODOLOGICAL QUALITY RESULTS DISCUSSION AUTHORS CONCLUSIONS POTENTIAL CONFLICT OF INTEREST ACKNOWLEDGEMENTS SOURCES OF SUPPORT REFERENCES TABLES Characteristics of included studies Characteristics of excluded studies ADDITIONAL TABLES Table 01. Abbreviations Table 02. Intervention description Table 03. Assessment of limitations in included studies Table 04. Reference pricing versus no reference pricing: Outcome 1.1 Drug use Table 05. Reference pricing versus no ref pricing: Outcome 1.2 Health outcomes - Mortality Table 06. Reference pricing versus no ref pricing: Outcome 1.3 Health care utilisation Table 07. Reference pricing versus no reference pricing: Outcome 1.4 Drug expenditures Table 08. Reference pricing versus no reference pricing: Outcome 1.5 Drug expend. savings Table 09. Index pricing versus no index pricing: Outcome 2.1 Drug use Table 10. Index pricing versus no index pricing: Outcome 2.2 Drug prices Table 11. Summary of findings. Effects of reference pricing Table 12. Factors that could modify the effects of reference drug pricing Table 13. Search strategies: EMBASE Table 14. Search strategies: Effective Practice and Organisation of Care Group Register Table 15. Search strategies: CENTRAL Table 16. Search strategies: CSA Worldwide Political Science Abstracts Table 17. Search strategies: EconLit Table 18. Search strategies: SIGLE Table 19. Search strategies: INRUD Table 20. Search strategies: PAIS International Table 21. Search strategies: International Political Science Abstracts Table 22. Search strategies: NHS EED Table 23. Search strategies: NTIS Table 24. Search strategies: IPA Table 25. Search strategies: OECD Table 26. Search strategies: SourceOECD Table 27. Search strategies: World Bank Documents & Reports Table 28. Search strategies: World Bank e-library Table 29. Search strategies: JOLIS Table 30. Search strategies: Global Jolis Table 31. Search strategies: WHO i

3 Table 32. Search strategies: WHOLIS GRAPHS AND OTHER TABLES INDEX TERMS COVER SHEET ii

4 Pharmaceutical policies: effects of reference pricing, other pricing, and purchasing policies (Review) Aaserud M, Dahlgren AT, Kösters JP, Oxman AD, Ramsay C, Sturm H This record should be cited as: Aaserud M, Dahlgren AT, Kösters JP, Oxman AD, Ramsay C, Sturm H. Pharmaceutical policies: effects of reference pricing, other pricing, and purchasing policies. Cochrane Database of Systematic Reviews 2006, Issue 2. Art. No.: CD DOI: / CD This version first published online: 19 April 2006 in Issue 2, Date of most recent substantive amendment: 25 January 2006 A B S T R A C T Background Pharmaceuticals can be important for people s health. At the same time drugs are major components of health care costs. Pharmaceutical pricing and purchasing policies are used to determine or affect the prices that are paid for drugs. Examples are price controls, maximum prices, price negotiations, reference pricing, index pricing and volume-based pricing policies. The essence of reference pricing is to establish a maximum level of reimbursement for a group of drugs assumed to be therapeutically equivalent. Objectives To determine the effects of pharmaceutical pricing and purchasing policies on drug use, healthcare utilisation, health outcomes and costs (expenditures). Search strategy We searched the following databases and web sites: Effective Practice and Organisation of Care Group Register (date of last search: 22/08/03), Cochrane Central Register of Controlled Trials (15/10/03), MEDLINE (07/09/05), EMBASE (07/09/05), ISI Web of Science (08/09/05), CSA Worldwide Political Science Abstracts (21/10/03), EconLit (23/10/03), SIGLE (12/11/03), INRUD (21/11/03), PAIS International (23/03/04), International Political Science Abstracts (09/01/04), NHS EED (20/02/04), PubMed (25/02/04), NTIS (03/03/04), IPA (22/04/04), OECD Publications & Documents (30/08/05), SourceOECD (30/08/05), World Bank Documents & Reports (30/08/05), World Bank e-library (04/05/05), JOLIS (22/08/05), Global Jolis (22/08/05 and 23/08/05), WHOLIS (29/08/05). Selection criteria Policies in this review were defined as laws, rules, financial and administrative orders made by governments, non-government organisations or private insurers. To be included a study had to include an objective measure of at least one of the following outcomes: drug use, healthcare utilisation, health outcomes, and costs (expenditures); the study must be a randomised controlled trial, non-randomised controlled trial, interrupted time series analysis, repeated measures study or controlled before-after study of a pharmaceutical pricing or purchasing policy for a large jurisdiction or system of care. Data collection and analysis Two reviewers independently extracted data and assessed study limitations. Quantitative analysis of time series data, for studies with sufficient data, and qualitative analyses were undertaken. Main results We included 10 studies of reference pricing and one study of index pricing. Most of the reference pricing studies were for senior citizens in British Columbia, Canada. The use (dispensing) of reference drugs increased in five studies, between 60% and 196% immediately after introduction of reference drug pricing, whereas the use of cost sharing drugs decreased by between 19% and 42% in four studies. In three studies the reference drug group expenditures decreased (range 19% - 50%), whereas in the fourth study the expenditures increased by 5% in the short term. The results after six months of reference pricing do not show any clear pattern in relationship to 1

5 the immediate effects. We found no evidence of adverse effects on health and no clear evidence of increased health care utilisation. For index pricing the evidence was much more limited than for reference drug pricing. A small reduction in drug prices was found. Authors conclusions We found relatively few studies of pricing policies. The majority of the studies dealt with reference pricing. They had few methodological limitations. Based on the evidence in this review, mostly from senior citizens in British Columbia, Canada, reference drug pricing can reduce third party drug expenditures by inducing a shift in drug use towards less expensive drugs. We found no evidence of adverse effects on health and no clear evidence of increased health care utilisation. The analysis and reporting of the effects on patient drug expenditures were limited in the included studies and administration costs were not reported. P L A I N L A N G U A G E S U M M A R Y Large amounts of health care money are spent on drugs, and these amounts are increasing. Spending more on drugs could mean less money for hospitals, doctors or even other non-health care services. There is therefore a pressure to control the costs of drugs, without decreasing health benefits. This review found 11 studies that evaluated two ways that governments, non-government agencies and health insurance companies have used to try to control costs. Ten studies evaluated reference pricing and one study evaluated index pricing. The review did not find any rigorous studies that evaluated other pricing policies, such as direct price controls, maximum prices and price negotiations, although such policies are commonly used. When reference pricing is used, one reference drug is chosen from a group of drugs that are equally effective and safe. The price for the reference drug is covered, but if people want a more expensive drug from that group they have to pay the difference in price. This review found that reference pricing resulted in less use of the more expensive drugs and more use of reference drugs. This generally decreased the amount spent on drugs by third party payers (such as government drug insurance plans). Reference pricing was not found to have adverse effects on health. Nor did it increase the use of health services, with the possible exception of an increased number of consultations when reference pricing is started, when patients switch from a more expensive drug to a reference drug. The studies were mostly well designed. However, most of the studies involved senior citizens in British Columbia and it is not certain what the effect of reference pricing would be in other places or for other drugs. When index pricing is used, an index price is set for a group of similar drugs. The index price is the amount that a pharmacy receives from the government or insurance company when one of the drugs from the group is dispensed. By choosing drugs that are cheaper than the index price the pharmacies can keep the difference. This should lead to an increase in the dispensing of cheaper drugs. This may also lead to the pharmaceutical companies lowering their prices to ensure that pharmacies choose their drugs. One study from Norway found that index pricing led to a small decrease in drug prices. B A C K G R O U N D Pharmaceuticals can be important for people s health. At the same time drugs are major components of health care costs. Drugs accounted for more than 10% of total health spending in nearly all Organisation for Economic Co-operation and Development (OECD) countries in 2001, and even exceed 20% of health spending in Italy and France (OECD 2003). (See Additional table 1 for a list of abbreviations used in this review). In low and middleincome countries the proportion spent on pharmaceuticals of government spending on health was on average 16% and 13% respectively in 2000 (WHO 2004). Most countries face large increases in expenditures on pharmaceuticals. In several OECD countries combined public and private spending on pharmaceuticals rose by more than 70%, in real terms (adjusted for price movements), between 1991 and 2001 (OECD 2003). Pharmaceutical spending increased by 63% and 97%, in nominal terms (unadjusted for price movements), from 1990 to 2000 in low and middle-income countries respectively (WHO 2004). These increases put pressure on policy makers and insurers to control drug expenditures and to do this without causing adverse effects on health, or increasing health care utilisation or other costs. Pharmaceutical pricing and purchasing policies intend to determine or affect the prices that are paid for drugs. They can be targeted at different components of drug prices - such as wholesale prices, retail prices, drug taxes and reimbursement prices. Examples are price controls, maximum prices, price negotiations, reference pricing, index pricing and volume-based pricing policies. Although this review also deals with purchasing policies, we will 2

6 for simplicity use the term pricing policies in this review. These policies can have an impact on drug expenditures in two main ways - directly, through price changes, and indirectly, through drug use changes related to the price changes. Furthermore, the split between third party and patient expenditures can be influenced. Since pharmaceutical pricing policies might affect drug use they could also have effects on health and utilisation of other health care services. Mrazek 2004 distinguishes between direct price controls and indirect approaches. Direct methods include negotiated prices, maximum fixed prices, international price comparisons and price cuts or freezes. Indirect methods include profit regulation or reference or index pricing. In Productivity 2001 indirect methods are grouped together under the term reimbursement pricing systems. Under such systems insurers set price ceilings for subsidised drugs. Insurers agree to cover or reimburse the cost of listed pharmaceuticals up to a certain reimbursement price. Manufacturers are free to price above the reimbursement price, but then the patient has to pay the difference. There are different methods of determining the reimbursement prices: economic evaluations, reference drug pricing and international price comparisons. We briefly describe the main types of pricing policies below, emphasizing policies for which we have identified studies that are included in this review. Pharmaceutical prices consist of different components reflecting who is receiving the payments: the manufacturers price, wholesalers price and retailers price. At each of these steps there are mark ups and possibly tax components. Pricing policies can be targeted at one or more of these specific components. Reference drug pricing For drugs that are assessed as therapeutically similar (here called a reference drug group) a reference drug (or a group of reference drugs) is chosen. The price of the reference drug is reimbursed (except for ordinary copayment). For drugs that are more expensive than the reference drug, the patient has to pay the expenses above the reference price. These are called cost share drugs. Thus reference drug pricing is not a price control - the retail prices are not set. The policy makes patients aware of price differences by giving them responsibility to pay for the differences. However, it does not restrict the drug producers, wholesalers or retailers freedom to set drug prices. The policy sets the reimbursement price and thus implicitly the payments by patients. This can lead patients to switch from more expensive to cheaper drugs, and thus decrease the sales for the producers of the more expensive drugs. The producers then would have incentives to reduce prices so that market shares would not be lost. Policies that set reimbursement prices, like reference pricing, are similar to copayment policies, since both influence what the third party payer and patients pay for the drugs. The difference is that patients can choose to use the reference drug and thus not have to pay a reference premium, whereas with copayments patients have to pay a portion of the cost regardless which drug they use within a drug group. Reference drug pricing can be applied to different levels of drug groups (Dickson 1998; Ioannides-Demos 2002; McLaughin 1997): Level 1. Grouping of drugs that have identical bioactive ingredients and therefore are considered therapeutically interchangeable i.e. generic groups. This has been used in many countries. Examples are Canada (Ontario), Denmark, Italy, Norway, Sweden and the USA (Medicaid). Level 2. Drugs are pooled in analogue groups, i.e. chemically slightly different but related drugs with comparable or identical indications (e.g. the analogue group of angiotensin-convertingenzyme (ACE) inhibitors, the analogue group of histamine-2 receptor antagonists (H2RAs)). This is, for example, used in British Columbia. Level 3. Grouping of all drugs used to treat a particular condition (e.g. all drugs for hypertension.). This is, for example, used in the Netherlands and Germany. Compared with reference pricing at level 2 or 3, reference pricing at level 1 potentially has far less risk, if any, of causing adverse effects due to therapeutically non-similar drugs within the reference group. However the potential for savings is also less at level 1. Different terms have been used for reference drug pricing policies, including reference pricing, reference based pricing, maximum allowable costs (level 1 used, for example, in USA for Medicaid), best available prices (level 1 used, for example, in Ontario, Canada), minimum pricing (Australia). Index pricing An index price is the maximum refundable price to pharmacies for drugs within an index group (Brekke 2003). An index group consists of therapeutically interchangeable drugs. The index price is updated quite frequently (e.g. every third month) and is based on the volume weighted average of prices in the index group. The price is refunded independent of which drug is dispensed. Since the pharmacy keeps the difference between the index price and the price, pharmacies have economic incentives to dispense a drug that is priced lower than the index price. Thus, the hypothesis is that the pharmacies will dispense more of the cheaper drugs, which will lead to a lower index price when that price is adjusted frequently. A lower index price will then lead to lower reimbursements and thus reduced third party drug expenditures. An increase in the dispensing of cheaper drugs could also increase the producers incentives to lower the drug prices so that market shares will not be lost. Profit regulation Rates of return (ROR) on pharmaceutical companies capital can be regulated by the government or negotiated between the government and the companies, as under the Pharmaceutical Price 3

7 Regulation Scheme (PPRS) in the UK (Borrell 1999). This can indirectly influence drug prices by setting profit limits. The PPRS is based on periodic negotiations between the Association of the British Pharmaceutical Industry and the Department of Health. It is reviewed every few years (Mrazek 2004). If profits exceed a certain level, the company must reduce profits by cutting prices, delaying or restricting previously agreed future price increases, or repaying the excess profit to the Department of Health. Other pricing policies These include direct price controls, maximum prices, price negotiations, volume-based pricing, procurement and rebate policies. Direct price controls involve setting prices on a product by product basis. The prices can be set by the authorities or negotiated with the manufacturer. The price level can be fixed or a maximum price can be set, leaving the supplier free to set the price lower or equal to the maximum price. When setting or negotiating the price, several considerations can be taken: costs of products, prices in comparable countries, therapeutic value of the product, evidence of clinical efficacy and safety, and price-volume arrangements (Productivity 2001). Under a price-volume arrangement the agreed drug price is based on a forecast volume of sales. If the actual volume exceeds the forecast, the drug price usually has to be lowered. We are not aware of any other systematic reviews of the effects of pharmaceutical pricing and purchasing policies. There are some reviews on some pricing policies, like reference drug pricing (Danzon 2001; Danzon 2003; Huttin 2002; Ioannides-Demos 2002; Lopez-Casasnovas2001; Mrazek 2004; Puig-Junoy 2005; Selke 1993; Zammit-Lucia 1995) and broad reviews of pharmaceutical policies that include some pricing policies (Bloor 1996; LeGrand 1999; Ratanawijitrasin2001; Soumerai 1993). Most of these reviews are limited in scope. To our knowledge none have been kept up to date, and for the most part they are not systematic. Our aim is to support informed decisions about pharmaceutical policies and to guide future evaluations by preparing an up-to-date, comprehensive summary of what is known from well-designed research about the effects of alternative pricing and purchasing policies on drug use, healthcare utilisation, health outcomes and costs (expenditures). Complementary reviews on other pharmaceutical policies are under progress, see protocol (Aaserud 2006). O B J E C T I V E S To determine the effects of pharmaceutical pricing and purchasing policies on drug use, healthcare utilisation, health outcomes and costs (expenditures). C R I T E R I A F O R C O N S I D E R I N G S T U D I E S F O R T H I S R E V I E W Types of studies Randomised controlled trials (RCTs), non-randomised controlled trials (CCTs), repeated measures (RM) studies, interrupted time series (ITS) analyses, and controlled before-after (CBA) studies. Types of participants Health care consumers and providers within a large jurisdiction or system of care. Jurisdictions can be regional, national or international. Studies within organisations, such as health maintenance organisations, are included if the organisation is multi-sited and serves a large population. Types of intervention Policies on price and purchasing: Policies that determine or are intended to affect the price that is paid for drugs. Included in this category are price control, maximum prices, price negotiations, rebates, reference pricing, index pricing, volume-based pricing, and procurement policies. Policies in this review are defined as laws, rules, financial and administrative orders made by governments, non government organisations or private insurers. Interventions applied at the level of a single facility were excluded. Types of outcome measures To be included a study had to include an objective measure of at least one of the following outcomes: Drug use (prescribed, dispensed or actually used) Healthcare utilisation Health outcomes Costs (expenditures), including drug costs and prices, other health care costs and policy administration costs S E A R C H M E T H O D S F O R I D E N T I F I C A T I O N O F S T U D I E S See: methods used in reviews. The search to identify studies for this review was initially done as a part of a much broader review, Pharmaceutical policies: effects on rational drug use (Aaserud 2006), dealing with the effects of all pharmaceutical policies. The broad review has been split into several sub-reviews, including this review. INITIAL BROAD SEARCH FOR STUDIES OF PHARMACEUTICAL POLICIES We developed the search strategy without language restrictions. The following databases were searched: Effective Practice and Organisation of Care Group Register, Idealist database searched 22/08/03 4

8 MEDLINE Ovid, 1966 to June Week , searched 18/06/03 EMBASE Ovid, 1980 to 2003 Week 23, searched 18/06/03 ISI Web of Science, searched 08/09/05 for cited key references CENTRAL, The Cochrane Central Register of Controlled Trials, Ovid, searched 15/10/03 CSA Worldwide Political Science Abstracts from 1975-present, searched 21/10/03 EconLit WebSPIRS from 1969-present, searched 23/10/03 SIGLE, System for Information on Grey Literature in Europe, WebSPIRS from /06, searched 12/11/03 INRUD, International Network for Rational Use of Drugs, searched 21/11/03 PAIS International, Public Affairs Information Service, WebSPIRS from /07, searched 23/03/04 International Political Science Abstracts, WebSPIRS from /12, searched 09/01/04 NHS EED, National Health Services Economic Evaluation Database, CRD, searched 20/02/04 PubMed searched 25/02/04 for relevant journals not indexed in MEDLINE NTIS, National Technical Information service from present, searched 03/03/04 IPA, International Pharmaceutical Abstract, WebSPIRS from /12, searched 22/04/04 The Health Management Information Consortium (HMIC) database was tested and found not to be useful for this review. In addition the following web sites and databases were searched: OECD (Organisation for Economic Co-operation and Development) Publications & Documents, searched 30/08/05 SourceOECD, searched 30/08/05 World Bank Documents & Reports, searched 30/08/05 World Bank e-library, searched 04/05/05 JOLIS, The Library Network serving the World Bank Group and IMF, searched 22/08/05 Global Jolis, online catalogue for the World Bank Country Office PIC/Libraries, searched 22/08/05 and 23/08/05 WHO (World Health Organisation), browsed 25/08/05 WHOLIS, the WHO library database, searched 29/08/05 The MEDLINE search strategy was mainly developed using reviews cited in the background section of the protocol and their references. The strategy includes terms for the following categories of interventions: Regulation and classification (licensing) policies Patent and profit policies Marketing policies Policies that regulate the provision of drug insurance Policies that determine which drugs are reimbursed Restrictions on reimbursed drugs Prescribing policies Pricing and purchasing policies Regulation of sales Co-payment and caps Patient information We used a modified version of the EPOC search strategy methodology filter to limit the MEDLINE strategy to randomized trials, controlled trials, time series analyses and controlled before-after studies. Search strategies for most of the other databases were developed on the basis of the MEDLINE strategy. We screened the reference lists of all of the relevant reports that we retrieved. We searched the Science Citation Index for articles citing key references. Authors of relevant papers, relevant organizations, and discussion lists were contacted to identify additional studies, including unpublished and ongoing studies. FURTHER SPECIFIC SEARCH FOR STUDIES OF PHARMACEUTICAL PRICING AND PURCHASING POLICIES We performed a subsequent search for studies of pricing and purchasing policies before publishing this review. Search strategies were developed for MEDLINE and EMBASE, based on relevant parts and yields of the initial broad search strategy. MEDLINE OVID, 1966 to August Week , searched 07/09/05 EMBASE Ovid, 1980 to 2005 Week 36, searched 07/09/05 The MEDLINE Ovid search strategy used both MeSH terms and text words (tw): 1. (regulat$ or requirement? or restrict$ or monitor$ or control$).tw. 2. (legislation? or law? or act? or policy or policies or politics or reform$ or system? or plan$ or program$ or strateg$).tw. or Policy Making/ or Legislation, Drug/ or Public Policy/ or Health Policy/ or Politics/ or Health Care Reform/ 3. (drug or drugs or pharmaceutic$ or medicines or medicament? or medicat$).tw. or exp Pharmaceutical Preparation/ or Prescriptions, Drug/ or Drug Utilization/ 4. (*Cost Control/ or *Cost Savings/) and 3 and 2 5. ((control$ or containment or curtailment or reduc$ or save or saving) adj3 cost?).tw. 6. ((cost? or expenditure? or expense?) adj3 (drug or drugs or pharmaceutic$ or medicines or medicament? or medicat$)).tw and 6 and 2 8. ((control$ or reduc$ or cut$ or regulat$ or negotiat$ or fix$) adj3 (price? or pricing)).tw. 9. ((price? or pricing) adj3 (drug or drugs or pharmaceutic$ or medicines or medicament? or medicat$)).tw and 9 and (reference$ adj3 (price? or pricing)).tw. 12. (index$ adj3 (price? or pricing)).tw. and ((maxim$ or minim$) adj3 (cost? or price? or pricing)).tw. and 3 5

9 14. (cost? effect$ adj3 (price? or pricing)).tw. and (reimburs$ adj1 contract?).tw. and (*Drug Costs/ or *Economics, Pharmaceutical/) and (1 or 2) 17. (*Purchasing, Hospital/ or *Group, Purchasing/) and (purchas$ adj3 (group? or join$ or hospital? or shared)).tw. 19. ((group? or join$ or hospital? or shared) adj3 (drug or drugs or pharmaceutic$ or medicines or medicament? or medicat$)).tw and 19 and (procurement$ adj3 (drug or drugs or pharmaceutic$ or medicines or medicament? or medicat$)).tw. and (acquisition cost? adj3 (drug or drugs or pharmaceutic$ or medicines or medicament? or medicat$)).tw. and (rebate? adj3 (drug or drugs or pharmaceutic$ or medicines or medicament? or medicat$)).tw. and (generic adj3 (price? or pricing or substitut$)).tw. and ((price? or pricing) adj3 (policy or policies or regulat$ or negotiat$)).tw. and (rate? adj1 return).tw. and (profit$ adj3 regulat$).tw. and or 7 or 10 or 11 or 12 or 13 or 14 or 15 or 16 or 17 or 20 or 21 or 22 or 23 or 24 or 25 or 26 or randomized controlled trial.pt. 30. controlled clinical trial.pt. 31. intervention studies/ 32. experiment$.tw. 33. (time adj series).tw. 34. (pre test or pretest or (posttest or post test)).tw. 35. random allocation/ 36. evaluation studies/ 37. evaluat$.tw. 38. comparative studies/ 39. (randomized or randomised).tw. 40. (random$ adj1 (allocat$ or assign$)).tw. 41. or/ and Animals/ 44. Humans/ not not 45 The search strategies for the other databases and websites are reported in Additional tables M E T H O D S O F T H E R E V I E W Two authors (of MOA, ATD, JPK and HS) independently reviewed all of the search results, abstracts and reference lists of relevant reports. The full text of potentially relevant reports was retrieved (if one or both authors thought it was potentially relevant) and two (of the above) authors independently assessed the relevance of those studies and the limitations of included studies. The lead author (MOA) extracted data from included studies in collaboration with one other author (ATD, JPK, HS or CR). For all the steps in the above process disagreements were resolved by discussion, when necessary including another author (ADO or CR). INCLUDED STUDY LIMITATIONS We used the standard criteria recommended by EPOC to assess the methodological limitations of studies (risk of bias) included in EPOC reviews (EPOC 2002). The criteria for RCTs and CCTs were: 1. Concealment of allocation 2. Baseline measurement of outcomes 3. Follow-up of professionals 4. Follow-up of patients 5. Intention-to-treat analysis 6. Blinded assessment of primary outcomes 7. Reliable primary outcomes measures 8. Other risk of bias The criteria for CBA studies were: 1. Baseline measurement of outcomes 2. Baseline characteristics of studies using second site as control 3. Follow-up of professionals 4. Follow-up of patients 5. Reliable primary outcomes measures 6. Blinded assessment of primary outcomes 7. Protection against contamination 8. Other risk of bias We used the EPOC definition of RCT, CCT, CBA and ITS studies. For ITS studies the definition is: The study must have a clearly defined time of intervention AND must have at least three data points before and three data points after the intervention. We also considered designs where there was a control ITS group. Control ITS designs are conceptually similar to CBA design but the addition of multiple time points pre and post intervention decreases the likelihood of secular change bias. ITS study usually have only one data item at each point in time (e.g. number of hospitalised cases). However, in this review there were studies that had ITS data for many individual patients (i.e. each individual contributed data to every point in time). Such designs usually produce a higher level of evidence than a simple ITS because between patient variability can be modelled as well as within patient variability, resulting in a study with substantially more power than a simple ITS. The criteria for protection against bias are the same as for a simple ITS except that the appropriate methods of analysis differ (e.g. repeated measures anova, generalised estimating equations or random effects models). We have called these studies repeated measures (RM) studies. As with an ITS study with a control group, RM studies can also have a control group consisting of control patients repeatedly observed over time. 6

10 Based on experience with two previous systematic reviews (Davey 2005; Grilli 2002), the statistical editor of EPOC, who is also a coauthor of this review (CR), suggested minor revisions to the EPOC criteria for ITS (and RM studies). These consisted of defining reanalysed studies as meeting the analysed appropriately criteria and allowing studies that had at least 12 monthly data points pre and post to meet the reason for number of data points criteria. These criteria more accurately reflected the chance of bias in the study effect sizes. We therefore used the following criteria: 1. The intervention was independent of other changes (protection against secular changes). This was MET if there were compelling arguments that the intervention occurred independently of other changes over time and the outcome was not influenced by other confounding variables/historic events during study period. 2. Data were analysed appropriately. This was MET if autoregressive integrated moving average (ARIMA) models were used OR time series regression models were used to analyse the data and serial correlation was adjusted/tested for OR reanalysis performed. 3. Reasons for number of data points were given. This was MET if data for 12 months (or more) pre- and post-intervention was used OR reason for the number and spacing of data points is given OR sample size calculation performed. 4. Shape of the intervention effect was pre-specified. This was MET if point of analysis was the point of intervention OR a rational explanation for the shape of intervention effect was given by the author(s). Where appropriate, this should include an explanation if the point of analysis was NOT the point of intervention. 5. Intervention unlikely to affect data collection (protection against detection bias). This was MET if it is reported that intervention itself was unlikely to affect data collection (for example, sources and methods of data collection were the same before and after the intervention). 6. Blinded assessment of primary outcome(s). This was evaluated as protection against detection bias. This was MET if the authors stated explicitly that the primary outcome variables were assessed blindly OR the outcome variables were objective, e.g. length of hospital stay, drug levels as assessed by a standardised test. 7. Completeness of data set. This was MET if the data set covered % of total number of participants or episodes of care in the study. 8. Reliable primary outcome measure(s). This was MET if two or more raters with at least 90% agreement or kappa greater than or equal to 0.8 OR the outcome was obtained from some automated system e.g. length of hospital stay, drug levels as assessed by a standardised test. 9. Other risk of bias. For CITS (controlled ITS) and CRM (controlled RM) studies, the time series part of the studies were assessed independently from the control part, using the above described criteria for ITS and RM studies. The control series part of the study was assessed using the CBA criteria above. If the control part had a high risk of bias, it was not included and the study was classified as ITS or RM, otherwise the control data were used as a control in the review. Overall limitations for each main outcome within each study was assessed by each of the data extractors using the following guidelines: No serious limitations = low risk of bias = all criteria scored as met Some limitations = moderate risk of bias = one or two criteria scored as not clear or not met Serious limitations = high risk of bias = more than two criteria scored as not clear or not met Fatally flawed = study results that we believed to be untrustworthy based on an overall judgement of the risk of bias in the study, based on all of the criteria used to assess the risk of bias. Some setting dependant judgement (i.e. judgement dependent on knowledge of the setting in which a study was done) was used when assessing overall limitations. Where setting dependent judgement has been used, the explanations are provided in Additional table 3. DATA EXTRACTION The following additional information was extracted from included studies using a standardised data extraction form: Type of study (randomised trial, non-randomised trial, repeated measures study, interrupted time series, controlled before-after) Study setting (country, key features of the healthcare system and concurrent pharmaceutical policies) The sponsors of the study Characteristics of the participants (consumers, physicians, practices, hospitals, etc.) Characteristics of the policies Main outcome measures and study duration The results for the main outcome measures If the study presented results for more than one outcome in each of the four outcome groups (drug use, health, health care utilisation and costs), we chose what we considered the most important outcome in each group, either as specified by the author or based on discussions among the reviewers. We aimed to be parsimonious. However, in cases where additional outcomes might lead to different conclusions, we also included them. Decisions about which outcomes to include were not based on the direction or size of effect, or whether a finding was statistically significant or not. In two cases we included additional outcomes because they provided additional insight. For drug use we included use of reference drugs, use of cost share drugs and total use of drugs in the reference drug group and the therapeutic group, when available, to provide insight into how reference pricing influenced both the level and the mix of drug use. Both are important factors 7

11 for understanding the effects on drug expenditures. For health care utilisation we included three outcomes representing different aspects of use of health services (physician visits, emergency room visits and emergency hospitalisations, and non-emergency hospitalisations), all of which we considered important and all of which were reported across four studies. Tables were prepared for each sub category of intervention including the following information: study identification, characteristics of the intervention, drug use, healthcare utilisation, health outcomes, and costs. These tables form the basis for the primary qualitative analyses. We also described potential mechanisms through which the policies were intended to affect drug use and costs and postulated mechanisms for other effects, both intended and unintended. We also briefly listed and described important policy options for which no evaluations were found. Our confidence in the available estimates of effects was graded using a modification of the approach recommended by the GRADE Working Group (GRADE 2004). When grading the quality of evidence, we initially graded ITS and RM studies as Moderate quality, and CBA studies as Low quality. This reflects our impression that the results of ITS and RM studies were more compelling (more likely to be correct) than those of CBA studies. The GRADE quality scores are High, Moderate, Low, and Very low. There were an insufficient number of comparisons for similar outcomes across studies to allow for meaningful exploration of heterogeneity. The following potential explanatory factors were considered: differences in the characteristics of the policies, differences in the settings and differences in study limitations. In addition, we attempted to identify important factors that might be taken into consideration by anyone contemplating implementing any of the policy alternatives, including: possible trade-offs (of the expected benefits versus harms and costs), short versus long term effects, indications and contraindications for when the polices might be used, limitations of the available evidence and other important factors that might affect the translation of the available evidence into practice in specific settings. ITS and RM studies The preferred analysis method for ITS and RM studies was either a regression analysis with time trends before and after the intervention, which adjusted for autocorrelation and any periodic changes, or ARIMA analysis. The results for the outcomes should be presented as changes along two dimensions: Change in level and change in slope. Change in level is the immediate effect of the policy and is measured as the difference between the fitted value for the first post-intervention data point (one month after the intervention) minus the predicted outcome one month after the intervention based on the pre-intervention slope only. Change in slope is the change in the trend from pre to post intervention start reflects the long term effect of the intervention. Since the interpretation of change in slope could be difficult, we chose to present the long-term effects similar to the way we calculated and present the immediate effects. We presented the effects after half a year as the difference between the fitted value for the sixth month post-intervention data point (half a year after the intervention) minus the predicted outcome six months after the intervention based on the pre-intervention slope only. The effects after one year, two year etc were measured similarly. For drug expenditures we also calculated the savings after a half year, one year etc. as the area between the predicted expenditures curves and the actual expenditures. Given that policy changes are often announced some months prior to official implementation, we defined a transition phase as the six months from official announcement. If the included ITS and RM studies stated a different transition phase, we used the studies definition. All results excluded the transition phase data. If papers with ITS design did not provide an appropriate analysis or reporting of results, but presented the data points in a scannable graph or in a table, we (CR) reanalysed the data using methods described in Ramsay The following segmented time series regression model was specified: Y(t) = B0 + B1*Pre-slope + B2*Post-slope + B3*intervention + e(t) where Y(t) is the outcome in month t. Pre-slope is a continuous variable indicating time from the start of the study upto the last point in the pre-intervention phase and coded constant thereafter. Post-slope is coded 0 up to and including the first point post intervention and coded sequentially from 1 thereafter. Intervention is coded 0 for preintervention time points and 1 for post-intervention time points. In this model, B1 estimates the slope of the pre-intervention data, B2 estimates the slope of the post-intervention data and B3 estimates the change in level of outcome as the difference between the estimated first point post intervention and the extrapolated first point post intervention if the pre-intervention line was continued into the post-intervention phase. The difference in slope is calculated by B2-B1. The error term e(t) was assumed to be first order autoregressive. Confidence intervals (95%) were calculated for all effect measures. In a repeated measures design, the data are repeated outcome measures from many individual patients. If the study did not report appropriate results we did not reanalyse the data from the summary graphs, because no estimate of within patient variability could be obtained from the summary graphs and any reanalysis would underestimate or overestimate the standard error of the effect sizes. Therefore, for RM studies we used the results reported in the original papers only. CBA studies For CBA studies we reported relative effects. For dichotomous outcomes we have reported, if possible, the relative risk, adjusted 8

12 for baseline differences in the outcome measures; i.e. the relative risk post intervention / relative risk pre intervention. For continuous variables we have reported, if possible, the relative change, adjusted for baseline differences in the outcome measures; i.e. (the absolute post-intervention difference between the intervention and control groups - the absolute pre-intervention difference between the intervention and control groups) / the postintervention level in the control group. D E S C R I P T I O N O F S T U D I E S The main literature search for all pharmaceutical policies as described earlier using electronic databases and web sites resulted in references to sift. The updated search for pharmaceutical pricing policies in MEDLINE/EMBASE, Science Citation Index and web sites resulted in 1670 references. Including reference lists from relevant studies and reports, roughly estimated we sifted approximately references all in all. We identified and retrieved in full text a total of 246 papers that were potentially relevant for the pricing policies sub group. 226 of these papers were excluded, most of them because they did not meet the study design inclusion criterion. They were primarily reviews, editorials, modelling studies, cross-sectional studies, and before and after studies without a control group. The excluded studies table provides reasons for exclusion of those studies that met the following: Studies about which it is plausible to expect that a reader would question why the study was not included, studies that are well known but do not meet all of inclusion criteria, and ITS studies that meet all inclusion criteria except for that there were too few data points. Five studies (Bergman 2003; Danzon 1997; Grootendorst 2005a; Grootendorst 2005b; Narine 1997) were identified and judged to possibly meet inclusion criteria, but were not retrieved and assessed before submission of the review. The studies are listed amongst studies awaiting assessment in the reference list. Fifteen papers, reporting eleven studies, met the inclusion criteria. In ten studies the effects of reference drug pricing were analysed (Aronsson 2001; Grootendorst 2002; Hazlet 2002; Marshall 2002; McManus 2001; Narine 2001; Pavcnik 2002; Sawyer 1983; Schneeweiss 2002; Schneeweiss 2003). The other study analysed effects of index pricing (Brekke 2003). Three studies were reported in more than one paper (Grootendorst 2002; Pavcnik 2002; Schneeweiss 2002). See the Included Studes table for more details. Study designs Some of the studies had more than one design, i.e. different designs for different outcomes. None of the studies were RCTs or CCTs. We included four RM/CRM studies (Grootendorst 2002; Hazlet 2002; Schneeweiss 2002; Schneeweiss 2003), eight ITS analyses (Aronsson 2001; Brekke 2003; Grootendorst 2002; Marshall 2002; McManus 2001; Narine 2001; Pavcnik 2002; Sawyer 1983) and three CBA studies (Grootendorst 2002; Schneeweiss 2002; Schneeweiss 2003), see Included Studies table. Characteristics of settings and patients Of the reference pricing studies six (Grootendorst 2002; Hazlet 2002; Marshall 2002; Narine 2001; Schneeweiss 2002; Schneeweiss 2003) were from Canada (British Columbia), one (Sawyer 1983) from the USA (Maryland), one (McManus 2001) from Australia and two from Europe - Germany (Pavcnik 2002) and Sweden (Aronsson 2001). The index pricing study was from Norway (Brekke 2003). The setting in all the BC studies was The Ministry of Health s drug subsidy program, Pharmacare. The patients in all these studies were Pharmacare beneficiaries - senior citizens aged 65 years and older. The setting in the other studies were the national drug insurance plans - including all beneficiaries (Australia, Norway, Sweden), the Statutory Health Insurance (SHI) plan (Germany) and Medicaid (USA). The SHI plan in Germany covers about 88 percent of the population. It is compulsory for workers with income under a certain level, for unemployed and retired people, and for specific population groups such as farmers, artists and students. The state specific Medicaid Programs in the USA provide medical benefits to low-income groups, medically needy groups, or to special groups. Characteristics of interventions The policies in the studies were mainly introduced in the 1990s, except for the Maximum Allowable Cost policy in Maryland, USA (1970s). Reference pricing in the Australian, German, US and Swedish studies was for generics, i.e. drug group level one (see Background section). All the six British Columbia studies were level two - for classes of analogue drugs (ACE inhibitors, CCBs, nitrates used for long-term prophylaxis and H2RAs). No information was given on the infrastructure around the policies, e.g. what kind, if any, of electronic systems for prescription claims. In British Columbia there were several exemptions in the reference price system (Grootendorst 2002): For all included drug classes there were special authority exemptions, which were valid indefinitely and given after the physician had applied and provided a valid reason for exemption. See Additional Table 02 for further details. There was little information on specific incentives in the studies. The general incentives in reference pricing systems are described in the Background section. Few of the included studies stated in numbers how high or low the reference price was relative to the other drugs in the relevant drug groups. No specific information was given (in the studies) on what incentives, if any, the physician or pharmacists had, to spend time on identifying and retrieving the reference drug, or whether this was facilitated in some way (e.g. through an automated system). However, in British Columbia the reference drug program was introduced at the same time as a province-wide on-line pharmacy network was established. This pharmacy network keeps track of exempt patients, indicates the portion of the drug price that PharmaCare will cover and relieves the patient of the responsibility of 9

13 submitting claims to PharmaCare and of the need to understand complicated policies (Pharmanet 2003; Pharmanet 2005) The index pricing system in Norway covered six groups of active substances. Characteristics of outcomes None of the studies presented data on all outcomes. The studies provided data on drug use, i.e. either the number of dispensed doses or the number of dispensed prescriptions, (7 studies), drug expenditures from a drug insurer s perspective (5), drug prices (3), health outcomes (mortality) (2), and health care utilisation (4). None of the studies reported effects on patient drug expenditures or other costs (either intervention costs or costs in other parts of the health services sector) using one of the study designs specified in our inclusion criteria. M E T H O D O L O G I C A L Q U A L I T Y See Additional Table 03. For the reference pricing studies limitations were assessed as follows: Drug use was assessed in six RM or ITS studies (Grootendorst 2002; Hazlet 2002; McManus 2001; Narine 2001; Schneeweiss 2002; Schneeweiss 2003) of which two had serious limitations. In these studies, there was another important drug policy introduced simultaneously, potentially affecting the outcomes in such a way that the interpretation of the results is difficult (Hazlet 2002; Narine 2001). For drug expenditures we included five RM/ITS studies, none of which had serious limitations (Grootendorst 2002; Marshall 2002; Sawyer 1983; Schneeweiss 2002; Schneeweiss 2003). Two ITS studies, one with some limitations (Aronsson 2001), reported effects on drug prices. For health outcomes there was one RM study, without serious limitations (Schneeweiss 2002), and one CBA study, with some limitations (did not fulfilled the baseline measurements criterion) (Grootendorst 2002). Of the studies that measured effects on health care utilisation, two were CRM studies (one with some limitations (Grootendorst 2002)) and two were CBA studies (one with some limitations (Schneeweiss 2002)). The included ITS study (Brekke 2003) for index pricing had some limitations (the source of data collection changed during the study period). R E S U L T S Detailed results for the included studies are provided in Additional tables REFERENCE PRICING We included and assessed ten studies reported in 14 papers. Drug use Five studies (Grootendorst 2002; McManus 2001; Narine 2001; Schneeweiss 2002; Schneeweiss 2003) provided estimates or information to calculate estimates of the immediate (after a short transition period) effect on the level of drug use. One study (Narine 2001) had serious limitations for the outcome use of reference drugs. The reference pricing was for analogue groups of drugs (level 2 reference pricing, see Background section) in four papers and for generics (level 1) in one paper. --Use of reference drugs in the reference group All four studies (Grootendorst 2002; McManus 2001; Schneeweiss 2002; Schneeweiss 2003) without serious limitations demonstrated an increase in reference drug use immediate after the transition period following the policy start. The increases were between 60% and 196%. Confidence intervals could be obtained from two of these studies (Grootendorst 2002; McManus 2001), which showed a statistically significant increase in reference drug use. Three studies reported effects for at least half a year (only one study for one year) after the transition period. In one of the studies (Schneeweiss 2002) the relative increase in reference drug use after half a year was somewhat higher than the immediate increase. In the other two studies (Grootendorst 2002; McManus 2001) the relative increase after half a year was somewhat lower. --Use of cost share drugs in the reference group The use of cost share drugs decreased immediately by between 19% and 42% (in four studies (McManus 2001; Narine 2001; Schneeweiss 2002; Schneeweiss 2003)). In one of the three studies that provided data for half a year on the use of cost sharing drugs, there was a large change in the effect size (an increased reduction) (McManus 2001). --Total use of drugs in the reference group The effect on total use of drugs in the reference group was smaller and not consistent (-9% to +11%) in the two studies (Schneeweiss 2003; Schneeweiss 2002) with no serious limitations. --Use of other drugs than those in the reference group Two studies reported the effect on use of other drugs than the reference group drugs. In both cases the reference drug group was a drug class with drugs mainly used for hypertension, and the studies reported the effect on the use of all anti-hypertensive drugs. One study (Schneeweiss 2003) reported no effect, and the other (Schneeweiss 2002) reported a statistically non-significant decrease of 7% (p = 0.4). Drug expenditures Two studies, both with level 2 reference pricing, reported the immediate effects on drug expenditures for the reference drug group in total. Grootendorst 2002 reported the effect on three reference drug groups and Marshall 2002 reported the effect on one group. For CCBs, H2RAs, and nitrates the drug expenditures decreased (range 19% - 50%). For ACE inhibitors expenditures increased 10

14 by 5% in the short term. After two years these effects were slightly less substantial. Two studies, with reference pricing for ACE inhibitors (Schneeweiss 2002) and CCBs (Schneeweiss 2003) respectively, reported an immediate reduction in expenditures for all anti-hypertensive drugs of 19 % and 12 % respectively. In Marshall 2002 the senior citizen patient payment share of total H2RAs expenditures increased from 0% to approximately 16% immediately after the introduction of reference pricing. Two studies (Grootendorst 2002; Marshall 2002) included data that allowed savings to be estimated (i.e. the area between the expected and the observed drug expenditures), for ACE inhibitors, CCBs, H2RAs and nitrates. The relative savings were of the same magnitude as the relative reduction in drug expenditure levels reported above. Drug prices In two studies from Europe, reference pricing appeared to reduce drug prices. In Pavcnik 2002 (level 3 reference pricing) the estimate of price reductions for oral antibiotics was 18%. The prices of generics dropped by an average of 11% whereas the decline in brand prices was additionally 26%. For anti ulcer drugs the estimated reductions ranged from 12% to 26% dependent on which years that were excluded from the estimation equations. All the estimates were significant at the 5% level. Aronsson 2001 (level 1 reference pricing) also found that brand prices were reduced, but did not report comparable data. Health Two studies, with reference pricing on level 2 (analogue groups), reported effects on mortality related to reference pricing. In one (Grootendorst 2002) of these studies the effect on cardiovascular and renal related deaths over one year for the study cohorts (users of ACE inhibitors, CCBS and nitrates respectively) was reported. Following the reference pricing of nitrates and CCBs the mortality decreased (ratio of hazard ratios and 0.962), while it increased after reference pricing of ACE inhibitors (ratio of hazard ratios = 1.101). None of these effects were statistically significant. In the other study (Schneeweiss 2002), there was no change in standardized monthly mortality ratios for the study cohort over ten months. Health care utilisation Four studies (Grootendorst 2002; Hazlet 2002; Schneeweiss 2002; Schneeweiss 2003), with reference pricing on level 2, measured the following three outcomes: emergency room (ER) visits and hospital admissions through the emergency department (ED); nonemergency hospital admissions; physician office visits. For all these outcomes the studies reported effects at different time points after the intervention, over one to 29 months, resulting in ten comparisons for each outcome. For ER visits and hospitalisations through the ED the median effect was a relative increase of 9%, with a range from a 41% decrease to a 49% increase. Six of the ten comparisons showed an increase. Of these only one was statistically significant. For non-emergency hospitalisations the median effect was a relative reduction of 12%, with a range from a 42% decrease to a 7% increase. Three of the ten comparisons showed an increase in non-emergency hospitalisations. None of the three were statistically significant. For physician office visits the median effect was a relative increase of 1%, with a range from a 31% decrease to an 18% increase. Five of the ten comparisons showed an increase, all being statistically significant. The relative increases were biggest shortly after the policy change. In two of the studies (Schneeweiss 2002; Schneeweiss 2003), both cardio vascular disease (CVD) specific (not reported in the studies) and overall hospitalisations were analysed providing pretty much the same results (Schneeweiss 2006). In the third study (Hazlet 2002) the authors were not able to link ER episodes of care to specific diagnoses. INDEX PRICING We identified one study (Brekke 2003), from Norway. Drug use The effects on use of drugs in the index pricing groups were not analysed appropriately in the report. Based on graphs we conducted an ITS analysis of the effect on use of brand and generic citalopram. The use of brand citalopram decreased, relatively, by 29 % (immediate) and 43% (after six months) after a transition period following the introduction of the index pricing system. The use of generic citalopram increased by 114% (immediate) and 55% (six months). Drug prices Brand and generic drug prices were both reduced. The reduction in brand drug prices was not statistically significant. The generic drug prices were reduced more (relatively) than the brand drugs. The long-term effects were slightly larger than the short-term effects (-1.1% vs -0.8% for brand drugs; -5.3% vs -4.0% for generic drugs). D I S C U S S I O N Reference pricing Additional Table 11 provides a summary of the main findings for reference pricing in this review. The quality of evidence is strongest for the effects on use of reference drugs and cost share drugs. In the included studies the aggregate use of reference drugs increased, while the use of cost-share drugs decreased. This was the intention of the policy. Thus, there seems to be an aggregate shift of drug use within each reference drug group. The total use of drugs did not change as much, but there were some changes, which might 11

15 be a little surprising. The idea of reference pricing is to shift the drug use within each reference group from expensive to cheaper but equally effective drugs, with no intended impact on the total use of drugs in the reference group. In two included repeated measures studies, Schneeweiss 2002 and Schneeweiss 2003, the effect on shift in drug use and savings in drug expenditures only include the effect for prevalent users of the drugs in question. In a paper that did not meet our inclusion criteria, Schneeweiss 2004b estimates that the savings from incident users of ACE inhibitors rises from approximately 3% of the total savings in the first years to around 50% of savings after 10 years. Three studies reported effects on individual switching of drug use. These analyses of switching behaviour did not meet our inclusion criteria. The studies followed cohorts of patients and recorded how many of them switched drugs after reference pricing was introduced. In Grootendorst 2002, 34 % of the restricted nitrate users (senior citizens) switched from cost-share nitrates to reference nitrates over 29 months. For ACE inhibitors and CCBs the figures were 25% and 21% respectively over 15 months. In Schneeweiss 2002, 18 % of patients receiving ACE inhibitors subject to cost sharing switched to lower priced alternatives over 10 months. Schneeweiss 2003 reported that within the first six months after the introduction of reference pricing for CCBs 9.3 % of the cost share drug users switched to no cost share CCBs. The results after six months of reference pricing did not show a clear or consistent pattern in relationship to the immediate effects. The results indicate that the relative percentage increase in reference drug use is higher than the decrease in the use of cost share drugs. This relates to the fact that the pre- intervention use of reference drugs is usually much lower than the use of the cost share drugs. (see Additional table 4). In three (McManus 2001; Schneeweiss 2002; Schneeweiss 2003) out of four studies the absolute increase in reference drug use was lower than the decrease in cost share drugs. Only one study discussed this (Schneeweiss 2002). The authors suggested that dose reductions and discontinuation of therapy by patients who were receiving cost-share ACEinhibitors before the policy start, were reasons for long term reduction in the use of ACE inhibitors. Reference pricing appears to decrease drug expenditures for third party payers. The change in expenditures can be decomposed to different effects; a) a shift in drug use from more expensive to less expensive drugs within the reference drug groups; b) patients or their private insurers paying a larger part of the expenditures; c) reduced prices; d) reduced total use of drugs in the reference drug groups. The studies provided little systematic information on which of these factors were the main factors behind the reduction in drug expenditures for third parties. The results above seem to indicate a shift in drug use. However it is not clear what proportion of the drug expenditure reduction can be accounted for by this shift. In British Columbia, the incentives to reduce prices were minor, because it would have reduced profits in other Canadian jurisdictions, particularly Quebec, a larger province (without reference pricing) whose government has the policy of paying no more than the lowest price in Canada for individual drugs (Hollis 2004). Some studies report on patient payments, but these data were limited. In Marshall 2002 the senior citizen patient payment share of total H2RAs expenditures increased from 0% to around 16% immediately after the introduction of reference pricing. In Grootendorst 2002 the impact on patient expenditures was studied by an uncontrolled before and after design. The senior citizens patient expenditures for all ACE inhibitors and CCBs increased around four fold and three fold respectively, after the introduction of reference pricing. Specially, expenditures by patients or their private insurers increased if patients did not switch to less expensive drugs, unless they were given a clinically justified exemption from the policy which allowed Pharmacare to pay fully for the more expensive drugs. Ioannides-Demos 2002; Zammit-Lucia 1995 and others have claimed that reference pricing does not reduce long term growth in drug expenditures, since reference pricing mainly addresses only two of the drivers that increase drug expenditures: prices and shifts in drug use within the reference group of drugs. We found no data for long-term growth effects that could support or refute this. However, even if the short-term reductions in drug expenditures growth rates are not sustained, the absolute difference in drug expenditures could be sustained for many years to come. None of the included studies provided data on administration costs related to reference pricing. Such costs would be related to the logistic system and incentives for physicians, pharmacists and drug insurance administrators for handling prescriptions and exemptions. In a paper that did not meet our study design inclusion criteria, Schneeweiss 2004b estimated the administrative spending due to the reference pricing for ACE inhibitors in British Columbia, Canada. The administrative expenditures related to the design, implementation, and ongoing support for the policy were estimated to approximately 7% ($0.42 million / $6.2 million) of the savings during the first year of the policy. In another paper excluded from our review, ECON 2000 estimated the time costs for physicians and pharmacists related to a generic reference pricing system in Norway. The time costs were estimated to be approximately 60% of the public drug insurance savings. We found no evidence of adverse effects on health and no clear evidence of increased health care utilisation, although the evidence for health effects is weaker than for drug use. None of the studies followed patients for more than one year. Two studies showed a transitional increase in the number of physician visits amongst switchers compared to non-switchers (Schneeweiss 2002; Schneeweiss 2003). The authors suggested that this could be related to treatment discussions and monitoring after medication switching. 12

16 One study on reference pricing on CCBs (Schneeweiss 2003) reported descriptively that 3% of those receiving cost share CCBs before reference pricing, stopped using anti-hypertensive drugs after the policy was introduced. We found too few studies to analyze the impact of different factors that potentially could modify the effects. These include equivalence of drugs within a reference group, incentives, exemptions, political context, electronic information systems, availability of reference/generic drugs and initial price gap between cost share and reference drugs. See Additional table 11. One study suggested explanations for found effect sizes. Grootendorst 2002 discussed two factors that may explain why estimated savings in third party drug expenditures were relatively smaller for ACE inhibitors than for nitrates in British Columbia: 1) Generous exemptions 2) The reference price for ACE inhibitors was set relatively high. Schneeweiss 2002 and Schneeweiss 2003 argue that ACE inhibitors and CCBs respectively have low within-class variability of effectiveness and thus represent particularly safe candidates for reference pricing. Thus there is uncertainty regarding the transferability of the results in the included studies to other settings and drug classes. Most of the included studies on reference pricing were for senior citizens in British Columbia. An argument against reference drug pricing is that it could lead to disincentives to pharmaceutical innovation (Ioannides-Demos 2002). It is hard to document such effects of reference pricing empirically. We have not identified such documentation. Index pricing With only one included study the evidence is much more limited than for reference drug pricing. Brekke 2003 evaluated the policy half a year after policy start. The effects on prices of generic and brand drugs (though not statistically significant for the latter category) as well as on the use of generic and brand citolapram were all in the direction intended by the policy makers. Rate of return regulation Only one study was identified, but did not meet our inclusion criteria (Borrell 1999). The study indicated that the aggregate medicine price index in the UK changed (relatively) by 0.15% in relationship to a 1% change in rate of return cap. A U T H O R S Implications for practice C O N C L U S I O N S We found relatively few studies of pricing policies. The majority of the studies dealt with reference pricing. They had few methodological limitations. Based on the evidence in this review, mostly related to senior citizens in British Columbia, Canada, reference drug pricing can reduce third party drug expenditures by inducing a shift in drug use towards less expensive drugs. We found no evidence of adverse effects on health and no clear evidence of increased health care utilisation. The analysis and reporting of the effects on patient drug expenditures were limited in the included studies and administration costs were not reported at all. Implications for research Our review found few well designed evaluations of pharmaceutical pricing policies. Although we performed an extensive literature search, there could be more studies in the grey literature, such as working papers or internal government reports that we have not identified. Updates of this review will include further efforts to identify studies in the grey literature. Compared to pricing polices elsewhere, reference drug pricing in British Columbia, Canada has been relatively well evaluated. The study designs in our included studies were mostly interrupted time series design for drug use and drug costs and controlled before and after studies for health and health care utilisation outcomes. Such observational designs have limitations. We found no randomised trials. Well done trials could reduce the risk of bias, might be done more quickly and efficiently than observational studies, and could be used to evaluate drug policy interventions (Schneeweiss 2004a), especially for health and health care utilisation outcomes, where the evidence we found had a high risk of bias (e.g. controlled before and after studies with limitations. Evaluations in the majority of included studies focus on relatively short term outcomes. Longer-term analyses would provide important supplementary evidence, but the risk for bias related to other confounding interventions would increase with the length of the observation period. Because pharmaceutical policies have uncertain effects and they might cause harm as well as benefits, it is important that they are properly evaluated. Evaluations should be planned ahead of introducing the policies and should be a routine part of the policy process. P O T E N T I A L I N T E R E S T C O N F L I C T O F MA has previously carried out short-term pharmacoeconomic projects for the National Insurance Service and the Norwegian Medicines Agency. From he worked for a private company, Brevreklame, doing market research for pharmaceutical firms in Norway. HS is supported by the Dutch Health Care Insurance Board (CVZ). JPK has previously worked one year each for the Danish Medicines Agency and Lundbeck A/S as part of a residency in clinical phar- 13

17 macology and is currently employed five hours a week at the Danish Medicines Agency (Licensing Division). A C K N O W L E D G E M E N T S We gratefully acknowledge: - Marit Johansen conducted the literature searches. - Sue Hill, Malcolm Maclure, Carolyn J. Green and Kristin Kamilla Linnestad helped sift references and abstracts from the broad literature search for pharmaceutical policies and commented on drafts of the data collection form. Kristin Kamilla Linnestad also assessed one study (Brekke 2003) together with MOA. - Doris Tove Kristoffersen and Torbjørn Wisløff provided statistical advice. - Curt D. Furberg, Mark Gibson, Roberto Grilli, David A. Henry, Bob Nakagawa, Dennis Ross-Degnan, Gail Shearer, Stephen B. Soumerai, Luke Vale, Lisa Bero, Kirby Lee, Merrick Zwarenstein and Alain Mayhew provided helpful comments on drafts of the protocol or the review, or both. - Morten Bjørklund, Matthew Oxman, Kjetil Olsen and the Library of the Norwegian Directorate for Health and Social Affairs helped retrieve, copy and register papers. S O U R C E S O F S U P P O R T External sources of support No sources of support supplied Internal sources of support Norwegian Knowledge Centre for the Health Services NOR- WAY R E F E R E N C E S References to studies included in this review Aronsson 2001 {published data only} Aronsson T, Bergman MA, Rudholm N. The impact of generic drug competition on brand name market shares - evidence from micro data. Review of Industrial Organization 2001;19(4): [Med- Line: 11002]. Brekke 2003 {published data only} Brekke K, Grasdal A, Holmås TH, Steen F, Sunnevåg K. [Evaluering av ny apoteklov og indeksprissystemet]. Bergen (Norway): Rokkansenteret; 2003 Vol. Rapport 17. [MedLine: 17406]. Grootendorst 2002 {published data only} Grootendorst P, Dolovich L, Holbrook A, Levy A, O Brien B. The impact of reference pricing of cardiovascular drugs on health care costs and health outcomes: evidence from British Columbia. Volume 2: Technical Report. SEDAP research paper no. 71. Hamilton (ON): McMaster University QSEP Report Series No. 370; Grootendorst PV, Dolovich LR, O Brien BJ, Holbrook AM, Levy AR. Impact of reference-based pricing of nitrates on the use and costs of anti-anginal drugs. Canadian Medical Association Journal 2001; 165(8): Hazlet 2002 {published data only} Hazlet TK, Blough DK. Health services utilization with reference drug pricing of histamine(2) receptor antagonists in British Columbia elderly. Medical Care 2002;40(8): Marshall 2002 {published data only} Marshall JK, Grootendorst PV, O Brien BJ, Dolovich LR, Holbrook AM, Levy AR. Impact of reference-based pricing for histamine-2 receptor antagonists and restricted access for proton pump inhibitors in British Columbia. Canadian Medical Association Journal 2002;166 (13): McManus 2001 {published data only} McManus P, Birkett DJ, Dudley J, Stevens A. Impact of the Mini- 14

18 mum Pricing Policy and introduction of brand (generic) substitution into the Pharmaceutical Benefits Scheme in Australia. Pharmacoepidemiology & Drug Safety 2001;10(4): Narine 2001 {published data only} Narine L, Senathirajah M, Smith T. An assessment of the impact of reference-based pricing policies on the H2 antagonist market in British Columbia, Canada. Journal of Research in PharmaceuticalEconomics 2001;11(1): Pavcnik 2002 {published data only} Pavcnik N. Do pharmaceutical prices respond to insurance?. Cambridge (MA): National Bureau of Economic Research; Working Paper 7865; Pavcnik N. Do pharmaceutical prices respond to potential patient out-of-pocket expenses?. Rand Journal of Economics 2002;33(3): [MedLine: 3797]. Sawyer 1983 {published data only} Sawyer DO. Pharmaceutical reimbursement and drug cost control: the MAC experience in Maryland. Inquiry 1983;20(1): Schneeweiss 2002 {published data only} Schneeweiss S, Maclure M, Soumerai SB. Prescription duration after drug copay changes in older people: methodological aspects. Journal of the American Geriatrics Society 2002;50(3): Schneeweiss S, Soumerai SB, Glynn RJ, Maclure M, Dormuth C, Walker AM. Impact of reference-based pricing for angiotensinconverting enzyme inhibitors on drug utilization. Canadian Medical Association Journal 2002;166(6): Schneeweiss S, Walker AM, Glynn RJ, Maclure M, Dormuth C, Soumerai SB. Outcomes of reference pricing for angiotensin-converting-enzyme inhibitors. New England Journal of Medicine 2002; 346(11): Schneeweiss 2003 {published data only} Schneeweiss S, Soumerai SB, Maclure M, Dormuth C, Walker AM, Glynn RJ. Clinical and economic consequences of reference pricing for dihydropyridine calcium channel blockers. Clinical Pharmacology & Therapeutics 2003;74(4): References to studies excluded from this review Anis 1994 Anis AH. Substitution laws, insurance coverage, and generic drug use. Medical Care 1994;32(3): Anis 2003 Anis AH, Guh DP, Woolcott J. Lowering generic drug prices: less regulation equals more competition. Medical Care 2003;41(1): [MedLine: 3825]. Atella 2000 Atella V. Drug cost containment policies in Italy: are they really effective in the long-run? The case of minimum reference price. Health Policy 2000;50(3): [MedLine: 5123]. Bergman 1998 Bergman M, Aronsson T, Rudholm N. [Sankta lakemedelspriser med referensprissystemet]. Lakartidningen 1998;95(23): [MedLine: 17013]. Borrell 1999 Borrell JR. Pharmaceutical price regulation. A study on the impact of the rate-of-return regulation in the UK. Pharmacoeconomics 1999; 15(3): [MedLine: 5400]. Boyce 1990 Boyce D, Bartlett G. The maximum medical aid price programme. A review of the concept and of its ability to reduce expenditure on medicines. South African Medical Journal 1990;78: [Med- Line: 13952]. Duetz 2003 Duetz MS, Schneeweiss S, Maclure M, Abel T, Glynn RJ, Soumerai SB. Physician gender and changes in drug prescribing after the implementation of reference pricing in British Columbia. Clinical Therapeutics 2003;25(1): ECON 2000 ECON. [Evaluering av referanseprissystemet for legemidler]. Oslo (Norway): ECON; 2000 Vol. ECON-rapport 44/2000. Ekelund 2001 Ekelund M. Generic entry before and after the introduction of reference prices. In: EkelundM editor(s). Competition and innovation in the Swedish pharmaceutical market. Stockholm: Stockholm School of Economics, 2001:Chapter 4. Giuliani 1998 Giuliani G, Selke G, Garattini L. The German experience in reference pricing. Health Policy 1998;44: Lee 1983 Lee AJ, Hefner D, Dobson A, Hardy RJ. Evaluation of the maximum allowable cost program. Health Care Financing Review 1983;4(3): Morton 1997 Morton FMS. The interaction between a most-favored-customer clause and price dispersion: an empirical examination of the Medicaid rebate rules of Journal of Economics and Management Strategy 1997;6(1): Narine 1999 Narine L, Senathirajah M, Smith T. Evaluating reference-based pricing: initial findings and prospects. Canadian Medical Association Journal 1999;161(3): Rikstrygdeverket Rikstrygdeverket. [Økonomiske konsekvenser av referanseprisordningen]. Oslo (Norway): Rikstrygdeverket; 1999; Rapport 4/99. Rothberg 2004 Rothberg AD, Blignault J, Serfontein CB, Valodia B, Eekhout S, Pels LM. Experience of a medicines reference-pricing model. South African Medical Journal 2004;94: Schneeweiss 2004b Schneeweiss S, Dormuth C, Grootendorst P, Soumerai S, Maclure M. Net health plan savings from reference pricing for angiotensinconverting enzyme inhibitors in elderly British Columbia residents. Medical Care 2004;42(7): Thomas 1998 Thomas M, Mann J, Williams S. The impact of reference pricing on clinical lipid control. New Zealand Medical Journal 1998;August:

19 References to studies awaiting assessment Bergman 2003 Bergman MA, Rudholm N. The relative importance of actual and potential competition: empirical evidence from the pharmaceuticals market. Journal of Industrial Economics 2003;51: Danzon 1997 Danzon PM, Liu H. Reference pricing and physician drug budgets: The German experience in controlling pharmaceutical expenditures. Philadelphia (USA): Wharton School Working Paper; University of Philadelpha; 1997 [MedLine: 16349]. Grootendorst 2005a Grootendorst PV, Marshall JK, Holbrook AM, Dolovich LR, O Brien BJ, Levy AR. The impact of reference pricing of nonsteroidal anti-inflammatory agents on the use and costs of analgesic drugs. Health Services Research 2005; Vol. 40: [Med- Line: 17448]. Grootendorst 2005b Grootendorst P, Stewart D. A re-examination of the impact of reference pricing on anti-hypertensive drug plan expenditures in British Columbia. Toronto (ON): University of Toronto; Working Paper; Narine 1997 Narine L, Senathirajah M. Pharmaceutical cost containment policies: intended and unintended impacts. Toronto (ON): University of Toronto; 1997; Report prepared for the Pharmaceutical Manufacturers Association of Canada. Additional references Aaserud 2006 Aaserud M, Dahlgren AT, Sturm H, Kösters JP, Hill S, Furberg CD, Grilli R, Henry DA, Oxman AD, Ramsay C, Ross-Degnan D, Soumerai SB. Pharmaceutical policies: effects on rational drug use, an overview of 13 reviews. Cochrane Database of Systematic Reviews 2006, Issue 2. Art. No.: CD DOI: / CD pub2. Bloor 1996 Bloor K, Maynard A, Freemantle N. Lessons from international experience in controlling pharmaceutical expenditure. III: Regulating industry. BMJ 1996;313(7048): [MedLine: 1343]. Danzon 2001 Danzon PM. Reference Pricing: Theory and Evidence. In: Lopez- CasasnovasG, JönssonB editor(s). Reference pricing and pharmaceutical policy. Barcelona: Springer Verlag Ibéria, 2001: Danzon 2003 Danzon PM, Ketcham JD. Reference pricing of pharmaceuticals for Medicare: Evidence from Germany, the Netherlands, and New Zealand. Cambridge (MA): National Bureau of Economic Research 2003; Vol. Working Paper [MedLine: 17079]. Davey 2005 Davey P, Brown E, Fenelon L, Finch R, Gould I, Holmes A, et al. Interventions to improve antibiotic prescribing practices for hospital inpatients. The Cochrane Database of Systematic Reviews 2005, Issue 4. Art. No.: CD DOI: / CD pub2. Dickson 1998 Dickson M, Redwood H. Pharmaceutical reference prices. How do they work in practice?. Pharmacoeconomics 1998;14(5): EPOC 2002 Cochrane Effective Practice and Organisation of Care Review Group. THE DATA COLLECTION CHECKLIST. epoc.uottawa.ca/checklist2002.doc Accessed Feb 22, GRADE 2004 The GRADE working group. Grading quality of evidence and strength of recommendations. BMJ 2004;328(7454): [MedLine: 17500]. Grilli 2002 Grilli R, Ramsay CR, Minozzi S. Mass media interventions: effects on health services utilisation. The Cochrane Database of Systematic Reviews 2002, Issue 1. Art. No.: CD DOI: / CD Hollis 2004 Hollis A, Law S. A National Formulary for Canada. Canadian Public Policy 2004;30(4): Huttin 2002 Huttin C. Experiences with reference pricing. International Journal of Risk & Safety in Medicine 2002;15: Ioannides-Demos 2002 Ioannides-Demos LL, Ibrahim JE, McNeil JJ. Reference-based pricing schemes: effect on pharmaceutical expenditure, resource utilisation and health outcomes. Pharmacoeconomics 2002;20(9): LeGrand 1999 LeGrand, Hogerzeil HV, Haaijer-Ruskamp FM. Intervention research in rational use of drugs: a review. Health Policy & Planning 1999;14(2): Lopez-Casasnovas2001 Lopez-Casasnovas G, Puig-Junoy J. Review of the literature on reference pricing. In: Lopez-CasasnovasG, JönssonB editor(s). Reference Pricing and Pharmateutical Policy. Barcelona: Springer Verlag Ibéria, 2001:1 41. McLaughin 1997 McLaughin P. Reference-based pricing of prescription drugs. Canadian Journal of Cardiology 1997;13(1): Mrazek 2004 Mrazek M, Mossialos E. Regulating pharmaceutical prices in the European Union. In: MossialosE, MrazekM, WalleyT editor(s). Regulating pharmaceuticals in Europe: striving for efficiency, equity and quality. Maidenhead, England: Open University Press, 2004: OECD 2003 Organisation for Economic Co-operation and Development. OECD Health Data Pharmanet 2003 British Columbia Medical Association. Physician access to Pharmanet. publications/policy_backgrounders/physicianaccesspharmanet.asp (accessed 18 January 2006). Pharmanet 2005 Ministry of Health in British Columbia. Pharmanet. http: // (accessed 18 January 2006). Productivity 2001 Productivity Commission International pharmaceutical price differences. Canberra (AU): Research report, Ausinfo. 16

20 Puig-Junoy 2005 Puig-Junoy J. What is required to evaluate the impact of pharmaceutical reference pricing?. Applied Health Economics and Health Policy 2005;4(2): Ramsay 2003 Ramsay CR, Matowe L, Grilli R, Grimshaw JM, Thomas RE. Interrupted time series design in health technology assessment: Lessons from two systematic reviews of behavior change strategies. International Journal of Technology Assessment in Health Care 2003;19(4): Ratanawijitrasin2001 Ratanawijitrasin S, Soumerai SB, Weerasuriya K. Do national medicinal drug policies and essential drug programs improve drug use?: A review of experiences in developing countries. Social Science & Medicine Vol 2001;53(7): Schneeweiss 2004a Schneeweiss S, Maclure M, Carleton B, Glynn RJ, Avorn J. Clinical and economic consequences of a reimbursement restriction of nebulised respiratory therapy in adults: direct comparison of randomised and observational evaluations. BMJ 2004;328:560. [Med- Line: 17567]. Schneeweiss 2006 Schneeweiss S. Personal communication January Selke 1993 Selke G. Reference price systems in the European Community. In: MossialosE, RanosC, Abel-SmithB editor(s). Cost containment, pricing and financing of pharmaceuticals in the European Community: the policy makers view. Athens: LSE Health and Pharmetrica SA, 1994: Soumerai 1993 Soumerai SB, Ross-Degnan D, Fortess EE, Abelson J. A critical analysis of studies of state drug reimbursement policies: research in need of discipline. Milbank Quarterly 1993;71(2): WHO 2004 WHO. The World Medicines Situation Zammit-Lucia 1995 Zammit-Lucia J, Dasgupta R. Reference pricing: the European experience. Health Policy Review 1995; Vol. 10:1 31. Indicates the major publication for the study T A B L E S Characteristics of included studies Study Aronsson 2001 Methods Participants ITS Some limitations Setting: Sweden, national, public insurance Physicians: No information provided Patients: No information provided Prescriptions: No information provided Interventions Outcomes Notes Allocation concealment Reference pricing on 12 brand drugs Drug prices Research grant from Swedish Competition Agency D Not used Study Brekke 2003 Methods Participants ITS Some limitations Setting: Norway, national public drug insurance Physicians: No information provided Patients: No information provided Prescriptions: No information provided 17