TERM PAPER EduardoTavares

INTERNATIONAL MASTERS IN HEALTH ECONOMICS AND PHARMACOECONOMICS
2011
TERM PAPER
Evaluation of the impact of the Implementation of a Reference Pricing System in the Total Expenditure with Drugs by the National Public Health Insurer (INPS) in Cape Verde.
Continuing Education Institute (IDEC) of Pompeu Fabra Univertity (UPF) Research Centre for Economics and Health (CRES-UPF)
Eduardo Jorge Monteiro Tavares
EDUARDO TAVARES 20111
Evaluation
of
the
impact
of
the
implementation
of
Reference Pricing System in the total expenditure with drugs by the National Public Health Insurer (INPS) in Cape Verde.
Index
Index.........................................................................................................03 Abbreviations Index.....................................................................................04 Tables Index...............................................................................................04 Figures Index..............................................................................................05 Abstracts....................................................................................................06 Objectives..................................................................................................07 Background and Bibliographical Review...........................................................08 The Pharmaceutical Market in Cape Verde.......................................................11 The Reimbursement System in Force in Cape Verde.........................................15 The Price Definition Criteria...........................................................................19 The Proposition of a New Reimbursement System Based on Reference Prices.......20 Comparison of the Portuguese RPS with the Proposed RPS for Cape Verde..20 Data..........................................................................................................22 Methods and Analysis...................................................................................22 Examples of Calculations to Estimate Insurer Savings with the New RPS..24 Results.......................................................................................................26 Discussion of the Results..............................................................................30 Futures perspectives of improvement of the study............................................32 Bibliographical References.............................................................................33
Abbreviations Index
API ARFA DGF EMPROFAC Active Pharmaceutical Ingredient Drugs Regulatory Agency General Directorate of Pharmacy National Public Enterprise for Importation and Distribution of Pharmaceutical Products FOB INPHARMA INN INPS RPS WHO Free On Board National Pharmaceutical Industry International Non-proprietary Name National Public Health Insurer Reference Pricing System World Health Organization
Tables Index
Table 1: Principles of drug reimbursement systems. Table 2: Examples of the calculations to estimate the insurer savings for each regimen and grade of the copayment system. Table 3: Impact on the INPS. Means, Standard Deviation and Sampling Error Estimations for Insured People. Table 4: Impact on the INPS. Correlation between the methods before and after the application of the new RP System for Insured People. Table 5: Impact on the INPS. t-test obtained in the SPSS for Insured People. Table 6: Impact on the INPS. Means, Standard Deviation and Sampling Error Estimations for Pensioners. Table 7: Impact on the INPS. Correlation between the methods before and after the application of the new RP System for Pensioners. Table 8: Impact on the INPS. t-test obtained in the SPSS for Pensioners.
Figures Index
Figure 1: The flowchart of the pharmaceutical market in Cape Verde.
Abstracts This paper focuses primarily on the definition of a drug reimbursement system for Cape Verde and to measure the impact of its implementation in the National Public Health Insurance Institution (INPS). For that were used an ex-ante descriptive analysis, which focused on a sample of all pharmacotherapeutic groups drugs covered by the public national insurance system in the year of 2007. The ex-ante examination studies of effectiveness, efficiency, impact and sustainability are both based on forecasts and prospects. Its aims are to conduct a baseline study or to establish indicators. It were simulated the impact on drug prices of the new methodology of prices definition, which is still in its implementation. Finally, were simulated the impact of drug copayment system proposed in spending on medicines by INPS. The study concluded that the implementation of a copayment system based on drug reference pricing seems to bring significant savings on drugs copayment to the managing body of the INPS due to a lower baseline for drugs copayment. Although, there is no sufficient evidence that the proposed system will bring an additional global saving to the drugs copayment system, taking into account that the parameters surrounding the implementation of the new reimbursement system were not measured in this study. Key words: reference pricing system, reimbursement system, generic drugs, copayment.
Objectives General Objectives: To design, analyse and interpret, from a critical point of view, a reasonable system for drugs reimbursement in Cape Verde.
Specific Objectives: a) Evaluate the impact of the implementation of this system in the expenditure with drugs by the INPS; b) Get the monetary value of the difference between the systems.
Background and Bibliographical Review There are five preferred vectors of intervention to ensure the sustainability of the expenditure on drugs: the pharmaceutical industry, the wholesalers, the
pharmacies, the prescribers and the consumers. The operation of the pharmaceutical industry, wholesalers and pharmacies tend to be imposed through administrative measures which directly affect the price and the marketing margins of drugs. The intervention on prescribers can take the form of mandatory prescription by INN, which favours the penetration of generics on consumption, since the intervention on consumers can take place through mechanisms to make them sensitive to drug prices, leading to rational decision making at the time that medicines are purchased. The main objective of the reference pricing system used, over the years, in several countries is to ensure the control on public spending on medicines, the rational use of drugs and to increase the medicines access. The reference pricing systems have in common that they are based on technical criteria defined on the retail prices of certain classes or groups of drugs. With the introduction of this system it is intended to contribute to the promotion of rational restraint on pharmaceutical spending, either by encouraging the decrease in the prices of branded drugs or by encouraging the increase in the use of generics. However, the prevailing notion is that the expenditure control is limited and occurs in the short deadline, giving rise to a situation of increase in pharmaceutical expense that tend to perpetuate the long term.1 This objective can be achieved by setting a ceiling for the price of one of the same drugs. As quoted by Schneeweiss2, there is no evidence that a drug has greater
Ioannides-Demos LL, Ibrahim JE, McNeil JJ. Reference - Based Pricing Schemes Effect on Pharmaceutical Expenditure, Resource Utilization and Health Outcomes. Pharmacoeconomics 2002; 20(9): 577-91. 2 Schneeweiss S, Maclure M, Dormuth C, Avorn J.Pharmaceutical cost containment with reference based pricing: time for refinements. Journal of Canadian Medical Association 2002; 167(11): 1250-1.
effectiveness or is associated with a more limited profile of toxic effects, for other drugs with lower prices, and therefore the difference in prices should not be subject of public funding. The same author supports this line when he states in another article3 that adoption of the RPS in British Columbia, Canada for inhibitors of conversion of angiotensin did not provide substantial evidence regarding
discontinuation of treatment, nor as negative repercussions on the use of services or on health spending. Kanavos and Reinhardt4 further develop this view of thinking, adding that the design of a centralized RPS should consider other policies measures of the drug, exacerbating the innovation in drug therapy, with the exclusion of these drugs under patent from the RPS. Danzon5 also mentioned that the equity and efficiency associated with public funding, are guaranteed when the drugs covered by RPS are perfect substitutes of each other, i.e., when the chemicals are similar. The reimbursement by RPS is, in fact, the example of a process of public funding that has shown results in curbing pharmaceutical expenditure growth6, without jeopardizing the quality of the care, when measured through the adverse effects related to the health of patients or for the use of more expensive health care.7 However, this cannot be accepted unanimously among the researchers, since it was observed different results on the effect of RPS over pharmaceutical spending.8
Schneeweiss S, Walker AM, Glynn RJ, Maclure M, Dormuth C, Soumerai SB. Outcomes of Reference Pricing for Angiotensin Converting Enzyme Inhibitors. The New England Journal of Medicine 2002; 346(11): 822-9.
4
Kanavos P, Reinhardt U. Reference Pricing for Drugs: is it compatible with US Health Care? Health Affairs 2003; 22(3):16-30.
5
Danzon P. Reference Pricing: Theory and Evidence. In: Lpez-Casasnovas G, Jonsson B. Reference Pricing and Pharmaceutical Policy Perspectives on Economics and Innovation. Springer Verlag Ibrica, Barcelona. 2001.
6
Schneeweiss S, Maclure M, Soumerai SB. Prescription duration after drug copay changes in older people: methodological aspects. Journal of American Geriartrics Society 2002; 50: 521-525. 7 Schneeweiss S, Soumerai SB, Maclure M. Reference Drug Pricing. Canadian Medical Association Journal; 167(2): 126-127.
8
Kalo Z, Muszbek N, Bodrogi J, Bidl J. Does therapeutic reference pricing always result in cost containment? The Hungarian evidence. Health Policy 2007; 80: 402-412.
Indeed, the RPS have shown a high potential for cut in prices but, as noted by Master Ferrandiz, the RPS has not revealed the same impact on the control of pharmaceutical spending.9 There is documented evidence which reflects that the implementation of the same system in different countries does not guarantee obtaining similar results.10 So the question remains... Does that reimbursement system (which will be proposed forward), just as the international evidence, allow the reduction of drugs expenditure by the public insurer in Cape Verde?
Mestre Ferrandiz J. Reference prices and generic medicines: what can we expect? Journal of Generic Medicines 2003; 1(1):31-38.
10
Mrazek M. Comparative approaches to pharmaceutical price regulation in the European Union. Croatian Medical Journal 2002; 43(4):453-461.
The Pharmaceutical Market in Cape Verde Since 1976 the Cape Verdean pharmaceutical sector, meets a new phase, according to the pharmaceutical policy defined on the basis of the WHO recommendations, developed in the same year and whose objectives were: 1. To ensure a sufficient supply of affordable medicines and improve the methods of buying and storage; 2. To promote an efficient and regular distribution; 3. To ensure the effectiveness, safety, acceptance and rational use of drugs; 4. To develop a national technological capacity; 5. To create and develop a dynamic local production.
THE DRUGS CIRCUIT PRODUCTION This sector experienced a development in 1991, date of the creation of INPHARMA Laboratories a Luso-Cape Verdean Company composed by public and private capital. The locally manufactured drugs, by agreement with the National Public Enterprise for Importation and Distribution of Pharmaceutical Products (EMPROFAC), are not imported. Despite the monopoly, INPHARMA did not neglect its responsibility to produce products with quality at affordable prices. To encourage the acceptance of INPHARMA products, EMPROFAC set a retail margin of 35% versus 30% over imported products. INPHARMA products are distributed by EMPROFAC to the private sector and directly to health facilities, since 1999, by conjoint decision between the Ministries of Health and Industry. INPHARMA's sales are primarily intended for the private market which accounted for 87% of total sales in 2000. Regarding the fact that the public sector has a very
10
limited budget and the consumption of, in particular, injectable products and others not locally manufactured are certainly the explanation for this orientation towards the private market. For products in hospital packs for the public sector, INPHARMA products are not always competitive.
IMPORTATION The importation segment is a State monopoly played by EMPROFAC, whose activities extend to public and private sectors. Characterization of the system of importation: - Importation of only drugs listed on the National List of Drugs, unless authorized by the General Directorate of Pharmacy for medical reasons or research. - Importation of a maximum of three products by reference (a molecule or combination of molecules) for a dosage form and strength, except those imported for health facilities in hospital packs. - Acquisition through an annual international concourse for the products to hospital facilities. - Transportation provided by sea, except in cases of urgency and products that require refrigeration (vaccines and reagents). - Direct purchase from qualified suppliers for the private sector must have a package labeling and patient information leaflet in Portuguese, which limits the acquisition to Portuguese suppliers only. This limitation leads to some situation that the importer has to acquire drugs at higher prices. - Requests are annual for indicative quantities. Orders and deliveries are made four times per year which allows adjusting the quantities to actual consumption. - Selection based on confidence in partners.
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DISTRIBUTION EMPROFAC is the only wholesale distributor who owns two stores: Praia and Mindelo which supply respectively the Leeward and Windward Islands. Aside from drugs representing 83% of sales, EMPROFAC distributes other health products as well. FINANCING The State, as in the whole world, is involved in financing of health services and medicines. This role, reserved to the State, is a result of, in one hand, the society reorganization of Health as a fundamental right of the population and, on the other hand, because the private market may not be able to guarantee quality or solidarity. In addition to State, the funding of medicines is done by the INPS and the users. Since 1996, the INPS become the first source of drugs funding. Created in 1983, it had a major impact in the pharmaceutical sector to the extent that the INPS insured population to have copayment of drugs not only on the National List of Drugs, as well as those imported in exceptional cases by permission of the General Directorate of Pharmacy. PRICES The System of Medicine Prices, in accordance with article 20 of Decree Law n. 3/93 of 15/2/93, is fixed by a joint decree of the Government Cabinet members responsible for the Health Sector and Industry and Trade. Without a price regulation system, the imported drug prices were set by EMPROFAC, in accordance with the rates approved by the supervising Ministry (Ministry of Trade and Industry), which are as follows: Margins of pharmacies and retail sales:
12
- Imported Drugs - 30% of the purchase price - National Drugs - 35% of the purchase price These margins are respected to the extent that the price is written on a sticker affixed to the boxes by EMPROFAC. For products sold per unit (case of hospital packs) the margin should be decreased by 10% but usually this rule is not met and the percentage applied is higher. EMPROFAC Margins: - Sales to the Public Sector - 15% of the cost price - Sales to Private Sector - 20% of the cost price (imported products) - 15% of the cost price (domestic products) The margins are applied on the Free On Board (FOB) price plus 22,5% for expenses. The drugs are free of customs duties. The Drugs Regulatory Agency (ARFA) The current market situation and prospects of its development in the wake of the measures provided for in the liberalization of the economy, determined the need for the creation of a regulator in order to implement a transparent and effective regulatory framework that safeguards the interest of operators and consumers. Since the market can not exercise its regulatory role and considering the pharmaceutical market characteristics, where key-players of the system create a structural imperfection in the market, ARFA comes to replace its regulatory action. As regulator, exercising technical and economic regulation - test efficiently and effectively that operators (producers, importers and distributors) complies with technical standards established by the State, that prices are adequate for the producer/distributor and consumer and there is a good price/quality balance.
13
The flowchart below describes the pharmaceutical market circuit in Cape Verde:
Production (INPHARMA)
Importation (EMPROFAC)
Distribution (EMPROFAC)
Central Hospitals
Pharmacies
Statal Drug Depositories
Health Care Facilities
Population
Figure 1: The flowchart of the pharmaceutical market in Cape Verde.
The Reimbursement System in Cape Verde The reimbursement system plays a crucial role in shaping the consumption of drugs and consequently the costs of financing them. There are several types of systems of drug reimbursement around the world. Demonstrations are shown in the following table:
14
Country
Proportion drug
of
Basis reimbursement calculation
of
Reimbursement affected by severity of illness effectiveness medical product or of
Reimbursement to different children from
Patients wealth the reimbursement affects
System recognizes other groups special
Ceiling
set
to
RP System
payable
patients payments
by patient
reimbursement to adults Yes Yes
Belgium Denmark
Percentage Percentage
Prescription Drug costs months purchase over 12
Yes Yes
No No
No Yes
yes yes
yes yes
Germany Iceland
Fixed Fixed percentage +
Package size Prescription
No Yes
Yes No
yes No
Yes Yes
yes yes
yes yes
Portugal Spain Sweden
Percentage Percentage Percentage
Prescription Prescription Drug costs months purchase over 12
Yes Yes No
No No Yes
yes No No
Yes Yes No
No yes yes
yes yes yes
Cape Verde
Percentage
Prescription
Yes
No
No
Yes
No
No
Table 1: Principles of drug reimbursement systems.
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In Cape Verde the structure of the pharmaceutical market is potentially adverse to the implementation of some of the reimbursement systems listed in table 1. The smallness of the market is such that at the national level there is only one producer and one importer who is also in charge of the wholesaling and distribution. The national drug reimbursement system is totally based in the drug prices that are defined by the exclusive importer. The composition of those prices is made by a set of factors like the price of acquisition in the international markets, the shipment cost, the insurance fees and custom expenses. On top of all those values, an additional commercialization margin of 22.5% for the importer and, subsequently, 30% for the pharmacies is incorporated. It is on that final value that the National Insurer has to pay the fixed percentage in each case: 1. General Regimen ensured people and family: In the procurement of medicines for insured assets and family members, the National Public Insurer participate with a percentage of their selling price to the public, according to the supports and conditions as stated below: a) Grade A - 90% b) Grade B - 75% c) Grade C - 50% d) Grade D - 25%
2. Special Regimen - pensioners and family: The reimbursement of the drug cost by the National Public Insurer for pensioners receiving a pension value equal to or greater than two and a half times the minimum remuneration stipulated by the Government, applicable to officers of the Public Administration, rounded to the thousands of shells immediately bottom, is as follows:
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a) Grade A - 95% b) Grade B - 85% c) Grade C - 60% d) Grade D - 35% It is the user responsibility, in both General and Special Regimens, the payment of the remaining amount of the purchase price of the drug. The drug reimbursement value currently in use in Cape Verde is based on copayment by the consumer that focuses on the price fixed by the importer (EMPROFAC), without observing if the medicines are generic or not. The main problem of this system is, undoubtedly, in one hand, the aversion that is created in relation of generic drugs acquisition, since the consumer is almost indifferent in terms of the amount reimbursed to acquire a brand name or a generic drug. On the other hand, along the time, the drugs importer have imported almost exclusively branded drugs creating on the consumers loyalty to these brands, which further hinders the penetration of generic drugs in the market. The main problem to implement a reimbursement system, in this scenario, is also the fact that the importer hardly ever imports the same brand and generic drugs concomitantly. For example, it is very unusual to see in the market both the brand and generic paracetamol at the same time. This issue excludes the possibility of free choice of drugs by the consumers. The pharmacies usually do the drugs substitution in accordance with which one that is present at that moment in the country, without taking in consideration whether drug name presented in the doctors prescription is branded or generic.
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The Price Definition Criteria Historically, the importer and producer of drugs in Cape Verde are those responsible for the pricing of their drugs, according to the importation costs and logistics, which were incorporated in the cost of transportation and insurance as well as the companies own inefficiency. In 2009, through a Decree-Law of the Government, it was established the criteria for the pricing of medicinal products through an independent system, where the base price is calculated based on prices in international markets, to which are added marketing margins and rates in force in Cape Verde. A novelty of this system is that now there is a clear differentiation in the calculus of the prices of generic drugs compared to brand name drugs. Prices of generic drugs must be at least 35% lower compared to the reference brand name drug to the same API, strength and dosage form. The price definition criteria are not completely implemented at the present moment.
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The New Reimbursement System (proposal) The best option to implement a reimbursement system for drugs would be the use a reimbursement system based on the pricing criteria (Decree-Law n 22/2009, from July 6). The terms of this piece of legislation establish that the price of generic drugs should be, at least, 35% lower, compared to the price of the reference drug (a brand name drug). If we establish that the percentage that should be reimbursed by INPS has to take into account the price of the generic medicine approved by the regulatory entity, for the same API, strength and dosage form, it is possible to correct two main situations in the pharmaceutical system: the capture and imprisonment of national public insurance provider by the economic operator that imports and distributes the medicines in the market (the insurance entity funds fixed percentages on variables values established by the economic operator) and the establishment of a fair copayment mechanism that arouses in consumer the consciousness (moral hazard) when acquiring drugs. My proposition is to maintain the classification of the copayment system like it is defined above, including the percentages for each grade. The only change will be the base on that the copayment is made: from thats established by the importer (EMPROFAC) to thats defined to generic drugs by the regulatory entity (ARFA).
Comparison between the Reference Pricing Systems of Portugal with the Proposed for Cape Verde The RPS applied to Portugal has sets of drugs known as a Homogeneous Groups. Each Homogeneous Group is a set of drugs with the same qualitative and quantitative composition in active pharmaceutical ingredients, dosage form, strength and route of administration, which includes at least one generic drug on the market.11
11
Decree-Law, n 270/2002, from 2/12/2002.
19
For each Homogeneous Group, the reference price corresponds to the higher retail price of the generic drugs on the market which integrates the group. The States reimbursement in drug prices covered by the Homogeneous Groups takes place according to their regimen or grade in the reimbursement system. General Regimen: Grade A - 95% Grade B - 69% Grade C - 37% Grade D - 15% Special Regimen. For pensioners whose total annual income does not exceed 14 times the minimum wage in Portugal: Grade A - 100% Grade B - 84% Grade C - 52% Grade D - 30% Despite some similarities (establishing regimens and levels of reimbursement), it may already be listed some RPS differences between Portugal and that one proposed for Cape Verde, including the reimbursed percentage by the national copayment systems. In addition, the proposed RPS does not have the figure of Homogeneous Groups, since the prices of generic drugs with the same qualitative and quantitative composition of API, dosage form, strength and route of administration are calculated in the same way by the regulatory agency, which means that all of these generics have the same price.
20
Data In this paper it was used information of the total national consumption of medicines in terms of quantities and prices. It was also used information on the total amount of reimbursement of drugs by the INPS, on general and special schemes. Given that the pricing system is still being implemented, the prices used to assess the impact of the definition price system in 2007 drug prices are those already calculated by the regulator12, although not in force. The interval time under study began in January 2007 and ended in December 2007. The sample consisted on drugs of all the pharmacotherapeutic classes covered by the social security system in Cape Verde in the study period. Exclusion criteria included drugs without the minimum information required and those not covered by the copayment system. The sample size is 444 drug presentations. The selection of 2007 for the study was due to the accessibility of data necessary for this purpose. For the purposes of simulation, the data were disaggregated according to the schemes (general and special) and grades of reimbursement (A, B, C and D) for each of the schemes in force in 2007. Method of Analysis The analysis of trends in pharmaceutical spending has been conducted taking into account the segment corresponding to the total public spending. It was considered the segment at the national expenses of the breakdown in expenses associated with the pharmaceutical market covered by both general and special reimbursement regimens.
12
In accordance with the Decree-Law n 22/2009, from 06 July 2009.
21
Given that there was a lack of specific data in relation to the amount reimbursed in the various grades and regimens of the national system of reimbursement, weights were calculated for the simulation of the probabilities of acquiring drugs by INPS beneficiaries with active rights (active ensured, pensioners and families). These weights reflect, by a purely statistical view, the likelihood of a recipient of the reimbursement system (active or retired insured and their families) to purchase the drugs in the market, in relation to total population. It is important to state that it was not taken into account the reflection of socio-economic conditions on drug use resulting on whether or not the person is a beneficiary of the system. Statistical tests were performed with SPSS software support, version 19, as an instrument of calculation. The statistical t-test were conducted for paired samples, allowing inferences about the equality of the means of two paired samples, where each case was analyzed twice, before and after the intervention, to test the hypothesis that the difference is zero or not. The hypotheses to be examined are:
H0: 0 - a = d = 0 Ha: 0 - a = d 0
The Shapiro-Wilk test was not conducted due to the fact that the sample is much higher than 50. The confidence interval used was 95%.
22
Examples of the calculations to estimate insurer savings:
1. Calculation of weights used to determine the proportion of people who obtain medicines through the INPS copayment system: a) Insured People = number of insured people/ total population = 112,535 / 491,419 = 0.23 (23%); b) Pensioners = number of pensioners /total population = 0,025 (2.5%).
2. Determination of the amounts reimbursed by the INPS in the current system (year 2007): a) Insured People= estimated amount of drugs purchased by insured people X unit price of the drug (defined by EMPROFAC) X % reimbursement by the INPS in the copayment grade; b) Pensioners = estimated amount of drugs purchased by pensioners X unit price of the drug (defined by EMPROFAC) X % reimbursement by the INPS in the copayment grade.
3. Determination of the amounts reimbursed by INPS in the proposed system: a) Insured People = estimated amount of drugs purchased by insured people X unit price of generic drugs (defined by ARFA) X % reimbursement by the INPS in copayment grade; b) Pensioners = estimated amount of drugs purchased by pensioners X unit price of generic drugs (defined by ARFA) X % reimbursement by the INPS in the copayment grade.
23
The table below shows some examples of these calculations:

INN INPS Grades EMPROFAC Prices ARFA Prices for Generic N of sold packages N packages purchased by Insured of N packages purchased by Pensioners of Copayment by the INPS on Copayment by the INPS on Copayment by the INPS on by packages Copayment by the INPS on packages
packages purchased Insured People (EMPROFAC Prices) by
packages purchased Pensioners (EMPROFAC Prices)
purchased by Insured People (ARFA Prices)
purchased by Pensioners (ARFA Prices)
People
Acetazolamida A 6,91 0,54 137 31,51 3,43 195,98 Albendazol B 2,47 1,26 6288 1446,24 157,20 2675,67 Cloranfenicol C 1,05 0,71 7023 1615,29 175,58 849,65 Piracetam D 7,27 6,37 359 82,57 8,98 150,14 Table 2: Examples of the calculations to estimate the insurer savings for each regimen and grade of the copayment system.
22,49 329,61 110,82 22,85
15,28 1368,48 576,72 131,57
1,75 168,58 75,22 20,02
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Results Impact on the INPS:
The results seem to point, in the first instance, to a considerable decrease in the expense of the INPS in reimbursement of medicines. The range is from -30.12% in both the General and Special Regimens. General Regimen for Insured people and their families:
Paired Samples Statistics Mean Pair 1 INPS_EMPROFAC_Insu red INPS_ARFA_Insured

People.
N 444 444
Std. Deviation 5174,53 2842,51
Std. Error Mean 245,57 134,90
1987,07 1388,66
Table 3: Impact on the INPS. Means, Standard Deviation and Sampling Error Estimations for Insured
In the observed sample, the mean value obtained respectively before and after is equal to 1987.07 and 1388.66. The standard deviations and the stability measures of the mean values presented in two paired samples have very different distributions. In both cases the standard deviation and the standard error mean are lower before the intervention.
Paired Samples Correlations N Pair 1 INPS_EMPROFAC_Insured & INPS_ARFA_Insured

Table 4: Impact on the INPS. Correlation between the methods before and after application of the new RP System for Insured People.
Correlation 0,858
Sig. 0,000
444
The level of significance associated with this test on the correlation is 0.000, lower than the type I error of the analyst, 0.01, 0.05 or 0.10, showing that the correlation of 0.858 is significant and that there is a high positive linear association between scores on two occasions. This high correlation makes advantageous the use of the t- test for paired samples rather than the same test for independent samples, thus obtaining a smaller variance in the data.
25
Paired Samples Test Paired Differences Mean Std. Deviation Std. Error Mean 95% Confidence Interval of the Difference Lower Pair 1 INPS_EMPROFA C_Insured INPS_ARFA_Ins ured Table 5: Impact on the INPS. t-test obtained in the SPSS for Insured People. 598,41 3101,57 147,19 309,12 Upper 887,69 4,065 443 0,000 t df Sig. (2tailed )
The t-test has an associated level of significance equal to 0.000, which takes the p < 0.01, to the rejection of H0. In fact, the confidence interval ranges from 309.12 to 887.69, not including zero. SPSS calculated the t-test by entering the sample standard deviation equal to 3101.57, without the need to correct the value given the fact that the sample is large. It can be concluded as soon as the difference of 598.41 is significantly different from zero, indicating that the implementation of a new drug reimbursement system based on reference prices for generic drugs calculated by the regulatory agency (ARFA) may bring positive results in terms of savings on the part of national health insurance, because it leads to a drop in the reimbursement of 79, 7% of the drug sample.
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Special Regimen for Pensioners and their families:
Paired Samples Statistics Mean Pair 1 INPS_EMPROFAC_Pensio ner INPS_ARFA_Pensioner

Pensioners.
N 444 444
Std. Deviation 637,15 350,79
Std. Error Mean 30,24 16,65
247,66 173,75
Table 6: Impact on the INPS. Means, Standard Deviation and Sampling Error Estimations for
Paired Samples Correlations N Pair 1 INPS_EMPROFAC_Pensioner & INPS_ARFA_Pensioner

Table 7: Impact on the INPS. Correlation between the methods before and after application of the new RP System for Pensioners.
Correlation 0,856
Sig. 0,000
444
Paired Samples Test Paired Differences Mean Std. Deviati on Pair 1 INPS_EMPROFAC_ Pensioner INPS_ARFA_Pensi oner Table 8: Impact on the INPS. t-test obtained in the SPSS for Pensioners. 73,91 382,40 Std. Error Mean 18,15 95% Confidence Interval of the Difference Lower 38,25 Upper 109,58 4,073 443 0,000 t Df Sig. (2tailed)
In the case of Pensioners, the statistical results obtained are in all the cases very similar to those obtained for the Insured People. Thus, we can consider that the fact that there are different regimens and grades of reimbursement of drugs are maintained in the proposed system, little or nothing affects the partial results of the analysis.
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Impact on the cost transferred to the patient
With the available data it was not possible to calculate the impact on the cost transferred to the patient via higher values of effective copayment. To do that analysis, it would be necessary to obtain data with the binary classification of drugs in the sample, distinguishing them as generic or branded, once the prices of drugs, both generic and branded products, changes with the implementation of a new system of prices definition, which is not based on cost of acquisition, transport, insurance, marketing margins and other costs that make the price charged by the importer of drugs. Decree-Law No. 22/2009 uses two reference countries13 for setting prices for brand name drugs and generics, and generic drug prices must be less than the price of brand-name drug in at least 35%. Moreover, it is even possible to say that there will be an increase in the amounts reimbursed by copayment system beneficiaries, due to the change of two variables simultaneously (system of drug pricing and reimbursement system of medicines), which directly affect the prices of drugs (branded and generic), as well as the basis for reimbursement (from any medicine to generic drugs only). Monetary value of the difference between before and after the intervention
Sum of the total sample expenditure before intervention = 992.223,25 Sum of the total sample expenditure after intervention = 693.712,18 Difference between the scenarios = 298.511,07
13
Reference Countries: Portugal and Spain.
28
Discussion of the Results The fact that two interventions were simulated simultaneously can be a source of bias results. Ideally, the mechanism for setting up drug prices should be previously implemented and their impact on the reimbursement system fully considered, so that later, on basis of solid evidence, to analyze the impact of using the price of generic drugs as basis for the copayment in the reimbursement system of medicines. Another factor of uncertainty in the results is the lack of concrete data on the behavior of drug users in the amount of drugs consumed, since the implementation of a reimbursement system that causes considerable reductions in the drugs prices will also reflect in an unknown fringe of the population that previously had no access to medicines. Depending on the size of this fringe, the savings made by INPS through the implementation of the new system as well as their new socioeconomic framework in relation to the affordability of medicines, it may be contrary to the trend of reducing expenditure because of the increased amount of drugs consumed. The use of weights was an alternative to the lack of data on the differences in behavior of the insured population in relation to the population not covered by social security system. Probably there are significant differences in behavior that are due primarily to greater accessibility by the beneficiaries of the reimbursement system. The perception is that the beneficiaries of the system, theoretically privileged, will be able to purchase more medicines, which should be reflected positively in the amount of drugs consumed, when compared with the non-beneficiaries of the copayment system. However, it is important to consider that the conclusions obtained contain limitations. There are limitations of the formation of the sample, since it was not
29
considering the entire market segment covered by de copayment system, but only the drugs that had all the basic information necessary for the development of this work, even though this fringe corresponds to more than 70% of this segment. The fact that there are only one importer and one producer is translated to a lack of competition in the market. The importation restrictions of no more than three specialties for each API, strength and dosage form should be considered in the proper functioning of proposed system, since it has direct influence on the free choice of drugs by consumers.
30
Conclusion: Future Perspectives of study improvement Medicines are central axis in the system of health care. However, the efficiency and equity in access to medicines are directly linked to the reimbursement system implemented. The design of a system of reimbursement of drugs requires a set of complementary measures that should be adopted by different operators in the pharmaceutical sector in order to be truly sustainable and provide acceptable levels of health care benefits to citizens. In the particular case of Cape Verde, the reimbursement system has proved to be considerably unbalanced, due to the fact it does not take into account clear criteria and independence of the criteria baseline application. The lack of consistent data and detailed information about the operations over the years since its creation are factors that tend to perpetuate the functioning of this unbalanced and
unsustainable system. It has been noted an effort by the managing body of the INPS to create and implement information systems that would allow, in the medium term, to obtain accurate information that can support in-depth analysis of the current system and from there to propose more efficient and sustainable systems, adapted to the reality of the country. It is neither appropriate, nor acceptable, to make the implementation of principles and outcomes associated with its implementation and functioning elsewhere. There are multiple variables in the pharmaceutical system of each particular country that may modify the response to the implementation of an RPS. Thus, it becomes imperative to examine all the local conditions associated with implementing a new RPS. Finally, it should be noted that this work is not a conclusion but the beginning of a study that is intend to refine, improve the quality of information and processing of data and further analysis.
31
Bibliographical References [1]Ioannides-Demos LL, Ibrahim JE, McNeil JJ. Reference - Based Pricing Schemes Effect on Pharmaceutical Expenditure, Resource Utilization and Health Outcomes. Pharmacoeconomics 2002; 20(9): 577-91. [2]Schneeweiss S, Maclure M, Dormuth C, Avorn J. Pharmaceutical Cost Containment with Reference Based Pricing: Time for Refinements. Journal of Canadian Medical Association 2002; 167(11): 1250-1. [3]Schneeweiss S, Walker AM, Glynn RJ, Maclure M, Dormuth C, Soumerai SB. Outcomes of Reference Pricing for Angiotensin Converting Enzyme Inhibitors. The New England Journal of Medicine 2002; 346(11): 822-9. [4]Kanavos P, Reinhardt U. Reference Pricing for Drugs: Is it Compatible with US Health Care? Health Affairs 2003; 22(3):16-30. [5]Danzon P. Reference Pricing: Theory and Evidence. In: Lpez-Casasnovas G, Jonsson B. Reference Pricing and Pharmaceutical Policy Perspectives on Economics and Innovation. Springer Verlag Ibrica, Barcelona. 2001. [6]Schneeweiss S, Maclure M, Soumerai SB. Prescription Duration After Drug Copay Changes in Older People: Methodological Aspects. Journal of American Geriartrics Society 2002; 50: 521-525. [7]Schneeweiss S, Soumerai SB, Maclure M. Reference Drug Pricing. Canadian Medical Association Journal; 167(2): 126-127. [8]Kalo Z, Muszbek N, Bodrogi J, Bidl J. Does Therapeutic Reference Pricing Always Result in Cost Containment? The Hungarian Evidence. Health Policy 2007; 80: 402-412. [9]Mestre Ferrandiz J. Reference Prices and Generic Medicines: What Can We Expect? Journal of Generic Medicines 2003; 1(1):31-38. [10]Mrazek M. Comparative Approaches to Pharmaceutical Price Regulation in the European Union. Croatian Medical Journal 2002; 43(4):453-461. [11]Relatrio e Contas INPHARMA 2007. Laboratrios Inpharma Indstria farmacutica, 2008. [12]Relatrio e Contas Farmacuticos, 2008. EMPROFAC 2007. Empresa Nacional de Produtos
[13]Relatrio e Contas INPS 2007.Instituto Nacional de Previdncia Social, 2008. [14] Relatrio Estatstico da Sade 2007. Gabinete de Estudos, Planeamento e Cooperao, Ministrio da Sade, 2008. [15]PriceWaterHouse and Coopers: Market Liberalization: High Success, High Impact? Anlise do Impacto Econmico e Financeiro do Mecanismo de Fixao de Preos nos Diferentes Intervenientes. Relatrio Final, Agosto de 2008. [16]The World Health Report-Health Systems Financing: The Path to Universal Coverage. WHO 2010.
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[17] IBF International Consulting (Blgica) Instituto Portugus da Qualidade. Projecto de instalao da ARFA. Relatrio final, Junho de 2002. [18]Handbook of Health Economics, Volume 1, Edited by A. J. Culier and J. P. Newhouse, 2000 Elsevier Science B. V. [19]Culier A. J, The Dictionary of Health Economics. Published by Edward Elgar Publishing Limited Glensanda House, Montpellier Parade, Cheltenham Glos GL50 1UA, UK, 2005. [20]Zweifel P, Breyer F, Kifmann M. Health Economics. Springer Dordrecht Heidelberg London New York, 2009. [21]Braverman J. Health Economics. Published by the Pharmaceutical Press, 1 Lambeth High Street, London SE1 7JN, UK, 100 South Atkinson Road, Suite 200, Grayslake, IL 60030-7820, USA, Pharmaceutical Press, 2010. [22]Mills A, Gilson L. Health Economics for Developing Countries: A Survival Kit. HEFP working paper 01/88, LSHTM, 1988. [23]Fuchs V. R. Economic Ideas leading to the 21st Century-Vol.3 Who Shall Live? Health, Economics and Social Choice (expanded edition). World Scientific Publishing Co. Pte. Ltd, 1998. [24]Davis J. B, McMaster R. The Individual in Mainstream Health Economics: A Case of Persona Non-grata. Published online: 5 April 2007. Springer Science+Business Media, LLC 2007. [25]Pestana, M. H, Gageiro J. N. Anlise de Dados para Cincias Sociais: A complementaridade do SPSS. 3 edio revista e aumentada. Edies Slabo, 2009.
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INTERNATIONAL MASTERS IN HEALTH ECONOMICS AND PHARMACOECONOMICS

EDUARDO TAVARES 20111

INTERNATIONAL MASTERS IN HEALTH ECONOMICS AND PHARMACOECONOMICS

Eduardo Jorge Monteiro Tavares

INTERNATIONAL MASTERS IN HEALTH ECONOMICS AND PHARMACOECONOMICS

Eduardo Jorge Monteiro Tavares

INTERNATIONAL MASTERS IN HEALTH ECONOMICS AND PHARMACOECONOMICS

Eduardo Jorge Monteiro Tavares

INTERNATIONAL MASTERS IN HEALTH ECONOMICS AND PHARMACOECONOMICS

Eduardo Jorge Monteiro Tavares

INTERNATIONAL MASTERS IN HEALTH ECONOMICS AND PHARMACOECONOMICS

Eduardo Jorge Monteiro Tavares

INTERNATIONAL MASTERS IN HEALTH ECONOMICS AND PHARMACOECONOMICS

Eduardo Jorge Monteiro Tavares

INTERNATIONAL MASTERS IN HEALTH ECONOMICS AND PHARMACOECONOMICS

Eduardo Jorge Monteiro Tavares

INTERNATIONAL MASTERS IN HEALTH ECONOMICS AND PHARMACOECONOMICS

Eduardo Jorge Monteiro Tavares

INTERNATIONAL MASTERS IN HEALTH ECONOMICS AND PHARMACOECONOMICS

Eduardo Jorge Monteiro Tavares

INTERNATIONAL MASTERS IN HEALTH ECONOMICS AND PHARMACOECONOMICS

Eduardo Jorge Monteiro Tavares

INTERNATIONAL MASTERS IN HEALTH ECONOMICS AND PHARMACOECONOMICS

Eduardo Jorge Monteiro Tavares

INTERNATIONAL MASTERS IN HEALTH ECONOMICS AND PHARMACOECONOMICS

Eduardo Jorge Monteiro Tavares

INTERNATIONAL MASTERS IN HEALTH ECONOMICS AND PHARMACOECONOMICS

Statal Drug Depositories

Health Care Facilities

Figure 1: The flowchart of the pharmaceutical market in Cape Verde.

Eduardo Jorge Monteiro Tavares

INTERNATIONAL MASTERS IN HEALTH ECONOMICS AND PHARMACOECONOMICS

Basis reimbursement calculation

Reimbursement affected by severity of illness effectiveness medical product or of

Reimbursement to different children from

Patients wealth the reimbursement affects

System recognizes other groups special

reimbursement to adults Yes Yes

Prescription Drug costs months purchase over 12

Fixed Fixed percentage +

Package size Prescription

Portugal Spain Sweden

Percentage Percentage Percentage

Prescription Prescription Drug costs months purchase over 12

yes yes yes

Table 1: Principles of drug reimbursement systems.

Eduardo Jorge Monteiro Tavares

INTERNATIONAL MASTERS IN HEALTH ECONOMICS AND PHARMACOECONOMICS

Eduardo Jorge Monteiro Tavares

INTERNATIONAL MASTERS IN HEALTH ECONOMICS AND PHARMACOECONOMICS

Eduardo Jorge Monteiro Tavares

INTERNATIONAL MASTERS IN HEALTH ECONOMICS AND PHARMACOECONOMICS

Eduardo Jorge Monteiro Tavares

INTERNATIONAL MASTERS IN HEALTH ECONOMICS AND PHARMACOECONOMICS

Decree-Law, n 270/2002, from 2/12/2002.

Eduardo Jorge Monteiro Tavares

INTERNATIONAL MASTERS IN HEALTH ECONOMICS AND PHARMACOECONOMICS

Eduardo Jorge Monteiro Tavares

INTERNATIONAL MASTERS IN HEALTH ECONOMICS AND PHARMACOECONOMICS

In accordance with the Decree-Law n 22/2009, from 06 July 2009.

Eduardo Jorge Monteiro Tavares

INTERNATIONAL MASTERS IN HEALTH ECONOMICS AND PHARMACOECONOMICS

Eduardo Jorge Monteiro Tavares