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Drugs and Money - Prices, Affordability and Cost Containment
(2003; 158 pages) View the PDF document
Table of Contents
View the documentIntroduction
Open this folder and view contentsPart I: Problems and approaches to a solution
Open this folder and view contentsPart II: Selected experiences with policy options
View the documentList of Contributors
View the documentBack cover


Drugs and Money

During recent decades, society has attached great importance to improved health, and has witnessed a fast rising demand for health care. As a consequence of that development, most, if not all, countries have found themselves confronted with the problem of meeting growing expenditure on health care. That additional expenditure must either be financed or it must in one way or another be constrained; both approaches will probably have to be adopted in parallel. Increased public spending may meet with macroeconomic difficulties, while increased private spending will give rise to equity concerns. The growth and the ageing of populations, the widening range and complexity of available medical interventions and changes in society’s expectations regarding on the budget available for health systems, whether these comprise prevention, curative services or the provision of care for the aged or infirm.

The very rapid growth of expenditure on medicines is of particular concern and it has attracted considerable political attention, in part no doubt because it is a concrete issue which at first sight appears readily amenable to economic control. That first impression has often proven misleading; despite the impressive variety of cost containment measures which have been devised over the years, drug expenditure has remained high and as a rule it has continued to grow.

One of the complicating factors in this particular field is that in so many countries a regulated, collectively financed health care sector coexists with a free and profit-driven marketplace. Both are widely regarded as desirable and defensible, yet it is evident that where the two interact conflicts may arise; a country seeking to contain pharmaceutical expenditure will soon find itself imposing restraints on those very industrial and commercial processes which it is so anxious to promote. The countries of Central and Eastern Europe, currently transforming their centralized economies into market-driven systems, and with their frontiers now open to western products at western prices, have experienced these conflicts in a particularly acute form. They have struggled greatly to strike a balance between the one-time ideal of free health care and current concepts of free enterprise.

In their determination to contain pharmaceutical costs, while at the same time aiming at improved care and equitable access to medicines, countries have often implemented a series of measures in rapid succession or even simultaneously, readily seizing on and adopting what appear to be promising policies developed in neighbouring countries. The result can be a bewildering, complex and dynamic patchwork of interacting approaches. In that situation it can be as difficult to identify the causes of failure as to explain whatever successes are attained; there is rarely anything in the nature of a controlled experiment in cost containment, and it has therefore become increasingly difficult for one member state to learn from the experiences of others. In some instances, too, the feasibility or otherwise of a particular approach is determined by purely national factors. It can for example be tempting, in a country where the bulk of drugs are supplied by national manufacturing firms, to impose limits on their promotional expenses or profits; such countries are today however few and far between, and where one is dealing largely with multinational corporations one generally has neither the insight nor the implements which one needs to institute such methods successfully.

Health care systems in Europe are largely based on the principles of health as a human right, on equitable access to health and health services, quality of health care, on solidarity, and on the active participation of society as a whole. Because of the difficulties associated with rising costs, however, it is today vital to translate those ideals into achievements which are quantifiable both in terms of health and of expenditure; only with the help of such exact information can one hope to develop defensible policies which balance initiatives against resources. The 2000 World Health Report presented an approach to measuring the performance of health systems; it looked broadly at indicators in the areas of health attainment, of fair financing, of responsiveness of the system, and the efficiency with which these goals are achieved. Other publications have considered specifically the means which are available to assess the efficiency and costs of pharmaceutical care, a theme which is reflected throughout this book.

Many member states have over the years approached the World Health Organization for advice or information on the feasibility of (generally short-term) measures to control the growth of expenditure on medicines. Such calls for help led the Organization as early as 1983 to conclude that there was an ongoing need among member states for guidance in the development of their national policies with regard to cost containment in this field. In that year the Pharmaceuticals Unit (PHA), now the Health Technologies and Pharmaceuticals Programme, of the WHO Regional Office undertook a study under the title “Drugs and Money”; it culminated in a deliberately concise report, providing a critical overview of the effectiveness of older cost-containment schemes while also paying attention to innovative ventures. The report was widely used and repeatedly updated, with its sixth edition appearing in book form in 1992.

This present seventh edition aims, as its predecessors have done, to provide policy makers and regulators with a compact and practical review of the various approaches which have been developed and tested to date in an effort to contain the overall costs of pharmaceutical services and drug treatment. New measures, enjoying a greater or lesser degree of success, have continued to emerge during the ’nineties and the end is not yet in sight. In this small volume particular emphasis is again placed on those principles which may prove helpful in containing costs without introducing a disproportionate risk of adverse consequences. The true art of good housekeeping in this field is clearly to ensure that drugs continue to benefit society wherever they can, while eliminating every form of waste of public funds.

Unlike earlier editions of “Drugs and Money” this volume devotes considerable attention to the special problems of developing countries and those where the economy is currently in transition. While lessons learnt in one type of national environment may prove applicable in another, it is important to realise that the situation in western industrialized countries still differs substantially from that elsewhere. Although the nature of the problem of cost containment may be the same, transitional and less-developed countries do not find it easy to adopt many of the solutions developed by western-industrialised countries. Conversely, some of the approaches which have been developed in the developing world would not be applicable to industrial society.

Throughout the years the World Health Organization has taken the position that the question as to how to provide access to medicines while containing their costs must be viewed as an integral part of long-term pharmaceutical policies. More broadly it is a part of overall health care policy and, more broadly still, a component of the entire economic and social policy of a country. The problem of cost containment of pharmaceuticals cannot be viewed separately from such issues as equity, market structure or the quality of therapeutic care.

The book is structured in such a way as to provide the reader with a logical line of reasoning progressing from the scope and causes of the cost containment problem (Chapter 1) through the means which exist to examining and quantify it (Chapter 2), to an extensive consideration of the principal solutions which governments use to cope with the problem (Chapter 3) and to measure the impact of whatever measures are taken (Chapter 4). Actual experience with the most prominent of the methods used to date is considered in Chapters 6 to 13. In the last two sections of the book, special attention is devoted to the situation in developing countries and those undergoing structural transition. Although the various approaches to cost containment are in this volume necessarily discussed separately, they are in fact inter-linked and complementary; some overlap and cross-referencing between the various sections of the book is therefore unavoidable.

Last but not least, although the title “Drugs and Money” may to some suggest otherwise, government influence is not limited to the financing of health care, but extends also to the organization, standards and delivery of health care in all its forms. Many regulations concerning the intrinsic quality of pharmaceuticals, the quality of prescribing and the proper use of medicines have been introduced over the last four decades, and their influence is complementary to that of measures designed primarily to have economic effects in this field.

Developments in this field continue and are bound to expand further. The massive human and financial challenges presented by the HIV/AIDS epidemic could not have been foreseen when the first edition of “Drugs and Money” appeared twenty years ago. Nor however could the ongoing worldwide response, encompassing challenges to the entire issue of drug pricing and patents. For all that, many of the methods currently in use to contain costs in the field of pharmaceutical care have essentially developed from those which were first conceived in the ‘eighties, gained in different environments to assess their strengths and weaknesses. It is to be hoped that this review of what has been done and what can be done to provide affordable pharmaceutical care will again provide a helpful guide to all those faced with the issue.

M.N. Graham Dukes
Institute of Pharmacotherapy
University of Oslo, Norway

Flora M. Haaijer-Ruskamp
Department of Clinical Pharmacology
University of Groningen, The Netherlands

Kees de Joncheere
Health Technologies and
Pharmaceuticals Programme
World Health Organization
Regional Office for Europe
Copenhagen, Denmark

Ad H. Rietveld
Cambridge Pharma Consultancy
Cambridge, United Kingdom

December 2002


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