Health Reform and Drug Financing. Selected Topics - Health Economics and Drugs Series, No. 006
(1998; 49 pages) [French] [Spanish]
Table of Contents
View the documentAcknowledgements
View the documentExecutive summary
Open this folder and view contents1. Introduction
Open this folder and view contents2. Financing reforms
Close this folder3. Affordability and efficiency
View the document3.1 Therapeutic efficiency in drug selection and use
View the document3.2 Cost-control measures
View the document3.3 Affordability for consumers
Open this folder and view contents4. Organizational reforms
View the documentConclusions
View the documentReferences
View the documentBack Cover

3.2 Cost-control measures

Pharmaceutical expenditures are dependent upon which medications are consumed, at what price and in which quantity. In industrialized countries, proper implementation of a cost-control strategy should lead to optimal levels of both drug expenditures and quantities consumed. In developing countries, where insufficient drug consumption due to poor access is often an issue, efforts to make pharmaceuticals more affordable may result in a desirable increase in the quantity of their consumption.

A wide variety of measures have been evaluated which can minimize expenditures while providing the appropriate amounts of necessary pharmaceuticals [16, 3]. Some of these can be implemented by both public and private sectors, while others, such as price control, must be developed and implemented by the government but affect the private sector. A few examples of cost-control mechanisms are listed in Table 6 below. Section 3.3 provides more detailed discussions of some of these options.

Table 6. Examples of measures for controlling drug expenditures



Bulk purchasing

• Includes tenders
• Includes pooled procurement

Capping of expenditures

• Ceiling of pharmaceutical expenses
• Limits expenditures allowed per treatment episode

Drug selection

• Positive lists, such as essential drugs lists, are formulated based on criteria for inclusion (public health needs, therapeutic value, cost)
• Negative lists focus on excluding certain products

Marketing and advertisement restrictions

• Advertising and promotion can make up a sizable portion (15-25%) of ex-factory drug costs (estimated from Ref. [16], p. 17) and are intended to influence consumption patterns. Limitations are intended to reduce price and rationalize consumption

Prescribing controls or incentives

• Intended to reduce consumption and/or shift prescriptions towards cheaper or generic drugs

Price control

(refer to section 3.3)

Promotion of rational use

(refer to section 3.1)

Use of generic products

(refer to section 3.3)

User fees and co-payments

• May discourage excessive consumption but may have negative consequences on affordability and equity
(refer to section 2.3)

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