Lecture 13: Medicines and government policy Flashcards
what are the uncertainties and value judgements about drugs?
- no drug is completely safe
- no drug works every time, for everyone
- data on safety and efficacy is incomplete (limitations of clinical trials, evidence changes over time)
what are the value judgements about drugs?
- safety vs efficacy vs cost
- majority vs minority interests
what are the government roles in drugs?
- deciding which drugs should be available in their country
- improving access to drugs (through paying for some or all prescribed drugs)
- controlling costs
- supporting pharmaceutical industry
how does the government decide on which drugs should be available?
Licensing/registration of drugs based on criteria:
- quality
- safety
- efficacy
- cost-effectiveness
- in NZ this is carried out by medsafe
what are the issues with the online availability of medicines?
- challenge regulators in individual countries
- risks include: contamination, inaccurate doses, inappropriate drugs
what questions are raised when trying to improve access by funding medicines?
- how much should the government pay?
- how much should the patient pay?
- which conditions should be covered?
- which drugs should be covered?
- different countries have different answers
what is the funding of medicines like in NZ?
- from 1941, nearly all prescribed medicines funded through the Pharmaceutical Benefits Scheme
- costs increased dramatically due to new products and increasing prices
- no incentives for patients, doctors or pharmacists to contain costs
how have the costs changed over the years?
per person in 1986 dollars
in 1943
- 2.1 prescription items, total cost $11.40
in 1986
- 9.1 prescription items, total cost $105.60
what were the attempts to contain costs in 1985-1993?
- introduction of out-of-pocket payments
- 1985$ $1 per prescription
- 1988: $5 and $2
- 1991: $15 and $5
- 1992: $5, $7.50 and $20
- 2000s: $3
- 2013: $5
what was the result of the health reforms in 1993?
formation of PHARMAC
- to manage government expenditure on pharmaceuticals
what does PHARMAC do?
- pharmac has a fixed budget which it cannot exceed
- pharmac decides which medicines the government will fund, conditions for funding, and the price the government will pay
- uses government’s monopsony power to reduce prices
what must happen with the pharmac strategies?
must show benefit over medicines already funded
what are PHARMAC’s strategies?
- reference pricing
- cross-company deal
- tendering
- targetting
- expenditure caps
what is reference pricing?
PHARMAC pays price of the cheapest drug in a class. if other companies do not drop their prices, patients must pay the difference
what are cross-company deals?
PHARMAC negotiates with a company to lower prices on one product in exchange for something else the company wants
what is tendering?
for some drugs, pharmac calls for companies who want to be either the sole supplier, or preferred supplier
what is targetting?
restricting funding to people most likely to benefit from using the drug
what are expenditure caps?
PHARMAC and the manufacturer agree on the number of people who are likely to need the drug in a year, and therefore a certain level of expenditure. if more of the product is prescribed, PHARMAC does not pay for this: the manufacturer refunds the subsidy paid
what are the effects of this strategy?
prices falling, but expenditure continuing to grow because of the introduction of new more expensive medicines, and growing volume of medicines used
what does this show?
the estimated effect of PHARMAC on drug costs shows that without pharmac, expenditure would be very high.
what does this show?
pharmac had a huge impact on expenditure
what does this show?
NZ expenditure has gone down over the years (although NZ is incomplete) and other countries expenditure has increased
what does this show?
medicine prices are very low in NZ
e.g. salbutamol is $45 in australia, $91 in Germany, $13 in NZ
what are the controversies of drug funding?
- zero-sum game: savings to government equals loss of profit to the industry. initially litigation, attempts to gain public support by manufacturers
- patients ‘forced’ to switch drugs
- many groups concerned about lack of access to new treatments
- patient co-payments can be very large if medicine is not fully subsidised
what can be said overall about government funding drugs?
- governments have several important roles in relation to pharmaceuticals
- roles can conflict or reinforce each other
e. g. goals of increasing access and controlling expenditure can reinforce each other
