Advertisement

PharmacoEconomics

, Volume 4, Issue 2, pp 92–103 | Cite as

Economic Impact of Cost-Containment Strategies in Third Party Programmes in the US (Part I )

  • C. Eugene Reeder
  • Earle W. Lingle
  • Richard M. Schulz
  • Robert P. MauchJr
  • Brian S. Nightengale
  • Craig A. Pedersen
  • Marc L. Watrous
  • Susan E. Zetzl
Review Article

Summary

The rising cost of healthcare has strained the resources of governments, private third parties and individuals with responsibility to pay for it. Various strategies have been used in an attempt to control costs. This article examines the economic impact of 4 such strategies:.(a) cost sharing; b) prescription limits; (c) rebates; and (d) cost limits. Cost sharing has been successful at reducing utilisation of prescription drugs, although the effects have not been uniform across therapeutic categories. However, the long term effect on cost and utilisation of other medical services, and the impact on overall health status, remain largely unknown. Some evidence suggests that utilisation of other services may increase, The available data regarding drug rebate programmes have been descriptive in nature. However, the designs employed in this research do not establish a direct causal relationship between rebate programmes and changes in Medicaid drug expenditure. Furthermore, still unknown is the degree of cost shifting and the effect of she rebate programme on other large public and private drug purchasers. The Maximum Allowable Cost programme led to direct savings in drug costs, but the size of these savings was variable and uncertain because of administrative costs of the programme. The Estimated Acquisition Cost programme has not resulted in significant savings.

Keywords

Cost Sharing Medicaid Programme Prescription Limit Rebate Programme Rand Health Insurance Experiment 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. American Pharmaceutical Association, Policy Division. Medicaid prescription reimbursement reform, 1985–1986. American Pharmaceutical Association, Washington, DC, June, 1986Google Scholar
  2. Brian EW, Gibbens SF, California’s Medi-Cal co-payment experiment. Medical Care 12(Suppl.): 1974Google Scholar
  3. Chen MK. Penny wise and pound foolish: Another look at the data. Medical Care 14: 958–963, 1976CrossRefGoogle Scholar
  4. Dyckman ZY. Comment on copayments for ambulatory care: Penny wise and pound foolish. Medical Care 14: 274–276, 1976PubMedCrossRefGoogle Scholar
  5. Editorial. FDC Reports. The Pink Sheets, 54 (34): 3–4, August 24, 1992aGoogle Scholar
  6. Editorial. FDC Reports. The Pink Sheets, 54 (7): 3–4, February 17, 1992bGoogle Scholar
  7. Editorial. FDC Reports. The Pink Sheets, 54 (14): T&G-8, April 6, 1992cGoogle Scholar
  8. Gagnon JP, Jang R. Federal control of pharmaceutical costs: the MAC experience, p. 10, Roche Laboratories, Nutley, NJ, 1979Google Scholar
  9. Hall CP. Impact of cost sharing on consumer use of health services, In Muskin (Ed.) Consumer incentives for health care, pp. 333–361, Prodist, New York, 1974Google Scholar
  10. Harden ST. ‘Copay in the Alabama Medicaid Programme’, presented to Southeastern Regional Directors of Drug Programmes in Medicaid, July 1976Google Scholar
  11. Hopkins CE, Gartside F, Roemer MI. Rebuttal to comments for ambulatory care: penny wise and pound foolish. Medical Care 14: 277, 1976CrossRefGoogle Scholar
  12. Lee J, Hefner D, Dobson A, Hardy R. Evaluation of the maximum allowable cost programme. Health Care Financing Review 4: 71–81, 1983PubMedGoogle Scholar
  13. Leibowitz A, Manning WG, Newhouse JP. The demand for prescription drugs as a function of cost-sharing. Social Science and Medicine 21: 1063–1069, 1985PubMedCrossRefGoogle Scholar
  14. Levy RA. Prescription cost sharing: economic and health impacts, and implications for health policy. PharmacoEconomics 2: 219–237, 1992PubMedCrossRefGoogle Scholar
  15. Lohr KN, Brook RH, Kamberg CJ, et al. Use of medical care in the Rand health insurance experiment: diagnosis- and service-specific analyses in a randomized controlled trial. Rand publication no. R-3469-HHS, Rand Corporation, Santa Monica, CA, December, 1986Google Scholar
  16. National Pharmaceutical Council, Proceedings of a symposium, The effectiveness of medicines in containing health care costs: impact on innovation, regulation, and quality. National Pharmaceutical Council, Washington, DC, June, 1982Google Scholar
  17. Nelson AA, Reeder CE, Dickson WM. The effect of a Medicaid drug co-payment programme on the utilization and cost of prescription services. Medical Care 22: 724–736, 1984PubMedCrossRefGoogle Scholar
  18. Nelson AA Jr, and Quick MR. Copayment for pharmaceutical services in a Medicaid programme. Contemporary Pharmacy Practice 3: 40–42, 1980Google Scholar
  19. Newhouse JP. Controlled experimentation as research policy. In Ginzberg (Ed.) Health services research: key to health policy. Harvard University Press, Cambridge, MA, 1991.Google Scholar
  20. Newhouse JP, Manning WG, Morris CN, et al. Some interim results from a controlled trial of cost sharing in health insurance. New England Journal of Medicine 305: 1501–1507, 1981PubMedCrossRefGoogle Scholar
  21. Policy Research Group. Trends in Medicaid prescription drug expenditures and implications for Medicaid rebate collections. Washington, DC, May 13, 1992Google Scholar
  22. Porter BH, Carroll NV, Kotzan JA. A comparative study of current reimbursement (MAC/EAC) with prescription reimbursement based on a competitive market. Journal of Pharmaceutical Marketing and Management 3: 37–45, 1989CrossRefGoogle Scholar
  23. Reeder CE, Nelson Jr AA. The differential impact of copayment on drug use in a Medicaid population. Inquiry 22: 396–403, 1985PubMedGoogle Scholar
  24. Roemer MI, Hopkins CE, Lockwood C, et al. Copayments for ambulatory care: pennywise and pound foolish. Medical Care 8: 457, 1975CrossRefGoogle Scholar
  25. Sawyer D. Pharmaceutical reimbursement and drug cost control: the MAC experience in Maryland. Inquiry 20: 76–87, 1983PubMedGoogle Scholar
  26. Schulz RM, Lewis N. Payment restrictions for prescription drugs under Medicaid. PharmacoEconomics 1: 217–219, 1992PubMedCrossRefGoogle Scholar
  27. Soumerai SB, Avorn J, Ross-Degnan D, and Gortmaker S. Payment restrictions for prescription drugs under Medicaid. New England Journal of Medicine 317: 550–556, 1987PubMedCrossRefGoogle Scholar
  28. Soumerai SB, Ross-Degnan D, Avorn J, McLaughlin TJ, Choodnovskiy I. Effects of Medicaid drug-payment limits on admission to hospitals and nursing homes. New England Journal of Medicine 325: 1072–1077, 1991PubMedCrossRefGoogle Scholar
  29. US Department of Health, Education, and Welfare. Inflation impact statement on CFR Title 45, Subtitle A, Pan 19 — Limits on payment or reimbursement for drugs, July 25, 1975Google Scholar
  30. US General Accounting Office. Programmes to control prescription costs under Medicaid and Medicare could be strengthened. US Government Printing Office, Washington, DC, December, 1980Google Scholar

Copyright information

© Adis International Limited 1993

Authors and Affiliations

  • C. Eugene Reeder
    • 1
  • Earle W. Lingle
    • 1
  • Richard M. Schulz
    • 1
  • Robert P. MauchJr
    • 1
  • Brian S. Nightengale
    • 1
  • Craig A. Pedersen
    • 1
  • Marc L. Watrous
    • 1
  • Susan E. Zetzl
    • 1
  1. 1.College of Pharmacy, Department of Pharmacy PracticeUniversity of South CarolinaColumbiaUSA

Personalised recommendations