Others Eye B.C.'s Controversial Pricing Strategy

By Matt Borsellino
The Medical Post, February 4, 1997

VICTORIA - British Columbia's successful but still controversial reference-based drug pricing control strategy is reportedly being considered by at least two other provinces.

Reference-based pricing, dubbed RBP, was implemented by the B.C. government in October of 1995 to control its $350-million Pharmacare program, the cost of which doubled between 1991 and the end of 1996, despite introduction of the RBP.

RBP pays for the least expensive product in four drug families. The most recent family added to the list was antihypertensives -- ACE inhibitors and calcium channel blockers -- which became part of the program Jan. 1 over the strong objections of the Canadian Cardiovascular Society (see The Medical Post, Nov. 12).

Under RBP, doctors can have patients exempted by completing special authorization forms outlining therapeutic reasons. Patients can use more expensive products and pay the difference between them and reference-based drugs.

Also, long-term care and pediatric patients are exempt from RBP.

Over the 15 months since RBP began, restrictive formularies have been the target of severe criticism, but according to the government, RBP has saved B.C. Pharmacare at least $25 million and produced efficiencies in other areas of health care. Premier Glen Clark and Health Minister Joy MacPhail expect the addition of hypertensives to save an additional $14 million a year.

While other provinces -- reportedly Ontario and Nova Scotia -- are studying the RBP, the scheme seems to have gone about as far as it can in B.C.

The West Coast version now covers "about 90%" of all possible drug families right now, Tom Brogan, an Ottawa-based health care consultant, told The Medical Post's sister publication Canadian Healthcare Manager recently. It touches 11% of all prescriptions filled in the province.

Efforts to expand the policy further, however, are likely to continue anyway, critics fear.

"With the Clark government's focus almost entirely on reducing the cost of delivering government services, continued expansion of RBP and perhaps other cost-saving measures can be expected," suggested the B.C. Medical Journal's monthly Victoria Report.

When RBP was unveiled, both doctors and pharmacists worried about its impact on quality of patient care. Opponents felt having third parties introduced into the doctor-patient relationship would compromise optimal therapy. The giant drug firms charged the B.C. government had no legislative authority to implement such a scheme.

Provincial courts, though, ruled otherwise, leaving pharmaceutical manufacturers to decide whether to appeal the decision.

After more than a year, many of the worst fears have not been realized, and today, the Pharmaceutical Manufacturers' Association of Canada (PMAC) seems largely isolated in continuing to oppose the plan. It believes increased restrictions are associated with increased total costs because simply managing drug plans does not take into effect other aspects of health care.

Such a philosophy generally specifies budget targets within a particular organization and attempts to manage those targets independent of the total health care organization or system.

Further, profits could shrink to the point of damaging the industry's research and development capacity to produce new and improved products, PMAC officials contend.

(One recent government ad explaining RBP stated the policy puts "patients and taxpayers ahead of drug industry profits.)

Pharmacies save money by carrying larger inventories of fewer, less expensive brands, while doctors say there has been no spike in hospital readmissions caused by inappropriate use of the cheaper drugs. In fact, changes in physician prescribing patterns have played an influential role in the success of RBP.

Those running employee health plans have also enjoyed reduced drug costs as doctors prescribe cheaper RBP drugs for patients on private, employee health plans.

Despite their objections, drug firms have also responded to RBP, according to Michael Corbeil, Pharmacare's executive director. One company cut the price of its nitrate patch by more than half to match the referenced product.

Copyright 1997 Maclean Hunter Publishing Limited
Reprinted with permission.

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