Lessons from international experience in controlling pharmaceutical expenditure III: regulating industry

Abstract

This is the third of three papers that review international policies to control spending on drugs and to improve the efficiency of drug use. This paper reviews policies regulating the supply of drugs, particularly licensing and reimbursement controls, price and profit regulation. Price and profit controls contain few incentives for improving cost effective use of drugs, and focus on cost containment and profitability of domestic industry. Carefully monitored economic evaluation could lead to improvements in efficiency and benefits to patients and the health care system. In this series of three papers we describe recent policies to control spending on drugs in several developed countries which can provide insights for British health policy. We also examine rigorous evaluative studies, where they are available, to assess the impact of these policies on prescribing. Details of our literature search are in the first paper in our series. In this paper we review policies intended to regulate the behaviour of drug manufacturers, particularly governments' control of licensing, reimbursement, and prices and profit. Previous papers have examined policies aimed at influencing the behaviour of doctors and of patients. Most countries require evidence of efficacy and safety for licensing new drugs, but none requires evidence of cost effectiveness. Licensing may be “ultimately the most powerful economic control as it can exclude products from the market,”1 and an increasing number of countries include economic factors when deciding whether to reimburse products. Many governments may restrict publicly reimbursed drugs by positive lists (Australia, New Zealand, Italy, France) or negative lists (Germany, Ireland, the Netherlands, Spain, United Kingdom). Decisions are based on information about safety and efficacy, professional opinion, and, occasionally, cost effectiveness. Australia and the province of Ontario in Canada were the first to include data on cost effectiveness data in decisions about reimbursement. France, Britain, and …