ESTIMATION OF CHANGE IN PRESCRIPTION DRUG EXPENDITURES ON THE REFERENCE PRICING SYSTEM IN SOUTH KOREA
Author(s)
Heo JH1, Rascati KL2, Lee E3
1University of Texas at Austin, Austin, TX, USA, 2The University of Texas at Austin, College of Pharmacy, Austin, TX, USA, 3Sungkyunkwan University, Suwon-si, Gyeonggi-do, South Korea
OBJECTIVES: A reference pricing system is a policy strategy that sets a reimbursement level or reference price for a group of therapeutically interchangeable drugs, i.e. the reference group. A patient is responsible for any difference between the reference price and the price of a more costly drug. The purpose of this study was to estimate future prescription drug expenditures after implementation of the reference pricing system in South Korea. METHODS: Korean national health insurance data collected for January, April, July, and October in 2011 were obtained from the Health Insurance Review and Assessment Service. All medications were included to estimate drug expenditures, except patented drugs and orphan drugs. A reference group was defined as the category including drugs with same ingredient or same therapeutic class. Possible scenarios after the introduction of the reference pricing system, such as a copay deduction program for only drugs below the reference price by the government, price lowering by companies and changes in prescribing patterns, were included in the model. RESULTS: A base-line copay rate of 20.4% was calculated. When a reference price was set at the average price of drugs in the reference group, patient co-payment rates were estimated to increase to 23.9%. However, when we assumed that companies reduce the price by 5% and prescribers changed 10% of prescriptions to avoid patients paying additional co-payments, co-payment rates were estimated to be 22.9%. In addition, the copay deduction could help decrease co-payment rates to 19.6%. CONCLUSIONS: Reference pricing system can contribute to a reduction in prescription medication expenditures for third-party payers. The co-payment for patients could be increased by moving additional financial burden from the insurer to patients. However, an increase in co-payment rates could be limited and total drug expenditures could be reduced by copay discounts, medication price reductions or prescribing changes.
Conference/Value in Health Info
2014-05, ISPOR 2014, Palais des Congres de Montreal
Value in Health, Vol. 17, No. 3 (May 2014)
Code
PHP23
Topic
Economic Evaluation, Health Policy & Regulatory
Topic Subcategory
Cost/Cost of Illness/Resource Use Studies, Pricing Policy & Schemes
Disease
Multiple Diseases