Generic Price Regulation and Drug Expenditures: Evidence From Canada

Jun 1, 2023, 00:00
10.1016/j.jval.2023.01.008
https://www.valueinhealthjournal.com/article/S1098-3015(23)00014-1/fulltext
Title : Generic Price Regulation and Drug Expenditures: Evidence From Canada
Citation : https://www.valueinhealthjournal.com/action/showCitFormats?pii=S1098-3015(23)00014-1&doi=10.1016/j.jval.2023.01.008
First page : 833
Section Title : ECONOMIC EVALUATION
Open access? : No
Section Order : 833

Objectives

Rapid growth in pharmaceutical spending is a major challenge in Canada. To control rising costs, the Canadian government implemented a generic pricing policy in 2013, which reduced prices for some prescription generic drugs by roughly 50%. This article explores the effects of the Canadian pricing policy on drug expenditures and drug utilization among seniors.

Methods

Using a unique prescription claims data, this article adopts a difference-in-differences methodology to estimate the policy effects, and it further investigates the mechanisms by exploring the demand-side incentives and the role of health insurance design with a triple-difference approach.

Results

Exploiting the policy variation across drugs and provinces, the results suggest that the policy has reduced drug expenditure per capita, largely because of the inelastic demand among seniors. Although the policy leads to lower out-of-pocket costs for seniors facing coinsurance than for those with a fixed copayment, individual utilization and total demand display no differences across cost sharing.

Conclusions

The price regulation in Canada was successful in reducing drug expenditures per capita. The success rests on the interaction with demand-side regulations and demand incentives. The evidence of cost containment in Canada can provide some insights to other countries with similar needs and priority.

Categories :
  • Health Policy & Regulatory
  • Pricing Policy & Schemes
  • Retrospective Databases: Electronic Medical and Health Records, Admin Claims
Tags :
  • cost-sharing policy
  • generic price regulation policy
  • pharmaceutical expenditures
  • prescriptions demand
Regions :
  • North America
ViH Article Tags :